Wednesday, October 19, 2022

Go to Market Strategy before Supply Chain Strategy

This article is directed mostly towards practitioners who operate supply chains within companies which market and sell products. I have done a lot of thinking recently about the discussions going on concerning "is just in time dead" or "on-shoring / near shoring" etc. There are a lot of conversations happening relative to all sorts of strategies for supply chains (and no lack of consultants who want to sell you on the latest and greatest ideas). My thesis here is that the first thing you have to develop and fully understand is your business' go to market strategy. Then, after that is completely articulated and written down, you can discuss your supply chain strategy

So, what is a go to market strategy? It is simply writing down what products you will provide, what markets will you provide them into, who are your competitors, who are your customers and how will you compete? In a 1993 Harvard Business Review article (and subsequently in his book Double Digit Growth) Micheal Treacy and his co-author Fred Wiersema argue that most companies have to pick one strategy they will really excel at and exploit it. The three strategies, from which a company picks are: 1) Customer Intimacy 2) Operational Excellence 3) Product Innovation. It is a fairly rare unicorn which can "master two".

Just by the names of these strategies and without reading the book (Although I highly encourage you to read it) the reader can understand the implications for your supply chain strategy:

  1. Customer Intimacy - High service is the calling card. Maybe not service at any cost, but high service nonetheless. The thesis here is that if you provide a truly differentiated and incredible service level, customers will be loyal and they will buy more from you. You will also keep your competitors away as they likely cannot functionally or financially compete against you. 

  2. Operational Excellence - This is low cost. You will compete on cost and every nickel counts. Your customers do not want (and certainly will not pay for) extra bells and whistles. Just do what you say you will do. At this year's CSCMP Edge conference I attended a great presentation with one of the returnable pallet providers. Their strategy was all about efficiency and low-cost. 

    It is not "bad" to be in a low cost industry. You have to know it and embrace it and that is what this person did in his presentation. The company's network design, systems and operations were totally geared towards efficiency. They will do exactly what they say they will do with no frills, bells or whistles and they will do no more. The customer gets what they need at rock bottom prices. 

  3. Product Leadership - Think Apple. This is where the product is so good that customers, while they want efficiency, will actually "pay up" or even wait for the product because that product is so good and desirable. Everyone uses the iPhone as an example of this and so some may think only Apple can do this. Let me use another example: The Kitchenaid Standmixer. I worked specifically for this division of Whirlpool for over a year and I can tell you, people will wait for that product. It is iconic. Everyone wants one. Mother's took bus tours of the plant with their daughters before they got married. So, yes, if you truly do have an exceptional and differentiated product, you do not need to be Apple to win. 
So, what does this have to do with supply chain? My submission is it has everything to do with supply chain because you first have to understand which of the three your company is doing to determine what your supply chain strategy will be. Imagine if the person from the pallet company decided his supply chain strategy was going to be "Customer Intimacy" and he built a highly responsive, high service and high cost supply chain. This would be a complete mismatch to the customer's desires and expectations of a low cost and highly efficient supply chain. The supply chain leader needs to fully understand the "go to market" strategy of the company before s/he can build out the supply chain strategy. 

One last bit of advice and warning: Be very leery of a company that wants to be one of the strategies above but is in an industry that demands another strategy. For example, many sales and marketing people want to be in a customer intimate industry because that is what they do. It is fun and energizing. But, this what they want. What do the customers want? If the customers want operational excellence or product leadership then what you will have is chaos. You will never get the supply chain strategy right.

In conclusion:
  • Understand your company go to market strategy before you do anything.
  • Ensure that stated strategy matches up with the industry you are in. 
  • Then, and only then, develop and implement your supply chain strategy. 
After two years of supply chain disruptions and craziness, I tend to think I am Napoleon at Waterloo so tonight, I offer ABBA singing Waterloo:

Sunday, August 28, 2022

Zero Dark Thiry, Precision, and Supply Chain

 Last night I re-watched Zero Dark Thirty which is a great Hollywood rendition of the search for and ultimate killing of Osama Bin Laden.  No politics here and I just want to reflect on what the learnings are for us, especially in that final scene where we get to see execution with amazing precision.  

There is a lot to learn here for supply chain professionals and it all revolves around the word precision.  If there was one word which defined that mission, it is that word, precision.  I underline and bold it as it is a word to not forget. Precision is an outcome of two other key words: planning and practice.  This could become a new term in supply chain, or perhaps a new formula:  Prc = Pl*Prct.  Precision = planning multiplied by practice. Let’s look into this:

  1. Planning: If the Pandemic taught us nothing else it taught us the importance of scenario planning. This means you look at all the different scenarios which could impact your business and supply chain, you identify those things which are “early warning indicators” to let you know if the scenario is happening or not, you identify what the severity of the issue will be if it occurs, then you plan and execute a mitigation strategy if needed. This is similar to a FMEA except you do this for external events. 
    1. Note:  McKinsey and Company reports 37% of supply chains implemented some element of supply chain scenario planning and these were 2.0x more likely to not have supply chain disruptions
  2. Practice: This is an area business tends to lack and as the formula would imply, if your planning is 100 but you practice at 0 then your precision will be 0.  It is also something the military does extremely will. Think of the movie I am referencing where they have complete mock ups of where they are going, they knew when they went in the house, even at night, exactly where they were and they knew the name of every occupant.  They knew this because they practiced, and practiced and practiced.  How many companies do you know have great scenario plans but they just sit on a shelf somewhere and no one has looked at them, let a lone practiced them.  
This all leads to precision which is what supply chain is all about. Precision means a process is both reliable and repeatable. It means you do what you say and it means “9x%” is not good enough (Remember, you can be 95% on time but to the customer in the 5% part you are 100% not on time). Precision means each part of the chain can absolutely rely on the other parts of the chain to execute exactly what they are supposed to do without even checking. Another part of the military is when they go on missions and they do minimal or no talking with each other (Radio silence). They just expect you to do your part and there is no checking. 

Precision then leads to a world class customer experience.  Technology and even talent are means to get to precision.  If you have great technology but still cannot get precise in your execution then it was, what I described last week as FOMO technology. Technology which is “cool” but does not accomplishes much. 

So, lesson for today, recommit to precision, never say “good enough”, once you get to one level of precision, spend 5 minutes congratulating yourself and then move to the next level. 

With this, I leave you with the trailer of this incredible movie.  Next time you watch it, watch it with the thought of a precise supply chain in mind. What can you learn?

Sunday, August 21, 2022

My Thesis on FOMO for Logistics and Supply Chain Technology Has Stood The Test of Time

Paraphrase:  "We reduce the logistics' cost as % of GDP which results in lower costs for goods and services, which lifts the standard of living for all Americans" - Don Schneider


Don Schneider

That phrase, while I many not be getting it word for word, has stuck with me from the day I met him almost 30 years ago. 

First, I apologize as it has been a long time since I put thoughts on the blog about what is going on in the supply chain world.  I should have kept up with it better.  I just went back and looked at my last posting which was on January 19, 2022 and it addressed the issue of supply chain technology. 

Two quotes from that post really stand out:

"The "free money" aspect of the pandemic has also driven an explosion in supply chain / logistics technology. Again, some have driven huge value but by far the vast majority have not.  They have just been the recipients of a lot of money sloshing around in the economy looking for a place to land."


"They [Supply Chain Practitioners] layer technology on top of technology and it still does not get them very far.  This is FOMO.  This is "I am going to try anything and everything because I am afraid I am going to miss out on the latest greatest thing". 

We are starting to see the realization that this technology, without good processes and without assets, is not helping very much. The aggregate outcome metric I like to use is the US Business Logistics Costs as a percent of the nation's GDP. After all the technology improvements we have made, in 2021, this cost was 8% of GDP which, according to the 2022 State of Logistics report issued by CSCMP, has not been this high since 2008.   

Source: CSCMP 2022 SOL Report

Ultimately, we as an industry have to be measured on whether we are delivering value (higher service at lower costs) or not.  This table and information would say we are not doing that.  From the same report, we can trace these costs back to 2012:

Source CSCMP 2022 SOL Report and 10xLogistics Analysis

The graph is up 2bps since 2012 (coming out of a deep recession) and has, more importantly, changed the game significantly since 2018.  Some may say is only 2bps so what does it matter and my point is you would think we could get improvement with all the technology spend we have incurred. 

Do not get me wrong as there is a lot of good in our newest supply chain technology and there are certain aspects of running a supply chain I could not live without however, in the aggregate, logistics has become more costly for less service. 

My question for the supply chain industry is: "Would Don be Happy with this result"?  I will leave you to answer that on your own.  

This is something the supply chain industry has to address and hopefully people will talk about this at CSCMP EDGE conference this year.  Engage on Twitter with the hashtag #logtech



Wednesday, January 19, 2022

Beware FOMO and New Supply Chain Technology

 In November of 2019 I wrote an article entitled "What Do FOMO and LinkedIn Have To Do With Supply Chain". FOMO is short for "Fear of Missing Out" and the general thesis of my article was if you become consumed with chasing every rabbit down every rabbit hole for "fear of missing out" then you will likely not get much done. 

The same can be true about LinkedIn. I wrote this in 2019 and I submit it has become 100x worse than when I wrote this article. 

And yes, we can somewhat blame the pandemic for this phenomenon in supply chain.  Ever since everyone has been home there has been an explosion of podcasts and home grown "T.V." shows discussing supply chains.  Some of them are hosted by people who have worked for a very short time, if at all, as a practitioner of supply chains.  

The "free money" aspect of the pandemic has also driven an explosion in supply chain / logistics technology. Again, some have driven huge value but by far the vast majority have not.  They have just been the recipients of a lot of money sloshing around in the economy looking for a place to land.  

Practitioners have some culpability in this as well.  Many have scrambled to do something - anything to show their leadership they are trying everything to overcome the effects of disruption.  So, what do they do?  They layer technology on top of technology and it still does not get them very far.  This is FOMO.  This is "I am going to try anything and everything because I am afraid I am going to miss out on the latest greatest thing".  Here are my simple few suggestions for the practitioner to avoid this trap:

  1. Do the detailed work BEFORE you talk to a technology company:  This means you have to process map out how your business operates.  You need to identify the key metrics you are using and you have to identify what success looks like.  Use the Amazon methodology which is just what Covey taught us when he said, "Begin With The End in Mind".  Write the press release you will release 4 years from now.  What will you have accomplished. 

  2. Operate Manually First if at All Possible:  This will allow you to be incredibly flexible as you "test and learn" all different ways of getting things accomplished. 

  3. Follow the Tom Brady rule of focusing and ignoring all the noise. (See my posting on this: What Separates "Vital Few Metrics" from "Nice to Know" Metrics - And What Can We Learn from Tom Brady...). 

  4. Write the spec! This is not necessarily hard work but some may find it tedious.  This is the work where you get as specific as possible on what you really need and what will really add value to your organization.  The more detailed this is written the more likely it is you will not get enamored by "shiny spinning plates" but rather will identify and get what you really need.  

  5. Then and only then do you start inviting in technology providers and identify which is best to fill the gaps you identified by going through the 4 step process above. 
I am not saying not to "shop around and learn" but look at those interactions as learning - nothing more and nothing less.  Realize that as soon as you step into the bazaar that is a trade show, full of technology shiny toys, you are at high risk of FOMO kicking in and you being distracted by things that you do not need.  Much like going into a high tech electronics store and walking out with $1,000 of technology that you now "absolutely have to have" but 1 day ago you had no idea you "needed", you run the risk of doing the same for your company.  Except in this case, it could cost millions.

When you feel you are starting to get caught up in the FOMO mania, I suggest activating the "breathe app" on your Apple Watch and, just breathe. 

To that end, tonight, let's just meditate:

Great Update from Craig Fuller on Supply Chain in 2022

 I am sure many in this community follow Craig Fuller from Freightwaves.  I thought this was a very good interview on Bloomberg so I thought I would post it here. 

Sunday, January 16, 2022

What Separates "Vital Few Metrics" from "Nice to Know" Metrics - And What Can We Learn from Tom Brady...

 I was reading an article about Tom Brady today in the Washington Post and it led me to think about metrics in supply chain.  How could that possibly be, you ask?  What does how a quarterback preforms in football have to do with supply chain?

First, in case there are those who do not know who Tom Brady is I would just ask you to google him.  Whether you like him or not as a fan you have to respect all that he has accomplished.  We literally likely will not see another like him in our lifetime, or maybe ever, as it relates to football and longevity.  9 super bowl appearances,  7 titles and 13 AFC Championship games.  When everyone thought he was done, he went off to Tampa Bay where he promptly won another super bowl.  ( I will not list them all here but if you want to know all the records he holds, I found this website).

The article in the Washington Post was titled: Tom Brady is telling his own story and doing it at his own pace(May require firewall).  The general theme was the success of Tom Brady (Besides raw talent - which a lot of NFL QBs have had and have been far less successful) can be boiled down to just a few items:

  • His ability to focus on the mission in front of him. 
  • His ability to ignore all the noise around him in terms of success (fan noise, social media noise, trappings of fame noise).
  • His discipline in controlling his time.  Everyone wants a piece of his time but he rarely provides it.  He does not have to be everywhere. 
He trains in February to win the Superbowl a year later.  That is what we would call medium to long term thinking and that is what metrics allow us to do in supply chain.  If we focus on a few, remove all the noise by ignoring the "nice to know", eliminate our natural FOMO (Fear of missing out) instincts, identify the critical outcome (spoken in the terms of a customer) and then relentlessly monitor and improve, we can be like Tom Brady and win a lot of supply chain super bowls. 

I believe people get in trouble in three areas when they devise metrics:
  • They are inwardly focused and not from the view of a customer
  • The critical few are not separated out from the "nice to know"
  • They do not have one or two (no more) clear outcome metrics.  Using our football analogy, think of the outcome metric as the score of the game.  All the individual stats that are produced (proudly by AWS) during the game are just input or driving metrics.  They only matter if they indicate and predict what the outcome of the game will be. 
Finally, we learn from Tom Brady (and Bill Belichick, the coach of New England) that it is all about improving.  You win the superbowl by winning one game at a time and not dwelling on the negatives.  My favorite press conference was after New England got destroyed by Kansas City one year and at the post game presser all Belichick said was, "We are on to Cincinnati".  Meaning, the game with KC is done, over, now it is about improving and winning the next game.  (Patriots ended up beating Cincinnati 43-17 and went on to win the Super Bowl)

Too often people are looking at "rear view mirror" metrics so much that while they are constantly reviewing the metrics they forget to look in the windshield to see what is coming next (Cincinnati).  Sometimes you have to just learn then move on.  A critical few metrics, where you isolate and ignore all the noise, will ensure you do this.   

In honor of Bill Belichick, below is the press conference I reference.  (You will have to go to YouTube to see these)

Have a great week!

As an added bonus, if you want to have a lot of laughs, here is a montage of all his press conferences which are epic:

Wednesday, December 15, 2021

Supply Chain Update - Hint: Disruption is Not Going Away and as The Who Warned Us: Don’t Get Fooled Again

I am traveling for the last time this year and when I am on the road I get to reflect a lot on what is actually going on within supply chains and what we can expect into the future.  Here are some things I have reflected on and believe for 2022:

Disruption is not Going Away:

Short of a major economic turndown, the container issues, ship issues, port issues, driver and transportation issues all will continue through 2022 and into 2023.  There is no evidence that until significant ship and container capacity comes on line (2023) there will be much improvement.  As we have learned this last few weeks, the “appearance” of improvement has been somewhat of a mirage.  Ships are slowing down and they are at anchor just further out at sea.  

COVID Is Moving from a Pandemic to an Endemic:

The definition of an endemic is something that is around us and never going away.  Covid will be around us, at a baseline level for the foreseeable future.  The next time you hear someone say to you, “When this is over… “ , remind them we are going into our 3d year. This is the “way it is” and masks, vaccines and therapeutics will be needed likely for the remainder of my life.  Supply chains cannot “wait until this is over “  to implement change and execute process improvements.  We have to learn to work within it. 

Shippers Will Continue To Take More Control of The Assets:

We all have seen the stories of big companies leasing ships but who would have thought a large furniture company would buy a large trucking company?  This is a perfect example where shippers will be adjusting their supply chains to deal with the massive margin inflation in purchasing of supply chain services.  It takes a while but supply chains will adjust.  Product will be on-shored, assets will be insourced, and networks will be redesigned to adjust and mitigate the inflation.  

This was started by Amazon when they bought Kiva Robots and they have progressively taken control of their own destiny.  Amazon will surpass UPS and FEDEX as the largest package shipper (on their own assets) sometime next year.  The massive margin inflation passed to shippers this year is not sustainable and it will end. 

We Will See 3 Interest Rate Hikes in 2022:

This is breaking news as it was today the Fed had their press conference after the December FOMC meeting.  You decide what this means for your business but suffice to say the “punch bowl” is going to be removed from this economy.  I personally believe this will mean a number of “zombie” companies will struggle to survive.  The easy money will be gone and companies which generate no profit will not continue to be valued at such high levels as they are today.  

A Few Charts:

Those who know me know I track the FRED Inventory to Sales ratios as an indicator telling us what stage the restocking and the “normalization” of supply chain is in.  The news is that we are still dramatically lower than we need to be and this means restocking will continue for the foreseeable future (See Disruption is Not Going Away above):

Below is a great visualization showing what is happening with COVID and is updated through today, December 15th:

Over the next few weeks I will get a bit more granular on my predictions however this provides a good high level overview of what 2023 looks like. 

With this information it really makes sense to play The WHO:  Don’t Get Fooled Again!

Friday, October 22, 2021

Thursday Note on THE Supply Chain - Birth Rate in The United States

 This is just a quick note on some learnings from the last few days.  While there are a lot of issues in supply chain which are well documented both here and other places (i.e., international capacity, truck capacity, shortages of materials etc.) the single biggest issue I hear from all my peers is the labor issue.  So, why is this such a big issue?

First, it appears to be a very systemic issue which is pervasive and has no easy fix.  A lot is discussed about pay rates but the reality is America is running out of workers.  it is simple math.  The chart below from MacroTrends (Source United Nations) shows it clearly:

The birth rate of the United States is the problem.  Combine that with a very restrictive immigration policy of late and you can see the problem.  This was not an unforeseen problem.  5 years ago, at a HBS reunion I heard the head of the Dallas Federal Reserve say this was coming.  Is it COVID related?  Well, like all things, COVID did not help, but this was coming for a long time.  We are just now here.

So, if you are young and fertile… get at it and do your patriotic duty and have kids. 

Second, I hear over and over again from friends in almost every industry in America:  They cannot produce fast enough to meet the demand for everything.  Thus, there is a shortage of everything.  Given how long it takes to spin up large capital projects I would just say we have to learn to live with it.  

Finally, the trend of the markets valuing and investing in technology instead of assets continues.  Flock Freight is now the newest unicorn according to TechCrunch.  Another app to try to help me find capacity.  This, I will admit is a bit unique in that it is not just another brokerage app but more assistance in co-loading.  Co-loading has been the holy grail for 30 years so I will watch this closely but so far, app or no app, no one has seemed to be able to make this work.  

OK, that is it and the song for tonight is in honor of these unicorn companies getting 100’s of millions of dollars:  Winner Take It All, by Abba:

Wednesday, October 20, 2021

Wednesday - Mid Week General Thoughts

 Here is just a quick summary of some things I am looking at this week and also some things which just make you go ... hmmmmmm:

  1. California Ports 24-Hour Operation is Going Unused - WSJ).  So far the 24 hour out gate at the ports of LA/LB are considered a total bust.  Unfortunately, those making these rules don't understand the "chain" in supply chain.  It is not just about time available.  It is about trucks, drivers, port space, all sorts of workers, chassis and a myriad of other things.  If nothing is done on those fronts, the chain breaks and no amount of extra "open" time will fix it.  More to come but so far I rate the 24 hour port plan a F-.  

  2. Driving up and down the highways at night allows you to see a big part of the problem.  Trucks parked all over the highway as they run out of hours and there is no parking for them.  Is anyone addressing this issue?  Does anyone think that parking on the side of the road, with no facilities and with no safety will attract people to the trucking industry?  Remember, for in trucking for every "machine" you employ you have to employ at least one person.  It is not like manufacturing where a "machine" eliminates the need for a number of people.  In trucking the capital employed to human is 1:1.  Treatment of Drivers: F.

  3. Anyone been to Costco lately?  I have been in one in Michigan and one in Georgia recently and guess what?  The toilet paper shortage appears to be coming back.  This time I think it is more about lack of trucking capacity than anything.  Come on Costco, you can get restocked!

  4. Inventory to Sales Ratios both total and just retail show little to no improvement.  This means my "when will this get better" meter is moving to the beginning of 2023 when I had it pegged at mid year 2022.  Still not coming off of the 2022 but the likelihood of it going into 2023 is getting more real. Likelihood of a quick resolution to the supply chain issues in America ending soon - D

    Total Inventory to Sales:

    Retail Inventory to Sales:

  5. Port of Savannah is still the best port out there by far however it has been "found" by some big retailers who are slow to move their boxes off the port.  This has meant some ocean carriers have cancelled calls to Savannah and added the Ports of Jacksonville and CharlestonI think just about everyone is starting to look at "over the water" movements to the East Coast versus getting into the mess of LA/LB then trying to move it over ground. Port of Savannah is an A

  6. JB Hunt  (Stock information: JBHT)is the best run trucking company in America by far.  They knocked their quarter out of the park and they have even better days ahead.  They have transformed from an old school, irregular route trucking company to a high tech, well disciplined supply chain company.  And, the market is rewarding them for it as they have a P/E that values it like a tech company and just about everyone upgraded their stock this week.  YTD J.B. Hunt is up 44.64% as compared to Schneider (SNDR) who is up 19.7%.  (See comparison chart here).  JB Hunt is an A+

  7. Costs continue to rise in all facets of the supply chain:  Various data sources tell us that yes Virginia, there is inflation, and a lot of it. 
OK, I just wanted to pass on some thoughts for mid-week.  Things I am working on include: 

  1. Why is the market not putting capital into asset companies?  Just today another $200M investment in a tech company that is supposed to help you find a truck.  So, we keep building apps but we don't staff trucks.  Not helpful but the folks doing investing must know something I do not know. 

  2. Should there be a reserve corps for Supply Chain Professionals?  I am really thinking we need this.  People join just like you would join the Army reserve except it is a national supply chain corps.  You would get the same protections the old "Soldiers and Sailors Relief act" provided and you would get called up as needed.  This would accomplish the same thing as calling up "the military" but you would get a lot more professionals to join as they would not have to do all the "Army Stuff"
More on those topics later.    I thought it fitting to end this post with "Bad Moon Rising" by Credence Clearwater Revival.  This should be the theme song for all supply chain experts!

Sunday, October 10, 2021

This is Not Just COVID - Supply Chain Disruption Has Been Building for Years

 I will not bore you with all the pictures and the discussion of how many ships are off the coast of LA waiting to get unloaded.  If you are reading this, you already know that fact.  What I do want to discuss is the real problem with supply chains and the root cause of this mess. 

My fear is everyone is attributing everything to covid-19 and covid-19 certainly did not help.  Covid-19 dramatically changed the buying patterns across the world (from experiences to things) and that impacted supply chains tremendously.  However, like a lot of things related to covid-19, the impact merely accelerated a trend which was already growing.  My thesis is this:  The infrastructure of global supply chains was cracking and breaking and Covid-19 sped it up.  What is included in infrastructure:

  1. Driver capacity
  2. Lack of investment in highway infrastructure (just look at the trucks parked all over every night)
  3. Lack of investment in port infrastructure
  4. Lack of connectivity in systems (i.e., you book a container to come to the US but the people on the ground don't know when or even if it is coming)
  5. Lack of a cohesive strategy on chassis management
  6. Massive disruption and economic distortion with "on again and off again" tariffs. 
  7. Lack of investment in real assets.  A lot of money going into apps and other systems for visibility etc. but what we need our trucks, drivers, trailers, containers and ships. 
My belief is until we get a comprehensive national strategy to deal with these issues, much like we have a national security strategy, petroleum reserve strategy etc. we will have these problems forever and what you see now may actually be the "new normal".  If you look at the group that is meeting now with the White House they still signal their belief that this is just a temporary covid-19 problem.  Their newest idea?  Keep the ports open longer!  Will that help? Yes, but does that deal with the core problems?  Absolutely not.  It is the aspirin for a headache which is actually caused by high blood pressure.  Your head will feel better but eventually your heart will burst.  

As much as we may dislike it or may hold an "all things government does is bad" idea we have to develop a national strategy to address these issues.  Remember, the Interstate Highway Network was a project the federal government did, with private industry, to ensure we could defend the country and it had the effect of enabling smooth frictionless commerce.  We need a big idea like that now.  

Don't let the excuse of covid-19 cover up all the issues in the supply chain in the United States. Despite all the billions of dollars invested in technology over the last 5 years, the global and national supply chains are performing worse than ever. 

And, for those of you who just cannot get enough of it, I will provide the obligatory picture of ships backed up at port. 

Wednesday, May 19, 2021

Is the Chief Supply Chain Officer now A Chief Crisis Manager

The last two years have been incredibly challenging for anyone in supply chain.  It started with a supply disruption out of China in late 2019 / early 2020.  We then went into a demand crisis in April / May of 2020 and then for many industries it very quickly turned right back to a supply crisis.  Both with inventories being low and then the entire country trying to restock at the same time which led to too much demand and not enough capacity to move global products.  Even US based products were effected because whether made in the US or not, many of the components come over seas. 

One hidden part of the capacity issues was the fact that passenger planes stopped flying.  In the "belly" of passenger planes flies a lot of cargo and when those planes stopped flying, cargo which normally went by air had to find another way to travel.  This added to the supply chain issues.  

Much of this has been covered and many articles written so I will not rehash them here.  However, what have we learned?  What will we do differently?  The first thing I think about is crisis management.  It turns out, if you are going to be a great supply chain leader,  you need to be a crisis manager.  That has somewhat always been the case but in the last two years it has gone "mainstream".  So, what does it take to be a good crisis manager.  Here are my 4 learnings from the last few years:

  1. Honesty - Be Honest and Straightforward in Communication:  This is akin to the idea that you will never solve a problem or deal with a problem unless and until you face up to it and admit it.  In your company you need to honest with your executives, your associates, sales and even, yes, your customers.  

    When these supply issues hit hard two companies stood out: Peloton and Ikea.  Both companies went public early on, described what the problem was, what they were doing about it and what people could expect.  "Bad news does not get better with age" applies here.  

    This also applies to associates.  Make sure you are honest and straightforward with them as well. 

  2. Be Calm and Do Not Panic:  Panic is a flight response to an issue that is somewhat embedded in our DNA.  However, we as humans can control our responses to anything.  This is the time when you have to lead with calmness and strength.  Stay focused on the mission(s) at hand.  Focus on solving problems. 

  3. Be Decisive:  You will not have all the facts by the time you need to make a decision.  You need to get as much data as possible but when the time comes you are going to have to "make a call".  And this is where the job can get lonely - YOU need to make that call.  As Matt Damon says in Ford v. Ferrari, "You cannot win a race by committee".  You then need to have all your antenna up to read new and conflicting information, synthesize it quickly and adjust if necessary.  Procrastination is not a decision.  

  4. Provide a Vision of the Future:  Most people understand when a crisis hits and they understand the work is going to get difficult and they are OK with working incredibly hard if they see what the end vision looks like.  For example, out of this pandemic and supply chain crisis we will have actions in place to get us through even more difficult times should they come up in the future.  The company is going to do great when the consumer hits the great reopening period.  Those are two examples of hope and vision.  
Finally, as Toyota taught us a long time ago, use a crisis as a major learning event.  A lot of "rocks" were uncovered during this period in business, in government and, in some cases, in personal lives.  Don't cover those rocks with water again - use this as a learning period and fix them.  

To learn this, and for some entertainment, I offer you the lessons of Carroll Shelby in Ford V. Ferrari about lessons learned and how to go forward.  Notice how Carroll Shelby applies all of these - Especially at the end when he gives Henry Ford II a vision of the future when "the only thing that didn't break were the brakes":

Monday, March 29, 2021

What Does The Ever Given Episode Teach Us?

 Many have focused on the Ever Given episode as a symbol for the dangers of international shipping.  Some have discussed it in terms of "choke points" such as the Suez Canal where when one thing goes wrong entire supply chains are disrupted.  And, some have taken it as an opportunity to discuss the topic of the size of the ships.  Have ships become too big?  What happens when there is a problem with a 20K TEU ship?

All of these are very important questions and are being addressed however I believe the question is even bigger.  It is about how we structure our supply chains.  It is about the age old debate of efficiency v. resilience.  Basically, how much insurance are you willing to buy to mitigate the potential of disruption? 

Start with inventory.  What is inventory?  As I have discussed previously, inventory is merely a buffer of product to substitute for the lack of perfect information. In fact, Lean teachings tell us that inventory is considered waste.  What do good managers do with waste?  They try and eliminate it.  

So, as we have done over the years companies have fallen in love with the idea of eliminating inventory because it makes the balance sheet look amazing.  But, is inventory really waste?

I submit that inventory is not waste just like your fire and auto insurance is not waste.  Think of your insurance policies.  You may pay a couple hundred dollars a month for a product you hope you will never use!  Wouldn't you consider that waste?  Well, not if you are protecting your portfolio you wouldn't.  

So, now, let's go back to the Ever Given.  The lesson here is we need more insurance (read: resilience) in global supply chains.  If we have learned anything in the last year we have learned things will go wrong.  Buffer stocks help mitigate this.  

The next question is whether we will learn that lesson from this incident.  My answer is, I doubt it.  Efficiency drives short term results and effectiveness is for the long term.  Most businesses will not be able to resist the allure of the efficient.  Even if in the short term they sacrifice efficiency for effectiveness most will eventually look for efficiency.  Not only are businesses likely to do it on their own but Wall Street will demand it for the publicly traded companies.  Another reason private companies will always have an advantage. 

What can a supply chain manager do?  Well, first, we can strike from our "lists of wastes" the word inventory.  Inventory, as I have hypothesized above, is not waste, it is insurance.  Second, become a story teller.  Supply chains in the age of COVID and Ever Given should be remembered for what they have become - stretched to the limit.  The mantra of "Never Forget" comes to mind. 

If you have doubt of my position look at my favorite graph (posted here for years) measuring, for the United States, our sales to inventory ratio:

Notice the far right of this graph.  Here you will see our inventories in the US relative to our sales is at the lowest point since April of 2012.  This is what leads us, as consumers, to scramble for everything.  

Let's not make it so every generation has to learn the same lesson.  Let's build resilient supply chains.  

Sunday, November 29, 2020

Why The Chief Supply Chain Officer Needs to Understand Customer Experience in Detail

 Thesis:  The Chief Supply Chain Officer (CSCO) needs to be very close to the Chief Customer Officer or whoever in the enterprise is responsible for the customer experience. 


This article is for those who are working supply chain within a company that makes or sells things.  We know the 3PL world needs to have a customer experience strategy but what about the CSCO within a manufacturer or retailer?  Isn't their job to just reduce costs and become "efficient"?  NO!  For those who have read my writings over the last 5 years you know I believe the single biggest job of the CSCO is to drive revenue.  In this day and age you drive it through customer experience (CX) even more than through product.  

Let's look at the big advancements which have propelled massive sales growth for key players during the pandemic.  A few examples:

  1. Buy on line and pick up in store
  2. Buy on line and have curbside pick-up
  3. Use your smartphone to activate and pay for fuel at key gas stations (I do this a lot at Shell).
  4. Use of stores as micro fulfillment centers

I could go on and on but all of these are supply chain solutions, empowered by technology to drive customer experience.  Notice nothing in that list had anything to do with product but rather had to do with how a customer or consumer acquires the product.  If you are back in the supply chain don't think you are immune from this trend because your customer has the same needs as a consumer.  They want a frictionless experience to make their business more impactful to the consumer.  You can help them with that and that will endear you more to your customer, they will buy more and they will be more loyal.   So, a quick conclusion for CSCO's to take action in this space:

  1. Get to know and partner with the person in your company who is in charge of the customer experience.  A lot of times this is in the sales or marketing area.}
  2. If your company does not have a person who owns this then take extreme ownership and take charge of it. 
  3. Ensure your supply chain strategy supports everything your company is promising in their go to market and customer experience plans.  Nothing is worse than a supply chain strategy which is different than the go to market strategy. 
  4. Consistently come back to the customer experience and use data such as net promoter scores (NPS) to determine if your supply chain is meeting the customer expectations.  

The customer and the consumer have the power.  You will differentiate yourself and your company if your supply chain focuses on the customer experience and "wow'ing" them each and every day. 

Post Script:  I think of this today and had to write about it industry lost a legend this weekTony Hsieh.  Tony founded Zappos and with it founded a company which was legendary for differentiating itself through customer experience.  How do you differentiate the selling of shoes?  Through Customer Experience! He built the company from nothing and sold it to Amazon for over $1bl.  We should all focus on CX like Tony did. 

 Rest in Peace, Tony Hsieh.  

By Charlie Llewellin from Austin, USA - tony hsieh, ceo, zappos.comUploaded by Edward, CC BY-SA 2.0,

Sunday, August 23, 2020

There is No "Fast Following" in Today's Technology

There have been a lot of supply chain learnings as a result of the COVID-19 environment and there is nothing more important than the lesson of technology.  Technology has separated the haves and have nots in just about every industry.  Those companies which have been able to adapt are thriving even in this stressful time.  Those who did not have the core technology available, or have been unwilling to invest in the technology, have suffered and many have filed bankruptcy. 

As if to prove this case, look at a 4  industries and you will see they have come down to duopolies or maybe three to 5 companies which own the industry.  Think of this:

  1. Home Improvement - Two huge players in Home Depot and Lowes
  2. General Store Retail - Target and Walmart
  3. E-Commerce - Amazon and Wayfair
  4. Pure Technology - Apple, Google (Alphabet), Facebook (Advertising). 
You can go on with this but the point I am making is the companies which invested in technology early have thrived and are so far ahead of most of their competitors it is very likely those competitors cannot catch up.  Technology does a few things for these companies:
  1. It makes them infinitely scalable.  Meaning they can scale to huge sizes and add little to no cost to the company.  Their cost per unit decreases dramatically as they grow.  
  2. It allows them to be incredibly flexible and resilient.  Think of Walmart and their now infamous scale with pick up grocery business.  Walmart e-commerce business is up 97% YoY.  This would not even be possible without the underlying technology already in place. There are very few companies in the world which could handle a 97% increase YoY and have any reasonable chance of still functioning.  
  3. It makes the customer experience far better because the technology allows you to customize the experience to the person.  You don't need to "group" people but rather, through the technology, you can customize the experience.  Someone wants to come into the store, you have a solution for that.  Someone wants curbside pickup, you have a solution for that. Someone wants it brought to their home, you have a solution for that.  Someone wants the products delivered to the trunk of their car (specific models allow Amazon to open the trunk of your car and put product in it), you have a solution for that.  
  4. Because the technology is cloud based and built on the cloud it allows for the ability to grow dramatically very quickly.  Think about this:  In December of 2019, Zoom hosted 10 million daily meeting calls.  By April, they were up to 300 million per day.  
Virtually all of this are supply chain solutions which have made these companies leaders in their industry.  So, what lessons have we learned?
  1. Technology allows companies to become dominant in their industry. 
  2. Technology allows scale
  3. Technology allows companies to be resilient in the face of adversity;  It actually allows those companies to thrive. 
And finally, there is no "fast following".  Walmart, because of its resources, has been able to catch up to Amazon but this is a rare example - in fact it may be the only example.  Those who get behind, will be behind forever and, ultimately, will be left behind.

Sunday, May 17, 2020

The Final 3 Feet Have Become The Most Important in The Supply Chain

We have talked about "the final 3 feet" before which is defined as the leg of the supply chain where product is brought from the back room to the shelves.  However, in this COVID-19 world, the final 3 feet have really become the final 5 feet as there is a building expectation that the store will bring the product to the car and put it in the trunk for your.  People do not necessarily want to go in the store.  My thesis is the stores which do this really well will win and they will beat Amazon.

So, I have done some of my own research as I have not been in a store for at least 1 month yet I have bought many things.  I have used either Amazon or I have used the buy on-line / curbside pick-up process and I can emphatically say that when the latter is done right, it is by far the best experience. The inverse is true however.  When it is done wrong it is such a pain and so frustrating I just will never go back.  Here are the elements of a great curbside pick-up process (This is NOT buy on line, pick up in store - BOPIS as I do not go into the store.  This is Buy On-Line, Deliver to my Car).  
  1. A seamless web presence which allows me to buy what is in inventory at the local store.  Take payment so there is a complete touchless process when I arrive at the store. 
  2. An alert process which tells me when the order is ready. 
  3. A tracking method, using my cell phone, which tells you when I am at the store and in the parking spot. 
  4. A well established location to park - good signage - easy to find. 
  5. A numbering system on the parking location to make it easy to find me. 
  6. A "through the window" confirmation process (Show ID, Scan email etc.)
  7. Associates put in the trunk. 
  8. Associates need to be the best customer service people and need to be in full PPE (Mask and gloves).  
While many stores have done a good job at this, I have yet to be in one which does it all extremely well.  Even the big box home stores have yet to tie all the inventory into the order system (if the store buys locally it is not in the web site) meaning I have to order some on line and some I call in. 

They almost all fail at the last two which is great customer service at the car.  Many stores (including the big ones) have sent people to my car without any PPE and they have leaned over to ask me a question.  The entire purpose of this drill is lost when that happens. 

      Surprisingly, the most sophisticated has been Shell gas station.  Here, of course, the issue is not going into a store but it is the extensive interaction you have to have with a dirty pump and they have eliminated virtually all of it.  Using the Shell app on my phone I follow the process below. 
      1. Open the Shell app and it knows I am at the station.  It asks me what pump number I am at. 
      2. It then asks me how much gas I want (From a fixed dollar amount to a "fill up). 
      3. I use Apple Pay on my phone to pay (Completely eliminates the "skimming" threat which is where a lot of credit card fraud occurs).
      4. The app activates the pump and all I have to do is put the nozzle in the car and select gas type.  
      They have solved a lot of issues by doing this and one at least (the skimming) was a pre-COVID 19 issue. 

      The lesson here is for all retailers:
      1. Invest heavily in the final 3-5 feet of your supply / value chain.  The rule used to be your mission was to get people through the threshold of the store.  But now a huge amount of customers will not want to cross the threshold no matter what.

      2. Technology is your friend - Use it aggressively and substitute in-store upgrades with technology upgrades. 

      3. Always think seamless.  If there is a spot the consumer is interrupted in this process fix it with technology. 

      4. Train your associates to forget their political views.  Give the customers what they want and they want to feel safe.  Masks, gloves and touchless processes do this. 

      5. Take mobile payments.  It is almost silly in this day and age that we, as a society,  are not close to 100% pay by smart phone / mobile payment.  Everything should be paid this way.  
      Technology is the "great equalizer" for the locally owned and operated stores.  If they embrace it and invest in it, the will beat Amazon.  Remember, Amazon can replicate just about everything except the things I described above.  GO AFTER WHAT THEY CANNOT DO!

      Sunday, April 12, 2020

      Have Clicks and Bricks Won The Game over Pure E-Commerce

      First, I will give you my hypothesis answer which is "Yes" it has.  Of course, I have been wrong before and will be wrong again but this would be my position going into the discussion.  Because of COVID19 we have learned the proper mix of "I need go to the store" with "I can wait to get it delivered". So, yes, my answer is an resounding "Yes".

      I see this for three main reasons and in this posting I am going use Amazon as the proxy for e-commerce since it is so dominant in that space.  A little background on how this idea started developing.  I tweeted the following:
      The next morning I opened the Wall Street Journal to an article (Posted at midnight and my tweet was at 10:40pm) titled  "Will We Forgive Amazon When This is Over"  by Christopher Mims (@Mims, (May be Paywall).  The theme is the same:  At precisely the moment we needed Amazon the most, the model failed and it failed big.  There are a couple of key areas where it failed and only one could really have been an "unknown unknown":

      1. Merchandising and Inventory:  This is the big "unknown unknown" and we cannot hold Amazon or anyone fully responsible for this as no one could have seen the massive whipsaw / bullwhip which occurred with certain products.  We essentially had a "run on the bank" and ran out.

        However, the "bricks" portion was able to respond much faster through limiting amount someone can buy, "senior hours" and other tactics (Not the least of which is just public shame if you are walking out with cases of toilet paper).  Amazon just could not get ahead of this and still to this day are not ahead.  They essentially have shut down all other "non essential" product lines yet I can still get all that stuff through either BOPIS (Buy on line pick up in store) or just in store at the bricks.
      2. No Customer Loyalty:  The big question for the e-commerce providers such as Amazon will be whether they invest a lot into their networks to support a crisis like this or do they chalk it up to a "once in a lifetime" crisis and assume everything goes back to normal.  I think it will not go back to normal and the pure e-commerce players will lose customers and not gain them. 

        Take the Amazon Prime program for example.  Many hundreds of thousands have paid for years into that program.  Yes, you get free delivery but it also is somewhat of a loyalty program as well.  As soon as the crisis hit, prime customers were thrown to the curb.  By doing that, many prime customers are asking themselves "What am I paying for" and now that they have had the experience of "bricks and clicks", these customers may never come back.  I would imagine Amazon will see a decrease in both Prime customers and customers overall.
      3. The Technology Just Did Not Work:  This led to a massively poor customer experience that did not have to be.  In fact, prior to COVID19 most discussions I have been in have always started with, "If Amazon can do... (Kind of like, "If they can put a man on the moon why can't....)".  This will no longer be the case.  No one will want to replicate this.  I think most give them a pass on the inventory issues but why is their website so screwed up?  Why do I have to click 4 times before I find out either the product is out of stock, it is reserved for first responders or the delivery will be two months from now (Why would they even allow it to be displayed)?

        The purchase experience has been awful.  The great technology has gone haywire and their "hands off the steering wheel" AI systems failed at precisely the time they were needed.  I found websites of other "off line" stores to be far more helpful, far more accurate and far more useful.  Amazon is going to have reevaluate this entire problem.  Their technology just does not appear to be much better.
      4. Counterfeiting:  One item the "bricks" stores have is brand reputation.  Nothing makes it into a Home Depot, Lowes, Target, or Wal-Mart store without it being properly vetted to safety, service and functionality.  The item has to perform as specified.  Yes, there will be some warranty claims but not complete failure.  The "E-Commerce" world, led by Amazon, has had this "endless aisle" approach and they purposefully do very little vetting.  They claim they are a "platform" not a store (Although I think this is mostly "lawyer speak" so they can defend in lawsuits).  This has led to massive counterfeits, items which are displayed but never fulfilled, , items which say they will be fulfilled but it may be 2 months from now etc. 

        What is worse is the e-commerce players want the "wisdom of the crowd" to sort through it all, figure it out with "star ratings" (Which are easily manipulated by the very people doing the counterfeiting) and then report them.  The e-commerce people want the buyer to be their merchandiser as well and not pay us.  Bad form.  
      For all these reasons, I believe pure e-commerce will lose business and it will take them a long time to get it back.  The "old guard" businesses with store fronts, reputations and really good technology have won this round and a big round it was (and still is)!

      Long term readers of mine will not be surprised by this as I wrote two posts a while ago about how the bricks and mortar should win because they can do everything Amazon can do and Amazon cannot do everything they do.  I welcomed WalMart up from their long slumber (June 26, 2017) when they finally committed heavily to e-commerce.  I then wrote a post on June 3, 2018 titled: Convinced Even More That Wal-Mart Should Be The Winner Against Amazon.  

      Monday, March 23, 2020

      The Final Three Feet is Really Really Important (As We Are Re-Learning)

      Back in April 2, 2013 I wrote a blog post entitled, "Is the 'Final Three Feet' The Most Important Logistics Leg" and it was created after I saw so many empty shelves at a Wal-Mart and I saw how they were restocking in an almost haphazard and unplanned way.  Of course anyone in retail knows an empty shelf facing translates into a lost sale.  It is very simple.  Keep the shelves stocked.

      A simple idea but not quite as simple in practice.  You still see empty shelves in the day, you see aisles blocked because people are restocking during peak shopping times and you see trash (Broken down boxes) etc. cluttering the store.  All of these are signs the store has put no planning into how to stock shelves.
      Store Shelves Being Stocked
      During Prime Shopping Time
      Now with the COVID-19 issues we are finding stores are relearning these lessons all over again.  It took weeks for stores to figure out how to adjust hours to ensure shelves were stocked.  What difference does it make that you are open 24 hours if by the 8th hour of being open your shelves are bare?  Too much time was lost in this and they should have read my posting.  The final three feet needs to be engineered just like the final mile and just like the DC to Store network

      I will say one of the most sophisticated processes I have seen is at Home Depot.  At Home Depot, carts are built at the RDC (Large cross dock) which tell the store exactly what aisle and location on the planograph those products go. Yes, it takes more at the RDC but it makes stocking shelves in the store much simpler.  This ensures a few things:
      1. The store associates can help customers and not stock shelves.
      2. The cart is there, shelves are stocked and it is gone.  Out of the way of the customers. 
      3. Minimizes complex training on the store floor.
      The basic theory is push the work and the complexity back to the DC so the store is able to sell.  Which, after all, is what it is there for.  

      Sunday, March 22, 2020

      Time for a Supply Chain Reserve Corps

      As I am sure every supply chain professional and logistician is doing now, I am spending quite a bit of time thinking about the overall supply chain in the United States and wondering if it is truly set up to service the Country in a time of national emergency.  We heard the Governor of NY today in his press conference say that the states are basically bidding against each other to get needed (and scarce) health care supplies.  Rather than going where they are most needed they appear to be going to the highest bidder.

      We have also heard the President tell the states this is substantially a state problem and the feds are there to help and backstop.  Finally, we are hearing about the shear lack of ventilators and hospital beds when (just a few weeks ago it was "should") a pandemic hit the United States.  All of this makes me wonder if this is truly the best way to deal with a national emergency.

      By now many of you have also seen the incredible Ted talk Bill Gates gave back in 2015 where he essentially predicted this COVID-19 outbreak.  While not predicting this one in particular, Mr. Gates did say something like this would happen.  I highly encourage you to watch this:

      Here are some key points from the talk (March of 2015):
      1. The next big crisis will be from "microbes" not "missiles".
      2. We have insulated ourselves from huge war catastrophes (i.e. a nuclear war or another world war) because we have spent a trillion dollars plus on national defense and the infrastructure required to defend the United States.
      3. We have a military which can scale up dramatically in a short time to fight or deter a war.
      4. We should model our fight against microbes after the structure of the military.  You have a permanent "active" force and you have a large "reserve" force which can be called up and which actively practices, trains. and stays functional. 
      When I saw him say this I was absolutely floored.  When I was in the Army in Germany we used to practice going to our "General Defensive Position (GDP)" and we would periodically go visit the warehouses set up all over Europe with stockpiles of tanks, trucks etc.  We would start them up, move them, practice deploying them etc. and we would do that in conjunction with our reserve forces.  We called it "REFORGER" which stood for "Return of Forces to Germany".  It was all a preparation for scaling up the military in Germany to over 1 million soldiers if the war started.  Similiar exercises were done in Korea and other places.

      So, the question I am thinking about now is if it is time to have a "Reserve Supply Chain Force"?  This would be something you would sign up for just like the military reserves.  You would have a role / rank, you would go and practice once a month on the weekend, you would do a 2 week summer training and you would be available to be called up if the government activated the reserves.  We would have needs for coordination with civilian industry, you would run a huge reserve of trucks, trailers and drivers and you would work for a leader of this organization.

      If your civilian job was in an "Essential industry or company" you may get activated but stay embedded in that company to coordinate all the work.

      There are a lot of details to work out but perhaps we need this force that can work in the complex civilian world of supply chain and tie it to the needs of a pandemic so we can scale up the supply chain and distribution / logistics network very quickly.  What would this accomplish:
      1. It would allow us to scale up almost instantaneously.  Get the expertise in place, get the trucks / trailers along with drivers and immediately establish the infrastructure for leadership.
      2. It would prioritize the loading of the nation's supply chain after huge "air in the pipe" is created (Think the run on TP).  This could be done in conjunction with FEMA.
      3. It would allow us to train so we are ready right away.  By being trained we don't take months to just figure out "how things work".
      4. Finally, it would establish a professional "corps" which is qualified, ready and willing to get called up as needed. 
      In the end, we have the model on how to build an infrastructure to fight a huge event which comes up on us like a black swan.  The model is the military and the reserves.  We should follow it.  Perhaps CSCMP can help with this and build out the model.  

      Sunday, January 19, 2020

      Extreme Ownership in Supply Chain Management

      I think it is well known that the supply chain area becomes somewhat of a hub for the corporation.  Just about every activity either flows into or flows out of the supply chain area.  Great ideas turn into products through the supply chain; Great sales of products cause great products to flow out of the supply chain and into the customer's hands.  Through the S&OP (Sales and operations planning) process, just about all planning activities move through the supply chain. 

      This is why Extreme Ownership is so critical for the supply chain manager.  There is a saying in the safety world:  "You see it, you own it" and that is true for the supply chain manager.  You see the issue, you own the issue and since you are going to see just about all the issues you have to take ownership to get those issues solved.  Product defects?  You will see it in inflated returns - You see it, you own it!  Inventory problems (Too little, not enough) the distribution center manager will see that in his/her distribution center - You see it, you own it!

      These ideas are built from a fantastic book called: "Extreme Ownership: How US Navy Seals LEAD and WIN by Jocko Willink and Leif Babin.  This book is written for all leaders but especially for the supply chain leader.  We see it all and therefore we have to own it.

      While there are many types of leaders I think one large macro category could be that there are two types:  Victim and Owner.  The victim is the one who lists off all the things that have happened to him or her and therefore that is whey they cannot get their job done.  If only forecasts were better!!  If only we made products which cubed better... If only.... .Well, you get the picture.  This person sits back and plays the "if only" game as a complainer, not a participant.

      The Owner (in the way of Extreme Ownership) sees the issues and regardless of origin takes ownership.  Rather than play the "if only" game as a spectator the Extreme Owner takes action to solve the issue(s).  If only forecasts were better! - Action: I am going to meet with the head of planning to discuss how I can give an early warning indicator to things which are not selling (Planning is in supply chain but the early warning indicator may come from outside the planning department).  If only products cubed better! - Action: I am going to participate further upstream in product development to educate others on the costs of not cubing properly and how we may be able to meet all the customer needs and ensure a cost efficient way to cube transportation conveyances (Design for Logistics).

      My advice here is to take ownership and move out of of your "sphere of influence" and into your "sphere of concern" (Covey).  Take action, own the issue and work with your other partners across the company to bring to a resolution. 

      After reading this book and contemplating for over 1 year (Read it last year), I really have concluded this separates out the great from the good.  The great take extreme ownership, the others observe and say "If only...".

      Thursday, November 21, 2019

      What do FOMO and Linkedin Have to Do with Supply Chain Management

      Has anyone noticed recently that your linkedin feed is just full of a bunch of technology looking for a reason to exist and all sorts of conventions and other events people are attending?  When I first got into Linkedin (Yes, I am an earlier adopter) it was a community of practitioners who would exchange ideas and thoughts on real issues, mega-trends and other more practical items of supply chain.  Then the "Facebook" world invaded.  And FOMO began.

      First, if you do not know what FOMO is it is the "Fear of Missing Out" and I think it has become the most dangerous marketing tool technology and others have used in a long time.  People are not even sure sometimes why they need or want something but what they do know (Thanks to "social media") is everyone else is doing it so I better jump on board before I miss out.  Harvard MBA Peter McGinnis coined this phrase and also warned us about the problems it will create for business.  In an INC article, it is defined as:
      "He used FOMO to describe managers who execute on too many initiatives or follow too many potential paths, out of fear of missing some positive trend or opportunity"
      The weapon the purveyors of FOMO use in business is LinkedIn.  It is here everyone posts about some fancy technology or some convention that you just "must be at" or "must have".  Mind you, most of these posts are not practitioners rather they are just advertising.  Rather than buying advertising they just create an environment where you feel like if you do not engage you will "miss out".  

      There is a corollary to this phenomena and it is called FOBO - Fear of a Better Option.  This is the other side of the coin which is when managers are inundated with so much information they are behave like a deer in headlights.  They freeze.  They are waiting and assuming there must be something better out there and so they stop awaiting a "better option".

      According the article cited above, FOBO can be a direct result of our "big data" world.  We have so much data and so many ways to display it, slide and dice it, and analyze it that we continue to do that figuring if I "slice it one more way maybe the answer will come out".  In other words, we keep looking at the data hoping a "better option" will come out.  

      Both of these are problems.  If you are infected with FOMO you will go down every path known and you will end up with too many disjointed initiatives with no clear direction.  If you are infected with FOBO you will stop everything. You will not innovate.  You will be like your father at Christmas who says "Don't buy that T.V., next year there will be something better".  Of course, this is true every year and it leads to inaction and lack of innovation.

      My advice is to be careful on your LinkedIn feed and be very careful who you accept invites from.  It is full of "advertisers".  Stay focused by reading about topics in depth and stick more to the academic world for studies and thoughts about the future.  Don't get sucked into these diseases. 

      If you want to learn more about it, Peter has a Podcast called FOMO Sapiens and you can listen to it on your favorite podcast player. 

      Thursday, October 31, 2019

      Another Tough Report from A Carrier - Schneider Has Tough Q32019

      The freight recession is real and the carriers are feeling the pain.  We know the smaller carriers are truly suffering however today Schneider (SNDR) reported and it does not appear to be pretty.  First, relative to expectations it was a tough quarter.  From Seeking Alpha:
      1. EPS missed by .02 on Non GAAP and by .11 on a GAAP basis
      2. Revenue was down 7.7% YoY and missed expectations by $40mm
      A couple of key points from their press release:
      1. Volumes and price were "compressed" and while they stated there was a "moderate" uplift in the seasonal volume the tone of the message was it was virtually meaningless.  We have learned this from other carriers:  There has been no meaningful "surge" period.
      2. We knew there were shutdown costs due to the closing of the First to Final Mile business (Which opened to a lot of fanfare about 2 years ago) but I found it surprising they had to impair the value of trucks they are selling.  This tells me they are shrinking the fleet and are actually taking losses on the equipment to dispose of them.
      3. While their truckload numbers are tough to decipher due to impacts of the FTFM closure and the impairment of tractors, both intermodal and logistics (think brokerage) suffered as well.  Intermodal was down 2% due to volumes and Logistics was down 13% (Blamed on a major customer insourcing). 
      4. They lowered their guidance from what was $1.30 per share to $1.38 and it is now $1.24 to $1.30.  Again, this appears to be due to the tractor impairment charge.  Interestingly they lowered their CAPEX for the year which again, indicates to me they are shrinking the asset base.  
      My opinion is the freight recession is even tougher than originally stated for all carriers.  While I do think there is some "kitchen sink" activity going on here (So many losses due to shutting down the FTFM that they are adding in other stuff to clean up) I think the recession is real.