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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Jul 12

Retirement Supply Chain Positions – Part 2

I am fortunate enough to have a retirement position in Supply Chain with Signode. In my previous email I talked about the skills that are needed to be attractive to a potential hiring firm. This blog post I will write about what the company should think about in hiring such a person.  I should note in many cases this position is a part time position with limited benefits. This post will be generic and is not really about my specific present employment.

What is the potential retiree position about and what is not about?

The job I am described here is not a CEO or other C level temporary fill position, which will have different characteristics. I going to talk about mid-level help for the firm.  It is also not a position to do the repetitive paperwork or computer work though, undoubtedly, any position will have some of that.  For the repetitive activities an inexperience worker may be the best choice in terms of cost and maybe a trial run for long term position. For building long term bench strength in your organization a more inexperienced worker may be the best choice.

What the retiree aged employee can bring in that person’s experience. So when there is a need for proactive action beyond just doing the grunt work, it can occur.  An experienced worker will know when to bring management into it and when take action, so further the success of the firm.  An example of this might be a recurring documentation problem. The inexperienced worker will correct the error, the more experienced worker will take the initiative to provide a solution so the mistakes do not continually reoccur and hurt productivity.

It is really important to understand what the hiring of the retiree can do to enhance the value of other employees in your organization. Those managers and administration people have talents to help the firm in its objectives but may be bogged down in detail work which those not allow them to really bring their full value to the firm. You might look as the retiree as basketball guard doing the grunt work to bring the ball down court, so the other players can prepare and start running their offense plays.  To justify the costs of hiring a part time retiree employee, one should look at this position affects the success of other employees.

Much of my writing in this series of blogs is about utilizing employees as an asset and not as just a necessary cost. For retiree hire to be of value, the company culture truly needs to value its employees and any hire needs to have that philosophy also.

 

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Jun 27

Supply Chain Retirement Job Part 1

I am fortunate enough to have a 25 hour a week “retirement” job with Signode. I will be using that experience as basis to write two short blogs. Part 1 is about the job attributes I think are necessary to be lucky enough to find such a position. Part 2  in about a week will be thoughts on when such a position would be of value to a firm. While I will not be describing my specific job, obviously, it will be of influence in these blogs.

What are the values you can bring to an employer?

Your experience with some important caveats is one the main value to our employer.  The employer does not need 10 or 20 year old business processes. What is needed is good judgement on how to improve and foster current business processes in a continually changing business environment.  Your judgement when to proactive on an issue and engage people on it, and when not to do it are extremely valuable. Your experience should help you make the generally good calls on when to bring others before doing something and when you just go it alone.

You can be of value as mentor to younger workers, providing the guidance that others in the organization just do not have the time to do.

And yes, even though you might be ancient to some, you can be a change agent. Change is a difficult for everyone, and using good change agent processes you can be of value to the organization.

Chemistry with the people in the firm is particularly important. At older age you should beyond needing a job just for money. It needs to be enjoyable to go work, otherwise, why do it?

One more important aspect is the end game which is extremely important. When management decides that your position in the company is no longer needed, leave graciously.  Be glad to have been able to contribute and for the experience and compensation that came along with it. Leaving on good terms with your employer will not cause others to fear hiring you for fear of complications when you leave.

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Jun 05

Breaking Up Silos is Hard to Do

I had to laugh at myself, when I heard a recent Rabbi sermon about being a better person by breaking out of your personal silo. Silo is a term we who have a career in supply chain/logistics hear a lot. In the supply chain, not on do you have to break out of your personal silo, you have to help others break their silo, when there are a lot of incentives not to.

Company and organizational functional activities are silos and tend to focus on themselves. The focus natural enough is on the success of the internal silo. Along comes supply chain people, whose ideas and whizz-bang software say that if we do such and such which might sub-optimize a given silo, the organization would be better off. A typical example might be a national contract with truck service provider. Overall it might save 5% to the company and provide better service to our customers which would likely increase sales. But sales district A might see their individual lanes cost more and their profits drop. There goes their yearly bonus.

In such situations , supply chain management in order for change to successful occur should understand the following:

  • Listen to those affected by change. How will it success of their business? How will if affect them personally. By listening, major obstacles can be avoided and buy to the change is possible.
  • Think metrics of the organization will respond to the change.  If the metrics do not catch the advantage of the change, the change will not happen.
  • Learn what the metrics the locals have which may or may not be the same as the organization.  How will change effect the silo metrics? Do incentives need change
  • Thin about the educational and training component of the change. What do people need to know about the change to make it happen? How can they get information on questions, obstacles or to make suggestions.
  • Does the current corporate culture work for or against the change? If a corporate culture is necessary, training needs to be done.

People and their silos are resistant to change. But well managed change with significant listening component can overcome this resistance.

 

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May 23

Success has to be more than cutting costs

I recently attended the annual one day seminar of the CSCMP Chicago Roundtable. The key note address Dr. Jonathan Bryne, a senior lecture at MIT and yes, a supply chain consultant.

The thesis he presented was that to be a success in the supply chain, one must successfully add to the profitability of the firm.  Many supply chains he encounters are being run reasonably efficiently says costs are were they should be. The costs have been cut.  But the value that supply chain personnel provide firm needs to be more than being efficient, it needs to help the firm increase its successful and profitability. Supply Chain which all the business operations is in a unique place to do this.

With the real time data that supply chain software is generating, it is much easier than in the past to cost each individual customer and each product or sku. Supply Chain personnel need to be proactive to use this data to find how can manage its customer approach. One simple example: A regular customer orders daily LTL shipments but those not bring much profitability because of the shipping costs and labor its entails. Sales can be approached to ask the customer to make larger order quantities, with both parties sharing in the savings and increasing the profitability of the account.

Dr Brynes said in some cases, highly profit accounts had led firms to realize they can invest more in customer service for this customer, providing additional services which would make it harder for the customer to rationalize a change in vendors.

There were several questions from the audience but relatively low profit customers whom might make up most of the volume in the business. His response was to use supply chain data to learn how to best manage this group of customers.

Non-profits which have a supply chain can make the same sort of management exploration, but with the goal of how effectively is the supply chain helping the organization meets its objects. Are there changes in the process which would help that?

 

 

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May 01

Using the Energy of Complaining

Complaining, you hear it during coffee breaks, at special events, and yes, of course, in the rest room. By nature, the supply chain/logistics affects many departments, many people, management and customers. With that many moving parts, something will be suboptimal. In lean processes, the goal is to reduce waste.  Since complaining is a process, there are chances for significant gains by removing the waste. Let me be clear, the complaining itself is not the waste of energy, it is the lack of response that wastes the energy of the complaining.

Imagine a steam engine with some of the steam being given off as waste.  Now, imagine that you capture the steam being wasted to do some useful function.  That is the analogy I wish to make with complaining.

Looking at complaining as an asset does take a change of focus for some. The aim is taking of what could be destructive criticism and turning it instead to constructive criticism.

Or to say it another way, the organization’s employee is an asset who can improve the success and profitability of the organization. Improve handling of complaints can enhance this process.

Steps taken should include:

  1. Listening.  Many time the important information in complaining is only available outside the organization. Organizations should provide a forum for this process to take place, making the information visible.
  2. Responding. Avoid negative feedback to the speaker of the complaint.  That person just took a risk to himself/herself to better the organization This is a risk that should not be made into a crime.
  3. Analyzing the complaint. Not every complaint can be responded in the way the complainer would like. However a response, either yea or nay to the proposed change is necessary.  The response should include the reasoning of the decision. If the criticism is respected, then is a chance for further efforts by that individual to improve the organization
  4. Crediting.  Crediting is a powerful motivational tool to encourage people to be proactive. So when something goods comes about as a result of a complaint, the person who brought up should be publicly recognized.

 

 

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Apr 05

Imagining Sustainability

I attended the opening day keynote at the Promat convention entitled: Building Supply Chain Sustainability for Competitive Advantage: Lessons learned from leaders in innovative facility design. I will focus what caught my attention below. For other details on the speakers and what they said, you can find it here with write up:

http://www.naylornetwork.com/mhi-promat/articles/index.asp?aid=434596&issueID=54866

When you have a group of speakers from large and successful companies like UPS and Boeing which have tremendous resources to do things, when they speak about sustainability, it is easy to think: Yea, they have the money and they can do anything. I have trouble getting a extra box of pens in my budget!

I was in that mode of thinking until I heard Rick Bingle, Vice President of  Supply Chain Recreational Equipment Inc. (REI) discuss his company’s brand new warehouse in Arizona which is LEED  Platinum certified, the highest level green. The key thing that caught my attention was  his comment  that before there is a green building, the internal processes of your firm within the building must be thought out in a green way so that building can achieve LEED certification status.  In short, one has to use his imagination to envision a green future and have that as part of one’s thinking. For REI the key decision was making most of the machinery use electrical system that used 24 volt electricity. That led to a lot of tradeoff decisions between various methods of doing things. The bottom line result is that the solar panels will supply 100% of the power to the building. So when the solar panels are paid off in 3 years, there will be almost no energy cost to run the operation. I assume the extra building costs to build LEED building will have a similar payback.

In the business world there needs to be tangible benefits to being sustainable and green. In REI’s case, if they did not imagine sustainability benefit, their warehouse would have been like every other one out there, with higher than necessary costs.  To be successful at this they had to allow themselves to imagine that things could be different and improved.  When doing any capital project, just by asking how to do this particular project can be done in a green and sustainable way has a chance, sometime a good chance, as being the most economical way to do things and bringing productive innovation to the process.

There are a couple practical issues choosing sustainability, both of which deal with time. One is time and the lack of it. It is just so easy to do what has been done in the past. It is certainly less time consuming.  One has to make the effort to bring sustainability into the conversation and process, Yes that does take time. This is something where a person, an individual, has to prioritize this because of the potential benefits.

The other issue is how much time does your company allow for return on investment. This is much less under many individuals control. Andrew Wilson, who led the pannel discussion noted that lack of long enough time horizon is a major block to sustainability efforts.  Many sustainability projects jsut have a longer payback period. Generally the payback will not be in a quarter or two.  Maybe the best strategy is  start with small sustainability projects with quick payback to build credibility necessary to do projects that take longer to payback.

 

 

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Mar 21

Logistics Customer Service is More Than Things

Customer Service is more than just about things; things such as omni-channel, data, warehouse choices and which transportation carrier to use.  Supply Chain and Logistics is very people and organization centric. One can know all about the bells and whistles of the supply chain, but if you are not aware of the people and organizations in it, success will be elusive. University and colleges do a good job of teaching about the things of logistics but many times ignore studying the people and organizations which populate that universe, leaving students not fully prepared for the “real” world.

What information should be imparted to students preparing for a supply chain/logistics career? Let me suggest these topics: budgeting, employees, change management, organizational cat fighting and intern programs.

Budgeting:  Students are taught the CEO version of budgeting, the 30,000 foot view of the organization, the global view. Rarely is it also explained how budgeting affects employee actions  in the middle and bottom rugs. Plant Managers, Sales people, marketers, production planners, plant workers and you name it to be success must meet or beat the budget directed assigned to them. Working with people, a key to know is or at least guess at what organizational budget issues and directives affects their actions and  decision making.

Employees: No matter what an organization thinks and treats its employees, working with people one should view them as an asset, capable of contributing to both to their own organization and possibly to yours. It is too easy to think when employees do not do things the way you want that they are lazy and dumb (stronger words are usually substituted for dumb).  But these same people, when they are listened to and respected, will many times share valuable institutional knowledge. More often than not the project your working on will not be a success if that institutional knowledge is not factored in. Learning to value others is not something that come naturally and needs to be taught.

Change Management:  Usually thought about only about in connection with the group of people assigned to make the changes, the concept needs to be enlarged to include all the employees affected by the change. Communication and listening are key issues.  If no focus is done on change management at the ground level, employees will ignore the project or in some actively work against the project at hand.

Corporate Cat fighting : One of the most difficult issues in change management is the resistance to change among people. It is a natural impulse.  This resistance sometimes results in making the persons leading change look bad. It is important at that time to dig out that cell phone saved file about being confident. Resist the urge to get in a corporate cat fight and find ways to work with these people. There is a long term here and the friction generated can be turned in many ways to help future collaboration on change. By listening with your ears and your mind, real issues which would have eventually come to a head anyway may be headed off early in the process.

In developing intern programs, corporations would be wise to structure them so that come in contact with employees to accomplish some minor task. Just filling out reports, while necessary, limits the value of these programs as ways to develop employees.

Ultimately by gaining these skills you greatly improve the productivity of yourself, which why these skills are important to learn.

 

 

 

 

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