Organizational culture is critical to success

Last evening my wife and I were having a conversation about days gone by that covered a brought spectrum of supply chain topics. We spent a lot of time on how travel, business and personal has become a lot more expensive given the significant fare increases the airlines have taken.   And as all frequent travelers have found, the amount of sitting and leg space has been reduced to make it uncomfortable for all those who are of average size and weight.  It wasn’t long ago the airlines weren’t doing very well financially, with now being close to a 180 degree turnaround. 

We drifted to my days on the road, which added up so almost 3 million miles on United alone, and how I did my best to limit the number of days in hotels so I could spend more time with my family.   Then we bounced back to the changes made by the airlines that covered upgrades to first class.

I’m not traveled much of late, since leaving VICS in 2012, consequently my status has changed and it will be further downgraded in July 2015. My wife reminded me that when I was with Nabisco that my executive status allowed me to book first class flights.  She went on to remind me that I didn’t take advantage of this perk, paying for economy seats rather than incurring the additional cost of first class. 

With that we went on to discussing the importance of leadership setting an example for their team.  I always felt it was critically important to demonstrate to our team what which constituted our priorities.

There were other visible working habits of leadership that the team could witness on a daily basis.  This was all about establishing a culture. Here a just a few; I was always in the office early, at my desk and getting prepared for the day, week, etc. I was usually the last to leave at the end of the day. “Joe’s watch file” was infamous, i.e. a file of what was to be accomplished on a particular date that we would follow up with the individual responsible. There were times when a commitment couldn’t be completed on time, however, it was incumbent upon the responsible team member to provide a heads up, with plenty of leeway, when the target date would be met.  Another way of looking at this is that surprises were not acceptable.  So this was a reasonable method of working with the team, acknowledging that there would be times that a due date couldn’t be made, but that it was necessary for the team mate to give a heads up, far in advance, the reason for missing the target date and when it would be made in the future.

I think you get the drift here, i.e. that we were buttoned up in all areas, at all times. This also meant that we would show up for all meetings 10 minutes before the start time and be totally prepared to deliver on the commitment for the outcome of the meeting.

There is so much that can be attributed to organizational culture that you won’t find in operating instructions. What we’ve touched on in the above paragraphs, permeates throughout the organization, through word of mouth and first hand observation. Keep in mind that this works on the positive as well as the negative side of the equation.

It’s very important for the team leader to be consistent in explaining what is expected and then in demonstrating the behavior that was expected.

Consistency is critically important. A team that has a earned reputation for delivering on commitments earns the respect of their business partners, within the company, with service providers and most importantly with customers.  Think about the value of an individual’s reputation, and that of a company and how it contributes to that of the company. The value of reputation moves in both directions, e.g. north to south, south to north, with the total being greater than the sum of the points.

More to come on the subject of culture and the importance it has on the success of the company on one hand, and the individual on the other.     Uncle Joe

Correct inventory: a major initiative that has measurable results

It's well established that omnichannel and online order management have made dramatic changes in retail. On the news this evening it was mentioned that this relatively new business model has made significant inroads. I spent many hours working with several companies to learn that a key problem was that stores were not familiar with being used as distribution centers.

 

I came to the conclusion that the supplier and the supplier's third parties had to be as conversant with their customers' business models as their own. There are so many channels, e.g. the driver shortage; the significant amount of supply chain/logistics positions that will have to be filled in the near future, which raises the need for training programs. I serious believe my students will be well prepared to enter the marketplace, hitting the distribution and customer-service centers ready to make a positive contribution. My experience with the training program we used, while at Nabisco Foods, turned out professionals in every discipline. They have gone on to be promoted to leadership positions with reputable companies throughout the good ole USA. If you can feel my heart swelling with pride, you are spot on!!                     

We have found through several RFID pilots that the inventory records of the participants were inaccurate. Inaccuracy on several SKUs at the A level was found to be as much as 50%!!  We then looked into other examples and found that small companies also experienced this problem, even to a greater extent.

Understanding that it takes a strong financial case for action to garner the attention of the senior executive team, we have planned to determine the impact on the various aspects of supply chain management. For example, sales forecasting, customer service, inventory management, inventory investment, aged inventory, etc. Clearly, there are adjustments made in the software to account for what is known to be inaccurate, but without specifics.

It is our combined experience that there have not been any attempts to address inaccurate inventory and the impact it has on the P&L and balance sheet. That is, not up until now, where we have decided to do what we can, as a volunteer organization.

Therefore we will flesh out a clear objective and case for action. Our business plan will take into account the challenge of change management, anticipating that there will be changes to be made that may influence the responsibilities of individuals or departments. We have team members who have managed successful change-management initiatives, who will take the lead in explaining change management and what steps need to be taken by the management team of each organization.

We also believe that it will be responsible to develop a survey. The answers will help in coming up with a program that will explain what the key areas of focus are that need to be addressed.

This is one of the most important initiatives that can be undertaken, given the interest in omnichannel by a significant number of retailers. Accurate, companywide inventory and visibility are critical to success. The large amount of capital that is planned by some retailers for new distribution centers may not meet consumer expectations. This, in turn, will impact sales and the expected ROI.  It’s critically important to establish the foundation of accurate and timely inventory information.

The investment in time and resources will have a significant ROI, with a number of soft benefits, e.g. more effective use of the management/administrative team as a result of not chasing exceptions due to inaccurate information.

We are interested in having volunteers join in and make a contribution. Given the experience of some retailers in the stock market, the timing could not be better.

Cheers and Happy Holidays,   

Joe Andraski

Adjunct Professor, Fox Business School/Temple University.

Collaboration, communication, and trust

Hi As i prepare to conduct my first supply chain management class as Adjunct Professor at Fox School-Temple University i am planning on addressing the significant importance of collaboration, communication, trust and openness that must be practiced in order to bring value to relationships. I've always had this belief and it has become stronger as i have entered the next phase of my career. i hope it will be embraced and practiced. sincerely joe

A retail story for the ages

Approximately a year ago, i decided to purchase a franchise for a retail store that has a varied customer offering of candy, soda and collectables. There's a lot to this story, but the drive behind my decision was to provide two of our grandsons with an opportunity to learn and execute a business plan. They had no retail experience whatsoever, however they have very positive personalities, are technology skilled, and have a desire to succeed.

After a very short time, these two entrepeneurs have taken on the responsibilty of managing the store, with but a week of off-site training. Our family could not be more proud of them, they have been all that we could have hoped for and then some.

From every metric that we could utilize, they have gone above and beyond, exceeding our expectations.
The hours are long and the store constantly busy with serving customers, all of whom tell us how energized they feel, just upon entering and viewing the product line, meeting George and Joe, and enjoying every moment of this great shopping experience.

This is just the beginning of what we are sure will be a retail story for the ages. Stay Tuned! Joe

Resetting personal and professional plans

At a point in time, it’s appropriate to reset our professional as well as our personal plans.  What we oft times fail to acknowledge is that our professional and personal plans have several points at which they intersect.   In my opinion, which is based on many years of my personal experience of highs and lows, any plans that have to take into account several basics that relate to the professional and personal aspects of our id.

For example, a decision to engage in a practice that is immoral, will undoubtedly have an undesirable impact on the individual. It may not be obvious, but becoming distracted is one of the side effects. You will not be able to draw upon your full resources important to solving a particular problem or coming up with a strategy that will have long term prospects. More on this later in a subsequent paper.

To further add to the complexity of building a plan, is a religious commitment, or the lack of one, as may the case be on an individual basis. Recently articles have pointed out that the Millennials are less inclined to be active in a religion then older age brackets. This may cause physiological stress, for the individual, as it is one less foundational piers for them to see lifes’ balance.   Or, leaving the religious sect, physically or psychologically, may in and of itself be a major distraction for the person making this change in their life.

I mention these two examples of what can be major distractions, fraught with so many variances that are for the experts in the field of phycology have most likely researched.  From my personal experience, the performance demands that are placed on each member of a supply chain management team are such that any distraction can and will have a negative impact on performance. 

Each individual has the responsibility of examining their portfolio of business knowledge on one hand and the influence their personal lives have on their business performance.  I like to use the analogy of a manufacturing facility that has a certain capacity to produce a given number of products.  The facility requires utilities and other resources that are provided by the local government. Then there are the other factors that impact our model, e.g. product research, development, and engineering. And of course we have plant management, sales, marketing, administration, technology, supply chain management and the beat goes on,

In the case of each of the departments, they all have an impact on the plant, either from the effectiveness/efficiency stand point.  In other words, a sales department that doesn’t understand the customers in their area of responsibility are not capable of being able to provide competitive information.  Of course, this is not to point a finger at sales, but to point out that each of the departments have a direct impact on the plant.

Regarding to our “personal plant” how efficient/effective we are is largely dependent upon the amount of time and commitment we have to being a student of our area of focus. On the other hand, if we are distracted based on our personal interests, our on the job performance will most definitely be impacted.  Said another way, we will not reach our full potential unless our plant is balanced, with our emotionally charged battery running at optimal capacity.  if our on the job performance is negatively affected by running our battery to exhaustion dealing with a personal issue, e.g. divorce, children problems, drugs, etc. undoubtedly our performance will be negatively impacted. 

There is more to this story that will be shared on future DC Velocity Blogs.

Critical supply chain challenges that are being ignored

I have re-read  the article “Rethinking the Public Works Model,” found in the American Shipper magazine, May 2006 issue. One of its headlines read, “Infrastructure in Crisis”, While critical, our elected representatives are too busy with back biting and political high jinks to address solutions. I want to run for congress and make a difference, but that isn't in the cards.  A person has to be part of the "establishment" to get a foot in the door and then follow the leader.  

Consider the following and how you will go about dealing with the challenges that are upon us.  

• Container imports are expected to double by 2020;

• Rail freight tonnage is expected to increase by 50%;

• Air cargo volume is expected to increase 5 percent every year through 2016;

• From 1970 to 2003, vehicle travel on highways rose 161 percent, but road mileage increased only 6 percent;

• Congestion costs $63 billion in wasted time and fuel;

• Half of the nation’s 257 locks on inland waterways are functionally obsolete;

• Only nine new runways have been built in the US in the last six years

• Most US ports have not been dredged to handle the 10k-TEU jumbo container ships being built.

What is a supply chain leader to do in the face of this dire forecast?   Maybe it is time to launch into a new career, such as a surgeon, psychologist or taxidermist - and get out of the supply chain game?  

Or, is it time to really get serious and start dealing with our problems – head-on??

Even if partially correct, the ramifications of the issues stated in the article would be extremely significant. It could mean the death knell for some companies, have a major negative impact on our economy, cause spiraling inflation, induce product shortages, and require tremendous increases in inventory. Logistics costs, as a percent of sales, could dramatically increase (perhaps approaching China’s 20 plus percent).  Service failures would become the norm, with irate customers contacting their suppliers’ CEO’s for answers – and possibly compensation.

Logistics folks will not be able to stem the tide of rising costs and declining service levels. Some companies that deal in overstocked or distressed product will prosper as seasonal products that don’t make the sales floor in time will be significantly discounted or products will go out of date.

What is most uncomfortable is that senior company executives, let alone supply chain leaders, have little, if any influence on these unfolding events. The article suggests that “the private sector should play a larger role in controlling (public) infrastructure.”

We began this note with the impending infrastructure crisis.  However, we must consider that we are presently experiencing “the perfect transportation storm”. Fuel prices rose to  all time highs and the current respite in fuel prices is at best temporary. It's not going to take much to have fuel rise to deleterious highs. Driver shortages, lane imbalances, etc. etc.  What will we call the situation that combines the perfect storm with the infrastructure crisis?  More importantly, what are we doing to dig out of today’s challenges and be better prepared for the future?

 The answer is twofold: a focus on collaboration on one hand and common business practices on the other. Collaborating in such a way as to ensure trading partners and service providers are successful, (note that I didn't say trying) by agreeing to a standard way of doing business. For example, we have carriers that are asked to communicate electronically with their customers, but many of their customers have unique requirements which require special programming and execution.  And these ‘one-off’ accommodations cost real bottom-line money.   Let’s agree to one method, one approach, one set of information criteria that supports us – which will enable electronic Collaborative Transportation Management – eCTM – for all of us.

The Council of Supply Chain Management is aggressively taking on the challenge and is committed to making a difference. CSCMP members are looking at addressing the present challenges, and getting ready for those to come. We are fortunate to have experienced, talented and selfless volunteers who are working hard to make a difference. Professor Ted Stank,of the U of Tennessee, has recently been appointed to chair the CSCMP board.  I've known Ted for a number of years and I'm confident that he will provide great leadership and strategic initiatives that will "make a difference".

A question for all of us is, what has really changed since 2006?  The highway infrastructure continues to crumble, ignored by state and federal governments. The rail system is old and not to be compared with the progress made by Japan or China, with their high speed trains.   They are clean, comfortable and makes travel a delightful experience.  Acela doesn't begin to compare and is more like that of a , well I was going to go as far as a third world country, but Acela is not quite that bad. I recently used Auto Train from Washington, D.C. to Florida. Compared to my experience in rail travel in China and Japan, it is obvious that rail transportation has been ignored and the ride an unpleasant experience.

Air travel, hmmm, just recently articles in the WSJ and other publications, stated that we are headed for a pilot shortage!! Now how it that we find that there is a critical shortage?  A prelude to another fare increase, that’s necessary to train and pay pilots salaries that bring them back to the pilot seat. i'm a 2 million plus passenger on United. the cost of air fare has basically doubled and any benefits of being a frequent flyer are gone.  I'd be happy to never have to fly again.

In so many respects, we are going backward vs. taking the steps that will enable companies who want to produce in the USA. It’s going to take more than a village and taxes on the rich to execute a plan that will make the improvements that are crying to be made. There are many retired executives that can be marshaled to help develop a plan to make the appropriate changes.  They can do it, politicians do not have the experience,expertise or interest. The democrats are more interested in making disparaging speeches about the leader of Israel and his presentation to congress.

This isn't a political article as much as it is a wake-up call, that I pray will be addressed by Congress, with little chance of the white house (purposefully not capitalized) dong anything. it's more important to enable illegal immigration to bolster the democratic base.  So consider this  a call out to senior executives to take a leadership role and in doing so, create a strategic plan that will take us out of the dark ages.

You can make a difference.     joe

This is a serious success story.

The following is an excerpt from my book My Incredible Supply Chain Journey and What You Can Learn From It.

The leaders of Logistics/SCM( me)  and Demi Lappas who headed up IT Technology , with his number 1 guy, Joe Wisdo  developed the  technology/strategy and implementation plan together.  They decided de what delivered the greatest value over the shortest period of time. An unintended consequence was to form teams that learned from each other, where it was impossible for the uninformed to know who was on what team, logistics/SCM or IT.

The combined knowledge was greater than the parts resulting in leading edge operating systems, with results showing up in company metrics; e.g. customer order fill rates, customer case fill rates, on time delivery, perfect order (on time delivered and perfect order fulfillment). There were other measurements, e.g. sales per associate, cases shipped per associate, average shipment weight, transportation expense, warehousing expense, etc. all that had made positive gains, reducing the cost of percent of sales for Logistics  

This holistic measurement system provided management with a systems generated report, that could be used to determine metrics by company division, by customer, by sales region and other views into the business.  This information was relevant, useful, impactful,  resulting in the Logistics/SCM organization being rated among the top retail suppliers in the industry, by several leading edge consulting firms.  Therefore, this provided the  organization with a platform of pride and confidence that continued to drive gains in performance and company profitability.

 I've been a proponent of collaboration for a number of years. Long before collaboration received broad coverage, I had been practicing the concept for some time.  I think the proceeding provides a example of one of my experiences.  Let me know what you think.  Thanks for your readership

A key transportation challenge

This is a key transportation challenge that affects so many aspects of supply chain management. While transportation zealots work so very hard at managing transportation expense, there are factors outside of their control. I've looked into the connection between the Keystone Pipeline and the movement of thousands of trainloads of oil that move from west to east across the country.

So let's examine how the Keystone Pipeline and the movement of oil via rail are related. We'll begin with Presidents Obama's veto of the Keystone bill, reasoning that the oil is moving through the USA, destined to countries around the world. His logic is that Keystone will benefit Canada, not the USA. His position is compromised by the amount of oil that will actually stay here in the USA. Of course his position regarding job creation is compromised -- ( again) -- by threatening the veto that will keep some 44,000 people from enjoying the benefits of reasonable compensation. With the employment challenges that the USA is facing, we can only ask if there is an underlying strategy???

Well, maybe there is a underlying reason that requires that we put together other sources of information.

The railroads, one owned by Warren Buffet, who took it private a few years ago, are making a large and repeating fortune. So it’s in their best interest to defeat the Keystone pipe line as it will substantially reduce the amount of oil moved across the country via rail.

And there is a potential disaster looming on the horizon should a 100-car trainload explode in a heavily populated area, or a school zone, or the downtown of a city. Merely follow the path that the trains follow as they travel thousands of miles from origin to destination.

What Buffet and others refuse to acknowledge is the potential threat of a major calamity, with the 100-car trains exploding near a school, a town or some other populated area. This is not farfetched because it has happened in Canada in 2014. The town was destroyed, with many lives lost.

So, is the railroad lobby in Washington carrying a big stick, i.e., lobbying funds to kill Keystone? Yep, I think that the lobbies are spending substantial funds in Washington. We should try to find out who is protecting the movement of oil via rail, and vote them out of office.

With the new federal budget, which I will comment on, there is a need for dramatically improving the transportation infrastructure. This is something that has not been done since President Dwight Eisenhower sponsored the USA Interstate Highway. However, it’s a matter of how to pay for it. Fox News has suggested that the extent of lobbying that takes place in Washington D.C. costs the American Taxpayer a significant amount of money, by having pet projects approved and spending taxpayers' dollars frivolously.

It’s time for change, not the same old top-down management that we have seen prominently displayed, especially since 2008. And finally - and this really gripes me - there has not been a USA budget since 2009. How can an organization the size of the USA, be fiscally responsible without the means to effectively manage trillions of dollars spent annually, with a deficit that is out of control?

" Oh what a tangled web we weave, When first we practice to deceive".
Sir Walter Scott, Scottish author & Novelist (1771-1832)

What constitutes success?

I came to know and respect Senator Tom Coburn of Oklahoma when I learned of his principles: adhering to the Constitution, limiting federal government and protecting individual liberties.

The real key to his success was his penchant for hard work. He always felt he had to earn his paycheck, showing up in the office every morning at 7:30am. He thoroughly read and understood every bill before voting. There seemed to be no limit to his capacity to understand the tax code, the budget, veteran policies and health care.

He always was dedicated to the principle that knowledge is power and consequently he was highly respected in congress as he knew more than the authors of numerous bills.

A strength was his ability to practice politics, without being political. He shined a light on everyone but himself. He understood power structures and public outrage. Working with Democrats was a regular practice as he believed in collaboration.

He believed in leadership, courage and vision and that they must be paramount until a battle is won. He would share credit for any success achieved with his team and thank them for their meaningful contribution, for any success. Yes, he immediately mentioned his staff, who were the notably the first people he thanked in his farewell to congress. This was another reason he was respected, if not adored by his staff.

One of his key accomplishments, after a decade of floor speeches and amendments-and the phase “Bridge to Nowhere”—to get the GOP to swear off earmarks.

I was very impressed when I read “How Coburn Made a Difference” written by Kimberley A. Strassel of Potomac Watch in the WSJ 1-2-15. I thought about how an accountant who went on to become an obstetrician, had applied his skill and talent to benefit the country and all of its citizens. He served 3 terms in the House and 10 years in the Senate, and during that entire time he steadfastly stood by his principles.

As I reflected on Sen. Coburn over the last few days, I thought about how successful we, as individuals and our company and country, could be if we applied what we learned from his example of leadership and successful career. There are basics that are applicable to every profession, to every position from garage mechanic to company president.

We owe a debt of gratitude to Senator Colburn for what he has accomplished and the role model that he was been for young and old. He has reminded me of what I want to focus on, i.e. to make a contribution and not expect to receive accolades, but to know in my heart that I made a difference, regardless how small and non-transparent.

Thanks,
Joe

Facts of business life

You will find a considerable amount of advice as to how to manage through the problems you are sure to encounter during the course of your career. However, what is rarely addressed is the nature of humans to develop a dislike to certain individuals, for no apparent reason.

From personal experience, as a result of many mergers and acquisitions, there was a senior executive, that I had not known in the past, who began to send signals that I wasn’t on his list of favorites, to say the least.

It didn’t seem to make any difference how successful I was with the company or the amount of positive press that I earned, I just didn’t make the cut. This untenable situation existed, even though the top executive gave me every reason to believe that he had great confidence in me and gave me great decision making latitude. There were other members of the senior management team that I had earned their respect , but this had no influence.

Nevertheless, as change at the top took place, I eventually found myself being ushered out of the company, without a plausible reason. At that time, I had no support, as no one felt it was worth the effort to resist the change, however, I did receive numerous notes of praise for the contribution I had made to the success of the company.

Here’s the point to be made, if you haven’t had a similar experience, you may have at some point in your career. It’s just a fact of human inter relationships that you will likely encounter. It could be at an entry position, where your immediate supervisor has an undefined problem with you, or after a promotion, that has ticked off a competitor, who has vowed to do what can be done to bury you.

There are steps that can be taken. Determine if you have read the tea leafs correctly by going to your superior and explaining your concern. You can also go to the HR department and request their help, but now you are entering the political arena, and that has no sure path to success. Finally, you can go directly to the individual and express your interest in clearing the air.

Most importantly, you need to determine if you can resolve the problem and if that isn’t possible, it’s time to move on to another opportunity. Given today’s business clime, there isn’t any stigma related to several changes in companies. Trying to do the best you can with this problem hanging over your head is sure to lead to performance problems, and that leads to emotional problems, to include stress and maybe health.

You will find there are those challenges that you won’t be able to resolve. It’s important to recognize what you can change and what you can’t, then to move on to the next opportunity and this says that networking is critically important. Best of luck< Joe

Education - after college!!

It’s the responsibility of each and every executive, of every company, to continue the education of members of their team(s). We can agree that those who graduate with degrees from well recognized universities that focus on Logistics and Supply Chain Management have a firm grounding in those disciplines.  However, it’s characteristic that the focus of each university is largely due to the makeup of the faculty, how much they have published, etc.

Let’s agree that each individual who enters the business world, needs to have continuing education in the business practices and systems employed by a company. It’s the responsibility of the executive, who needs to fill that leadership role. Companies cannot achieve the level of proficiency that will meet goals, e.g. customer services, sales, balance sheet, P&L and market share. There’s other areas that can be added, but I think we’ve made the point.

 For example, a SCM organization that operates with a corporate, divisional offices and perhaps regional offices. Is ripe for additional education. The divisional executive has the responsibility of making education one of their objectives, establishing the subjects that would be included and how the program would be delivered

There are a host of individuals who can fill the role of subject matter expert.  Service providers are in fact subject matter experts and should be part of the program. The Sales department of the company absolutely needs to be included in the program. They need to explain to the sales strategy  and how the SCM team is critically important to success.  This is a very important subject that needs to be embraced by all.  Next, and not a suggestion as to what the priority list should be, tee up the company technology support. Regardless of how proficient the new associate is in the use of a PC, etc., learning the company software is critical to success of the division and its ability to meet the company goals. By the same token the ability of sales and marketing may be put in jeopardy if the SCM organization fails to provide the mission critical support.

“In academia, flipped learning turns the traditional classroom-teaching model on its head, delivering lessons online, outside of class, and moving homework into the classroom via individual tutoring or activities. Coach Meyer of Ohio State, used the “flipped coaching” technique has helped take OSU to the brink of a Big 10 title.  There’s more that can be found in the WSJ, Taking the Buckeyes to School” in the Dec. 6-7 edition.”

If Coach Meyer could lead his team to the record they hold today, and now down to a 3^rd string QB, we can easily see how companies can use this approach in their internal education program. Taking associates to plants, distribution centers, sales offices and “customers” would pay great dividends if applied appropriately.  Correlated with the visits would be the follow up class room sessions at home. Regardless where you are in the mgt. ranks, embrace education! More to come.