Recession focused firms on supply-chain management

Supply-chain management has always been an integral part of the business world, but the Great Recession spurred significant changes designed to save time and money in the control and organization of supplies and inventory, particularly for manufacturers.
One example is vested outsourcing, a new kind of supply-chain management based on long-term partnerships.
These changes and how they can apply to local businesses are the subject of the fourth annual Northeast Supply Chain Management Summit set for Aug. 25 at Bryant University in Smithfield, organized by Banneker Industries Inc., headquartered in North Smithfield.
Organizers expect more than 200 people to attend the daylong event, which this year has a theme of The New Dynamic Business Basics. Banneker specializes in supply-chain management and has nine American locations, in New England, Indiana, California, Texas and Virginia.
Supply-chain management “is important at any time,” said Junior Jabbe, sales and marketing manager for Banneker, “but it is gaining prominence now because, as business declines, you have to look at other ways to protect the bottom line.”
The recession has led to a “dynamic shift” that created “a whole new world” of supply-chain management because “we are now operating in an unsure environment,” he said.
The new focus is aimed at cutting costs.
As they review operations, business owners are increasingly looking at ways to eliminate inefficiencies in supply chains. “You’ll notice that packaging for certain products has changed over the years,” Jabbe said, “and what people don’t realize is that a lot of those packaging changes have to do with reducing costs [through supply-chain management].”
Companies actually compete to establish the most efficient supply-chain operations, Jabbe said, and “those companies with the best supply chains are dominating their markets,” citing such major corporations as Dell, Apple, Procter & Gamble and IBM as examples.
Kate Vitasek, an author and professor at the University of Tennessee who is an expert in supply-chain management, will be the keynote speaker at the summit. She is one of the nation’s leading authorities on vested outsourcing, a phrase she helped coin as a result of research she and her colleagues have done at the Knoxville, Tenn., university’s Center for Executive Education. In a recent telephone interview with Providence Business News, Vitasek explained that vested outsourcing is “when both the buyer and the supplier have a vested interest in each other’s success” and work together “in a more strategic way” than usual.
“So the supplier brings something to the table to help the buyer and the buyer brings something to help the supplier,” she said. The arrangement requires a long-term agreement between buyer and supplier where each is contracted to help the other. So, rather than merely cutting up the profit pie, the two entities work together to grow it, Vitasek said.
As an example, she mentioned the case of the British luxury-carmaker Jaguar, which outsourced its supply-chain management for service parts to the Unipart company in the United Kingdom in a vested agreement.
Jaguar had been ranked ninth in customer-service satisfaction in J.D. Powers surveys, but since outsourcing to Unipart has been No. 1 or No. 2 since 2007. Back orders dropped 76 percent, inventory was reduced 30 percent and average call-center wait times went from 10 minutes to 20 seconds, according to information provided by Vitasek.
Vitasek, who teaches an open-enrollment, three-day course on vested outsourcing at the University of Tennessee, is the author of “Vested Outsourcing: Five Rules that will Transform Outsourcing,” published by Palgrave Macmillan, and will sign copies of her book at the Aug. 25 summit.
She signed on to speak to the local summit many months ago, Jabbe said. “She is well-known in the supply-chain industry. We came across her book and her models fit Banneker, so we contacted her and she signed on,” he said.
Other highlights of the summit include separate sessions featuring panel discussions on future supply-chain technology, manufacturing services, aerospace and government contracting, and health care services.
Panelists scheduled to take part include: George Dooley, chief financial officer and vice president of Gap; Samuel Rose, vice president, Raytheon Co.; Nicholas Domenick Jr., vice president of Lifespan; Cheryl Merchant, president and CEO of Hope Global Inc. in Cumberland; Steve Lane, CEO of Ximedica and David Burton, director of strategic procurement for CVS Caremark Corp. &#8226