Coming Soon: Report of the Business Value of Supply Chain Security

For years, supply chain professionals have been begging for funding from CEOs and CFOs to enhance supply chain security within their respective company. And for years, they have been turned away because they couldn't prove the ROI. Not anymore. Thanks to Stanford University, The Manufacturing Institute, the research and education arm of the National Association of Manufacturers and 15 global companies, including IBM, a new report is being released on July 27th to answer this age old question.

The study was based the input of 11 manufacturers and 3 logistics service providers that have implemented supply chain security efforts, which have all demonstrated that investments in supply chain security can provide business value. I cannot share the actual numbers yet, but by July 27th these are the types of ROI metrics that be unveiled:

XX% reduction in theft/loss/pilferage
XX% reduction in tampering
XX% reduction in excess inventory,
XX% increase in reported on-time delivery
XX% increase in access to supply chain data
XX% increase in timeliness of shipping information)
XX% reduction in cargo delays
XX% reduction in cargo inspections / examinations
XX% reduction in transit time
XX% reduction in delivery time window
XX% reduction in customer attrition

This report has the potentially to shake up and increase supply chain security investments by several fold. Check back soon for a report abstract and the URL to download the full report.

Bronte: The Pistachio Supply Chain

Okay, I have one more supply chain story from my recent vacation in Sicily. Bronte is a town of 20,000 located towards the center of Sicily in the shadows of Mt. Etna, an active volcano. Comparatively speaking Bronte doesn't have much going for it. You won't find any quaint cobblestone streets or flowers hanging from windows. What you will find are narrow roads made of black volcanic stone along with many of the cathedrals and buildings and lots and lots of pistachios. Actually, on the way into the city you are greeted with a sign that reads (translated) "Welcome to the city of Pistachios". Bronte actually supplies 1 percent of the world supply.

Harvested every other year, Sicilian pistachios are slightly longer and thinner than those grown in the Middle East. They also seem to have a stronger, sharper taste, due perhaps in part to the volcanic soil in which they're grown. But with its narrow roads, lack of a major transportation system, how do these little gems get out to the rest of the world?

Unfortunately, it wasn't the harvest year, so I didn't get a chance to speak with any locals or witness the supply chain. But I did some research and apparently they employ the innovative strategy of "piggybacking" to export the nuts. Since much of the area is dedicated to agriculture and cheese making and since the harvesting schedule is similar, the farmers have formed a cooperative, where they combine all of their goods to ship at once. So for example and importer can buy pistachios from Guiseppe and cheese from Paulo, keeping logistics costs low and making it easier for the buyer. This is same technique is used by many niche food producers in the US that ship to supermarkets. Maybe I didn't give this town the credit it deserves.

The Making of an Olive Oil Supply Chain

As promised my vacation in Sicily is over and I have two supply chain tales to tell. This week I will discuss Becchina Olive Oil.

Towards the end of the vacation we traveled to Castlevetrano world reknown for olives. Arriving 15 minutes early before officially opening, the daughter of Gianfranco Becchina, founder of the company, gave my family and I a personal tour of the small, but efficient and spotless facility.

A few things set Becchina apart from other oils. First, the way they pick the olives. They pick them earlier in the season, around late October for a intense, fruity taste. While this limits the quantity, it improves quality, which is the foundation of Becchina's strategy. Secondly, instead of using a machine to shake the olives down, which when hit the ground get bruised, thus effecting taste, Becchina hires locals in Castlevetrano who pick each olive by hand. Each olive then gets gently placed in a sack that hangs around their neck. In order to keep the olives within reach, Becchina goes through the pain of keeping the trees short enough to be in arms reach. Another ode to quality and not quantity. Lastly, Becchina invented a machine that removes the leaves, snails and dirt that many olive oil companies simply grind up into oil. Yuck, indeed. When you use Becchina you are just getting pure oil, the company also refuses to spray chemicals. One tip I also learned was to keep your oil at room temp in dark cupboards to keep it from going stale.

So that's manufacturing. From a logistics standpoint, the bottles are flown to the US where they are sold in high-end gourmet shops and at niche grocery stores like Whole Foods. Next week I'll discuss the pistachios of Bronte.