Archives for April 2010

Fly Me To The Moon Unit, Dweezil!

By Art van Bodegraven | 04/26/2010 | 12:47 PM

The late philosopher, music theorist, and remarkably chemical-free visionary, Frank Zappa, once observed: "You can't be a real country unless you have a beer and an airline - it helps if you have some kind of a football team, or some nuclear weapons, but at the very least you need a beer."

In the same spirit, I wonder if you can have a real supply chain without an infrastructure.  My thesis is that you cannot.  Having visited places without much of a physical infrastructure - roads, railways, communications, etc. - over the past several years, and as recently as last week, I remain skeptical of vague claims of being part of the supply chain management universe.  In Jimmy Durante's memorable complaint, "Everybody wants to get into da act!"

Never mind that the ultimate infrastructure concept of multi-directional supply chain rlationships remains mysterious to all too many pretenders in the no-barriers-to-entry world of self-proclaimed supply chain management.

But a lot of high-sounding phrases, citations of standard concepts, all augmented with seminars, workshops, and conferences populated with learned local academics and imported guest experts aren't the same as day-to-day supply chain execution at ground level.  Too often, they reflect wishful thinking and self-congratulatory make-believe - Potemkin villages constructed for the sole purpose of getting into da act.

Shareholders, Stakeholders, And Supply Chains

By Art van Bodegraven | 04/26/2010 | 12:15 PM

The April 14 issue of The Economist (www.economist.com) asks whether the twenty-five year (or more) run of the shareholder value model has ultimately failed.  (NB: See Michael Jensen and William Meckling's 1976 "aha!" work, Theory of the Firm.)  This very fine self-styled newspaper goes so far as to quote a ferociously persuasive practitioner of the model, "Neutron Jack" Welch, who, in a possible about-face, recently called shareholder value "the dumbest idea in the world."

Yet another guru, an academic writing in the Harvard Business Review, has called shareholder value a "tragically flawed premise."  As an ardent adherent of the "human face" school of capitalism, I can only applaud signs of a return to a stakeholder value model, in which the interests of employees, suppliers, customers - and, yes, shareholders - are looked after in a balanced way, and with a long-term (i.e., longer than one fiscal quarter) perspective.

Here is the crux of the contest between shareholder and stakeholder value models, in my view.  Can tightly integrated supply chain partners successfully maintain effective business relationships if they are not on the same page of the value-model hymn book?  Further, does insular commitment to a shareholder value model preclude wholehearted participation in a supply chain driven by visions of collaboration, mutual benefit, and sustainable end-to-end performance for ultimate customers?

You may intuit my bias easily enough, but what's your take on the ebb and flow of competing value models?

Big Chief Buffalo Nickel

By Art van Bodegraven | 04/12/2010 | 7:48 AM

I was in the shower the other morning, channeling Leon Redbone doing Desert Blues, and thinking - a dangerous, even lethal, combination.  Not an alarmist by nature, Armageddon, Snowmageddon, Oilmageddon and such aren't usually what I worry about getting larger in the rear-view mirror.

But, a growing number of responsible commentators are beginning to speculate about future consequences of our overall economic position in the US.  (No, not just the weirdos in commercials hawking investment in gold.)  One line of musing anticipates a couple of somewhat related developments.  First is a continuing decline in the value of the dollar, which is painful enough already for anyone who travels.  Another is big-time inflation, thanks to, among other things, all the borrowed money that's been poured into the economy.  I'm not alone in these wonderings, according to The Ohio State University's Bernard J. (Bud) La Londe, Jr., Ph.D.

A third horseman riding toward apocalypse is a fairly rapid rise in interest rates.  On one hand, we'll likely need to do something to stem inflationary pressures.  On the other, we may need to make the dollar more attractive as an investment to domestic and international purchasers of US debt.  If lenders enjoy a higher rate of return, it surely follows that borrowers are going to be paying an even higher rate.

A fourth horseman might be continued high unemployment numbers, but we'll deal with those impacts at a later date.

The exceedingly bright commentator Charles Krauthammer has used the term "hyper-inflation," but I'm not ready to invoke the specter of Germany's Weimar Republic - yet.  But, we could see altered behaviors in business if inflation kicks in at a level not seen in some decades.  That is, a corporation with cash on hand might choose to invest the money in building inventory  - which would hold relative value - rather than watch the asset lose value when not put to some immediate use.  The flip side of the coin is that corporations without cash might be very reluctant to borrow in order to build inventory, and pay a premium for the privilege.

At that point, tightly integrated supply chain performance could be adversely affected if partners in business relationships take different approaches to the challenge.  If one supply chain partner builds a bloated inventory to use cash, but preserve value, while another slashes inventories (and elevates performance risk) to avoid the cost of borrowing, the disconnected day of reckoning will not be pretty.  And, the fabric of previously successful intimate business relationships could be strained beyond saving.

Be Careful Out There Among Them English

By Art van Bodegraven | 04/12/2010 | 6:51 AM

Unless you've spent time in Holmes County, Ohio or Lancaster County, Pennsylvania, your impression of Amish life has probably been limited to Witness and Harrison Ford (or Birch Interval  and Rip Torn).  For the record, Rip takes more alcohol than the norm for the Amish population.  This behavior by what the Amish call "the English" would not surprise breakaway leader Jacob Amman, or Menno Simons, who originally founded the sect from which the Old Order split.

The current issue (April 19) of Time magazine devotes a page to the success of Amish businesses, and the Amish styles of working and management.  They, for example, have a start-up failure rate only 20% of that  experienced by all US small businesses.  The telling phrase?  "Amish businesses value relationships over onetime deals."  There's also reference to working "higher up the value chain."  Maybe plain folk aren't as simple as we thought they might be.  

That's no surprise in this corner, but it's always encouraging to see unsolicited independent support for our core contention that the quality of business relationships is a compelling difference-maker in sustainable enterprise success, for, in Time's words, ". . . those more dedicated to the Golden Rule than the golden calf."

Harry Potter! Put Away That Cloak!

By Art van Bodegraven | 04/09/2010 | 7:26 AM

The five-year old is back.  A few nights ago, he zapped his mother with a Jedi knight's light saber.  She quickly shot back, "Ha!  That didn't hurt!  I am invincible!"  The kid gave her a gimlet-eyed once-over and announced, "No, youre not!  I can still see you!"

That little story might provoke a bit of supply chain anxiety.  Think about your supply chain, your role in it, and how you are positioned relative to your supply chain partners.  Are you part of an invincible supply chain that is putting increasing distance between it and its nearest competing supply chain?

Or, are you more-or-less invisible inside a supply chain that is eating the dust of one that has leveraged the power, dexterity, and creativity of the business relationships embedded within it?

If the latter, what do you intend to do about it?

Gaga Me With A Spoon!

By Art van Bodegraven | 04/01/2010 | 7:13 AM

How does one know where to draw the lines among au courant, avant garde, and limitless self-indulgence?  And, why does Lady Gaga immediately spring to mind when the question is posed in that fashion?

Similar definitional questions might be -  and have been - asked about how and what to call the flow of goods and materials from origin to comsumption, or application, and - sometimes - back again.  A recent LinkedIn discussion got all manner of folks' undergarments in a bunch as they tried to distinguish between supply chains and value chains.  As opinions flew in from across the planet, a recent convert to the Church of Lean managed to slip value streams into the punchbowl.

This exercise was about as time-consuming - and useful - as the centuries-old debate around the vital question of how many angels might be able to dance on the head of a pin.  It reminded me of arguments a couple of decades ago, when some ambitious, but misguided, consultants waged all-out war to replace "supply chain management" with "demand chain management."  They clearly failed in the attempt, but the apparently primal urges to create new terms to replace names that already exist remain strong, especially when someone hopes to cash in on the "new" concept.

We'd be significantly farther ahead of the game by putting our collective energies and creativity into making supply chains, and the business relationships that power them, work better, rather than fighting over names to give to what it is that we do.  That's a biased view to be sure, and I welcome opposing perspectives, but I'm inclined to focus on getting the job done before indulging in the luxury of semantic antics.

The opinions expressed herein are those solely of the participants, and do not necessarily represent the views of Agile Business Media, LLC., its properties or its employees.

About Art van Bodegraven

Art van Bodegraven

Art van Bodegraven (1939 - 2017) was Managing Principal of the van Bodegraven Associates consultancy and Founding Principal of Discovery Executive Services, which develops and delivers supply chain educational programs. He was formerly Chair of the Supply Chain Group AG, Partner at The Progress Group LLC, Development Executive at CSCMP, Practice Leader with S4 Consulting, and a Managing Director in Coopers & Lybrand's consulting practice. Concentrating in supply chain management and logistics for over 20 years in his 50+ year business career, he has led ground-breaking strategic, operational, and educational projects for leading US and global clients. Art was principal co-author of DC Velocity's Basic Training monthly column for a decade, and was the principal co-author, with Ken Ackerman, of Fundamentals of Supply Chain Management, the definitive primer in the field. His popular blog, The Art of Art, has been a staple of DC Velocity's web site since its inception.


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