When You Need Special Protection

The five-year-old is now six, and getting sophisticated.  The other night at dinner, a pan-Asian spectacular, he confidently announced, "You know, you have to use chapsticks to eat this kind of food."  Taken aback, I dropped my chapsticks on the floor, occasioning grumbling from his grandmother  and shrieks of laughter from the munchkins assembled, who thought it was all part of the act.

 Reflecting on the incident later, I contemplated the dangers involved in applying close, but not quite right, tools to supply chain planning and operations.  They often sound like the right thing to do, the right way to go.  But, without closer examination, they could prove to be not as useful as hoped, or worse, downright harmful.  The difference between chapsticks and chopsticks is minimal in print, noticeable upon inspection, and catastrophic in mis-application.

Whomever is selling either solution, is usually confident, and persuasive, though.  It's up to you to discover when you need - and can benefit from - trying to use one or the other.

Note: ChapStick is a registered trademark of Wyeth Consumer Healthcare, which is being acquired by Pfizer Inc.

Way To Go, Hugo

Softair Ag's CEO, Gabriel Weisskopf has hit another one out of the park.  In a recent parable from his Opinion column in Air Cargo World, he recounted the tale of an uncommon service provider, led by its CEO, Hugo First.

In contrast with the parade of usual suspects who took PowerPoint and bombast to new lows, glazing the eyes and numbing the senses of the selection committee, Hugo brought only a flip chart and a bizarre attitude.  After writing, "I am not here today to sell you anything," Mr. First admitted that he had really come "to find out what kind of buyer" he was dealing with.

Horror ensued.  No brochures, no testimonials, no incomprehensible "value propositions."  What was going on?

Actually, the approach is one that might signal bright prospects in a budding business relationship.  After all, what kind of business partner is interested only in: 1) itself, and 2) how to get you to buy something, and soon? 

Maybe the the right kind of service provider is one who's interested in the longer term, and how good the fit is between it and you.  Or art least, wants to take the time to understand you and your people before crafting approaches and solutions designed to actually solve real business problems in the supply chain.

Is this tactic sheer insolence on the part of a service provider, or an intelligent means of beginning to build the foundation of something sustainable - and valuable?

Brother, Can You Spare A Dime

About a month ago, John Trentacosta wrote about a subject that no one wants to talk about.  Fact is, an otherwise phenomenal supply chain can be brought to its knees when one partner in the chain runs into financial trouble.  A business relationship with a pauper is not sustainable.

Some early warning signals with suppliers - the canaries in the coal mine - include: requests for price increases, early payments, accelerated terms, or even financing support; late deliveries or quality degradation; failures to appropriately invest in IT and/or other assets; maintaining spend during downturns; delinquent taxes, deteriorating receivables, and extended payables; and bad press, among others.

Due duiligence on the front end can help prevent problems on the back end, but sometimes bad things happen to good people.  That's when an early response team reaction to early warnings can pay off.  Sometimes, you've got to pull the plug.  But, often you can mutually develop work-out plans to let the troubled partner survive long enough to prosper  - and to keep your supply chain humming in an unrelentingly competitive marketplace.

Self-Inflicted Fatal Wounds

So, now I read that many carriers and service providers are struggling with capacity issues.  They cut back, mothballed, whatever, when the economy turned down.

But, we've been preaching the need to get ready for recovery for the better part of two years.  Those who didn't listen are now paying a price.  Those who did are clearly going to wind up ahead of those who chose not to develop rapid response capacity alternatives.

It's difficult to work up much sympathy for either extreme: those who spent like inebriated seamen in the teeth of recession, or those who refused to believe that down cycles are always followed by up cycles.  Either approach risks the success of the supply chains involved, and jeopardizes the market position of innocent partners in the end-to-end chain.

I should come as no great shock that the companies caught up in the failure to marshall capacity additions as volume picked up are likely not to be invited to next year's prom - plunging them back into the abyss of the depth of recession while the economy around them recovers.

Slide, Freefall, Collapse . . . Or, None Of The Above

A good friend of many years was recently bemoaning what he sees as the continuing decline of manufacturing in the US.  His biggest complaint was that, every time a plant closes, its engineers hit the streets newly badged as "lean" consultants.

"Lean" indeed - a larger population trying to capture bigger pieces of a shrinking pie.

I don't have the data to challenge his contentions.  Clearly, a lot of manufacturiung has left our shores over the past couple of decades.  But, we still manufacture many things, although perhaps not on the scale of what General Motors plants used to look like.  Certainly not at the employment and production levels of twenty years ago.  That said, we're still in the early stages of in-shoring and right-shoring movements, and productivity - if not production - continues to climb throughout the sector.

It's possible that my morose amigo has seen his consulting and training business shrink because, at least in part, of other factors.  More and better-educated and better-trained engineers and operators.  Radical shifts in learning and knowledge transfer paradigms.  Tired branding and terminology.

And maybe - just maybe - more companies are learning from one another in close relationships, and have focused, targeted, and empathetic partners to help them improve performance.  Or perhaps they are getting help from subject matter experts with different styles, with different kinds of client relationships, and with different approaches to salvation that go beyond traditional projects and programs.

Seems to me that part of staying in the game - and ahead of the pack - in the 21st century is continual reinvention . . . within a supply chain, within a company, within a product, and within oneself.  I'm just sayin' . . .

Turn Right At The Produce Aisle

Costco continues to amuse and amaze by offering more than the usual products to pile in the cart.  The Costco Connection magazine for June (www.costco.com, "connection") has a page devoted to "Fresh Views," with mini-features on: Wally "Famous" Amos (who has moved on to found Wally's Muffin Company), brainstorming techniques, and a quick summary of a 2009 book, Extraordinary Groups: How Ordinary Teams Achieve Amazing Results.

My big takeaways this month, aside from a hankering for a muffin or a chocolate chip cookie, were from Extraordinary Groups.  One - not quite an aha! moment - was that a group dynamic can hinder, rather than stimulate, group productivity.  The other was that "exceptional experiences can be thoughtfully nurtured and intentionally encouraged."

Good stuff, but the authors may have missed the larger point, which is that transporting tools and techniques for elevating group performance, to the operation of business relationships involving entire companies, can magnify and multiply the consequences of what might be accomplished.

Maybe an even greater message, though, lies in how Costco works at a fuller customer relationship by providing unexpected value, beyond the nuts and bolts of selling them tires and tube steaks.

Face-To-Face vs. Send-To-Send

CSCMP's game-changing CEO Rick Blasgen really nailed it in his latest Direct Connection segment in the Q2 issue of Supply Chain Quarterly (www.supplychainquarterly.com).  The general point emphasized the value of face-to-face human-level communications in an age of instantaneous electronic communication via numerous media.

Even the Millennial Generation, btw, recognizes this value, despite its fondness for electronic access to all manner of information (and entertainment).  My deep suspicion is that way too many people of all ages like to hide behind the impersonal facade of email, texting, tweeting, twittering, flittering  - anything that buffers them from interactive personal contact.  But, that reflects a personality disorder rather than a generational "preference."

Rick went on to promote the idea that communication leads to collaboration, which can be transported from individual application to organizational relationships.  I take heart - when our profession's leaders get the picture this clearly, there's hope that the profession itself will follow.

Things get tricky at this point.  Organizational collaboration can't really be - as in the George Gershwin song from Porgy and Bess - "a sometime thing," done when it's convenient for one supply chain partner or another.  It needs to be part of day-to-day, and everyday, transaction execution within business relationships.

Now, the hard part.  Collaboration doesn't just happen; relationships don't blossom just because they're planted and watered occasionally.  All this is part of conscious investment of time and resources in  creating the right kind of relationships with the right kind of partners, and all with a business purpose.

The investment, consuming as it may be, is where the big payoff in supply chain management is, though.  It transcends momentary gains and losses when designed to deliver sustainable end-to-end marketplace advantage.  And, the wunderkind at the end of the table who's texting while you're talking is part of that set of organized relationships.

Heads You Win, Tails I Lose

Stadia emptied, vuvuzelas silenced, the Netherlands team has four years to contemplate what might have been in their resurgent prominence in the world of World Cup soccer.  FIFA has a shorter time to assess the salutory effects of public hanging for sight-challenged and judgement-impaired referees.  In the meantime, we'll don our colors and pull for Ajax, the pride of Amsterdam.

Back in the real world, the good news is that our universe of supply chain management is making headlines.  That's also the bad news.  USA Today's July 8 Money section carried a top-of-the-fold feature on shipping bottlenecks and their negative impacts on cost and timeliness.  Our friend Rosalyn Wilson was cited (but CSCMP's production of her annual State of Logistics study was not mentioned - another rant for another day).

The problem was blamed on recession-driven capacity cutbacks in air cargo, ocean shipments, and truck transport.  Adding container shortages to the mix makes marine transport the most severe manifestation of the problem, with shipping volumes increasing while Chinese container manufacturing has been seriously curtailed.

But, some of the damage was self-inflicted, and some continued difficulty is a matter of choice - an investment in short-term pain in exchange for a payoff in longer-term financial pleasure.  Carriers (of all types) embraced sharp price cuts in order to keep operating - even at a loss - when times got tough.  Many shippers took advantage of a perceived desperation, and turned the screws even tighter.

Now, the carriers want to get well - and fast.  The USA Today feature reports a 150% increase in transportation costs (following the historic decline of 2009).  Significant additional increases lie ahead, with re-activated capacity lagging demand.  Some observers maintain that the ocean carriers' recent practice of "slow steaming" is a faux green maneuver to mask a cynical manipulation that reduces effective capacity - and creates unholy pressures for further upward price movement.

Despite the fine words and high concepts coming from many players in the global supply chain community, this scenario reflects a sobering reality about talking the talk versus walking the walk.

How often must we repeat these cycles of adversarial win/lose (and lose/lose) industry-wide confrontation?  At some point, the strategists among us will learn to think, like Bobby Fischer, four or five moves ahead and build long-term business relationships.  Real relationships will insulate genuine partners from the debilitating skirmishes that perpetuate the paradigm of creating immediate transactional focus, short-term one-sided gains, and long-term supply chain underperformance.

We know better; now we've got to do better.  But, doing better requires that everybody - shippers, carriers, service providers - gets in the game.  And plays to win-win.

The Value Of Situational Values

Kevin Cornish (atrisk.net) recently blogged about situational values and fake parts in the supply chain.  His best line?  ". . . the human element matters more than ever . . ."

Citing the loquacious, but nearly always on-target, Tom Friedman from the New York Times, Cornish introduced the ultimate reality that all partners in supply chain relationships must become more responsible because we can't shield ourselves from the irresponsibility of others.

Right on, Kevin; right on, Tom!

But, do consider this.  The issue of values among supply chain collaborators would be much easier to deal with in those cases of building the right kinds of relationships with the right kinds of people (i.e., organizations) in the first instance. 

Think about the potential for financial and emotional catastrophes lurking in trying to extricate oneself from an E&J Gallo-induced marriage to a pole dancer of recent acquaintance.

It's much tougher to reconcile value systems after the fact, when commitments have been made on a superficial basis, cost per transaction for example, rather than on the value of integrated and collaborative efforts in a competitive marketplace.

After The Ash Settles

Have we over-outsourced our supply chains?  Michael L. Hetzel, a vice president at ProQC International, says that we in the US have, in a paper distributed to American Society for Quality (ASQ) members.  I believe that we have done so in Europe, as well.

Hetzel maintains that extended and distant supply chain structures have isolated and siloed procurement, quality, design, and logistics functions, with each focused on its own objectives and measurements - to the detriment of the end-to-end supply chain.

The stunning realization in all this is that loosely-connected functions in the supply chain are more likely to fall apart under stress than a strong system of better-integrated links would be.  There may be no stronger argument than this for the value of  - the necessity for - carefully structured business relationships among supply chain partners.

Perhaps near-shoring, in-shoring, right-shoring and the like might mitigate the consequences somewhat.  But, the risk of supply chain catastrophe in a world of bankruptcies, sudden and sometimes unforseeable communications and logistics breakdowns, economic turmoil, civil unrest, government actions, and Icelandic volcanic eruptions is simply too great to do otherwise.