Supply Chain Partners

A discussion with John Bolte, BDP’s Global Chief Strategy and Development Officer

John Bolte

Gateway: We read about trends among supply chain partners in such areas as capabilities and metrics alignment, sustainability, collaboration, and visibility. What do you see in the global marketplace?

Bolte: First of all, it is important to distinguish between trends and goals. Trends are activities that are occurring. Goals are targets—something we pursue. Are people talking about goals hoping they become trends or are they, for example, in response to a major customer’s request or government demand?

Gateway: What about capabilities alignment with vendors or partners?

Bolte: While I hear a lot about it, I don’t see a lot of it happening. Generally, providers and partner resources will push the alignment envelope…especially in the area of technology, in order to improve their systems interface processes, by supporting, for example, SAP, JD Edwards, Oracle, etc.

At BDP, we communicate our capabilities through hard facts. For instance: this is what you can save, this is more efficient, this is a better way of doing it, this supports your sustainability goals by eliminating hard documents and record-keeping.

Gateway: How about companies aligning their metrics throughout their supply chains with vendors or partners?

Bolte: Some of the larger companies are trying to align themselves internally—structurally and functionally, e.g. getting together on one version of SAP, because most companies may have multiple versions.

Processes are not always aligned…what a company does in Japan can be different to what they do in Germany and then different again to what they do in the US. That is why companies are trying to define some basic metrics and then align them to see if they can measure against them with a common goal.

Gateway: How so?

Bolte: I see companies selecting a specific key metric and pushing that through the supply chain. For example, on-time delivery (OTD). The problem is that OTD definitions can vary—trying to align this one metric within a company is a challenge. Often, there is a lot of oversimplification.

Companies may think an OTD metric at the domestic level can be applied on the international side. But it is not applicable. If you have a truck or rail move from point A to point B, on-time delivery means the customer asked for it on Thursday, so did you deliver it on Thursday? On the international side, when the customer requests delivery—through an initial sales or purchase order—by a specific date, there are lead times, multiple vendors, terminal operators, government authorities, shipping lines, airlines, etc. involved.

Measuring OTD as a global metric can be difficult. It has to be defined because if your sales terms are FOB and your customer still holds you accountable for it, or if they are DDP (deliver duty paid) at the customer’s location foreign, your responsibility changes. It is different by terms of sale: how much responsibility are you going to take when you sell something FOB or CFR at a port; how much are you going to measure the fact that it was delivered “on time”? It can get more complicated. If FOB means it is FOB US port, and if you deliver it to the port on day seven and the customer doesn’t get it for 40 days overseas, it that not on time?

Then you have customers that deliver all the way through, either on CFR (to a foreign port) or on DDU (delivered duty unpaid) or DDP–then they are delivering it to the facility. In this case, you can specifically measure delivery because it is your responsibility.

It is a very complicated world when you go beyond a western country border to another destination or from origin to your facility in your homeland.

“While it is about visibility, it is more about helping clients get their global database together, where our customers can go in and slice and dice their world any way they want to look at it, based on what they move through our system.

John Bolte, BDP Global Chief Strategy and Development Officer

Gateway: Do you see collaboration in areas such as customer demand and product creation by companies with their vendors?

Bolte: Not so much between companies and their logistics partners. However, at BDP, we get involved in customer demand through a historical view versus a proactive or collaborative way.

We develop so much data on inbound and outbound for a client that we can break down the data to show what their customers are buying from them and what the patterns are.

Gateway: Do you see companies including sustainability into their decision-making processes?

Bolte: Sustainability is a much more generic term than process standardization or green initiatives. It is a host of things and has a wide range of definitions.

As companies develop sustainability initiatives, they push them through their organization and into the various pockets their vendors deal with. Providers/vendors are being asked to make the commitment to be sustainability partners and challenged as to what they are going to do to help their customers.

Smart suppliers are going to look at the customer’s list of objectives and tell them what they have already done in the area of sustainability and what it will mean in the future for the customer.

We showed one of our customers what we were already doing for them. We said you can already count the number of carbon credits: we have completely eliminated your documentation and put you in an e-docs environment globally; we have saved hundreds of thousands of trees.

And we can demonstrate hard savings to clients; for example, we have helped you better consolidate your container loads and use more appropriate containerized equipment for your shipments---so you are now using fewer containers to move the same amount of product. We can tell you what you saved and how much fuel was not utilized by the trucker, rail, vessel, etc.
BDP has always been a proponent of process improvement, e-docs, containerization packaging and better supply chain and equipment utilization. They all result in fewer units on the water, in the air, on the rail, and on the road. That results in less fuel and for e-docs, less paper.

So we were already actively engaged in sustainability—we just hadn’t quantified the outcomes according to the definition of sustainability.

Gateway: Is there a push for greater visibility into a vendor’s capabilities, deliverables and costs to help companies improve their sales and customer forecasts?

Bolte: Yes. There are still challenges companies face when reconciling and predicting their customers’ demands and attempting to develop accurate forecasts. In fact, after 2008, when the markets crashed, all of the forecast models were thrown out the window because they were historical-based.

I would say it is becoming more and more about visibility. We have demonstrated to many clients what the data means…by turning that data into knowledge and providing more visibility for just about everything…with the ultimate goal being end-to-end visibility for our clients.

Many companies may not know or just do not ask their providers to help. Because BDP is located in the middle of the wheel of our clients’ processes and not on the outer edges of the spokes, we are dealing with all of the participants in the international supply chain. The data that ends up in our repository can become extremely valuable from a visibility standpoint, as well as a historical standpoint—looking at trends, doing analysis by customer, product, trade lane, etc.

While it is about visibility, it is more about helping clients get their global database together, where our customers can go in and slice and dice their world any way they want to look at it, based on what they move through our system.

The response from our customers to the enhanced visibility tools we can provide has been very positive. They are getting a tremendous amount of value out of it. The intellectual capital we bring to the table is increasing; it is absolutely huge. It is one of the major reasons for our customers to work with us.