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Category Archives for "For Managers and Analysts"

What is the Most Effective Strategy to Massively Slash Shipping Freight Costs?

Freight costs reduction is almost always the last frontier in the cost reduction landscape. At the board level, most companies do not pay much attention to their external freight costs. These costs never get the attention they deserve because they are scattered all over the place, and generally out of sight.

What if I told you this simple strategy can reduce the overall freight costs by over 75%. It will be hard to believe – right? Well, by the end of this article you will see an actual case study analysis proving this to be the case.

If you study that case example seriously enough, you can replicate the strategy in your own company, and see for yourself the enormous benefits it creates.

But, this magnitude of cost reduction needs strategic thinking. I call it a strategic because it is not a tactical (and, certainly not a trick). A trick is something which is impermanent, a sleigh of hand.

For example, I know a trick that can instantly cut your freight bill to zero. But, why would I even talk about this sleigh-of-hand. A trick rarely enriches you – it merely has some entertainment value, and perhaps, ocassionally, a short term monetary value.

For my clients, I focus on things of lasting and real value.

Strategies for minimising freight costs need fresh thinking

This strategy is so obvious to me that I am constantly surprised that very few companies are doing it. In fact, this is the first thing I look for when I visit a new company.

And, invariably, in every company, I find room for improvement. “Why is it not equally obvious to everyone else?” – that is a constant surprise to me. But then, that is the very definition of “the curse of knowledge.”

Consider the following scenario and see if sounds familiar: you join a new role (in the same company, or in a new company), and suddenly you are now in charge of the freight and shipping costs.

You look at the numbers, and they seem high. But as yet you have no means of saying they are high, so you dig out some benchmarks on google (or from your past experience, or reports) and while nothing definitive can be said because benchmarks never compare apples with apples, your gut feeling is confirmed. The freight costs for your company is in fact higher than the norm.

Freight costs can be reduced by these common tactics:

Even when you can conclusively prove that the freight costs are higher than the norm – what is your next step?

  • Do you go to all your shipping and freight vendors and start pressing them for discounts?
  • Do you wait till their contracts are up for renewal, and then initiate a rigorous and objective RFP process, with the full intention of negotiating as hard as you can?
  • Do you openly break the existing freight contracts and go out to the market straight away?
  • Do you surreptitiously call in alternate vendors and do some trial shipments?
  • Do you initiate a freight audit to ensure that the invoices for the past shipping activities actually match the contractual rates, and the actually delivered shipping activity?
  • Do you physically shadow a shipment to find times and places where the vendors were inefficient so that you can go back to vendors and press them to be more efficient and pass on the savings to you?
  • … … …

Take control of your freight costs by starting here

I could go on with another 20 points of activities that could be potentially done to reduce the freight and shipping costs. Each of them would be a legitimate alternative – though not the first thing to be looked at.

At different points in time, during my projects, I have seen all of them being done. Indeed, I have done many of these same things, but only at the right time. As in the rest of life, here too, timing is everything.

We have to do the first things first. And, for that very reason, you should not start with doing any of these things listed above.

Why?

Because if you do any of these things before doing the first thing first – your vendors, and even staff, will identify you either as a novice, or as non-serious player. And, they will calibrate their response accordingly.

So, what is the first thing that players will expect you to do?

Let me illustrate with three examples each one getting more and more complex, and see if you can guess the answer.

1. A mid-size business wasting money on freight costs due to careless shipping practices

I and my business partner were standing in the warehouse of a mid-size global player in a nice margin business. On the shipping docks were sitting a number of pallets – each half or more full of goods. I asked about the paperwork for one of the pallets and was surprised to be handed a thick sheaf of papers. Right on that single pallet sat more than 50 shipments, all going from one large city to another. Each was accompanied by a consignment note (and a Con. note fee of $35 each). So I asked why they were not being shipping in a single shipment, and distributed by a local courier? Or alternatively, by a inter-city courier covering the entire shipment. “We have always done the things this way” was the answer. I calculated that – just those 4 pallets were wasting at least $3000 in additional freight costs. That was over $100K a month – the practice was changed and the hole plugged straight away.

2. Another mid-size business had high freight costs due to wrong inventory, in the wrong places

After a very thorough and detailed analysis of the inventory holdings, and movements within this company, we created a chart similar to the one shown below:

Freight Cost Reduction 1

Because there was no scientific approach to inventory targeting (besides what was built into the ERP system), and because even that was very sloppily implemented, the company suffered from having excess stocks for items that were not required, and shortage of items that customers wanted. Almost every location suffered from this problem.

Even a very generous inventory allowance revealed that over 70% of the inventory was wrongly located.

As a result, the staff were all the time trying to track things in their system and ship the items from where they were located to where they were required.

3. A large business in multiple wrong locations suffered from very high freight costs

This third example is a much larger business. It had a global supply chain network, though we were only analysing the national network. Almost all the locations were decided based on factors other than efficiency or effectiveness. Some were just historical decisions, left to continue on without any thought. Others were made because the regional manager preferred to be located there (even though the customers for that region were located somewhere else).

A very thorough analysis of all the locations, and all the movements revealed that current network was the worst possible configuration for cost and customer service. Only the freight vendors benefited with this configuration (which had evolved gradually over several years). Take a took at the figure below:

Freight Cost Reduction 2

Reduce the number of transportation movements to minimum

Your own situation will not be exactly same as any of the three situations above. It would rather be same, same – but different. That is the reason I will not go too much into any of the examples above.

I am also skipping a lot of details about how the above analysis was done, and the changes were implemented.

In reality, it took weeks to conduct the analysis, and months to implement the recomendations. But the resulting benefits ran into millions of dollars in last two cases, and were worthwhile in each of the case. In each case the results prevented another round of dibilitating lay-offs, perhaps even saving the company in the long run. The cost of analysis, and implementation was mere fraction of the savings in every single case.

You need experienced eyes to look at freight costs with a fresh mindset

You will have to think about how to reduce the transportation movements in your business. But if the above businesses had the room to reduce the transportation movements by up to 83%, then your business might have at least some room to reduce transportation movements. You do not need to negotiate with the vendors to do this. You just need to organise your supply chain better.

And, once you do this properly, your vendors will take your business a lot more seriously. I have seen the change.

A word of caution is advisable at this juncture. The results above – over 70% erroneous inventory holdings, over 80% redundant movements due to supply chain misconfiguration, over 50 shipments that could be consolidated into a single shipment – are anything but typical.

In fact, in my over 25 years of hundreds of projects, they stick in memory full of similar cases, only because these cases were so far out on the limb. That is why it was easy to dig out the data for them, and share the facts of the cases (in a disguised form).

Does that mean you will not have these opportunities?

Quite the contrary, you will have these three, and nearly a dozen more, different types of opportunities to minimise the number, size and volume of shipments.

In conclusion, keep minimising the number of unnecessary freight movements all the time.

There will be a multitude of different types of unnecessary freight movements. These three were just the most obvious examples that occurred to me as I was writing this article. If I leaf through our past projects folder, I could detect at least a dozen more types of unnecessary freight movements.

But each company is different, and will have its own example of this practice. The trick is to have enough experience to recognise an unnecessary freight movement when you see it. And, then to call it as such you need fortitude and backing.

Finally, you need to come up with a comprehensive model that will replace the current logistics model. And, you need to be able to sell it to all the stakeholders.

And, you have not even started talking to your logistics vendors yet. The truth is that there are so many different ways of reducing freight costs that any blog will not do full justice to it. There are a couple of reports that we have issued covering the matter. Look for them in the footer on our website, or contact me.

The Trouble With Supply Chain Security

I know that Supply Chain Security is not the top of mind of anyone. Least of all for people who are so busy all day, every day that they barely have time to take a meal break.

I am, of course, talking about the supply chain managers. The mobile does not stop ringing from the time they take it off silent in the morning, to the time they are ready to crash. If it is not a customer calling about “another botched-up delivery”, it is one of the service providers calling about ‘another unpaid invoice”.

Literally, hundreds of things can go wrong as millions of things are moving around 24X7. And, sometimes they wrong, all at once. Like when a customer threatens to walk away, AND, a supplier takes you to court.

Nobody thinks of supply chain security until it is too late

Who has time to think of Supply Chain Security in the midst of all this? Only those who are most serious about their careers in the supply chain.

“Why is that the case” you ask? I think, by the end of this article the answer will be crystal clear to you.

Listen, I have written in many places earlier that the traditional supply chain model is gradually failing and will be relaced by a suplly chain model which is radically different.

It is true! Think about Sears, and all the others who were blindly copying Sears in the 80’s and 90’s. It gives me no pleasure to name all the favourites of the yesteryears in this context.

Anyway, you would have to be living under a rock not to know the names I am talking about. And, by the end of 2019, there will be many more names to add to that list.

But, this article is not meant to compare and contrast the supply chain models of yesterday, today and tomorrow. I will write a different article soon to cover that important point.

2019 is different

The point to pay attention is that 2019 is edgy. Things move slowly, but in a ‘definitive direction’. And this is the main point – careers are more important today, than in the past 20 years.

Nothing has bigger impact on a career than a major incident in the supply chain. What’s a major incident?

Take a look at the 1 minute video below to get a sense of the issue:

https://www.youtube.com/watch?v=_VZ4AaBhHKU
When everyone is scrambling around for answers…

But, sabotage is not the only type of potential incident that can hit your supply chain. There are many other types of potential incidents.

In fact, in a project last year we identified at least seven types of potential supply chain risks – each with very complex supply chain implications.

Threats To Supply Chain Security

Even making a list of all the different types of potential supply chain security breaches and related incidents is difficult. One you go past the most obvious ones – where do you stop? And, how do you neatly group them?

Take a look at the figure below:

(Source: Global Supply Chain Group’s SUPPLY CHAIN SECURITY REPORT – 2019)

the risk assessment and mitigation work in supply chain is extremely painstaking and thorough. All the projects that we have done which involve this kind of work have left me dissatisfied despite the projects being quite lucrative, and enlightening.

Why do I say that?

Because no matter how much you know – you cannot make a list of everything you don’t know that can happen. And that is just the trouble with the qualitative part of supply chain security and risk management.

On the quantitative side, it is even worse.

Try multiplying infinity by infinity. How do you assess the probabilities of something that has never happened before, but is likely to happen at some point in future? And, then how do you assess the full repercussions of that event, up and down the supply chain?

There is a tendency in our planning to confuse the unfamiliar with the improbable. (Thomas Schelling)

Did you know that in 2000 Ericsson permanently lost its pre-eminence in mobile phones market to Nokia mainly due to a fire in a chip factory owned by Philips. This is no place to tell the full story. That story is told on page 9 of my book The 5-STAR Business Network.

How did Nokia lose its crown to Apple due to its supply chain missteps is another story worth talking about. As is the story currently underway, how Apple is losing its crown due to its supply chain missteps.

But I digress. Let’s get back to the talk of supply chain security. People ask me why is supply chain security is such a dismal state that only by sheer providence (and goodness of population in general) we do not more incidents.

ABC of ‘Supply Chain’ “Security”

The main reason is this – most security professionals do not even know ABC of supply chains, and most supply chain professionals bother about only ABC of security.

A secondary reason is that it is just too difficult to secure supply chains with the current level of resorcing in most companies.

Think about this:

The truth is that there are so many moving parts in today’s supply chain that it is impossible to keep track of them all with the current level of supply chain resourcing.

And, companies are always reluctant to give more resources for anything, especially something as ‘unproductive’ as security, unless justified by a bulletproof spreadsheet vetted three times over by the most painstaking auditors.

Who will cop the blame for breaches of Supply Chain Security?

All this would not matter in the past when everyone could pretend that every security breach incident was a one-off, “could not be foreseen or prevented” kind.

Today, irrespective of whether it could be prevented or not, everyone – regulators, governments and public – are hyper-vigilant, and clamour for someone to blame. And guess who is going to cop most of the blame? The person who cops most of the blame when anything goes wrong in the entire supply chain – The Supply Chain Manager.

That trend is only going to escalate. And, that is the “Trouble With Supply Chain Security”.

Notes:

  1. We have created a supply chain security survey which can give you more ideas on important aspects of Supply Chain Security. If you are interested, here is the link for the survey.
  2. We also have a report titled Global Supply Chain Group’s GUIDE TO SUPPLY CHAIN SECURITY. If you are interested in this report, write to info@globalscgroup.com

How To Get The Biggest Bang For Your Technology Buck

There were only 24 hours left. Tomorrow the board would pull the plug on the project which had continued for well over 3 years. The total costs as per internal calculations had run into hundreds of millions of dollars.

External consultants reckoned that when you included the costs of internal resources seconded to the project from rest of the organisation, and other costs buried elsewhere in P&L’s the real total was at least double of that.

However, the project had built a momentum of its own. No one was willing to point at the elephant in the room, let alone to lead it out. Careers were at risk. Good careers – built over several years.

I will talk about the outcomes later in this piece. Before, I do that I want to spend some time talking about how did the company arrive here?

How did so many competent people miss obvious and easy signs that the project was not on track. More importantly, where did it all go off the rails?

Was this a unique situation – with no lessons for  others grappling with technology outsourcing?

Of course, I have covered these, and other similar questions in my book OUTSOURCING 3.0, and in my blogs and videos. The book, in particular, carries a very comprehensive model and diagnostic tool kit, which is value for money.

In this piece, I want to focus on only a few key points. And, I want to frame it as a positive affirmation of key things that would build momentum towards success.

  • Create Congruence in Thinking

Three kind of congruence is important:

  1. Congruence between business strategy and supply chain strategy
  2. Congruence between supply chain strategy and IT strategy
  3. Congruence between IT strategy and business strategy

In the case quoted above, while minor lapses occurred in all three, several major gaps very readily apparent in #2. It appeared as if IT team was working in total isolation from the Supply Chain and Business Transformation team – though their projects were closely linked.

  • Think Beyond Tactics

Short term, tactical thinking – predominantly related to cost savings and control issues and considerations tend to dominate. It is quite easy to lose track of the big picture in the process. All the initial discussions and dreams of gaining competitive advantage are thrown out of the window at the first opportunity.

Then, what is the point in spending all the money? The project appeared like a lot of effort, just to stay in the same place.

  • Visualise How The Life Will Change Once The New Systems Are in Place

This takes more than a flight of fancy. A lot of things will change when one thing changes. You cannot ever do enough of visualisation and preparation. Every time you do this exercise, you will discover some more things that need to change in parts of the processes, infrastructure, skill sets, SOPs, contracts, warehouses, etc. Change it.

  • Do Not Underestimate the Time and Money Requirements

That brings me to my last point. All this difficult work is highly specialised; it also takes considerable time and money.  It needs skills rarely found inside organisations, or even in IT service providers.

While it is well known that most IT projects run into time and money problems, the scope adjustment problem is less well articulated. Yet, taken together, these can wreck havoc on your business outcomes.

supply chain management

The above graphic – taken from my book OUTSOURCING 3.0 sums up the situation nicely.

In the case study quoted at the start of this post, the outcomes were a lot different than what was expected by the majority. The board made a bold decision and pulled the plug on the project in the middle. That single decision most likely saved the company in the long run. They could have saved a lot more money if, at the outset, they are created governance structure to ensure just a few key points.    After all, prevention is better than cure.

 

What Supply Chain Managers Can Do About Safety Recalls?

If you are in Australia, it is more than likely that you already know this saga. If you are not in Australia, or do not follow the news cycle, take a look at the video below:

This happens all too often. Once every few months, in some part of the world, a crisis of similar nature emerges.

Several years ago it was this:

I could keep finding a lot of similar videos about products and places – but you get the point. And, it is a not a new problem either. Take a look at this story from over 3 decades ago:

The point is that the lack of supply chain security hurts the company, the industry and the economy significantly.

Some band-aid solutions are rolled out – mostly to restore public confidence and get the demand up again. However, a comprehensive supply chain security regime is never put in place.

Having done large scale supply chain transformation projects for companies as sensitive as explosives, chemicals, fertilizers, food stuff, soft commodities, bakeries, meat, dairy, livestocks, and many others, we have seen both – the vulnerabilities and some really cutting edge supply chain security in practice.

Unfortunately, supply chain security, in conceptualisation and training, has not kept paced. There is no university course that covers this topic sufficiently. Conferences skirt this topic. Books cover it sketchily. Regulatory framework is patchy and officious.

And after complying with the regulatory burden most people relax in the belief that they have done enough.

In fact they have no basis to go beyond regulatory requirements, lest they are accused of being paranoid or overzealous about security.

Yet, dozens of incidents have demonstrated that regulatory framework is never enough. Each company has to develop its own supply chain security framework, based on its own particular circumstances. Even compliance with insurance requirements is not enough. Reputation damage to your business is a non-insurable loss in most cases.

How do you develop your own supply chain security framework?

Complying with regulatory and insurance requirements is a good start. You also need a more robust, holistic and comprehensive supply chain security framework that provides the guidelines for your own company’s supply chain security model.

Our report titled  SUPPLY CHAIN SECURITY – A COMPREHENSIVE, HOLISTIC FRAMEWORK provides the information to get you started.

Better still – run a one day workshop based on the content of the report. It will be the best 20K your company ever spent.

 

The Newest Way to Make Your Business Network Great

In his book The 5-STAR Business Network (http://bit.ly/5-STARBN), Vivek Sood mentions the concept of synchronicity, and focus on Carl Jung’s perception of it. The concept of synchronicity has a specific definition in Carl Jung’s mind.

For him, it is a causal connection of two or more psycho-physic phenomena. He started to use this word in the 1920s to describe two or more casually unrelated events happening together in a meaningful way. Although we could write pages on this concept, a short definition would be a coincidence that is not senseless. Carl Jung observed this phenomenon on a patient for the first time.

A patient dreamt about a golden scarab, and the next day, the same insect hit his cabinet’s window. The question that comes up with this kind of situation is: Was the relationship between the events random or was there some hidden force?

The concept of synchronicity has evolved through the 20th century and many studies exist about it, with many theories and explanations. However, this is Carl Jung’s thought in which we are interested. Indeed, his vision of meaningful coincidence is what I think happens with business relationships. Synchronicity is what enables our business networks to expand and to create more value.

To pursue his work, Jung started to collaborate with Wolfgang Pauli. This collaboration lasted for several decades, making conjectures about synchronicity. They conjectured that with a link between the apparently disparate realities of matter and mind were existing. Pauli called it a “missing link”.

While accretion and synergy are two other concepts that create value, synchronicity is the best. Indeed, synchronicity provides even more multiplied effects than synergy, whereas we usually think synergies are the best we can achieve.

Global business networks can become very valuable because of synchronicity power. While synergy provides a good value (2 + 2 = 5, whereas with accretion 2 + 2 = 4), synchronicity is the most valuable. Its mathematical principle is described as follows: 2 + 2 = 22. This is the power contained in this concept.

Therefore, you must focus on this concept to develop your business networks and make it more valuable than by using simple synergies or accretion. Visualization, if not faith, is compulsory to be able to understand this concept and make it work for you. Besides, the concept of synchronicity relies on key principles that may not be available for anyone. In fact, it is all about abundance of outcomes based on wisdom, creativity and cooperative effort. This is the cornerstone of the value of synchronicity.

Consequently, business networks are great and work successfully for your business when synchronicity is the main ingredient. This is the most powerful ingredient that can help you build a great business network. However, this is still a matter of coincidences, although they are meaningful. In fact, the economic metaphor that can be utilized for synchronicity strategy is the free networks.

Accretion relies on free markets. When your strategy evolves to improve the outcomes, through synergies, the appropriate term is “managed markets”. Then, the best strategy, which includes synchronicity, leads to free networks, which is much more significant and valuable than free markets or managed markets.

Thus, step-by-step, you can improve your business strategy, using your business network and gradually implementing strategies of synchronicity. Synchronicity will create the best value through a great business network.

by Anais Lelong

What Two African Entrepreneurs Have Learnt from Amazon.com – Globalization in Action Serving Humanity

Boasting exponential growth since its inception in 2012, Jumia became the first e-commerce site to bring the coveted Play Station 4 to Nigeria. The company announced the offering after just two days of the release in the US. The Nigerian would-be Amazon is following the global giant’s footsteps in becoming a super networked business, although there is still a long way to go.

Jumia started with a relatively similar aim and manifesto to Amazon, which puts customers at the heart of its operation. In the same vein, the Nigerian site also reaps benefits from being one of the pioneers in Africa’s emerging online retail market. “Being first is good, but it is not everything. What fuels Jumia’s success so far is somewhat akin to Amazon’s evolution into a Five-star business network” – said Vivek Sood, CEO of Global Supply Chain Group.

Jumia is not shy of innovation either, given the fact that people are still skeptical about online retailing as well as online payment in Africa. The Lagos-based retailer launched a range of online payment options but steers its technology-shy consumers by accepting cash on delivery and offering free returns. “It’s very important that people know it’s not a scam,” said co-founder Tunde Kehinde. They even take a step further and deploy a direct sales team of 200 to educate Nigerians about secure online shopping, which also serves as a means to build trust. Now with pick-up stations spanning over 6 locations, a warehouse facility, 200 delivery vehicles in Nigeria and 4 other country-specific microsites, Jumia seriously strives to become a one stop shop for retail in Sub-Saharan Africa. “Here you are collecting cash and reconciling payments almost like a bank desk, here you are building a logistics company,” said co-founder Raphel Afaedor.

Both co-founders and Harvard Business School graduates built the business from $75 billion in funding and are bringing “a couple of million” dollars in monthly revenue, a growth rate of nearly 20%. Vivek Sood, author of the book “Move Beyond the Traditional Supply Chains: The 5-STAR Business Network”, said: “Jumia is taking the right steps towards building the five cornerstones of a super networked business: innovation, efficiency, profitability maximisation, product phasing and result-oriented outsourcing. With the promising results so far, perhaps we could see the next perfect example of a 5-star business network besides Amazon.”

Why Business Networks Are Important?

“Call it a clan, call it a network, call it a tribe, call it a family. Whatever you call it, whoever you are, you need one.”

-Jane Howard

Business Networks are important to accelerate and sustain success for any individual or organization. It is imperative to learn from the evolution and success of business networks. Business structures have evolved radically to such a degree that nowadays, most businesses have no option but to create business networks.

Business Networks are more important than your business infrastructure

Naturally your business infrastructure is fixed, rigid and cost accruing. Your business networks, on the other hand, are evolutionary, flexible and revenue accruing.

Business Networks make your business more resilient and responsive – at the same time.

Those businesses which had the most responsive and resilient business networks were the ones to recover from any downfall the quickest. See who survived the global economic downturn during 2008 – 2009.

When Cash is the King – Business Networks Triumph

Data is visibly conclusive that in times of cash crisis, the quality of their business networks saves companies. Those with more robust business networks have far more superior cash conversion cycles, nearly 6 times better. In fact, as pointed out by Aberdeen Group, business network masters improve their cash to cash cycle leading up to the Global Financial Crisis while the rest of the industry went backwards.

In boom times Business Networks Give You Speed

Even relatively smaller businesses can achieve remarkable results quickly based on the responsiveness of their business networks. In economic booms, whether accompanied by economic volatility, or economic stability, business networks allow you to realize higher profits, quickly. The potential of your company’s capabilities are multiplied many times over, by the leverage effect provided by your business network. This is only possible through extensive utilization of business networks that the company has built, nurtured and managed effectively. Most executives grossly under-estimate the value and efficacy of business networks in ramping up capacity rapidly in boom times.

Business Networks Help Smooth out Volatility

Especially during times of extreme volatility, we see airlines and shipping companies forming global service alliances to ride out the season and economic peaks and troughs. In such volatile business environments, budgeting and planning can become a nerve-racking exercise for all companies except those which use their business networks to cushion the lean periods with long term contracts and find scarce capacity during boom periods. Supply chain is unique to every company and industry, formulated over a number of decades in many cases, and is worth several trillions of dollars in value.

Valuation of Business Networks is Astronomical, Though Difficult to Quantify

Estimates range into trillions of dollars, and yet may be underestimating the full extent and power of these hidden business resources. The magic of business networks has made it possible to design, build, launch and sell revolutionary products in less than one-third time of the industry. If you cannot make your business networks more visible and manage them more proactively, you may be silently yielding the competitive advantage to others who can. It is, after all, the obtainable magic.

Want to start now? Create your own 5-Star Business Network today.

Dear Hackers – Please Do Not Kill the Cloud…

There are already plenty of nude photos in the cyberspace. No matter how attractive these celebrities are, their photos are not worth what is at stake. News Reports have been taken over by the celebrity nude photo celebration. Here is a good summary, in case you missed out:

” MICHAEL BRISSENDEN: Explicit photos of dozens of female celebrities have been dumped on the internet in what’s believed to be one of the biggest celebrity hacking scandals to date. Jennifer Lawrence, the Oscar winning star of the cult movie the Hunger Games, is among dozens of high profile Hollywood actresses to have naked images posted on the internet by hackers. The incident has raised serious questions about the security of internet storage systems.

work-on-keybordSo far I have not made an attempt to see the leaked photos. Come to think of it, I have seen enough of them (when I was working in merchant navy) to last me a lifetime – so I will do this either. Is it really that big a deal? These people had posed for the photos, so assumedly they did not mind some people seeing them in those poses.

It is really of question of which people, and in what circumstances. When I posed for this photo, I did so with full knowledge that some people will look at it, and it might perhaps even leak from my cloud account. I do not mind if it happens; though now that I have put it here in this blog, hacking them will be purposeless. If you have photos of yourself in the cloud that you would not like people to see, delete them or make them public. Privacy is a luxury that does not exist in the global village.

We are all Kardashians now. But, the purpose of this blog is not to decry the loss of privacy – in my view it is overrated anyway. Plus, that bus has departed long ago. Purpose, of this blog is to make a direct appeal to the hackers to not kill the cloud. Too much is at stake. Global economic integration, supply chain 3.0 planning, collaboration, concurrent engineering, even cool products such as the next generation of phones, watches and tablets – none of this will be possible anymore with data residing in cloud and enabling So dear hackers – you will lose your cool products.

You will lose the low prices for great things – cost of everything will go up massively, if supply chain 3.0 planning and collaboration cannot be accomplished. And, you will lose your own ability to send huge files across the internet to your friends. Would you like to see that happen? A few photos of scantily clad (or unclad) bodies are not really worth that much.

Related articles

 

Supply Chain is the New Electricity – You Cannot Run Business Without It

Recently I did a small but quite interesting thought experiment with one of my sons.

We were discussing the invention of electricity and he asked me: “Dad, what would happen if there was no electricity?”

Since I actually had such an experience, I recounted to him my life in a remote village in Himalayas when my mother had taken a one-year assignment to teach economics to children in a school nearby.

I told my son that there was no internet, no computers, no telephones, no television, no radio and no light bulbs. Even more so, there was no electricity in that village at all. As a result, the whole village would get up at sunrise, go through their daily routines and were go to bed just after the sunset. People used kerosene lamps to light up for an hour or so after dark and only in case of necessity.

My son is only 8 years old, and grew up in Australia. Hence, obviously enough he found this life almost completely incomprehensible.

On my part, this conversation inspired me to think about life without supply chain management.

I have been lucky enough to have the opportunity of working closely with Dr. Wolfgang Partsch –  who is one of the co-inventors of supply chain management (SCM) in the early 80s. I have had a number of discussions with him about how the business life has changed compared to the life before SCM was invented.

No doubt, the division of labour was one of the biggest and most popular concepts which came out of the industrial revolution. The principle is that every job is divided into its constituent parts to the lowest possible level, so that each person can specialise in what he does best, this would increase the productivity of the overall system immensely. By the late 70s, the division of labour had totally taken over the business as well as governmental work.

Unfortunately, bureaucratic complications combined with the division of labour had created a world in which every department within any company was running as a small fiefdom.

Imagine that a purchasing clerk would issue a purchase order. Then he would let his boss know that he has issued the purchase order as per the boss’s instruction. Then his boss will countersign the purchase order and would inform his boss that such and such item has been purchased, who would then inform his boss, who would most likely be the head of purchasing.

The department head of purchasing would inform the head of manufacturing, who would inform his subordinate, assistant head of manufacturing, who would inform his subordinate, the factory manager, who would inform the manufacturing planner that the purchasing order had been issued.

There were 6 to 8 different links in this communication chain running from the purchasing clerk to the manufacturing planner or production planner. Each message would go up the chain in a department, right up to the department head, and then across to another department head who would filter the message down all the way to a person who would act on it. In such a world with these eight or more different links in the chain, the time difference by itself was enough for the message to lose its effectiveness.

Combine that timing issue with the possibility of a message getting garbled in a long chain of communication, due to the differences of intentions and possibility of misinterpretations of messages, suddenly you realize what a nightmare it would cause.

Not only that, the departmental heads were almost always the biggest bottlenecks in such a communication scheme where nothing would go up, down or sideways without a departmental head’s approval. Obviously, their capacity to process information was only limited by how much time they had.

Problems of the organization without supply chain management

Now before you think of this as a ludicrous, and imaginary situation – let me add that I encountered exactly this situation in an Island airlines where I had the opportunity to participate in a business transformation exercise a few years ago.

Many other organisations I have had the opportunity to serve exhibit at least some symptoms of the same malaise.

So, what would be the typical complications you could encounter if there was no SCM?

You would notice that some easy five-minute jobs could quite possibly take days to accomplish, for a simple reason of the lengthy communication chain required to get the cooperation. You would also see a lot of confusion, because of the possibility of the message getting misrepresented. You would see some coordination, but not a lot of it because of the nature and length of the communication chain.

You would see a lot of bureaucratic nonsense with people hoarding information and only giving it to their bosses or their subordinates in a very selective manner. In many cases, this information hoarding would be pointless and even harmful. The rationale behind the behaviour might simply be a cultural norm or an expectation in such a hierarchical organization.

You would also see too much command and control in this type of organization, for the simple reason that when everything has to pass through a departmental head, he becomes an ultimate arbiter of what information filters through and what does not.

You would also see that the departmental head would have to make all the decisions. Even the smallest scheduling decisions, or planning decisions, or execution decisions, which could have easily be made by people several layers lower than him/her, would need to be made by the departmental heads themselves, again for the same reasons.

You would also see such systems as very rigid with no adaptive capabilities to changing needs of the market place. If you notice any of these symptoms within your company, then there is bound to be a problem with how the supply chain functions in your company.

No matter whether you have somebody with a title of supply chain director or vice-president, your company does not act as an organization with an effective supply chain which cuts across the departmental silos.

As this is a very important subject, in another article I will talk about how supply chain helps to alleviate the silos mentality and integrate departments to act as one company.

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How To Find a Job

This blog post is relatively small and simple. Yet, as you will see, it is of immense use to anyone in today’s world. I do not want to make it any more complicated than necessary.

My friend Tony has a recession proof career. No matter what happens to the economy, or to his company, he seems to be always in demand. His last company went through a wave of retrenchments, and he happily accepted a payout. He was quite certain, something will show up when he wanted to rejoin the workforce after a short break – and sure enough, it did. This got me thinking, and finally I also spoke to him to find out his secret.

Here are the two keys to a recession proof career: As he says, this is easier said than done.

 

 

It takes years to earn the trust, and days to lose it. Millions of small things done well on a consistent basis day-after-day results in the type of reputation that he has developed. Yet, the primary quality has been to represent things in a very realistic light, and never fake them.

 1. Earn the TRUST for CARING:

agreementTony is known among his peers as a person of integrity who truly cares about his peers. He works hard to earn and keep their trust. He is well spoken, and only promises what can be delivered. While he does not take himself too seriously, people do take his word seriously. The net impact of all this is that people want him on their team because they know that he will contribute to his full capability. Over the past 14 years I have seen him accept bigger and bigger challenges on a consistent basis, and met these successfully. Yet, he has always been truthful about where he will need help in each case. This has allowed him to grow personally and professionally into the kind of person who is always in demand.

2. Become known for being better than anyone else in your field:

businessmen-in-a-rowCombined with the point 1 above is his sense of direction. He has become a go to person for his area of expertise. Over years I have watched him seeks assignments, postings, and projects that will develop his expertise and sharpen his practical knowledge. Rarely has he ever spoken about the pay-offs and bonuses from his postings and assignments. Almost in every case, his focus has been on how it will sharpen his edge and broaden his horizons. That slightest edge he has over others in his area of expertise is enough to tip the scale in most cases.And, that is why he never appears to anxious about his career prospects.

 

 

I will end this blog post here – because i have given the central message of this post. Only question outstanding is – how to do each one of these two things? I have written numerous posts that answer this question.

 

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