Supply Chain Partners

You can review a quick video summary of the below article here

I’m sure we have all heard the saying, “You get more bees with honey than you do with vinegar.” Its a fairly common phrase. I was recently involved in a large project that involved many partners and some ground-breaking technology coupled with a very new business model for the supply chain industry.

It was during this go-live, and in the weeks following it, that this expression popped into my collective conscience and spurred a much larger internal conversation about what is a “partner” in the supply chain / 3PL context. For many of us that have worked on all sides of the supply chain and logistics ecosystem from sales to operational delivery the term “partner” is one that pops up pretty often and is part of the standard vocabulary of deal makers and wanna-bes alike.

In fact, I think the word “partner” is one of those words that is thrown around so loosely and incorrectly that it has lost much of its meaning, similar in the way that an improperly used tool loses its efficacy when not taken care or incorrectly applied.  Throughout my career I’ve played both sides of the table, the vendor side where you’re trying to win the business and you use the partner term to connote how much your “vested” in the relationship and the customer side where you tell your vendor you need a (wink-wink, nudge-nudge) partner. The customer definition of “partner” is often code for bend over. Not to be crass, but seriously, most often the “partner” term when used by your customer is another way of saying I need somebody who is going to deliver a Rolls Royce, with all the benefits, but at a Yugo price. Too many times when a customer uses the term partner they are using it improperly. By definition a partner is one that is united or associated in an activity of common interest. This “common interest” qualifier is the area where the partner term sometimes begins to first break down.

Customers and Vendors by default often times have differing common interests. The customer wants to get the best product at the least cost (typically), conversely, the vendor wants to get the most volume sold at the highest price possible with an acceptable end product to the customer. To try and link these two worlds together in a quasi-kumbaya moment is…well… dumb. I am all for partnerships, but when the term is used the buyer and the seller need to be clear on the definition. The partner definition by design should always be oriented towards “we all win”. Often times in my career I see the partner term used in the beginning of the relationship to only find out later that the customer really meant “I win first”.

I would stipulate that a “True Supply Chain Partnership” is one that is focused on a mutual tenet of winning together. Seldom in today’s global marketplace can any one entity achieve true success in their business endeavors without a motivated collective of teams, companies and people helping to steer towards the common goal. Partnerships in the supply chain context are good when both entities have a healthy mutual dependence on one another and have commitment at the highest levels of their respective organizations. Partnerships that are primarily cost-cutting endeavors for the customer should check the fancy partner language at the door and instead indicate what they are really after at the onset of the relationship.

After careful thoughts here are the key characteristics that a true supply chain partner should exhibit:

1. Deep and comprehensive understanding of the operational & marketplace realities of the environment
2. Strategic thinkers that are problem solvers by design
3. Entrepreneurial mindset
4. Fast movers (*no room for bureaucratic group-think in a high performing partnership)
5. “We Win” orientation

Here are some additional characteristics of an engagement that will help foster the partnership:

1. Measurement & KPI frameworks that are mutually agreed
2. Clear expectations from both parties regarding performance expectations both operationally & financially
3. Quarterly business review meetings that delve into the health of the partnership (Ops, Finance, Marketing, Sales)
4. Open communication
5. Incentives & goals that provide mutual reward to entities involved

In today’s technological environment, the competitive barriers for most companies have dropped precipitously and made “partners” even more of an important concept in business.  This is especially true in the 3PL non-asset world.  An entity with smart, experienced folks can quickly get up to speed and leverage relationships and on-demand models to compete against all but the biggest of providers.  The word “partner” and the partnership approach is something that should be protected and reflected on by each business executive seeking to employ it in their respective pursuits.

In the end, we all know that “You get more bees with honey than you do with vinegar” but …. what we may not all know is this: “The bee stays not in a hive that has no honey.”  I hope that each supply chain executive out there can reflect and begin to understand that partnerships are a two-way street.  Ultimately, a successful relationship depends on empathy, honesty, open communication and a shared commitment or goal.  Supply chain partners should always be mindful of this and seek to create the most high-performing and successful relationships they can to propel their organizations and their partners to the next level.

NOTE: I’ve included an excellent video from Arizona State University’s Carey School of Business regarding Supply Chain Integration.  I thought it was appropriate to include this as supplement to my partnership discussion above.

As I write this article I’m on the plane heading back from sunny, beautiful and delicious California.  To be more specific the bay

area, that bastion of innovation where one feels like they are surrounded by greatness and all is truly possible. On this particular trip I was working with a client on an exciting project that is centered around the supply chain and in particular delivering heightened levels of operational execution and visibility through a mix of business process automation layered in with multi-channel communication systems. Hopefully someday in the not too distant future I can elaborate more fully on this really ground-breaking work and the importance of it.

I digress…. I was talking about sunny, beautiful and delicious California. Everytime I am in this area I can’t help but be in awe of the density of truly ground-breaking, innovative, “changing-industries” companies that call this area home. A quick jaunt on 101 takes you into the realm of well known companies like Oracle, Google, SUN Microsystems (now part of Oracle), Salesforce.com, Apple and the next round of up-and-comers like Pacific BioSciences, Zynga, Azul, Workday, Xirrus, PivotLink and on and on and on. For anyone even remotely interested in business this is a living lab full of fantastic case studies and mixed with its own blend of unique Silicon-Valley drama (i.e. Apple’s lost iPhone 4G skunk-works phone). It was this kid in a candy store feeling that made me want to put “ink-to-paper” regarding this special ecosystem that exists and things that corporate supply chain practitioners and stakeholders might learn from it to improve their own operations.

Supply chains by design are complex, highly-variant, and at times unwieldy creatures that always require constant care and feeding. In a very macro sense, the supply chain with its many stakeholders, variables and complexities comes close to paralleling the operating environment of an early to mid stage technology innovator like the ones described earlier. I know, I know – I can hear it now. You hard core warehouse operations guys are going to tell me I’m full of you know what and the high-altitude of my Delta flight is getting to me. But hear me out. The innovators in silicon valley deal with:

• Complex Operating Environment – what’s our weekly burn? can we get to break-even with version X? why is our cost of acquisition per customer rising so dramatically? if we add another work hour to the 24 hour work day can our huge team of 2 deliver the new software module on time?  …. You get the picture.  Its a difficult environment to operate in and takes a special and dedicated breed.
• Hyper Competition – If you read the story on the lost iPhone (linked above) you will have gained some perspective on the competitive forces these companies deal with.  Fortune 100 companies have nothing on some of these nimble startup companies when it comes to the multi-faceted aspect of their competitive sphere.
• Visibility Challenges – Just like corporate supply chain practitioners seek comprehensive visibility, these companies have different visibility challenges but similar in scope.  In summary, lots of people wanting lots of answers at the drop of a hat.
• Numerous Stakeholders - Even though some of these companies are small, only a few employees, the extent of the stakeholder value chain can be immense.  From VC and private equity interests to patent holders and those gray-haired board of advisers – each startup has many stakeholders they must interact with.

It is amazing that in such a pressure-cooker type environment that these companies are able to produce such great technologies, businesses and industry-defining advances.  I certainly recognize that out of every 1 Google-like star there are thousands, if not tens of thousands of failures that are equally defining but in more of a failing star (i.e. black hole) type of way.  With such an environment and with all the complexities what is it that makes this area so amazing that success after success can occur?  Is it something in the water? Or better yet, maybe it is a general over-consumption of Mountain Dew and Skittles by hopped up software programmers.  Oh no, I have it…..it is a Steve Jobs conspiracy and all inhabitants of the greater bay area are cyborgs…and the Guvenator is overseeing the whole thing. (video included for your enjoyment…)

So the cyborg thing is a bit far-fetched.  The reality is that I think there are some very easily captured characteristics that are exhibited by these companies and their leadership that can be applied directly into your corporate supply chain to drive better results. I’ve prepared the below list as a small highlight of some of the characteristics that I believe are most applicable:

1. Flexibility / Adaptability - Companies in this area seem to have a unique ability to adapt to the frequent changes in their operating environment.  This adaptability doesn’t come through luck or happenstance, instead these companies make it their job to stay plugged in and cognizant of the ecosystem around them.  It is a conscious, day-in and day-out investment of time and resources.  Quite possibly the biggest difference is that startups view change as healthy, each new variable or tact is just another on the path to success.  In large corporations it too often appears that change is the enemy.

2. Communication - Naturally the communication in a small startup will be superior to that of a large corporation with hundreds or thousands of team members.  To take you way back to your corporate training – its a simple matter of fewer senders and receivers.  However, I believe the communication in a startup is superior for another reason and that reason is candor. In a startup environment the clock is always ticking, the next product launch, the next funding round, and so on.  It is in this time sensitive environment where team members learn a different approach, its called being candid.  I once saw a note somewhere in my readings which went something like this, “I’m candid with you because I care enough to be candid and I value our relationship.”  The message is simple, life is short – dispense with the niceties and corporate political BS.  High performing startups seem to have a knack for developing the type of camaraderie, common vision and straight talk that drives results.

3. Outreach to Academia – Startups, their founders, stakeholders and associated are allied and plugged in to the academic and research powerhouses in the area. They recognize that no matter their industry there are always big changes, new thoughts and new opportunities present.  I would presume that some of these startups view their involvement with academia as food for their collective startup “brain”.

4. Fail Fast Mentality – A giant characteristic in the “black magic” potion of startup success could very well be their affinity with the idea of failing fast.  This put it on the line, assimilate feedback quickly, and build it or dump it is certainly something that could have direct correlation to the environment of supply chain.  Often times, supply chain practitioners take too long in instituting changes and wait too long in cutting it loose if it doesn’t work.  In the startup environment, I know many entrepreneurs take pride in their hatchet mentality when it comes to dropping those losing ideas, products and enhancements that are not bringing the company closer to success.  This idea may be the simplest of all, if it isn’t working drop it and focus your efforts elsewhere.  Unlike fine wine and cheese, bad ideas don’t get better with time.

There are other characteristics that I could list out but these are a few of my favorite ones. Do you have some characteristics that you would like to share that you think are important?  If so please email me at douglasringram [at] gmail [dot] com.  I always love new ideas and thoughts !!!  (see above point #1)

Before I get any nasty emails let me say it is very easy for me to paint with a large brush.  Clearly, there are large corporations and supply chain functions that work well and need just a few refinements.  The main point of this article is that a well-oiled startup machine has some unique characteristics that each of us could take back to our companies and refine to help make us better.  Besides who doesn’t want to be better, and along the way maybe you’ll develop your own Google-esque success story!

Adapthing Battlefield Insights to the Supply Chain Industry

On one of my recent business trips I was doing the obligatory late-night channel surfing.  I came across an interview with General David Petraeus and a well known news man, although I can’t remember his name at present.  The interview was being shown on PBS and I was immediately intrigued by General Petraeus’ overall demeanor and his humble, succinct and direct responses to a series of rapid-fire questions.

One question centered on the role of a leader.  Specifically, what did General Petraeus believe was the key role of a leader.  Excellent question for the General given his role as head of the U.S. Central Command.  General Petraeus’ response to the question was what I would have expected from a battle-hardened veteran and patriot,  profound wisdom in a strikingly succinct and simple veneer.

As I listened to his key points I fumbled around for a hotel notepad to capture them.  The points that the General identified were not just battlefield applicable but instead applicable to any industry that values leadership and execution.  In my particular case I wondered how many supply chain entities have leaders that embrace and practice the types of items denoted by General Petraeus.

Without further delay here is the list from General Petraeus.  I’ve added some additional commentary that is not representative of General Petraeus thoughts but rather my own analysis.

1. Focus on the Big Ideas

General Petraeus discussed the fact that leaders focus on the big ideas of the organization.  Certainly in any organization there are thousands of ideas, initiatives, and daily discussions occurring.  The job of a leader is to distill this “chatter” into those top items, those big ideas, that will really help propel the organization forward.

In a supply chain context big ideas could be mobile technology adoption, predictive analytics, advanced transportation audit, labor management, warehouse picking technologies, green chain and others.  I know in my own career I have worked at organizations that did an excellent job when it came to focusing on the big ideas and I’ve also worked at others where everyone, including leadership, became accustomed to managing the minutiae.

2. Communicate the Ideas through the Breadth and Depth of the Organization

After the idea(s) have been identified and the focus is set the next area is communication.  Any organization can have great ideas, critical paths, and clear direction but if the CEO is the only one who knows this info then there are bound to be problems.  The easiest analogy is this.  An organization more closely resembles a truck convoy then it does a train.  A truck convoy is composed of numerous individual entities that are all coordinating movements to arrive at the same end destination.  A train on the other hand has no choice but to arrive at the same location because each car is physically linked to the next.  A truck convoy can be disrupted by weather, mechanicals, and any number of other variables.  The same is true in life.  An organization can easily leave behind its other “trucks”, especially if upon the start of the voyage there was not a clear agreement on the interstates & roads that would be followed and what the end destination would be.

Petraeus intelligently asserts that any leader must be an expert at ensuring the big ideas are appropriately communicated throughout the organization.  I think about my own experience in the companies I’ve been involved in and often times the difference between success and failure was how well the company leaders helped to socialize the ideas throughout the company.

3. Oversee & Facilitate Implementation

After the big ideas / goals are known and the communication has occurred the next step of a leader is helping to ensure that the implementation is overseen.  Petraeus discussed the idea that leaders must help not only oversee the implementation but also must help facilitate.

Regardless of the industry, the leader must always keep perspective on the big ideas and help the organization overcome obstacles to adoption.

Summary

With the many new challenges and opportunities present in the supply chain I believe General Petraeus’ insights on leadership are both timely and at the same time “timeless”.  The first point is clear.  If you are to obtain progress on any initiative you can’t have 1000 initiatives that are all designated high priority and ‘critical’ to the success of the organization.  Think about a laser, its power isn’t in pushing light in 10,000 different directions, its power is in accumulating all of that collective energy in one highly focused stream.  Like a laser, a leader’s value is in their ability to cut through the “BS” and help the organization focus its resources on what is critical.

The second point concerning communications is important because a leader also recognizes that important initiatives and big ideas are useless unless the organization can willingly and enthusiastically adopt them.  Certainly in a military situation an order is an order, but morale is still important.  Just like the truck convoy example, if the lead truck gets separated from the rest, it shouldn’t mean they all get lost.  Instead, in an organizational context, the lead truck communicates before they leave as to the end destination.

Not only does a leader cut through the “stuff” and communicate but they also make sure they knock out all obstacles that stand in the way of effective implementation.  Clearly the battlefield insights that General Petraeus has garnered can be applied to any industry and adopted by any leader wishing to push his/her organization to new heights.  Put in  three words: DISTILL, COMMUNICATE, & FACILITATE.