Aug 12

Davy Crockett and the Supply Chain

Davy Crockett

In the latest addition of Supply Chain Quarterly,  Dr Bruce Arntzen, Executive Director of Supply Chain Management at MIT writes an article about the lack of leadership training for students in logistics/supply chain courses entitled “4 Keys for Unlocking Leadership Potential” http://bit.ly/2vX1LUL. Colleges are really good teaching logistics/supply chain processes but not so good in teaching how to apply these processes in the real world.

Reading the article all of sudden there was Davy Crockett leading the third key to leadership.

Next paragraph I will get it why he was in the article, but first a word about who was Davy Crockett (1786-1836) is as you might now not have been alive in the 1950’s when Davy Crockett was everywhere in pop culture. Davy Crockett was Tennessee frontier’s man, who served in Congress and fought against Indian racist of his day. He lost his seat for that reason and moved to Texas after the election defeat. There he died fighting for Texas independence at the Alamo. In 1948 Walt Disney decided to make a television show about him, and it also resulted a hit song entitled “Davy Crockett”  prompted many children to wear fake coonskin caps.

In the days before trucks, logs were rolled down local streams and rivers to get the wood were it needed to go. Davy Crockett championed the term “logrolling” in Congress for describing the act of trading votes behind the scenes to get your bill pass. The bill would not meet a perfectionist goal but progress was made, rather than have no progress. Yes things like do happen when a bill is not one issues  of those partisans scream about.

Connecting this term to day to day life of an organization, many people have different agenda and interests. To get anything done, sometime compromises and half measures need to happen. Corporate politics has a bad name, but it can be used for constructive processes also. Part of change management practice is to listen to others and understand their issues.  Budget issues will be extremely important in change and maybe not everything can be afforded at the start of the change. Supply Chain has been in a continuous process of change since the mid-20th century. Maybe the logistics/supply chain change your promoting will not be fully implemented as envision If 75% implementation helps the firm and that is the way to make it possible, accept this logrolling moment. Many times once the change is proven, process improvements will have political support to the change and closer to perfection can be achieved.

So “logrolling” as championed by Davy Crockett is an important part of leadership in complex organizations. It is an important part of change management, which is rarely discussed or championed.

 

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Jul 12

What Could Possibly Go Wrong

Havard Business Review has been putting out a series of articles on Artificial Intellience (AI) replacing all sorts of businesses management and labor including recently in the supply chain with article entitled The Death of the Supply Chain. https://hbr.org/2018/06/the-death-of-supply-chain-management. This article is in the June 15, 2018 issue.

To oversimplify what the article says, all the lower management people will be released and few data scientist types will be watching computer dashboard to see how the supply chain is running. Before I start to try to deconstruction this let me first say that higher levels of information and automation of repetitive tasks will change the supply chain in positive ways and will lead to some personnel changes. However lower management people should not yet being check if their local burger place needs somebody to flip their burgers.

The underlying flaw in the article is the author’s apparent lack of knowledge of how things get done in the real world. I put under the heading of “What Could Possibly Go Wrong”.   High level data is tremendously useful in managing operations.  But the actual execution part that is handled at much lower level. Yes, you can have the computer call in the trucker, but what if the carrier can take the load but two hours later than initially offered. That may be alright. It may be alright if the plant knows about the delay. As changes occur somebody using the system but outside the system needs to problem shoot. No program or AI system can anticipate everything. Importantly customers want people to resolve issues, not machines putting out data.

For large operations, the dashboard AI products will be very useful for a high level of the operation and seeing what issues come up analyzing the data. In large measure it will be the lower management level who will actually deal with resolving the issue.

For smaller and medium sized operation, undoubtedly third party will be available to provide analytics and data dashboard at a cost. The larger the operation the more this will be economically feasible.

 

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Jun 11

Talk about the data

I sometimes think  about changing the wording of a famous poem about the sea and lack of water to drink to focus on the flood of data and it would read:

Data, Data, everywhere, although the laptop did squeak, data, data everywhere, but no time to think.

Companies and organizations spend a lot of time and money getting data. Weeks, days and even years spent getting the systems to operate well and as anticipated. Meanwhile  hardly anytime is spent figuring out the process that the leaders and users  in the organization can effectively use that information.

It is only human to work on technology puzzle lacking implementing a system. It is relatively clear objective with an endpoint and a place you can call success. It is much less clear how to use the information in an effective matter in the organization and how to declare that process a success.

Here are thoughts on the process of people using the data.

  • The data should be arranged in matter useful to the users. Software makes it to easy to create dashboard and charts but many times they are hard to decipher and the most needed information is now usefully presented. Planning and involvement of users needs to be done.
  • Creating time to think. It may be that setting a regular meeting may be the tool to create the time to think about the data and make useful and actionable.
  • Related to this is getting others to think. That people at all levels who are affected by the data, need to be able to have input. Sometimes what one group thinks is the issue of the data, is viewed totally differently at  a different level or outside party to the organization affected by the data. Sharing the data can significantly increase its usefulness.

Once it enters into the organization of using its leadership and users in an effective matter for one software program and it will be used for others.

 

 

 

 

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Apr 01

Trendy Blockchain

A few weeks ago in the March 12, 2018 edition of Bloomsberg Businessweek Paul Ford wrote an article entitled ” The Blockchain is a Mind Virus”.  In writing this, he was pointing about how trendy items in the business world take a life of their own.

In between the lines of his article, I felt there was actually some praise for trendy items as it got people to think and do action. But it was mind virus because it kept people from looking at less costly and maybe better alternatives to do the same thing.

Blockchain has obvious attributes for handling the complexity of international shipments and supply chain visibility. Some people think this will be the end of the middle man broker operations. I don’t see that happening, but their role will change.  Most shippers will not be able to justify developing the software in house, so there will be a need for a middle man to be the supplier of software. Just because something is visible to national customs operations those not mean something can’t go wrong and that middle man will be needed  for theire expertise to resolve the issue.

Certainly blockchain software has many advantages, but it not only way to accomplish desired results. So let blockchain motivate to look for a better way to do things, but never limit your search to that.

 

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Mar 04

When You Least Expect It

Sometimes you find supply chain-logistics issues where least expect it.  Back in 2009, a documentary film entitled “The September Issue” was released. It told the story of putting together the 2007 September issue of Vogue which is one of the leading indicators of fashion. Right near the beginning of the movie in Paris, the editor of Vogue, Anna Wintour meets with Burton Tansky, the then CEO of Neiman Marcus.

And what does one of the leading fashion retailers talk about with the leading editor of the leading fashion magazine in the film? That demand is high, fashion is getting late to the stores, and could she talk to the fashion industry about this issue? Anna Wintour mumbled something about making fashion less complicated. The subject never came up again in the movie.  The movie’s presentation of Anna Wintour is highly focused individual who ignores anything that those not have a high priority with her. Supply Chain definitely was not her focus.

But it needed to be for a retailer like Neiman Marcus. Yes, in 2007 a lot of the super supply chain software was not yet out there or in early development stages. Numbers tell the present story but do not have the ability on their own to make things better . That is where management skills and adding value with your employment to the organization comes in. It was a wise decision by the Neiman Marys CEO to start asking these questions to improve the supply chain which would lead to increase store sales. And like any journey, there will be some dead ends but that should not stop the search for a better process.

Knowing what we know now, 2008-2010 were years recovering from a world wide recession. So any supply chain process change for the peak of 2007 was would also need to deal with the valley to follow.  So the peak may create the birth of energy to seek process change when things are not working out. But remember, the process change must all deal with down times, also

 

 

 

 

 

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Jan 31

Supply Chain Rough Sledding

In the US market, transportation and warehouse costs are going up, up, up. Supply Chain shipper managers are being asked to find ways to save money. There will be thoughts of network changes, carrier changes, and administrative changes.  A period of rough sledding is ahead but let us remember, the issues of the moment, will not last forever.

We are in a period of transportation supply shortage, a era of warehouses being full, and era of market changes in the supply change. How many stories on last mile deliveries, Amazon, robots and blockchain software have you read?  There is no shortage of supply of challenges, are there?

It is appropriate to ask: What can be done to improve my operation? Will spending the money make things better?

When you are going through these issues, remember that time those not stand still.  What happened the last time transportation prices rose rapidly? A few years later, they were dropping.  With US tax cuts, there will be a lot of financial stimulus to the economy. The chances of inflation increases are high. In almost any prosperity, there are the drivers for the next downturn of the economy.

If your business is looking good over the next year, respond to the market. But remember things change and there will be a time when things will not be as good.  Plan for resiliency for those changes.  Meet the challenges of good economy but remember things can change.

 

 

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Dec 17

B to B staring at B to C

If you are in a B to B, that is a business whose primary customers are other businesses, you are probably staring at the B to C, business selling directly to consumers, supply chain world.  Vast changes are happening there, requiring more sophisticated software, multiple distribute points including retail stores, with rapid delivery requirements. If your firm is primarily product distributor such as Grainger or Uline, there is no doubt you must be on the absolute top of your supply chain game. But most B to B’s when they handle transportation of their products are doing as a service to the customers for outbound shipments. Inbound supplies are handled usually because supplier providing those products is inadequate for some reason.

So how do you, a logistics/supply chain professional respond to the wild and crazy supply chain revolution that is going on out there in the B to C world. Your management is interested in being value to the customer and cost effectiveness. It is not really interested in spending money for super cool supply chain stuff because it those not  see the value in it (correctly at times).

An important start is to understand your customers, both the customers the business sells to and internal customer of your services in the company. The difficulty with both is getting clear information.  Realizing what you don’t know may be start of learning where to focus the future supply energies of the firm.

If the company has multiple product lines it will likely have differentiating customer needs. Many B to B organizations, dare I saw almost all, do not have a real good way to communicate customer needs to their  supply chain personnel, other than the truck was late, code one emergency. It is important to understand what one dose not know, so ways to obtain this information can be found. Those late trucks problems, can be a starting point to understand what the customer really needs and when.

Internal customers have bosses, budgets, suppliers and customers to which a response is required. Empathy for their business needs is clearly important in the supply chain personnel if they want to provide operation efficiencies for the company. Again, not all these are readily apparent and supply chain information is likely to be incomplete. That is real world.  Supply chain leaders need their antennas up to engage these issues.

Until one can get a sense of an improved direction of the supply chain, a transaction environment is inevitable. It is not easy to get away from this, but ultimately the firm is dependent on supply chain personnel to set the future direction. Learning about customers needs is the way to start this process.

 

 

 

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Oct 26

Dealing with the non-digital or partially digital world

I do volunteer work for the Chicago area food bank which goes under the name of the Greater Chicago Food Depository. This organization through its 2004 built warehouse serves Cook County annually shipping 70 million pounds of food per year. Like most organizations of a significant size, the possibility of using digital software promises to enhance and make more efficient its sizable operation. Some the food pantry or food distributors are pretty sophisticated themselves. These organizations want the food bank to upgrade their processes so transactions can be handled more efficiently.  But there are also some mom and pop like food pantries which have no electronic skills to speak of, but they deserved to be served also for the good work and the outreach they do. How does the digital world deal with these outliers?

In the for profit world of companies, if you are an operation say like WalMart you can say the organization will not deal with a supplier who cannot handle the digital world.  And for that type of operation that is most likely the right and best decision for a cost and process point of view.

Smaller organizations are likely to find that some suppliers and some customers are just not sophisticated in the digital world. Their business may be in large dependent on reaching the suppliers and customers who the big guys just don’t want and can’t handle with their high powered processes. That niche market is the one that is available to them and is the basis of their profitability.  Yet these middle to small organizations may be serving or buying from larger supplier or larger organizations where digital skills are required  and must to survive go the digital route.

If your organization is in the world where there are some sophisticated customers and suppliers and some not so much, choosing your software and your processes has to allow the possibility of out system events.  To be competitive or efficient digital processes are necessary, but for those non-digital outliers, processes must be put in place and the software has to allow this happen.

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Oct 10

With New Technology Be Patient

At the Council of Supply Chain Annual Professionals yearly conference in September at Atlanta, Missy Cummings of Duke spoke the second day of the conference about Artificial Intelligence and specifically about driverless cars and trucks. She said the technology is not there yet. Computers have trouble handling the contextual thinking humans have and there are no security procedures to stop GPS hacking. Though she did report that so-called truck platooning, where on human truck leads several driverless trucks on the highway is nearing being doable. This information as reported by Supply Chain Digest.

The innovators come in with the next great idea and they want to sell it and it is necessary for them to do this to get the finances to have a chance to do something special. Practitioners of the supply chain need to balance the potential benefits versus the costs, not all of which are known. So it is important not to go over board with the hype.  Hype such as driverless vehicles will replace all truck drivers and cars by next Tuesday or a week from Wednesday at the latest. But certainly for distance moves where platooning trucks can be arranged and there are potential savings, be alert for these. Choose your spots, as there are limited resources. So it worth it for the supply chain/logistics practitioner to be patient.

 

 

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Aug 23

AI-Maybe the Sky Will Not Fall

I was reading an article on artificial intelligence (AI) in a supply chain journal. The protagonist for AI says it will put all the brokers out of business because machines will make all the dispatch decisions. Really? Don’t you just love these sky is falling statements? Let’s take a more nuanced look at this, after taking a brief side trip to Steger, IL, south of Chicago.

My summer volunteer work took me to Steger, IL, just south of the Cook County, where I took a mid-day break to eat lunch. Relatively close to one another are a McDonald’s and a Culver’s.  McDonald’s has fewer employees, cheaper costs and for the most part more basic food. Culver, from a McDonald’s point of view, is widely over staffed where there is even enough employees that there is someone available to open the door for customers to walk in. Culver has higher prices but better, more tasty and more substantial food.  And you know what? At lunch time both restaurants parking lots are full of cars. That means both are successful operations.

In this example of two fast food restaurants, I think you can find some “truths” about the affect of AI on the supply chain. Let me stereotype each restaurant’s operation to explain this.

McDonald’s is the super efficient, low cost, few extras operation. Your prices are low but your food is not as good as Culver’s.  If you are running a commodity business where low price is everything, AI will let you do the basics with fewer employees. For some customers the basics are good enough. There will be customers who the lowest price means everything and poorer service will not keep customers away.

Culver’s has more employees per order. It justify that expensive because its patrons, its market, are willing to pay more for better customer service and better quality food.  Culver assuredly utilizes modern technology where it can to be as efficient as their business model allows.

Not one business model serves the  entire market. There are customers who need more the basics and are willing to pay for the extras. Brokers who design their services to provide extra value will need people to deal with people. It is not possible at all (or even wise) to program for everything that is going to happen.  In supply chains, human beings who can handle the ever changing complexity better than machines can. There will be a market for those type of services

A one size fits all market is almost rarely the case. So broad brush statements about AI putting brokers out of business simply is not a correct forecast. There will be changes as time goes on as their always is. Ultimately transportation providers and buyers will need to where the market is going and adjust their operations accordingly.  And yes, employees will be essential for some markets to work and be successful. And there will be a market for the lower flexibility, less service, but very efficient brokers substantially run by AI.

 

 

 

 

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