Association for Operations & Supply Chain Professionals

In thIs Issue

Logistics supported by Technology

Inventory – Asset or Liability?

Upcoming events: · 3PL seminar· CDDP Course· AGM

Issue no. 8 - WInteR 2014 WWW.nzpIcs.oRg.nz

Where in the supply chain are you?

NZPICS Benefits: Improve your organisation’s bottom line

> Learn today, Apply tomorrow > Globally recognised qualification

> Career Development > NZTE Capability Voucher Scheme funding available.

Suppliers

Logistics /3PL …

Core Manufacturers Retail/FMCG

Service Hospitality, Hospitals, Government, Defence

End Customers

Abel® is a fully integrated ERP system that delivers full-visibility Business

Management solutions across multiple companies, branches, locations, languages and currencies. We serve customers across

12 countries. Abel has been delivering affordable, scalable solutions to mid-sized

and growing Manufacturing, Distribution, Service and Repair, Wholesaling and

other businesses since 1996.

Abel was developed by a team of engineers with an extensive background in designing successful solutions for remote

industrial, manufacturing and mining organizations. Abel has established a prized reputation for reliability and simplicity of use.

Abel was designed using the principles and methodologies of APICS

The Association for Supply Chain and Operations Management.

ERP software designed for growing businesses

Abel’s Integrated Functionality

• Manufacturing & Production• Distribution & Supply• Inventory Management• Financials• Pricing• Multi Company Accounting that includes Multi-Currency, Country, Branch & Language• Customer & Supplier Management systems• Corporate View (Companywide view of

multiple Abel systems)

Abel Solutions Limited Level 3, Building A, 95 Ascot Avenue, Greenlane, Auckland 1051, New Zealand.Sales: 0800 Abel SalesSupport: +64 9 526-5210 Fax: +64 9 526-5214info@abelsolutions.co.nz www.abelsolutions.co.nz

Abel Solutions Australia Pty Ltd (Melbourne)302/71 Abinger Street, Richmond, VIC 3121, Australia. Phone: +61 418 696 488Abel Solutions Australia Pty Ltd (Sydney) Phone: +61 2 9888-3355 info@abelsolutions.com.au www.abelsolutions.com.au

www.abelsoftware.com

Abel’s Industry Specializations

• Manufacturing (Process, discrete, MRP and MRP11)

• Jobbing / Job Costing• Distribution• Engineering & Fabrication• Assembly• Service Industry• Repairs & Maintenance• Wholesaling• Food Production & Traceability• Apparel• Professional Services• Mining• Furniture & Fixtures• Marine• Asset & Project Management• Finance

Winter 2014 I 3

NZPICS magazine is produced twice per year for the benefit of NZPICS members and for other interested organisations.

Our readership includes over 500 NZPICS members and other decision makers in a wide range of supply chain sectors. Our readers are Supply Chain Professionals, HR Managers, Operations and Production Managers, Recruitment Consultants and Logistics personnel.

Publication in the NZPICS magazine does not constitute an endorsement of any product, service or material referral to nor does publication of an advertisement represent an endorsement by NZPICS or the magazine. All articles represent the viewpoint of the authors and are not necessarily those of the magazine or the publishers. Letters to the editor will be published at the discretion of the editor.

For editorial or advertising enquiries or for more copies of this magazine:

Please contact Jane Gravestock, Executive Officer on 09 525 1525 or enquiries@nzpics.org.nz.

Advertising rates are available upon request. For NZPICS committee listing – please visit www.nzpics.org.nz

These include improving our marketing,

supporting our tutors to be the best

they can be, providing a rich and varied

calendar of events for our members.

To that end, NZPICS is attending

Business Expos and will attend Career

Expos, and sourcing a marketing resource.

Our tutor based is expanding and we

are providing support to our current

tutors by way of evaluations, feedback

and audits. Site Visits are more frequent

and we look to host these outside

Auckland where possible. More events

are being considered.

Joint NZPICS/APICS Membership for

studying supply chain professionals has

been offered from the beginning of 2014.

This is not limited to those studying.

We invite all our members to consider

joint membership. The APICS membership

offers benefits to all supply chain

professionals. See the info box later in

the magazine which outlines the benefits.

I look forward to our progress this year.

Much of it is behind the scenes and

I hope you feel the benefits as the work

becomes more front of stage!

David turnbull,

president

Newsflash: Choosing the right 3PL for your businessDate: Monday 23 June, 5-7 pm at Lion.

Visit events page at www.nzpics.org.nz to register and to find out details of this relevant session.

Presented by Denzil Rogrigues, find out the way to select your 3PL. Networking and refreshments provided.

upcoming events: CDDP course - August 2014

Graduate Dinner and AGM. Date: Wednesday 27 August 2014

Association for Operations & Supply Chain Professionals

During 2013, APICS reviewed and renewed its relationships with its global partners such as NZPICS. APICS also reviewed many of its processes. Computer based testing of the CPIM & CSCP and joint membership have been implemented in 2014. Further changes continue; Certification Maintenance is going online. Electronic Certificates are imminent and free Student APICS membership for those studying fulltime are now available. All this signals APICS’ commitment to raising the supply chain profession both in eminence and reach. Couple that with the Supply Chain Council/APICS merger and the future for supply chain professionals looks bright indeed.

NZPICS focus is to implement key actions

from the strategic review to improve our

offering to our membership and to the

supply chain industry of New Zealand.

Thank you for ‘having your say’ in our NZPICS December 2013 Survey, and for sharing information about your experience of NZPICS and about your supply chain. The input from our membership was both significant in quantity and quality. Our work with the consultancy agency has brought insight and focus to our strategic direction, as has the renewed relationship with APICS. From January, NZPICS has been accorded APICS Premier Channel Partner status. This status recognises the important relationship between APICS and NZPICS, gives NZPICS access to preferential pricing and much more.

FROM THE PRESIDENT

Strategic Meeting, Nov 2013: Back row: Karen Binnie, Deloitte and Andrew Gibbs, Deloitte, Jane Gravestock and Tim Watt. Front row: Stuart Sheng, Vijay Todkar, David Turnbull and Kathy Gilroy. In David’s hands is John Marson who attended via Skype.

4 I Winter 2014

Association for Operations & Supply Chain Professionals

FROM THE DESK OF THE

We hope that these students have

found success and are already on their

next course.

Refer a colleague

Are you a lone CPIM or CSCP graduate

in your organisation? Are you part of a

supply chain team who talk at crossed

purposes? If yes, consider referring a

colleague to take the Basics of Supply

Chain Management.

• 57%ofNZPICSDecember2013

Survey respondents said their

supply team had 1-5 supply chain

professionals who could benefit

from NZPICS education.

The benefits of being part of a team with shared understanding of concepts, terminology and approach, which the APICS education offers, are significant.

Can we help you to refer your colleagues

to our courses, could we assist your

HR Manager or CFO to see the value of

APICS Body of Knowledge? Let us know

here in the office.

We invite you to recommend our

courses to your colleague or manager.

Where are you in the supply chain?

This was the question we asked visitors

to our stand in mid-May at the North

Harbour Business Association and

Greater East Tamaki Business

Association Business Expos. It was a

very interesting and motivating two days.

The cover of the magazine has the banner

we used. It was a great talking point.

Some visitors were clearly in the supply

chain, others were providers to those

in the supply chain. We could usually

show them how they fitted in, except

for a Chiropractor. Maybe though he

assists those who are busy within the

supply chain!

Joint NZPICS/APICS Membership: Live Local/Learn Global

New in 2014 is joint NZPICS and APICS

membership. We think this will be great

for supply chain professionals. We have

now registered over 100 studying NZPICS

members for joint membership. This does

mean you will receive a variety of APICS

emails covering a variety of areas: APICS

Connection shares APICS news, APICS

Membership alerts members’ important

membership matters, APICS Research

allows you to contribute to research and

shape the future. There are more – my top

tip is to read the heading and decide if it

is relevant to you today! I have a folder

where I drop them into and then I can

check back later for important updates.

We do invite all members to join APICS

as well as NZPICS and you can do this

via our NZPICS membership page of

the NZPICS website. Membership of

NZPICS is $60 pa and APICS $125 pa,

GST additional. See page 9 for NZPICS

and APICS membership benefits.

As membership renewal time is upon us -

we value your support of NZPICS and

ask you to renew your membership when

your invoice comes to you. If you wish to

become an joint member of NZPICS and

APICS, please advise the office.

Share your exam results. Opt in, not out!

Students registering for their APICS

exam now have the option to share their

exam results with their Channel Partner.

Previously this information came from

APICS with the exam letters, but this no

longer happens. A question is asked in the

exam registration process asking students

to opt in or opt out of sharing their exam

results. Some students are choosing to

not share the exam results. We ask you

to share! Help us to improve our course

delivery, office support and student

achievement outcomes by opting in.

NZPICS use exam result data to:

• Analyseexampass/failreportsalong

with our student course evaluation

forms to improve our course delivery

and student achievement.

• Trackyourprogressonourdatabase.

This information is only accessed by

NZPICS staff.

NZPICS does not share exam results in any

way that can identify students. We take

student privacy seriously. So please opt in

and help us to help you.

Basics of Supply Chain Management is now

an NZQA approved Training Scheme: We

are delighted to advise that from 1 January

2014, Basics of Supply Chain Management

is now an NZQA approved Training Scheme.

See page 5 to find out more.

Jane gravestock

executive officer

It has been a busy year so far and we are working hard to support our members and students. Our first full group of students went through the Computer Based Testing process this March-May. Julia has been busy supporting students through this new process. If you had any difficulty with your exam, please be sure to let us know so we can assist you. We are happy to liaise with APICS and Prometrics.

ExECuTIVE OFFICER

newsflash: All exam credits and Authorizations to Test (ATTs) purchased after 1 July, 2014, will each be valid for six months giving candidates one year to schedule and test. Any exam credits or ATTs purchased prior to 1 July, 2014, will each be valid for twelve months. Any questions re this new policy, please contact certification@apics.org

Winter 2014 I 5

NZQA approved Certificate of Basics of Supply Chain Management

NZPICS is delighted to announce that from 1 January 2014, our foundation course, APICS Basics of Supply Chain Management is also now recognised as a NZQA approved training scheme. NZPICS Incorporated has been granted approval by NZQA under section 251 of the Education Act 1989 to provide Certificate of Basics of Supply Chain Management (level 5).

Training Schemes are endorsed by NZQA but do not lead to a New Zealand qualification. Training schemes support a professional’s learning and career.

This course is set at level 5 and is worth 12 credits. This certificate is module based learning, not unit standards. Graduates of this certificate may be able to use the certificate as a Recognition of Prior Learning (RPL) for future study. This may be recognised by other institutions.

Learners who complete a level 5 certificate have the following levels of knowledge, skills and application of knowledge and skills:

• Havebroadoperationalortechnicaland theoretical knowledge within a specific field of work or study

• Canselectandapplyarangeofsolutions to familiar and sometimes unfamiliar problems

• Canselectandapplyarangeofstandard and non-standard processes relevant to the field of work or study

• Havecompleteself-managementoflearning and performance within defined contexts

• Havesomeresponsibilityforthemanagement of learning and performance of others

Source: NZQF Level Descriptors

All students who complete the BSC course and exam will receive with an APICS certificate and also an NZPICS certificate.

Students will need to provide NZPICS confirmation of their exam result from 1 January 2014, or agree to share the exam result, when registering for their APICS exam. Successful candidates will receive their certificate when NZPICS is notified of the exam result.

For further information, please the contact NZPICS office team.

We should all know the Pareto (80:20)

Rule where it applies to inventory

management, and if you have prepared

well for your exam, this rule will probably

apply to the multi-choice questions you

will encounter in your APICS exam,

namely80%ofthequestionswill

probablytakeyoujust20%ofthetime

limit. So here is an exam strategy to

make the most of this.

Your first time through the exam questions, answer the ones that are easiest first. These are the ones where the answer comes quickly, the ones you really know.

When you hit a more difficult question

that can’t be answered easily, or you

are unsure, then leave it for later and

move on. Chances are a similar question

may exist further on that may jog your

memory, or give clues on how to answer

the earlier question you skipped.

This first run through the exam will clear all the easy questions quickly, giving you more time to spend on the more difficult questions. You will also find it will boost your confidence and get your memory flowing to tackle the harder ones. Don’t be disheartened if you skip more than a few, think of the ones you have already eliminated!

On the second run through, tackle the

harder questions, and budget your time

wisely. Leave enough time if possible

for a third run through the exam to

double-check all your answers.

Important – APICS questions can be

tricky, they are designed to test your

knowledge and also your understanding

of the question, so read the question

thoroughly, focusing on the key words

in the question to aid you in picking your

answer. If the answer is still not clear,

try eliminating the wrong answers

provided so that if you have to take a

guess, at least the odds are shorter!

thanks

Our thanks go to Ian Phillips, an

NZPICS tutor, for this relevant insight

to strategies for take the APICS exam.

This approach is relevant with the

new computer based testing approach;

candidates can move backwards and

forwards through the exam and so can

make best use of the above approach.

About Ian: Ian has had a wide experience

dealing with finance, manufacturing,

purchasing, service, quality systems,

information technology, websites, ERP

Systems selection and implementation,

strategy and planning. After a long

career working in a number of

varied organisations, he is now an

independent consultant assisting many

SME companies in improving their

business processes, systems and people

as well as running a property valuation

business with his wife, Vicki, based in

Orewa, north of Auckland.

After completing his CPIM in 2009,

APICS Train the Trainer & Learning

Dynamics for Instructor courses and

his CSCP in 2010, Ian has contributed

to NZPICS Roadshow events, began

tutoring with NZPICS in early 2010

and is currently studying a Bachelor

of Business Studies degree at Massey

university majoring in Valuation and

Property Management.

IMPROVE YOuR

ExAM STRATEGY

6 I Winter 2014

Association for Operations & Supply Chain Professionals

The real question is not “how much

inventory” but rather “what inventory”

to have – you want the right quantity of

the right items at the right place and

time. In order to determine what that is,

you first have to look at why you have

inventory in the first place.

For a manufacturer whose customers

expect immediate shipment, you will

need enough of the right finished goods

inventory to meet the demand. The

implication is that you know what that

demand will be – meaning you need a

good forecast. Forecasting is difficult and

seldom accurate, so you are still at risk for

not having the inventory you need, and

probably will have too much of what you

don’t need. Running out of something is

likely to result in lost sales, so companies

decide to “pad” the inventory of popular

items, assuming the extra investment is

worthwhile to avoid losing business

opportunities. This extra inventory is

commonly called “safety stock”. As long

as this is a conscious decision, properly

justified and managed, then so be it.

But inventory tends to get out of hand.

Maybe the item is not as popular as it

once was so those finished goods

accumulate. Businesses seldom revisit

these inventory decisions unless there is

a crisis (shortages or so much extra stock

that finance or warehouse management

start to complain) and what was once

a reasonable investment to improve

customer service becomes an

unnecessary drag on company funds,

space and resources.

The same dynamic applies to goods that

are not needed for immediate shipment.

Whenever the acceptable lead time to the

customer is shorter than the actual lead

time to make or procure the product, it

takes inventory (raw materials, parts,

and/or work-in-process) either on hand

or in the pipeline to be able to meet that

customer shipment date expectation. In

this case, the amount of inventory needed

is related to the expected demand (usage)

during the time it takes to get more –

known as the resupply lead time. Then, of

course, there should be some additional

inventory (safety stock) to accommodate

variations like higher-than-expected

demand during the resupply period or

perhaps unexpected scrap or a late

delivery from the supplier.

Enterprise computer systems often

include inventory management and

forecasting applications that can measure

demand variation (forecast accuracy) and

manage the amount of buffer inventory

needed to meet your customer service

objectives. But the real secret to success

is to work at improving forecast accuracy

because that will let you reduce inventory

without harming service level. Accurate

inventory information is also critical – the

system can’t manage inventory if it

doesn’t know what you have.

Note that another source of inventory is related to how it is procured – volume price breaks, shipping costs, minimum purchase quantities, economic lot sizes and the like will increase the initial quantity on-hand but these extras should be used up in the normal course of business and are not usually the source of an inventory build-up.

Inventory has only two real purposes.

The first is to accommodate the

Every manufacturer, distributor and retailer has inventory and lists it on the balance sheet as an asset. But, from an operations management perspective, is inventory really a good thing? Too much inventory ties up precious resources (money, space) but too little can cause disruption and lost sales. So, how much inventory is enough?

INVENTORY – ASSET OR LIABILITY?

Winter 2014 I 7

difference between the supply and

demand cycles, decoupling these

opposing processes. Customer orders

may come in throughout the day, pulling

small quantities of goods at random

timing. Replenishment, however, can be

planned to meet the needs of efficient

manufacturing – lots of 100 delivered

weekly, for example. Supply manages

the cycle on the upstream side of the

decoupling point whereas demand is

in charge on the downstream side. For

make-to-stock (ship-from-stock) goods,

the decoupling point is finished goods.

For make-to-order products, the

decoupling point is at the raw material

level. Presumably, the company will stock

raw materials and parts sufficient to meet

expected needs, and is free to acquire

those materials and parts as they see fit

(supply-driven). use of those materials

and parts is tied directly to demand. When

the customer order is processed, it leads

to the release of work orders that then

pull the parts and materials from stock.

Where the product is assembled-to-order,

decoupling takes place at major

assemblies or configurable features –

supply manages the stock of these items

and demand pulls them from stock in

response to actual orders.

In addition to decoupling inventory, the

second reason is safety stock as discussed

above, to accommodate variation and

uncertainty. All other causes of inventory

accumulation can be considered part of

either decoupling or safety stock, or just

plain bad management or errors.

Lot size inventory is part of decoupling,

for example, as is anticipation inventory

(build ahead to meet high seasonal

demand). Shrinkage (recognition of

losses from stock) is variation from the

plan and can be considered a safety stock

factor. Many ERP systems have separate

data fields and program logic for such

factors as shrinkage, yield, and “safety”

lead time, and that’s a good thing as it

allows users to identify and manage

these causes of variation separately

and appropriately.

So, is inventory an asset or a liability? The answer is “both”. On the company financial statements, inventory is an asset – something of value that the company owns. However, because it is a cost to the company to have that inventory, it must deliver value at least equivalent to that cost. Any excess inventory is “waste” and is therefore the opposite of an asset (a liability).

Inventory can be viewed as a necessary

evil – a significant cost in most companies

that is justified by the role it plays in

reducing lead time and covering for the

unexpected (forecast errors, late

deliveries, damage or scrap, etc.).

The secret to making the most of your

inventory investment is in knowing

just how much you need – the right

amount of the right products or parts

at the right time. And that comes down

to good forecasts, and understanding

of the forces of supply and demand as

they meet at the decoupling point, and

intelligent policies and management

of safety stock. It’s not magic. It’s just

good operations management.

Dave Turbide, CFPIM, CIRM, CSCP, CMfgE is a consultant, analyst and writer with more than 30 years of experience helping companies select, implement and gain benefits from MRP, ERP and supply chain systems. Dave is president of the Granite State (New Hampshire) chapter of APICS, a master instructor for CPIM and CSCP, and writes “Enterprise Insights” for the APICS magazine. He welcomes your feedback at dave@daveturbide.com

this article was contributed by

Dave turbide and is published with

his permission.

As a supply chain professional, we hope

you value the high quality information,

case studies and best practices contained

in the magazine. We encourage you to

submit an article for publication.

Do You hAVe WhAt It tAKes? Be an nzpIcs author.

contact the nzpIcs office for author guidelines, feature article specifications, and editorial procedures.

8 I Winter 2014

Association for Operations & Supply Chain Professionals

NZPICS is delighted to share the following press release from APICS regarding the newly announced Supply Chain Council and APICS merger, which will occur following ratification by SCC Member vote.

NZPICS look forward to the opportunities and benefits this merger will bring. We will keep you informed about any changes that come. David Turnbull, NZPICS President notes “This is a brilliant opportunity to bring great value to our NZPICS and SCC members here in New Zealand, and we await with interest the details of how this will actually work in the New Zealand context.”

SuPPLY CHAIN COuNCIL

Combination Creates Global Leader

in Supply Chain Research, Education

and Certification Programs

CHICAGO, April 30, 2014 – APICS and

Supply Chain Council announced today

that the boards of directors of both

organizations have approved an

agreement under which Supply Chain

Council (SCC) will merge with APICS

upon ratification by SCC member vote.

The merger unites two industry leaders with complementary offerings to create the premier global provider of supply chain research, education and certification programs. Together, SCC and APICS offer a single-source solution for individuals and corporations looking to evaluate and improve supply chain performance.

Following the close of the transaction,

APICS intends to integrate Supply Chain

Council with its existing operations.

Abe Eshkenazi will remain the chief

executive officer of APICS with

Joseph Francis, executive director

of Supply Chain Council, serving as

executive director of the APICS

Foundation. Through the end of the year,

there will be an expanded, transitional

Board of Directors with board members

from each organization’s Board.

“This agreement reflects our ongoing

efforts to ensure that SCC’s and APICS’s

content and capabilities remain at the

forefront of our industry, providing our

members, customers and the supply chain

community at large the most up-to-date,

relevant and complete body of knowledge

in supply chain and operations

management,” said Jason Wheeler,

chair of the APICS board of directors.

“It’s a brilliant combination that will give

us a broader portfolio of products and

services to address two of the most

important topics in the global economy

today – elevating supply chain

performance and developing supply

chain talent,” said Eshkenazi. “APICS and

SCC both focus on providing programs

that advance supply chain excellence,

innovation and resilience. Together we are

a powerhouse poised to quickly realize

the benefits of this combination, and offer

greater value to our members, volunteers,

partners, customers and employees.”

“We are excited to join forces with APICS

because it makes sense for our members

and customers,” commented John Sells,

chair of the Supply Chain Council board.

“This combination makes it easier for

individuals to advance their professional

knowledge and for companies to

strategically and systematically improve

supply chain performance, which

improves business performance and

ultimately customer satisfaction.”

Strategic Rationale of the Combination

Both APICS and SCC believe that this

combination creates a global leader in

supply chain solutions, poised to benefit

members, customers, partners and

employees in several ways. Specifically,

the merger:

• Creates the industry-leading portfolio

of brands. The combination unites

entities ranked #1 (APICS) and #2 (SCC)

recently by SCM World, each holding

the most respected brands in the

markets they serve. The SCC SCOR®

model and SCOR Professional (SCOR-P)

brands will be leveraged along with

APICS’s Certified in Production and

Inventory Management (CPIM) and

Certified Supply Chain Professional

(CSCP) designation brands.

• Ensures investment, improvement,

innovation and continued relevancy of

training, standards, certifications and

intellectual capital. The combination

offers greater resources and access to

an expanded network of subject matter

experts and volunteers committed to

maintaining the organization’s reputation

as the source of industry standards,

benchmarks and thought leadership.

• Strengthens global competitive

position. The unified entity offers greater

resources and creates more opportunities

to distinctively serve members,

customers, corporations and partners in

over 100 countries around the world.

• Builds strong platform for growth.

The combined product portfolio offers

significant cross-sell and global expansion

opportunities including the marketing of

SCC’s highly-respected training programs

based on the SCOR model to APICS’s

clients, as well as the marketing of

APICS’s industry-leading courseware

and designations to SCC’s clients.

• Captures significant operational

efficiencies. The combination is

expected to identify operational

efficiencies and greater economies

of scale primarily in back-office and

support areas and through the sharing

of technology platforms.

TO MERGE WITH APICS

Winter 2014 I 9

About Supply Chain Council

Supply Chain Council

(www.supply-chain.org) is a global

non-profit management organization

that helps members make dramatic

and rapid improvements in supply

chain processes. SCC maintains the

Supply Chain Operations Reference-

model (SCOR®), the supply chain

management community’s most

widely accepted framework for

evaluating and comparing supply

chain activities and performance.

About APICS

APICS is the leading professional

association for supply chain and

operations management and the

premier provider of research,

education and certification programs

that elevate supply chain excellence,

innovation and resilience. APICS

Certified in Production and Inventory

Management (CPIM) and APICS

Certified Supply Chain Professional

(CSCP) designations set the industry

standard.Withover37,000members

and more than 250 international

partners, APICS is transforming the

way people do business, drive growth

and reach global customers. For more

information, visit http://apics.org,

join the APICS LinkedIn group at apics.

org/linkedin, and follow APICS on

Twitter at http://twitter.com/APICS.

About APICS Foundation

APICS Foundation advances supply

chain and operations management

and innovation through research,

publications, education and talent

development. Organizations and

academic programs gain access

to the information they need to

contribute to the success of supply

chains and meet enterprise goals

through the foundation’s exceptional

network and resources. For more

information, visit apicsfoundation.org.

Source: APICS

NZPICS Membership Benefits

• Accesstolocalevents,sitevisits,seminars and functions

• Education–learntheAPICSCPIMandCSCP at our tutored classes/inhouse or through self study

• GaintheCertificateinBasicsofSupplyChain Management. (NZQA approved)

• NZPICSMagazineande-newsletters

• Preferentialpricingforevents.

• Networkingwithover500 New Zealand based Supply Chain Professionals.

APICS e-Membership Benefits

• APICSSupplyChainChannel

• Researchreports

publications include:

- APICS magazine (e-version)

- APICS Dictionary (downloadable)

- APICS Operations Management Body of Knowledge (OMBOK) Framework

e-newsletters

- APICS Operations Management Now

- APICS Extra

- APICS e-News

- APICS Connection

• APICSCareerCenter

• Memberprogramsandsavings

Visit www.nzpics.org.nz/membership

today to join.

NEW: FREE APICS Student Membership: Start Your Career off with APICS

APICS student membership empowers you to experience a community of more than 3,200 other APICS student members. Student membership is free as long as you meet the eligibility requirements outlined below.

With APICS student membership, you will:

• meetandnetworkwithexperiencedprofessionals.

• earnrecognitionforoutstandingstudent contributions in membership, volunteerism, and leadership.

• benefitfromtheAPICSScholarsEducation Program sponsored by the Educational and Research (E&R) Foundation.

APICS student membership gives you access to:

• thecompletee-membership benefit package, including access to educational online resources.

• localtrainingandnetworkingopportunities.

• award-winningpublicationsanddiscounts on APICS products and services.

• dualmembershipswiththeAssociation for Manufacturing Excellence and the American Society

of Transportation and Logistics.

APICS Student membership eligibility requirements

In order to be eligible for free student membership you must:

• Becurrentlyenrolledasafull-timeundergraduate or graduate student (according to your educational institution’s policy) at an accredited college or university.

• Submitacurrentcollegetranscriptconfirming full-time student status is required for verification.

Your APICS membership remains active even if you change schools and is valid for one full year.

nzpIcs Membership is $60+gst

ApIcs student Membership: Free

Contact enquiries@nzpics.org.nz or phone the office for more information.

JOINT NZPICS/APICS MEMBERSHIP

10 I Winter 2014

Association for Operations & Supply Chain Professionals

– 10 YEARS ON

This year will mark the 10th anniversary of the change to the Trade Marks Act 2002 (“Act”), which made the parallel importing of branded products legal in New Zealand. This doesn’t include music, films and software, which are subject to different restrictions under copyright law.

PARALLEL IMPORTING V LICENSED DISTRIBuTORS

What is parallel importing?

Parallel importing is not to be confused

with the importing of counterfeit products

or unauthorised copies; what we are

talking about is genuine goods bearing

a trade mark, that are brought into the

country by someone other than the

local licensed distributor.

Changes to the Act in 2003 made it

possible for importers to use the

trademarks associated with these goods

provided that they have been put on the

market somewhere in the world by the

New Zealand trademark owner or with

the owner’s express or implied consent.

In 2011 the Act was amended further so

that if the goods are put on the market

anywhere in the world by an “associated

person” of the owner, then a parallel

importer won’t be infringing NZ

trademark law. This widening of the

provision is likely to prevent any creative

structuring as to trademark ownership

by licensees and international

manufacturers.

Australian

This can be compared with similar

Australian legislation which allows

parallel importers to use trademarks

where the trademark has been applied

to the goods with the trade mark

owner’s consent. To attempt to defeat

parallel importers in Australia, some

international brand owners are moving

their Australian trade mark ownership

into another company which plays

no part in the use of the trademark

elsewhere in the world, so that

theoretically the consent is absent.

Such efforts are not likely to be

successful here as the statutory

definition of “associated person of the

owner” is broad and includes a person

who has “effective control” of the

use of a trademark.

Registration repeal

At the same time as the “associated

person” amendment in 2011, the provisions

in the Act allowing the registration of

licensed users of trademarks was

repealed, so that there is now no public

register of licensees. This means that

an importer of trademarked goods may

not be aware of other traders having

contractual rights to use the same

trademarks.

The implications

So what has this meant for local licensed

distributors – are their distribution

agreements now not worth the paper

they are written on? On the contrary, a

solid distribution agreement has become

more important than ever, as the main

protection for licensed distributors is for

their foreign trading partner to keep a

tight control on the supply chain of their

products. An agreement which requires

the foreign manufacturer to actively take

steps to prevent their other contracted

distributors from selling to parallel

importers will be of value to a licensed

distributor, and will be of critical

importance to a distributor with an

exclusive licence who intends to spend a

significant amount of money advertising

and promoting the trademarked products.

Other legal tools that local licensed

distributors have will depend on how

the parallel imported goods are marketed

and whether they are identical to the

licensed products. For example, a

manufacturer might make the same

products slightly differently or package

them differently according to the tastes

and standards of the country they are

intended for. If a parallel importer brings

in goods that were actually manufactured

for use in a different country, then they

may not conform to New Zealand

labelling standards, which could lead to

a Fair Trading Act claim. Likewise,

the products may not meet New Zealand

safety standards.

If the products are of a different or lesser

quality to the product sold by the licensed

distributor, then the licensed distributor

may have grounds for an action in

passing off. Similarly, there may be other

intellectual property issues that apply,

such as copyright. Of course, these

may only be applicable in certain fact

situations, so the strongest defence

for a licensed distributor remains their

contractual relationship with the overseas

manufacturer/supplier, and the willingness

of that trading partner to take steps to

limit parallel imports.

Jenny Watson

clendons. Barristers and solicitors

The contents of this article are general in nature and are not intended to serve as a substitute for legal advice on a specific matter. In the absence of such advice no responsibility is accepted by Clendons North Shore for reliance on any of the information provided in this publication. This article was first

published in the June 2013 FYI Magazine and is reproduced with the kind permission of North Harbour Business Association and Clendons North Shore.

Winter 2014 I 11

The tour provided a good understanding

about Lion and the current market

challenges that their new facilities

were designed to meet. The discussion

surrounding the move from Newmarket

facilities was insightful. In particular,

of interest was the assertion that they

are not just a brewery so much as a

multi-beverage production facility.

The market has moved towards an

environment where they must be

responsive and capable of meeting

changing customer demand quickly.

Their logistics now play an important

role in the overall competitiveness.

The production starts with batch brewing

before beverages are fermented, matured,

and filtered. Strict quality controls are

adhered to with many signs of closely

monitored control and instrumentation

technologies and sensors being visible.

Next, bottling and packaging take place

before the items are warehoused. Water

quality is carefully monitored as a key raw

ingredient in all the beverages produced

at the Pride. Other raw materials

(e.g., hops) are procured and carefully

stored to preserve quality even following

harvest periods.

A quick look around the factory floor

showed a very clean and well-organised

working site with signs of improvement

programmes running. Everything was

organised and had a place on the floor

and the staff were able and delighted

to quickly break from their regular

tasks to explain the importance of their

workstation. Of particular interest was

the high-speed bottle filling line.

The management of health and safety

was understood by all staff with one

worker gently pointing out some safety

gear equipment deficiencies on display in

our group, enabling quick improvements

before we progressed! It was clear that

the staff were passionate and committed

to their jobs.

Lion NZ aims to only supply fresh

products to customers. This can be

challenging when the lifetime they

aim to use is only 12 months. Considering

the sheer size of the area that they

service, they use a FIFO policy for local

deliveries to ensure freshness of stock but

a LIFO policy for deliveries going to the

South Island (which clearly travel further).

This is complicated by the objective to

deliver quickly with next-day deliveries

around the country. Even to Stewart

Island! Meanwhile, the strong customer-

focus creates the situation where local

bars, often with limited storage space,

may require several deliveries per day

during peak events (e.g., sports events),

enabling high product availability for the

consumers. This is all supported by their

on-site warehouse and logistics facilities

where they also manage the return flow

of used kegs that must be monitored,

cleaned, and recycled or disposed.

Dr Lincoln c Wood, senior Lecturer

(operations and supply chain

Management), Auckland university

of technology. Duong nguyen Khanh

Linh, phD student, Auckland university

of technology.

NZPICS members visited Lion – Beer, Wine & Spirits NZ at their Pride facility in East Tamaki on the 30th April 2014. Lincoln Wood, an NZPICS member and AuT Lecturer attended the visit and sent this review. Our thanks go to Nick Barnes, Planning & Business Development Director for hosting the visit and Natalie Russell, Supply Chain Leader. Lincoln and his colleague Linh Duong have provided an informative overview of the tour:

LION SITE VISIT

12 I Winter 2014

Association for Operations & Supply Chain Professionals

Get Out of the Constant Compromises

Most Purchasing, Materials and

Operations Managers feel like they are

caught between a rock and a hard spot.

Shortages of critical items must be

eliminated while at the same time

inventory levels must be reduced or

kept lean and expedite related expenses

must stay contained. unfortunately

these personnel are left with a complex

but grossly inadequate tool set to

effectively resolve this conflict. They are

forced to work around, fool, supplement

and compartmentalize the system just

to survive. Despite having modern

ERP systems, ad-hoc and informal

systems rule the day. Why?

We Have Reached the Point of Diminishing Returns

Manufacturers are faced with severe

challenges in today’s more volatile and

complex global manufacturing and

supply environment. These conditions

have outrun the legacy rules and tools

embedded in conventional formal

planning and execution systems.

The simple fact of the matter is that at the core of conventional planning reside hard coded and embedded rules that were developed in the 1960s. These rules are inappropriate for the circumstances that we see today. This is forcing manufacturers and supply chains into a constant cycle of unsatisfactory compromises between working capital, service levels and expedite related expenses.

Continuing to polish, optimize and speed

up this legacy tactics will force companies

to put more in and get less back. Formal

planning and execution is in need of a

fundamental overhaul.

“Repetition does not establish validity” – Souder’s Law

Formal planning

is breaking down.

Lean can only be a

part of the answer.

Discover a new and

innovative demand

driven approach

that takes the

relevant and

meaningful

attributes of tools like MRP, DRP, Lean,

TOC and Six Sigma and combines

innovative planning and execution

techniques to end the compromises.

This ground breaking approach is called

Demand Driven MRP and was detailed in

the third edition of Orlicky’s Material

Requirements Planning (Ptak and Smith,

McGraw-Hill, 2011).

What is Demand Driven MRP?

Demand Driven

Material

Requirements

Planning is an

innovative formal

planning methodology that aligns

resources, working capital and supply

chain planning and execution to actual

demand. Through innovative and intuitive

approaches and fundamental planning

changes DDMRP ends the compromises

and dramatically augments the

effectiveness of a company’s planning

organization. DDMRP is comprised of five

components that bring Sales, Finance,

Operations, Deployment and Supply Chain

Management together with intuitive and

common thinking, rules, tools and

dashboards.

Demand driven MRP (DDMRP) is a

multi-echelon demand and supply

planning and execution methodology.

Multi-echelon means that DDMRP

integrates multiple tiers (including the

bill of material) in the supply chain in

order to provide end to end planning

and execution visibility so that flow

can be improved and better managed.

DDMRP ends the typical bi-modal

distribution for the parts/SKu that

matter and brings inventory into the

desired alignment. (See figure 1)

At its core, DDMRP uses a new type of strategically positioned and dynamically managed stock positions to dampen variability, compress lead times and reduce working capital requirements while ensuring unprecedented levels of service. These strategic stocking positions dramatically alter the planning and execution rules of conventional MRP.

In most manufacturing environments,

inventory stock in some form is a

requirement. As mentioned previously, a

primary reason to hold inventory is that

customer tolerance times are shrinking.

Customers will no longer tolerate long

lead times. However, most manufacturing

companies and certainly every supply

chain cannot be a pure make to order

system. Would you wait at the grocery

store for a quart of milk if you knew the

cow had not even been milked? What

about at the gas station if the oil had not

yet been drilled? Holding inventory is a

reality in the modern world. In most cases,

companies cannot position and manage

stock positions effectively because they

have only antiquated stock practices and

tools. At the same time it is also

extremely wasteful to not carry inventory.

When companies lean out too much

A Supply Chain Planning and Execution Revolution is Happening Now.

FROM “PuSH AND PROMOTE” TO “POSITION AND PuLL”

DEMAND DRIVEN MRP

Winter 2014 I 13

inventory, then frequent shortages

can result. When companies experience

shortages they are forced to spend

additional time, effort, money and capital

in order to resolve the problem and

significant market opportunities can

be missed. This is a significant source

of waste.

Agility is not synonymous with zero inventories. The key to effectively leveraging the working capital and capacity commitment inherent in inventory is to find the places where that inventory can make the biggest impact and therefore provide the greatest return. Inventory can decouple otherwise dependent events so that the cumulative effects of variation are not passed and/or amplified between the dependencies. Inventory can be a breakwall against the variability experienced from either supply (externally and internally) or demand variability. But, like any breakwall they are only effective if placed and sized properly. Thus, the first question to ask is “where?” and then the second question of “how much?” can be answered.

Today companies must think systemically

across the supply chain and not just

within their own four walls. Putting

inventory everywhere is an enormous

waste of company resources. Eliminating

inventory everywhere puts the company

and supply chain at significant risk.

Strategically positioning inventory

ensures the company’s ability to absorb

expected variability with the smallest

possible investment. unfortunately, today

most tools, training and educational

material is oriented towards determining

the answer to the questions, “how

much?” and, “when?” with little to no

attention to answering, “where?” Properly

determining where to place inventory is a

strategic question that should involve key

personnel representing a relevant cross

section of the company. There are six

critical positioning factors in determining

where to properly place inventory.

The Critical Positioning Factors

1) customer tolerance time – the time

the typical customer is willing to wait.

2) Market potential Lead time – the

lead time that will allow an increase

of price or the capture of additional

business either through existing or

new customer channels.

3) Variable Rate of Demand – the

potential for swings and spikes in

demand that could overwhelm

resources (capacity, stock, cash, etc.).

4) Variable Rate of supply – the

potential for and severity of

disruptions in sources of supply

and/or specific suppliers.

5) Inventory Leverage and Flexibility

– the places in the integrated BOM

structure (the Matrix BOM) or the

distribution network that leave a

company with the most available

options as well as the best lead

time compression to meet the

business needs.

6) the protection of Key operational

Areas – It is particularly important

to protect critical operational areas

from disruption. These key operational

areas do not necessarily need to be

a bottleneck operation.

These six factors must be applied systematically across the entire bill of material, routing structure, manufacturing facilities and supply chain to determine the best positions for purchased, manufactured and finished items (including service parts). The bigger the system these factors are applied to, the more significant the results can be.

After the initial positions are determined,

new innovations with regard to sizing

stock levels, replenishment rules based

on actual demand and judging execution

priority take over. Below is the complete

DDMRp methodology. these steps are

in prerequisite order.

Figure 1

The Demand Driven Institute (DDI) was founded by Carol Ptak and Chad Smith, co-authors of Orlicky’s Material Requirements Planning, Third Revised Edition in order to proliferate and further develop demand driven strategy and tactics in industry. This article was contributed by Demand Driven Institute and is published with their kind permission.

14 I Winter 2014

Association for Operations & Supply Chain Professionals

Our stand at the North Harbour Business

Association 4th Business Expo and the

Greater East Tamaki Business Association

Inaugural Business Expo is a new activity

for NZPICS. It fits within our goal of

raising the profile of NZPICS and the

supply chain profession to both business

andindividuals.Withover70and35

standholdersandover700and220

attendees respectively at both events,

we had plenty of people to talk with.

Our banner shows the flow of goods through businesses on the journey to reach the end customer. We could demonstrate that while an organisation may not be directly within a manufacturing or service chain, businesses often are within a supply chain or provide key services to many organisations in the supply chain. Lawyers, accountants, promotional companies, web developers all play their part.

Lightbulb moments occurred when a

conversation showed the clear value

of our training to an Expo attendee.

Promoting the value to business that our

education, the APICS Certification was

key to most conversations. We also were

promoting the next Basics of Supply

Chain Management Course. Thanks

to Kathy Gilroy for assisting for the

afternoon, and David Turnbull for

assisting over his lunchbreak. Kathy

even met a few supply chain buddies!

NZPICS had a prominent speaker slot on

North Harbour Business Association’s

seminar programme. Jacquelene

Bycroft, from Fisher & Paykel Healthcare

generously and very capably presented

to a full room. Sharing her inspirational

personal journey as a supply chain

professional and also sharing Fisher

& Paykel Healthcare commitment to

their family of employees, Jacquelene

delivered a compelling presentation.

She explained the length and breathed of

Fisher & Paykel Healthcare’s supply chain

and gave a great example of a business

improvement from within the business.

Our NHBA business card prize was won

by Greg Taylor from Taylorbuilt, whose

organisation manufacture greenhouses

and our GETBA business card prize was

won by Sam Suluni who work within

Sanitarium. They both have received a

goodie basket from NZPICS.

Our presence at these expos were

invaluable in raising our profile and we

anticipate these activities will become a

regular activity as we continue to raise

our profile. We learnt a lot and also

shared more with the attendees and

other stallholders. We have been making

a lot of follow up calls!

“WHERE IN THE SuPPLY CHAIN ARE YOu?”

NZPICS ASKS ExPO ATTENDEES

We posed this question to attendees to two business expos across Auckland in mid-May. The answer was often a quizzical “What is the supply chain?” or once we even were asked “NZPICS, hmm, do you do photos?” This demonstrates to us that we have some work to do to raise NZPICS’ profile and the critical place the supply plays in business. However there were a number of people who knew supply chain and wanted to know more about NZPICS.

Kathy Gilroy and Jane Gravestock talk Supply Chain

David Turnbull at GETBA’s Business Expo

Sam Suluni receives his prize

Jane Gravestock at the GETBA Business Expo

Jacquelene Bycroft from Fisher & Paykel Healthcare

Winter 2014 I 15

Croxley hosted a group of NZPICS

members for the afternoon. Firstly there

was a detailed history and background

of the company. From Kathy Gilroy’s

presentation it quickly became apparent

they had a much larger portfolio of

products they either made directly or

distributed nationally than the stationery

you find in every NZ classroom. All up

there were over 9,000 different SKu’s

with the peak seasonality for these being

in the lead up to the Back to School

period. As well as national distribution,

products were also exported across

Australia and the Pacific Islands.

Gottfried Gassler and Andrew Higgens

then took us on a tour of the Distribution

Centre and highlighted some of the rapid

improvements they had made using Lean

tools and empowering their staff to make

improvements. With clear targets in each

work area, and a focus on frequently

reallocating picking locations to minimise

distance travelled, some impressive

efficiencies had been gained and reduced

the need for temporary staff.

Another highlight was not only seeing the cleanliness of the work areas, but the focus on recycling all the waste packaging. Having a dedicated person to aggregate and sell the plastic and cardboard for recycling for the entire group reinforced the sustainability that Croxley encourages.

Last but most impressively, we saw a

demonstration of the voice activated

picking system, and marvelled at how

the picking team could comprehend

the automated voices high speed

instructions for SKu, picking location

and check digit. Only once slowed down

was it understandable to me. With the

great use of technology and motivated

staff the very high DIFOT achieved wasn’t

unexpected, but still outstanding.

All in all an impressive site, thanks to

the Croxley team for their time and

explanations, as well as for the Croxley

goody bag that my kids certainly

enjoyed getting.

Aaron stevens, cpIM

s&op Manager, Villa Maria

SITE VISIT TO CROxLEY’S WIRI DISTRIBuTION CENTRE

MoNDAy7THAPRIl2014 Aaron Stevens from Villa Maria, has kindly sent us this review of the Croxley site visit:

As a member of the NZPICS committee,

I am always pleased when we are able to

offer something new to the supply chain

community, such as the Certified Demand

Driven Planner workshop we ran in March.

It proved to be a good decision when

there was feedback such as:

“Being an experienced planning person,

the practical content and approach

relates directly to my work”

“It will benefit my organisation through

better visibility, process improvement in

planning and scheduling and significant

working capital improvement”

“Very happy I did the course, see a lot

of value in it.”

The course appealed to everyone, whether they had a senior management role or one related to more detailed planning and scheduling. Some of the participants had not done CPIM, but were still able to come to grips with the material within the two day course.

I think it is good to consider a practical

approach which is designed to cope

with our current demanding dynamic

environment, that uses actual

demand rather than forecast to drive

replenishment, and absorbs variability

in both supply and demand in strategic

placed buffers, which operate quite

differently to traditional safety

stock in MRP.

And of course, following the course,

there was the opportunity to take

an exam, and when successful,

join the growing community of

Certified Demand Driven Planners.

Watch this space!

Some people were disappointed that

they could not attend the course

because of timing. Good news!

We will be running the course again

in August.

John Marson

cpIM, cIRM, cscp, cDDp

IMMEDIATE APPLICATION: CDDP COuRSE DELIVERS!

John Marson and CDDP attendees, March 2014

NZPICS Members attend Croxley Site Visit

16 I Winter 2014

Association for Operations & Supply Chain Professionals

I have attended company site visits

before and this one to STIHL Ltd simply

happened to be the next one. The only

difference this time was that I did not

have to worry about commuting.

The company was located just a stone’s

throw away from where I worked (at

Farmers Distribution Centre). I simply

had to get up from my desk, get into the

car, turn round the corner and reach

the place for a whole 2 minute drive.

I reached STIHL around 9.45am to be

well in time for the 10 o’clock start. We

were warmly greeted at the reception by

Michael Chapman, Product Manager. We

got our visitor badges from the reception

staff to facilitate our visit on the premises

and were led to the conference room for

the presentation. Michael then introduced

to us Frans Beever, Commercial Manager

and Alan Padget, Procurement Assistant

who took us through the presentation

and the site visit.

Michael began the presentation with a

brief history of the company, its origins

inGermanyin1927,itsjourneyoverthe

years, its acquisitions and achievements,

and how people at the helm steered the

company to its current world class

position with more than 2 Billion in

revenue in 2012 worldwide. The key

manufacturing plants are located in

uS, China and Germany with a dedicated

logistics department at the headquarters,

catering solely to distribution of stock

to sales subsidiaries across the world.

Alan took over from Michael, to explain

about the product range, procurements

activities, supply constraints and few

generic details of how a product is

setup in their ERP system for further

processing. The insert box covers

STIHL’s Operation.

Frans then took over from Alan who

went on to explain the whole gamut of

planning activities they carry out right

from procurement up to distribution to

customers. He gave detailed overview

of the procurement, inventory and

production strategies they employ to get

their supply chain work at optimal levels.

Below are key points from his speech -

Note: A very interesting strategy is used

to optimise order processing during the

day. They use of staggered cut-off times

for orders received during the day, by

assigning separate priorities and

consequently cut-off time windows to bulk

orders, special orders and an extended

receiving time window for high priority

customer orders thereby allowing to

maximise order throughput during the

day and reduce bottlenecks.

Sale & Operations Planning: Business plan

every August looking forward 3 years,

Master Schedule horizon of 12 months,

3 year cycle for new product (from design

to launch).

Other Highlights: STIHL Ltd is privately

owned company with sales in more than

140 countries and more than 40,000

retailers worldwide. It is also one of the

very few companies in the world to

manufacture on their own, each and

every component for their products.

I had probably witnessed the most detailed presentation so far amongst all my site visit presentations. Frans very patiently answered all our questions and that too in minute detail.

We were then led into their warehouse

facility where we were able view some

picking-putaway operations and also

the automated storage system picks

for the day.

Michael then wrapped up the visit with

a warm thank you speech. It has been

another informative site visit.

Manish purandare

cpIM, cscp

Thanks to Manish Purandare for contributing this informative article about the visit to STIHL, back in November 2013.

EAST TAMAKI, AuCKLAND

SITE VISIT TO STIHL NZ LTD

NZPICS Members attend STIHL Site Visit

Winter 2014 I 17

Location: 9 Bishop Browne Place, East Tamaki, Auckland

host: Michael Chapman(Product Manager), Frans Beever

(Commercial Manager), Alan Padget (Procurement Assistant)

Structure

Facility: Distribution Warehouse and Admin office,

Size - Not more than 5000 sq. m.

Sales subsidiary of parent company STIHL Ltd in Germany

Layout: Distribution Warehouse distributing goods to wholesale

dealers and retailers

storage: Mix of High stud and Narrow Aisle Pallet Racking,

Fixed Pick Locations (Replenishment Stock)

Random Buffer storage (Bulk Stock), Automated Storage

(Valuable stock – Accessories)

Standardised Pallet locations (2.22 m)

strategy: Just-in-time Deliveries to Customers

suppliers: Parent company headquartered in Waiblingen,

Germany 3 Main manufacturing plants in China, uS and Germany

customers: Wholesale Dealers, Retailers

product: Power equipment including Chainsaws, Brushcutters,

Hedge Trimmers, Blowers, Concrete Cutters, Vacuum Cleaners,

Petrol Drills and related accessories

Infrastructure

Workforce: Warehouse 4 Permanent Staff, 1 Temp

software systems: Microsoft Dynamics ERP system & A3

Forecasting & Demand Planning Tool

productivity: Real time warehouse capacity usage

data to optimise space

Automated storage for majority of the skus (high value

stock Including accessories & spare parts)

Extended work hours to match time zones in Germany

Dedicated shipping/logistics department based in Germany

Inventory: ABC categorization

100 major product groups

10,000 active product skus, 15,000 active spare part skus

3 months stock holding, 2 months safety stock holding

procurement planning: 3 year cycle for new product

(design to sale)

60-90 days procurement cycle (60 days from Germany

to 45 days from China)

Business plan every Aug for next 3 years, Master schedule

horizon 12 months

Forecasting based on historical sales, 2 months Safety stock

Full EDI systems

Other Highlights

Privately Owned company

Sales in 185 countries, more than 40,000 retailers worldwide

Euro 2.8 billion in revenue 2012, Focus on environmentally

friendly products

97%DIFoTintermsofdelivery,100%intermsofstock

availability

use of Staggered cut-off times for orders during the day,

assigning priorities and squeeze in late orders as much

possible, reducing bottlenecks

One of the very few companies in the world to manufacture

on their own, each and every component of the product.

This information is kindly reproduced with permission from STIHL NZ Ltd.

STIHL New Zealand Limited

contact the nzpIcs office to register your interest in hosting a visit.

call 09 525 1525 or enquiries@nzpics.org.nz

host a site visit!

share your supply chain success with nzpIcs members.

18 I Winter 2014

Association for Operations & Supply Chain Professionals

Introduction

We live in an increasingly connected world where globalisation

is not slowing, New Zealand engages in significant export and

import activities, and technology changes at a blistering pace.

This is a world where New Zealand has free-trade agreements

with some of the largest economies in the world at a time

where companies are busy breaking new technological ground;

e.g., creating cars that can drive themselves. At this time, we

believe it is important to pause and examine the technologies

that we use to support, control, and manage our logistics

activities. As technology and politics change, the way in which

our businesses use logistics technologies may increasingly

provide competitive advantage.

The survey and response information

We want to examine the change in how our New Zealand

organisations use logistics technologies over time and

better understand these trends and how they fit within

wider business patterns. This was the first annual survey

of Logistics Technologies. Invitations to complete an online

survey were distributed and advertised by various groups

with an interest in logistics and supply chain management.

The survey in 2014 was intended to be exploratory research.

A total of 31 participants started the survey over the period

of November 2013 to February 2014 and not all questions

required responses from all participants. While the sample

size was not great enough to yield statistically significant

results, given the circumstances in New Zealand and the

globalised world that we live within, such trends are

important to be aware of.

Leaders and Followers

Early in the survey, respondents were asked to judge the

level of maturity in the management of and their overall

use of logistics technologies within the firm. Based on this

self-reporting, much of the report used an analysis divided

betweenleaders(thosetenrespondents(32%)witha

more mature use and management) and Followers (those

21respondents(68%)withlessmatureuseandmanagement).

Throughout much of the report the results were quite

different between these two distinct groups.

Internal integration

Internal integration is still important and the survey indicates

that this is still a necessary precursor to inter-firm collaborative

activities. The survey indicated this with most firms identifying

the importance of an enterprise resource planning (ERP) system,

which allows them to gather and use internal data, as a key

support to other Logistics Technologies (Figure 1).

Figure 1: Which of the following systems are you using to

support your Logistics technologies?

Vendor managed inventory (VMI) or CPFR

Contracts management system

Company-Government Portal

Customer-supplier portal

Global positioning system (GPS)

Radio frequency identification (RFID)

Enterprise resource planning (ERP) system

0 1 2 3 4 5 6 7 8 9 10

n=13

The total number of firms that responded to each element.

Leaders often sought higher stock rotations and improved order

planning from their use in logistics technologies, focusing on

specific outcomes that they ranked as more important than

Followers (Figure 2).

Figure 2: Manufacturers only - how important are the

following business drivers in your organisation when it comes

to investing time/resources in Logistics technologies?

Very unimportant (1); Unimportant (2); Neither important or unimportant (3); Important (4); Very important (5).

Increased stock rotation

Improved Order planning

0 1 2 3 4 5

■ Followers ■ Leaders n=5

Metrics and measures of success

Measurement is important in the management and use of

technologies to ensure that activities are returning appropriate

In late January 2014, NZPICS invited members to participate in a survey with AuT. Below is an overview of the findings and comment from Dr Lincoln C WOOD, Senior Lecturer (Operations and Supply Chain Management), Auckland university of Technology. Allyson WOOD, Senior Lecturer (Logistics), Manukau Institute of Technology. DuONG Nguyen Khanh Linh, PhD student, Auckland university of Technology.

NEW ZEALAND PERSPECTIVES IN 2014

LOGISTICS SuPPORTED BY TECHNOLOGY:Note: the full (31-page report) is available from:

LogisticsTech.co.nz from 2014-06-09

Winter 2014 I 19

benefits to the organisation. While there are clearly many

different operational measurements available, we were keen to

understand how different firms are using different metrics or

measurements to evaluate their use of logistics technologies.

First, Followers still manage expectations focused on costs and

accuracy and tended to use fewer metrics than Leaders did. In

contrast, Leaders also seek to understand overall measures of

supply chain risk, end-customer experiences, and internal process

improvements (Figures 3 and 4).

Figure 3: Leaders only - Which of the following metrics do you

use to track the performance of your Logistics technologies?

The total number of firms that responded to each element.

0 1 2 3 4 5 6

■ Leaders n=8

Inventory count accuracy

Supply chain flexibility

Customer satisfaction/feedback

Quality

Financial savings

Supplier satisfaction/feedback

Speed in resolving issues

Improved market share

Cash-to-cash cycle OR order-to-cash cycle

Delivery in full on time (DIFOT)

Contribution to sustainability goals

Manufacturing master planning

Level of transport regulation compliance

Level of border compliance

Out-of-stock

Forecasting planning cycle time

Compliance with contract

Internal stakeholder satisfaction/feedback

Figure 4: Followers only - Which of the following

metrics do you use to track the performance of your

Logistics technologies?

The total number of firms that responded to each element.

0 1 2 3 4

■ Followers n=8

Financial savings

Inventory count accuracy

Quality

Internal stakeholder satisfaction/feedback

Supply chain flexibility

Customer satisfaction/feedback

Supplier satisfaction/feedback

Speed in resolving issues

Improved market share

Out-of-stock

Forecasting planning cycle time

Compliance with contract

None

Second, few respondents rated inter-firm process improvements

as an important metric for the evaluation of Logistics

Technologies performance (Figure 5). The Followers indicated

they are generally not using inter-firm KPIs to measure the

performance of Logistics Technologies. In contrast, Leaders

are using some inter-firm KPIs, at least to a moderate extent.

There doesn’t seem to be a trend towards significant use,

although we see that respondents that possess a more mature

level of management of the Logistics Technologies have a greater

interest in how successful their approaches are… leading to

greater interest in inter-firm measurements.

Inter-firm business may be important, but many respondents still

focus on intra-firm KPIs in regards to their logistics technologies

performance (Figure 5). Logistics by nature will often be involved

in the movement and transfer or products and materials between

trading partners. Therefore, it would make sense to ensure that

inter-firm measures exist to manage this flow of materials

appropriately. This may reflect how far many New Zealand

enterprises have to go before they extend their cross-functional

integration further towards inter-firm integration at a higher level

of supply chain maturity.

Figure 5: to what extent are you currently using

inter-firm KpIs to measure the performance of your

Logistics technologies performance?

Don’t know (1); Not at all (2); Not very much (3); Moderately (4); Significantly (5).

Followers

Leaders

0 1 2 3 4

n=13

When considering future investments over the next year, Leaders

are focusing on increasing value in terms of quality, compliance

to contract (perhaps as being able to demonstrate capability),

and speed to markets. This shows a strong focus on improving

their capabilities to new levels. In contrast, Followers tended to

report greater interest in improving their performance regarding

compliance or cost-driven benefits (e.g., inventory), with their

interest being greater than Leaders in these categories:

• Improvedinventorycontrol

• Bordercompliance

• Carbonemissionreduction

• Manufacturingefficiency

• Regulatorycompliance

• leadtimereduction

Training and education

Despite the rapid changes in Logistics Technology, few firms

appear to be actively involved in educating and up-skilling staff

capabilities to manage and work with these technologies. Over

the entire survey, this is the area where the largest difference

between Leaders and Followers emerged, with Leaders showing

greater affinity for the use of formal training programmes and a

wider range of training activities than Followers (Figure 6).

20 I Winter 2014

Association for Operations & Supply Chain Professionals

To little extent (1); To some extent (2); To a moderate extent (3); To a large extent (4).

0 1 2 3

n=7

Attendance of external events (e.g., conferences and workshops)

Attendance of external courses (e.g., University or Polytechnic)

Classroom training (externally developed)

Classroom training (internally developed)

Studying towards formal qualifications

E-learning (internally developed)

E-learning (externally developed)

Practical on the job learning (e.g., buddying or mentoring)

No training in the last year

■ Leaders ■ Followers

Furthermore, training and development relating to the use of Logistics Technologies over the last year has been much stronger

amongst the Leaders than the Followers. Figure 6: What form does this training take?

Future investments

While many Followers are still moving towards IT processes

and management over their entire businesses before the work

towards integration with other firms, there are other differences

between the intended investments in Logistics Technologies

over the next year. Leaders appear to be moving towards more

sophisticated materials handling and warehousing solutions and

are more likely to be considering investments in technologies

relating to storage, conveyor belts and sorting technologies,

radio frequency identification (RFID), and voice order picking.

If we assume that many Followers are smaller firms, this may be

explained by the fact that these companies simply do not have

the volumes required to justify investments in such sophisticated

materials handling technologies. In contrast, Followers intend to

invest more in computerisation of processes and information

systems, ERP systems, e-payment systems, and vendor-managed

inventory (VMI) systems.

We welcome readers to visit logisticstech.co.nz for more

information and to participate in the 2015 round of this

longitudinal study (running in January and February 2015).

Nelson MPR Course July/August 2014:

register your interest with the NZPICS office.

cBt exam Window 2

Saturday7JunetoSaturday 5 July 2014

cBt exam Window 3

Saturday 16 August to Saturday 13 September 2014

cBt exam Window 4

Saturday 1 November to Saturday 13 December 2014

exam registration deadline

•Thereisnoexamregistrationdeadline however students need to register for their Computer Based Test early to secure their exam sit. There are limited exam dates and times available each exam window.

•Studentsareadvisedtoreadthe CPIM or CSCP Exam Bulletin on our website.

teRM 2 - course Dates Duration

Basics of supply chain Management•Penroseclassroom•NorthShore-MasseyUniversity

Thursday 5, 12, 19, 26June,3,10,17,24,31July,7August

10 weekly sessionsStart 5th JuneFinishes7th August 2014

strategic Management of ResourcesPenrose classroom

Tuesday17,24June,1,8,15, 22, 29 July, 5 August

8 weekly sessionsStart17thJuneFinish 5th August 2014

Detailed scheduling & planningPenrose classroom

Wednesday 11, 18, 25 June, 2, 9, 16, 23, 30 July, 6 August

9 weekly sessionsStart 11th JuneFinish 6th August 2014

teRM 3 - course Dates Duration

Basics of supply chain Management•Penroseclassroom•NorthShore-MasseyUniversity

Thursday 11, 18, 25 September, 2, 9, 16, 23, 30 October, 6, 13 November

10 weekly sessionsStart 11th SeptemberFinish 13th November 2014

Master planning of ResourcesPenrose classroom

Tuesday 16, 23, 30 September,7,14,21,28October, 4 November

8 weekly sessionsStart 16th SeptemberFinish 4th November 2014

execution & control of operationsPenrose classroom

Wednesday17,24September, 1, 8, 15, 22, 29 October, 5 November

8 weekly sessionsStart17thSeptemberFinish 5th November 2014

cscp overview sessions Monday 18 August, 1, 22 September, 6 and 20 October

5 Sessions 5 x 3.5hr

Auckland Tutored Classes

BSC Classes venues will be both at Penrose Classroom and on at Massey university on the North Shore, other classes held at: NZPICS, Level 1, 23 Fairfax Ave, Penrose, Auckland. From: 4.30pm – 8.00pm Registrations are accepted until the course is full.

2014 Exam Windows

Winter 2014 I 21

Rudi Kotze, B.tech production/operations Management, B.tech post school education, cscp,

current Role: Logistics & Quality Assurance Manager

company: Vetus-Maxwell APAC a Yanmar owned company designing, manufacturing and distribution of marine equipment and engines.

FIVE QUESTIONS ABOUT YOUR ROLE

How did you enter the Supply Chain industry?

For me it was natural progression from a more manufacturing base to Supply Chain as our company started off shoring and outsourcing a big part of our manufacturing function.

I worked as Production Manager, but when Vetus, a Dutch owned company acquired Maxwell in 2008, they started a process of offshoring/outsourcing. I was offered the Logistics Manager position. In this role I planned production into our CNC and assembly facility while also exploring cost effective sourcing and offshoring options. In 2011 we procured more than half of our previously manufactured components, and naturally got the quality function as part of measuring the quality and processes of the outsourced products/components as well as setting up effective processes for supply and communication. At this point I decided to do the CSCP Certification, the best thing I did from a knowledge base perspective - highly recommended.

What has been a highlight of your career so far?

1. Working as a consultant looking at cross functional process flow, eliminating non value adding activities.

2. In the manufacturing role: Implementing Lean concepts and reaping the rewards especially after facing resistance to change.

3. Dealing with International Suppliers, setting up Supply Plans and Metrics.

4. Obtaining ISO9001 certification for the Australian entity of our business.

5. Training and developing people are extremely rewarding.

Most interesting aspect of your role:

In Supply Chain we are fortunate to build cross functional relationships within the company and you also get the opportunity to build relationships with suppliers and customers, dealing with different cultures, working out solution and train people this is extremely rewarding.

Can you share a “top tip” for other members who maybe in a similar role?

Focus on the Process not necessarily the product, set up your process and put metrics in place to measure the outcome, if not satisfactory put small incremental steps in place to improve and most importantly love people as much as you love numbers.

FIVE FAST FACTS

Top influential industry book: 2 oldies but still brilliant, (don’t always have to re-invent the wheel).

How to Win Friends and Influence People by Dale Carnegie.

The Goal by Dr Goldratt.

Favourite “technology” product: Love my Car, Aeroplanes, my IPAD and have to love the internet as a SC professional.

Favourite Supply chain /operations website: SCMR.com is good, but be careful it’s focussed on the American economy of scale.

Your Mentor or Influence: I had a few that all added a bit of their own spice.

Previous Maxwell CEO- Ray Pickels for driving change and setting strategy.

Current Vetus-Maxwell APAC CEO – Andy Stephens for his charisma.

My Mom as a CPIM certified and Procurement Manager it is always good to touch base with her.

Your next career goal: Any challenging position in the field of Operations and Supply Chain Management, one where I can utilise and expand on the cross functional process approach building those end to end relations to add value.

MEMBER PROFILE

Kelly o’Donnell, BMs (Waikato), cpIM

Kelly O’Donnell is starting her journey with NZPICS to become a tutor so it is timely to find out more about her Supply Chain career.

FIVE QUESTIONS ABOUT YOUR ROLE

How did you enter the Supply Chain industry?

Studied Information Systems as part of business degree, including 6 month work/study component with Hansells writing up SOPs and investigating an ERP implementation.

What has been a highlight of your career so far?

Improving processes throughout various roles. Getting to know iconic companies and production processes from the inside out.

Most interesting aspect of your role:

Learning about the products and processes to make/supply them: soft drinks, toilet paper, fresh chicken pieces, industrial lighting.

Can you share a “top tip” for other members who maybe in a similar role?

Take note of the KPI progress when you first start and as part of regular performance reviews, and keep those notes for future reference.

THREE FAST FACTS

Why are you becoming an NZPICS tutor?: To improve my learning and promote Supply Chain as a profession.

Favourite “technology” product: Currently SAP – because it has been three years of Excel and AS400!

Your next career goal: To widen the commercial/sales side of my knowledge and experience.

22 I Winter 2014

callum Baird Abel Software Ltd

Rik Fothergill Abel Software Ltd

pey geldenhuys Abel Solutions Ltd

harvey noda Action Motor Bodies

sophia Javier Carter Holt Harvey Pulp & Paper

chita golbin Coca-Cola Amatil NZ Ltd

sherryl Ann gibbs Delegat̀ s Wine Estate

esau sibanda Epicurean Dairy Ltd

Jennie park Fletcher Easysteel & Fletcher

Reinforcing

Fionna stewart Flooring Brands Ltd

Angela Buckland Fonterra Co-Operative Group Ltd

Amanda cooke Fonterra Co-Operative Group Ltd

Rachel orr Fonterra Co-Operative Group Ltd

corey Rikihana Fonterra Co-Operative Group Ltd

neil smith Fonterra Co-Operative Group Ltd

Lynette Young Fonterra Co-Operative Group Ltd

steve Yianakis General Cable New Zealand Ltd

phil Moore Glidepath Ltd

Liz Barcas KONO Beverages

Amanda Ross KONO Beverages

paul Johnston LHF Ltd

paul clark Linfox Logistics NZ Ltd

connie Wallace Netcon Ltd

clare Arthur Redpath Ltd

Aaron tso Realcold Ltd

temple Larkin Redwood Cider Co

Meg Fern SeaDragon Marine Oils Ltd

peter taylor Sealed Air New Zealand Ltd

steve Bateson Sistema Plastics Ltd

Ann-Maree Byrne Sistema Plastics Ltd

Mark patterson Switch Lighting Ltd

Karen sims Treasury Wine Estates

Frank theunissen TWP2 Ltd t/a CES

tiffany Xu Westcon Group NZ Ltd

Welcome to our new members who have joined the NZPICS community between September, 2013 and April, 2014. We welcome you and hope you gain benefit from your membership with NZPICS.

ApIcs cpIMVladimir Brkovic Auckland Bearing Distributor Ltd

Amy Marie Jones Bendon NZ Ltd

Brett stirling Compac Sorting Equipment Ltd

Dmitry Yakimenko Delmaine Fine Foods Ltd

Alvaro Dominguez Fisher & Paykel Healthcare

Michael Feng Fonterra Co-Operative Group Ltd

nicholas sulimin Phillips New Zealand Ltd

elvira Roma cruz Sealed Air New Zealand Ltd

ApIcs cscpcorinne trimbour BSN Medical NZ Ltd

normandy gutierrez Ceva Logistics

tessa o’Leary Fisher & Paykel Healthcare Ltd

paul Johnston LHF Ltd

Vishal Vallabh Phonak New Zealand Ltd

Alberto A Adviento Rockwell Automation

Congratulations to our students, who have completed

their APICS CPIM and APICS CSCP between August

2013 and March 2014. We look forward to seeing you

and our other graduates at the NZPICS AGM and

Graduation Dinner in August 2014.

MEMBERSHIP uPDATE

THE 2014 APICS CSCP LEARNING SYSTEM IS HERE

Go to learncscp.com or apics.org/cscp for more information.

The APICS Certified Supply Chain Professional (CSCP) Learning System is recommended by 90 percent of users for preparing for the APICS CSCP exam. Now updated for 2014, the Learning System consists of print and web-based study tools that not only serve as an exam preparation program but also a comprehensive professional development tool. Take the next step toward the APICS CSCP, the first and only certification program to address the entire end-to-end supply chain, and order the Learning System today.

Module 1

FUNDAMENTALS OF SUPPLY CHAIN MANAGEMENT Book 1 of 2 2014 APICS CSCP Exam Content Manual (ECM)

Course Overview Section A: Supply Chain Management Concepts

Section B: Supply Chain Alignment with Business Strategy

Section C: Supply Chain Design and Improvement Considerations

Section D: Inventory Management

Version 3.2, 2014 Edition

2014 LEARNING SYSTEM

Module 2

SUPPLY CHAIN STRATEGY, DESIGN AND COMPLIANCE Book 1 of 2

Section A: Sustainability

Section B: Risk Management

Section C: Globalization

Section D: Logistics

Section E: Managing the Supply Chain

Version 3.2, 2014 Edition

2014 LEARNING SYSTEM

Module 3

IMPLEMENTATION AND OPERATIONS Section A: Supply Chain Dynamics

Section B: Managing Supply from Internal Sources

Section C: Managing Supply from External Sources

Section D: Implementation of Demand Plans

Section E: Continuous Improvement

Module Bibliography

Cumulative Course Index

Version 3.2, 2014 Edition

2014 LEARNING SYSTEM

CONTACT: Person's Name ###-#### 1234 Street Name City, Country

THE 2014 APICS CSCP LEARNING SYSTEM IS HERE

Go to learncscp.com or apics.org/cscp for more information.

The APICS Certified Supply Chain Professional (CSCP) Learning System is recommended by 90 percent of users for preparing for the APICS CSCP exam. Now updated for 2014, the Learning System consists of print and web-based study tools that not only serve as an exam preparation program but also a comprehensive professional development tool. Take the next step toward the APICS CSCP, the first and only certification program to address the entire end-to-end supply chain, and order the Learning System today.

Module 1

FUNDAMENTALS OF SUPPLY CHAIN MANAGEMENT Book 1 of 2 2014 APICS CSCP Exam Content Manual (ECM)

Course Overview Section A: Supply Chain Management Concepts

Section B: Supply Chain Alignment with Business Strategy

Section C: Supply Chain Design and Improvement Considerations

Section D: Inventory Management

Version 3.2, 2014 Edition

2014 LEARNING SYSTEM

Module 2

SUPPLY CHAIN STRATEGY, DESIGN AND COMPLIANCE Book 1 of 2

Section A: Sustainability

Section B: Risk Management

Section C: Globalization

Section D: Logistics

Section E: Managing the Supply Chain

Version 3.2, 2014 Edition

2014 LEARNING SYSTEM

Module 3

IMPLEMENTATION AND OPERATIONS Section A: Supply Chain Dynamics

Section B: Managing Supply from Internal Sources

Section C: Managing Supply from External Sources

Section D: Implementation of Demand Plans

Section E: Continuous Improvement

Module Bibliography

Cumulative Course Index

Version 3.2, 2014 Edition

2014 LEARNING SYSTEM

CONTACT: Person's Name ###-#### 1234 Street Name City, Country

tutored classes start soon. For further information visit nzpics.org.nz or contact the nzpIcs team on 09 525 1525.

apics.org/cscp

Setting the industry standard for more than 40 yearsAPICS CPIM

The APICS Certified in Production and Inventory Management (CPIM) certification is recognized globally as the standard of professional competence in production and inventory control. Since 1973, more than 100,000 professionals have earned the APICS CPIM designation.

An APICS CPIM designation will help you:

� Increase career opportunities and earning potential

� Gain a competitive edge in hiring decisions

� Earn college credit

� Reduce your organization’s costs

� Increase customer satisfaction

See why 90 percent of APICS CPIM designees recommend this certification program to others. To start investing in yourself and your career in 2014, go to apics.org/mycpim.

– APICS CPIM designee

“CPIM is the best functional certification course for supply chain-related jobs.”

CONTACT: Person's Name ###-#### 1234 Street Name City, Country

For further information visit nzpics.org.nz or contact the nzpIcs team on 09 525 1525.