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2013 Supply Chain Innovation Awards, Presented by SupplyChainBrain & CSCMP

Innovation of the Year: Smart packaging creates right size box for every item shipped from e-commerce centers Winner: Staples & Packsize International; Runner-Up: PepsiCo; Finalists: LMI, Motorola Solutions, Pa. Liquor Control Board, IBM

2013 Supply Chain Innovation Awards, Presented by SupplyChainBrain & CSCMP

Commenting some years ago rather cynically on the consumer's buying habits, someone quipped, “Package it rightly and brightly, and you can sell almost anything.” As true as it may be, that view has more to do with marketing than with packaging itself. However, the importance of the latter can't be overlooked or overestimated. Packaging has a great deal to do with a company's success. In fact, it has everything to do not only with product protection but with satisfying that consumer, who doesn't want a lot of cardboard lying around.

This year, in the 2013 Supply Chain Innovation Awards, presented by the editors of SupplyChainBrain, and the Council of Supply Chain Management Professionals, we salute Staples, a company that with partner Packsize International, knows a great deal about so-called right-size packaging. Their motto might be, “Package it rightly, and you can save money, help the environment and boost customer-service levels tremendously.”

In using Packsize's innovative On Demand Technology, Staples is able to create a corrugated box for every item shipped from its e-commerce fulfillment centers with dimensions that require almost no filling and leave virtually no waste. Hats off to Staples and Packsize International, who took home the 2013 Supply Chain Innovation award. Very smart, indeed.

If fact, there is something very smart about each of the finalists in this year's case study competition. Take PepsiCo, this year's runner-up. Simply stated, PepsiCo achieved what can only be termed “near-net-zero” environmental impact at its Frito-Lay plant in Casa Grande, Ariz. The company wanted to offset environmental impacts from water, electricity, natural gas and waste generation. The plant itself is only medium-sized by PepsiCo standards, but the goal was very big: to apply everything the company knew about sustainability to a single facility. The initiative ultimately involved multiple projects in numerous locations, within and beyond the facility’s boundaries. The goal was to achieve new operating efficiencies, improve the local environment and devise processes that could be replicated at other plants run by Frito-Lay and PepsiCo. Casa Grande would serve as a “live learning lab” for future sustainability efforts.

Talk about smart: some incredibly talented and intelligent people work in demand planning at the Defense Logistics Agency, which if it were a private company would rank 53rd on the Fortune 500 List. DLA is the Department of Defense’s largest logistics combat support agency, providing worldwide logistics support in peace and war to the armed forces as well as several civilian agencies and foreign countries. DLA manages nine supply chains and 5 million items, including clothing, subsistence, medical and spare parts.

The demand pattern for some of those categories is frequent; for others, demand is infrequent and highly variable. Managing the latter can be especially challenging.

Enter partner LMI, which was tasked with helping the agency to develop a more efficient system for managing items with infrequent demands through an innovative system that accounts for need and risk. All of that, of course, had to be done smartly without sacrificing mission-readiness – and it had to save money.

When Motorola Inc. jettisoned Motorola Mobility Holdings in 2011, the newly re-branded Motorola Solutions had to compete without the state-of-the-art tools and processes needed to meet changing customer requirements. It simply didn't have the tight connections with trading partners so essential to an efficient, fully functioning supply chain. Somehow it had to improve on-time deliveries, inventory turns, forecasting, and parts availability – all through closer ties with critical suppliers. The answer lay in the concept of collaborative execution – and in partnering with E2open. A very smart move.

The Pennsylvania Liquor Control Board, which manages sales of wines and spirits throughout the state, is in a totally different business than Motorola Solutions, of course, but it also had to find a new way of doing things. Traditionally, the PLCB bought product based on sales forecasts, took immediate ownership of it, and then stored it. The model was costly, however, as the agency owned the stock and held between $120m and $200m in warehouse inventory.

The PLCB needed to reduce its warehouse working capital cost by 80 percent. How to do that? Partner Deloitte Consulting had the answer, in moving to a vendor-managed inventory model called bailment. The customized solution brought 28 vendors into a web-based portal that supports collaborative planning based on shared forecasts and historic sales information. He system delays transfer of ownership, yet allows storage of vendor-owned merchandise and PLCB-owned stock in the same location without changing the existing WMS. The PLCB reduced its outlay by $100m in 2012, which left it the cash needed to run its business smoothly and smartly.

Advanced analytics is what enabled IBM to unify its integrated supply chain in a truly innovative way. IBM may be global, but in altogether too many instances its units acted in a disconnected manner, which meant that such processes as procurement, cash collection and logistics were every bit as siloed. The company's Integrated Supply Chain has had a mission for a number of years now: to satisfy customer fulfillment on a global basis. Its most recent application of sophisticated  analytics has led to what it calls a “smarter supply chain.”

In fact, “smart” is the common thread with each of his year's finalists, from Staples to IBM. Quick, sharp, bright, clever, keen, alert, intelligent – all synonyms for the word “smart”, and each highly descriptive of this year's competitors. Faced with challenges, they smartly found an innovative way to deal with them.

Our congratulations to each of these fine companies and their partners.

Keywords: 3PL, warehouse management, WMS, sustainable supply chain, supply chain management, supply chain IT, collaboration, supplier network, order fulfillment, demand planning, forecast accuracy, transportation management, logistics & supply chain

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