So I just finished reading an interesting article in Business Week entitled “Home Depot‘s Fix-It Lady“. The article was from the magazine’s JAN 17-23, 2011 issue and was sub-titled “Chief Financial Officer Carol Tome has a shot at CEO, if she can solve the retailer’s technology problems”. Of course the mention of technology and a brand like Home Depot piqued my interest so I read on. Less than five paragraphs in and I was stopped in my tracks by what was either a blatant editorial misrepresentation or a serious case of rationalization by the Home Depot execs. And by a case of serious rationalization I mean the kind where you break you’re New Year’s Diet Resolution with a Peanut Buster Parfait from Dairy Queen on the assumption that the delectable desert does have milk as an ingredient…and everybody knows milk is a good source of calcium, right?
Well, in Home Depot’s case the article premised that Home Depot was so focused on new store openings through the first decade of the 21st century that they lowered their focus on technology in the stores and their overall operations. Because of this they are now doing what amounts to a “tech catch-up” with Carol Tome leading the charge. Here’s the thing….I have to call some serious BS on this one. Why? Simpy put, you can’t be a publicly traded company with a $60 billion market value and somehow wake up in 2008 and decide that the Internet and technology may be a good idea to explore. It’s embarrassing.
The reality, if I must speculate, is that the executive team at the very top was out-of-touch with the operational environment that the store managers and staff were dealing with. Unfortunately, in today’s market it is not enough just to have operations that can execute effectively. In Home Depot’s case they were executing in the early 2000′s, they were growing revenues and expanding their store footprint. However, the tragedy was they WERE NOT doing this WHILE also improving their technology.
For supply chain companies the lesson to be learned from Home Depot’s story is you have to develop an operating environment in your company that assumes technology is a key enabling tool to facilitate achievement of more revenue, higher profits, and delighted customers.
In the supply chain arena a key reason for ensuring your technological initiatives are a basic part of your operational plans include:
1) Heightened Expectations from Customers – The great thing about technology is that we can now be connected almost anywhere. The bad news for logistics entities is that this era of instant access has altered what your customers want. The 60-year old procurement guy who is nearing retirement will be replaced by a 25 year old. And guess what happens. The 25 year old has grown up with iPods, iPads, Twitter, Facebook and a bad case of ADD. His questions, view and approach will baffle the provider organizations that haven’t caught up.
2) Dwindling Resources – Not to sound ominous but the reality is natural resources like oil and their by-products are not infinite. This limited quantity coupled with a rapidly increasing populous that is entering the middle class creates some staggering calculus. The result of this environment is that companies should always be in a fight internally to understand how they can push initiatives that reduce waste and protect valuable resources. Ultimately this translates right back to the bottom line.
So the moral of the story is simple – Don’t Rationalize. Figure out a way to drive your operational plans while also improving the basic infrastructure of your operation. After all, isn’t that why executives get paid… in the middle-management world its called “multi-tasking“.
“Four-who?…Oh FourSquare you say? What’s that – a new coffee shop?”
Go inside your supply chain department and start talking with the folks that make up your broader team and I suspect the above is the type of conversations you’ll end up having with many of your peers and leaders when it comes to new technologies. I will say right off the bat – I don’t think anyone is a bad logistician or supply chain operator if they don’t know who FourSquare is or how to Tweet. The broader point to be made is that today’s supply chain organizations need to make sure they are keeping up with a broad spectrum of technologies that could mean big changes for their companies and their supply chains.
I think the supply chain, in particular, suffers more than most organizations when it comes to technology awareness because often times the supply chain leaders are those that got their start as operators. Whether they did their time in the supply chain fulfilling positions like warehouse managers, planners, or on the transport side, many of today’s supply chain execs are all people who have come up through the heavy-duty ranks of operations. As most of us operators known, I started on commercial vessels sailing the ocean-blue (see below pic), the operational setting is a spartan one where you often times make do with what you have. This make do with what you have is great for the income statement but not so great for ensuring you’re always one step ahead of your competitors. In the last twenty years, the supply chain has undergone a radical transformation. The advent of MRP and then WMS and TMS systems has created dramatic efficiency in just about every nook and cranny of the supply chain.
I believe the best has yet to be seen and the next ten years of innovation in the supply chain is really going to be incredible. We are just now starting to scratch the surface of various technologies that could all have a significant effect on supply chain costs. Some of these technologies include things such as:
This is certainly good news for all of us. I think the rational majority is clear-headed about the inevitability of higher fuel prices and rising shipping costs associated with higher security standards and governmental regulation.
The message is a simple one for all of us supply chain operators. Get comfortable with technology and be equally adept at innovating as you are at driving margins and making that operation hum.
As the old saying goes, “change is a coming”. These winds of change are multi-variant and are carrying a wonderfully potent mixture of geolocation, analytics, and SaaS to today’s businesses. In fact, the supply chain stands to be one of the biggest benefactors of this sweeping change.
For many years, supply chain practitioners have discussed and envisioned a future whereby geolocation data could be seamlessly linked with order execution, warehouse management systems (WMS) and or transporation management systems (TMS). The benefits of being able to assemble this location data in real-time for the supply chain and effectively disseminate out to enterprise decision support systems and business users includes:
Better Planning – understanding inventory flows at a pallet or case level and being able to understand the velocity of movement, in transit product and the position of inventory could have significant impact for corporate planners trying to appropriately allocate manufacturing capability, purchasing decisions and procurement of input materials.
Optimization of Network - today the supply chain network of companies large and small is constantly in flux. Things such as seasonality, promotions, rain fall, weather, fuel costs and other variables can significantly alter product flows from traditional patterns. This constant flux makes it difficult for supply chain tacticians to understand their operating environment in real time. What typically happens in today’s world is that supply chain leadership is always looking at a dated snapshot of the network and resulting product flows. If supply chain tacticians had the ability to visually understand their environment in real time then the possibilities become quite endless and very interesting.
Audit Precision & Compliance Initiatives – Another benefit of maintaining geolocation data that may not be so obvious is the financial benefit that could be realized. In transportation, a common variable used in calculation of costs for over the road type movements is mileage. With geolocation capability tied to various gates in a shipment’s lifecycle such as order confirmed, pick confirmed, in-transit, and POD, a procurement team could use time stamp data correlated with latitutde and longitude information to deduce actual mileage transited, cost estimates, route traveled, and velocity at various checkpoints. With the same geolocation information described companies could reference rules and ensure compliance with either internal policies or insurance mandates. An example of this could be the idea that a tractor-trailer cannot exceed some average speed.i>
Green Initiatives – As green initiatives continue to take over old-school industries geolocation data can help supply chain departments to gather the critical intelligence they need to undertake carbon footprint measurements and other green related initiatives. Other capabilities provided by having precise location information
Customer Service – An excellent use for geolocation data could include the ability to more accurately measure transit times from frequented origins to destinations. For example, consider the case where a large distribution facility in a metro area restocks materials to numerous homes, stores or smaller warehouses in the state. By maintaining geolocation data the distribution facility could more accurately assess transit times to each end destination, by time, by day, etc.
New Service Offerings & Market Differentiation – The market for transportation services and third party logistics services continues to grow and become more competitive each year. With geolocation capabilities transportation entities can offer new services to their customers and help differentiate their offerings from a sea of competitors and look-alikes.
Safety – As the recent bomb incidents on board UPS planes indicated, we live in an increasingly dangerous world where cargo operations are being used as a mask for potentially nefarious activities by terrorists and wrong-doers. Geolocation and its integration into asset management systems, inventory control and transport management could help provide corporations with clear visibility into key personnel, assets and product flows at all times.
So the question beyond what benefits will geolocation bring is one of how does it become a reality, what are the steps and what may be some of the most present obstacles today.
To usher in the type of benefits that can be realized from geolocation organizations need to have a few basic building blocks in place.
Centralized Data w/ Well Defined Schemas
Integration with Key Order Management, Inventory Management and Transportation Systems
Modern Applications Frameworks (SOAP, REST, etc.)
Deployment of Applications to Diverse Devices (Web, SmartPhones, iPads)
The last point may be one of the more important points to make. The premise of geolocation by default also means a literal avalanche of data. In the example that was given above imagine a distribution facility normally has 100 orders a day to local destination points. With geolocation enabled these 100 orders could potentially produce tens of thousands of records with juicy tidbits like latitude, longitude, time, vehicle ID, driver ID, temperature, etc. Without proper business intelligence platforms this data is somewhat useless.
Geolocation has some awesome capabilities for the supply chain and I am hopeful that with recent announcements and initiatives from government entities and startups alike that the promise of geolocation will soon be supplanted by a more widespread reality and many real-life implementations.
For a video overview of this blog visit this link – Video Overview
As I write this article I’m on the plane heading back from sunny, beautiful and delicious California. Â To be more specific the bay
Supply Chain Practitioners Could Learn a Lot from Startup Mindset
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? Â …. You get the picture. Â 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. Â 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. Â 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. Â 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. Â 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. Â With such an environment and with all the complexities what is it that makes this area so amazing that success after success can occur? Â 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. Â 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. Â 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. Â 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. Â It is a conscious, day-in and day-out investment of time and resources. Â 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. Â 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. Â 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. Â 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. Â Often times, supply chain practitioners take too long in instituting changes and wait too long in cutting it loose if it doesn’t work. Â 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. Â This idea may be the simplest of all, if it isn’t working drop it and focus your efforts elsewhere. Â 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? Â If so please email me at douglasringram [at] gmail [dot] com. Â I always love new ideas and thoughts !!! Â (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. Â Clearly, there are large corporations and supply chain functions that work well and need just a few refinements. Â 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. Â Besides who doesn’t want to be better, and along the way maybe you’ll develop your own Google-esque success story!
So I just finished reading an interesting article in Business Week entitled “Home Depot‘s Fix-It Lady“. The article was from the magazine’s JAN 17-23, 2011 issue and was sub-titled “Chief Financial Officer Carol Tome has a shot at CEO, if she can solve the retailer’s technology problems”. Of course the mention of technology and a brand like Home Depot piqued my interest so I read on. Less than five paragraphs in and I was stopped in my tracks by what was either a blatant editorial misrepresentation or a serious case of rationalization by the Home Depot execs. And by a case of serious rationalization I mean the kind where you break you’re New Year’s Diet Resolution with a Peanut Buster Parfait from Dairy Queen on the assumption that the delectable desert does have milk as an ingredient…and everybody knows milk is a good source of calcium, right?
