Robert Palevich - The Lean Sustainable Supply Chain: How to Create a Green Infrastructure with Lean Technologies

How to Create a Green Infrastructure with Lean Technologies

Robert Palevich

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2012 by Robert Palevich
Published by Pearson Education, Inc.
Publishing as FT Press
Upper Saddle River, New Jersey 07458

FT Press offers excellent discounts on this book when ordered in quantity for bulk purchases or special sales. For more information, please contact U.S. Corporate and Government Sales, 1-800-382-3419, .

Company and product names mentioned herein are the trademarks or registered trademarks of their respective owners.

All rights reserved. No part of this book may be reproduced, in any form or by any means, without permission in writing from the publisher.

Printed in the United States of America

First Printing January 2012

ISBN-10: 0-13-283761-7
ISBN-13: 978-0-13-283761-3

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Library of Congress Cataloging-in-Publication Data

Palevich, Robert, 1945
The lean sustainable supply chain : how to create a green infrastructure with lean technologies
/ Robert Palevich.
p. cm.
ISBN 978-0-13-283761-3 (hardback : alk. paper)
1. Business logistics. 2. Business logistics--Environmental aspects. 3. Technological
innovations--Management--Environmental aspects. 4. Industrial management--Environmental
aspects. I. Title.
HD38.5.P348 2012
658.7--dc23
2011041342

My book is dedicated to my loving parents, Frank and Lucille Palevich, for always believing in me.

Do it Best Corporation got its start back in 1945 as the vision of Arnold Gerberding. It was known then as Hardware Wholesalers, Inc. (HWI). Gerberding set out to build an entirely new way of serving the needs of independently owned hardware stores and lumberyards. From those humble early days of the co-op and just a few hundred members in the Midwest, Do it Best Corp. has grown into a $3 billion worldwide distributor of hardware, lumber, and building materials with close to 4,000 member locations and operations in more than 50 countries around the world. That growth would not have been possible without an industry-leading supply chain.

The companys first computer was purchased in 1964: an IBM 1401 with a whopping 8K of memory! It was out-of-date almost before it was turned on. Its capabilities were certainly limited, but it was an important investment in keeping up with the companys rapidly growing base of members. Its tasks were limited to maintaining a perpetual inventory, generating billings and packing slips, and other routine tasks. With upgrades to the next generation of computers, an IBM 360 in 1968 and an IBM 370 in 1972, the company soon realized that the new systems could be a powerful tool in the buying and replenishment function. The ideal system would be able to track merchandise movement, vendor performance, and customer requirements. At the heart of this was the need for an effective replenishment system that factored in lead times, customer demand, promotional impact, and seasonality to help maximize inventory turns and fill rate.

Enter Rob Palevich.

Rob started with HWI in August 1970. With his undergraduate degree in industrial management and computers and a masters in business administration, he was in the perfect position to take control of the companys inventory control efforts. Rob single-handedly developed the software for a unique automated order and replenishment system called FOURTE, or Forecasting and Ordering Using Regression, Time Series, and Econometrics. In 1981, HWI was able to put the FOURTE system into service as the industrys most sophisticated inventory control system, helping the company achieve fill rates of close to 95% in its then four distribution centers. The system analyzed data for every item, vendor, and line of merchandise handled by HWI. It took into account product seasonality, regional differences, store purchase history, and more. The program could also adjust to increase an order to meet minimum dollar, weight, or cube requirements, and it could factor in manufacturing and delivery lead times as well. This extraordinary system did much more, from aiding in financial control to pinpointing problem areas and analyzing cash flow impacts. In short, Rob Palevichs development of FOURTE revolutionized the manner in which purchasing and distribution would be managed going forward and gave HWI another considerable competitive advantage in the marketplace.

The steady advancement in computer memory and processing speed provided Rob with strong, new tools and an ever-expanding canvas to further his development of the FOURTE system. As HWI became Do it Best Corp. and the company continued its rapid growth, FOURTE enabled it to maintain a fill rate in excess of 96% on more than 65,000 items in eight distribution centers with accuracy in excess of 99%. Not a bad effort for a young man who started out in the data processing department at $3.12 per hour!

Throughout his career, Rob has demonstrated a thirst for learning. Name a programming language and hes most likely studied it and used it. In 1998, he spearheaded an initial entry into e-commerce with the launch of doitbest.com. In 2001, Indiana UniversityPurdue University Fort Wayne (IPFW) recognized Rob with their Distinguished Service Award for his engagement with the University. Hes also the only person in the companys history to have used the tuition assistance program to study two years of Chinese...not a surprise if you know Rob. But his passion all along has always been in improving the supply chain.

After 33 years of service, Rob retired from Do it Best Corporation but didnt stay idle for very long. He began a teaching career at nearby IPFW with a focus on SAP, enterprise resource management, and supply chain excellence. He quickly put his background and experience to work in the development of long-range radio-frequency identification tags. Rob is the founding director of the Business Enterprise System and Technology (BEST) Institute at the Richard T. Doermer School of Business at IPFW, a center for knowledge management and networking in Northeast Indiana. He also serves as CEO of RP Global Technology Solutions.

Based on a considerable measure of practical hands-on experience and focused through a lens keenly trained on the future, The Lean Sustainable Supply Chain provides an important framework for developing a world-class supply chain that is both lean and green. It moves far beyond the basics of inventory management to the exceedingly more complex and content-rich environment of information management, and it provides a GPS map for the road to the future of the global supply chain. Even while Rob is officially retired, his talents and expertise continue to feed the success of Do it Best Corporation as they raise the bar on supply chain initiatives and strive to make the best better.

Robert N. Taylor
President & CEO
Do it Best Corp.

I am grateful for all the support I have received from so many people in writing this book. I credit Dr. Jim Moore from the Richard T. Doermer School of Business for encouraging me to participate in an International Symposium on the Green Supply Chain at Kent University. Winning the competition ultimately led to my decision to share my insights.