Stadia emptied, vuvuzelas silenced, the Netherlands team has four years to contemplate what might have been in their resurgent prominence in the world of World Cup soccer. FIFA has a shorter time to assess the salutory effects of public hanging for sight-challenged and judgement-impaired referees. In the meantime, we'll don our colors and pull for Ajax, the pride of Amsterdam.
Back in the real world, the good news is that our universe of supply chain management is making headlines. That's also the bad news. USA Today's July 8 Money section carried a top-of-the-fold feature on shipping bottlenecks and their negative impacts on cost and timeliness. Our friend Rosalyn Wilson was cited (but CSCMP's production of her annual State of Logistics study was not mentioned - another rant for another day).
The problem was blamed on recession-driven capacity cutbacks in air cargo, ocean shipments, and truck transport. Adding container shortages to the mix makes marine transport the most severe manifestation of the problem, with shipping volumes increasing while Chinese container manufacturing has been seriously curtailed.
But, some of the damage was self-inflicted, and some continued difficulty is a matter of choice - an investment in short-term pain in exchange for a payoff in longer-term financial pleasure. Carriers (of all types) embraced sharp price cuts in order to keep operating - even at a loss - when times got tough. Many shippers took advantage of a perceived desperation, and turned the screws even tighter.
Now, the carriers want to get well - and fast. The USA Today feature reports a 150% increase in transportation costs (following the historic decline of 2009). Significant additional increases lie ahead, with re-activated capacity lagging demand. Some observers maintain that the ocean carriers' recent practice of "slow steaming" is a faux green maneuver to mask a cynical manipulation that reduces effective capacity - and creates unholy pressures for further upward price movement.
Despite the fine words and high concepts coming from many players in the global supply chain community, this scenario reflects a sobering reality about talking the talk versus walking the walk.
How often must we repeat these cycles of adversarial win/lose (and lose/lose) industry-wide confrontation? At some point, the strategists among us will learn to think, like Bobby Fischer, four or five moves ahead and build long-term business relationships. Real relationships will insulate genuine partners from the debilitating skirmishes that perpetuate the paradigm of creating immediate transactional focus, short-term one-sided gains, and long-term supply chain underperformance.
We know better; now we've got to do better. But, doing better requires that everybody - shippers, carriers, service providers - gets in the game. And plays to win-win.
UTZ Certified Good Inside is a program tried to creating open and transparent market place for agricultural products. Its vision is to achieve greater sustainable agricultural supply chains by farmers who are professionals implementing good practices that lead to better businesses. And by the food industry takes responsibility by demanding and rewarding sustainably grown products.
In the first quarter of 2010, 32042 metric tons of UTZ Certified Good Inside coffee was purchased by coffee roasters and brands. This is the highest volume in the history. UTZ Certified Good Inside coffee helps farmers manage their farms by trains farmers, facilitates farmers with common problems in the coffee farming and provide farmers knowledge agricultural practices and global coffee market. The UTZ Certified sustainability program helps farmers grow their coffee professionally and care for their local communities and the environment.
When roasters and brands buy UTZ Certified coffee, they know where if came from because UTZ Certified provides complete resources. Thus, UTZ Certified increasing demand for coffee production and willingness to invest in coffee market.
video: http://www.youtube.com/watch?v=fDmxw7oYe28&feature=related
North America is a weak spot in the global drinks business, largely because of the decline of carbonated soft drinks. With PepsiCo’s soda volume dropping 5 percent last year, according to Beverage Digest, the company had to figure out how to restructure its distribution network in order to fill customer needs more readily. Last year, PepsiCo agreed to purchase it’s two largest independent bottlers for $7.8 billion. This all comes at a time where the carbonated beverage market is losing share to healthier, non-carbonated products like juice and water. Ten years ago, soft drinks comprised 70% of PepsiCo’s beverage selection, where today they are responsible for only 45%. PepsiCo wanted to put an end to the days in which it argued with bottlers over profits and plans for new brands. When the company wanted to try new drinks or package sizes, the requests were sometimes hard for its big, independent bottlers to fulfill at the pace Pepsi wanted. That highlighted one of the central tensions: Bottlers thought Pepsi was too demanding, and Pepsi thought bottlers didn’t move fast enough. Big decisions between PepsiCo and its large bottlers too often became tug-of-wars over revenue, sales volume and profits. This shows just how willing partners must be to work with one another and just how important it is for businesses in partnerships to respond to the wants of the other. The new system put in place by PepsiCo now allows for a more integrated and seamless operation. This allows more flexibility to move with consumer’s changing tastes and compete with rivals like Coca-Cola in the short term. And in a time where big-box chains like Wal-Mart and CostCo continually demand lower prices, this acquisition allows PespiCo more negotiating leverage than its rival, leaving the boys at Coca-Cola to play catch-up. http://online.wsj.com/article/SB124939009522504571.html
http://www.orionmagazine.org/index.php/articles/article/5339/
“The Only Way To Have A Cow”
The article I read came from Orion Magazine. This article starts out with the author telling us how he does not and has not eaten meat in a fairly long time. He then goes on talking about how “vegetarians and vegans have upped their attack on the consumption of animal flesh” and also that consumption of meat has helped cause climate change. I do not believe that the consumption of meat has helped cause global climate change, mainly because I am in an atmospheric science class this semester and we have learned that all the little things people believe are causing climate change are not. It also states that “going vegan is 50 percent more effective in reducing greenhouse gas emissions than switching to a hybrid car.” The article goes on to tell us how cattle, today, are a big cause of climate change and greenhouse gas emissions. It also mentions how today’s cattle give off more greenhouse gases than bison from earlier decades because they are stationary or stay in pretty much the same area all day everyday until slaughtered, whereas bison moved around to keep away from predators. I, personally, do not agree with this article at all, but I was born and raised on a farm that taught me completely different views than what this author believes.
Wal-Mart entered India with the idea of global expansion, but it has been faced with opposition that it usually does not face. What did Wal-Mart do? It adapted to the market conditions and made it work. Instead of focusing its attention down the chain on customers, which Wal-Mart cannot do because of restrictions, it is focusing its attention upstream on the producers – the farmers. This relationship is mutually beneficial because it gives Wal-Mart a valuable partnership within the country, which is important when entering new markets, and the farmers receive higher prices for their products as well as information and technology that are available through Wal-Mart and its affiliates. Perhaps the higher productivity and incomes will alleviate some of the poverty problems and Wal-Mart will succeed in India. This example is a good indication that adaptation and cooperation are the keys to successful entrance into a new market.
http://www.ndtv.com/news/india/how-wal-marts-wooing-indian-farmers-19777.php
Kraft's marriage with Cadbury Article http://www.businessweek.com/managing/content/feb2010/ca2010028_928488_page_2.htm Kraft’s acquisition of Cadbury has been part of every conversation in the agbusiness industry. Both companies are prestigious brands with solid global markets, this merger of Kraft and Cadbury will control 15% of the world’s confectionary market making it the largest. In respect to business relationships, this merger in terms of annual cost savings, is predicted to save Kraft about $625 million in procurement, marketing and R&D. Kraft will take advantage of these cost reductions by using Cadbury to tap into the luxury segment of many emerging markets like India and Latin America. So far this all sounds good for Kraft, but what benefits does Cadbury receive? Cadbury benefits from Kraft’s huge amount of financial resources and assets to make products like Chocolate bunnies and Dentyne Ice at cheaper costs. The merger in the long run is expected to increase sales 5% annually. This relationship will work in the long-run.
Cargill, the world's largest trader of agricultural commodities, is threatening to halt business with one of its suppliers based on information that points toward the company's deforestation activites. Sinar Mas, a major Indonesian palm oil supplier, has been accused of illegal land-clearing activities to create plantation ground for its palm oil production. Sinar Mas assures that once further investigation is completed, its business with Cargill will remain. However, other buyers, like Nestle who is switching suppliers and Unilever who scrapped a $33 million contract with Sinar Mas, are way past threatening. Their business relationship with Sinar Mas is no more, because these multinationals didn't want to harm their companies' global perception because of their supplier's actions.
Companies stop business relationships all the time; so, why is this particular situation significant from a food marketer's standpoint? None of these buyers had any real issues with what they were buying. The issues that terminated the supplier/buyer relationship had nothing to do with the quality or physical ascpect of the product that was being transacted.
Here, we see the extension of a generic commodity to what Theodore Levitt would call a product bundle + intangibles. In business relationships, there are intangibles that are added into a product bundle with the commodity/product that are remarkably influential. It was an "intangible" part of the "product bundle" that Sinar Mas created that was unwanted by its buyer. Nestle, Unilever and now Cargill can't do business anymore with Sinar Mas. But did this have anything to do with the product? Nothing. The problem was entirely in the risk of tarnishing the perception of the buyer, and how that was affected by WHO they bought palm oil from, and HOW it was being produced, but not WHAT it was.
Many factors, be it technology, globalization, or media influence, make any business relationship extremely fragile nowadays, in that absolutely EVERYTHING that is offered to the other company matters. Every aspect of what you sell/buy and how you go about it in a business relationship can be influential, even if it is "intangible."
The intangibles that are included in the product bundle are significant. So significant, in fact, that it cost Sinar Mas a relationship with some of the most recognizable food companies in the world.
http://www.ft.com/cms/s/0/79510d4c-37af-11df-88c6-00144feabdc0.html
Theodore Levitt: http://cte.jhu.edu/courses/pii/marketing%20success%20through%20differentiation.pdf
Dr. Tachi Yamada is President of the Bill & Melinda Gates Foundation's Global Health Program. In a recent interview with Adam Bryant of the New York Times, Dr. Yamada recounted a few lessons he has learned along the way, including the importance of making the person with whom you are talking feel like they are significant, or that what they have to say matters most in the current moment.
Dr. Yamada designates time to read and respond to email and to take and return phone calls, but he does so by focusing on one task at a time. He does not carry a Blackberry!
His approach is interesting and encouraging. It seems to me that the current business landscape involves multi-tasking each and every last thing that can possibly be multi-tasked. I like the sincerity of his living-in-the-moment practice.
Says Dr. Yamada,
"What I've learned is that when you actually are with somebody, you've got to make that person feel like nobody else in the world matters. I think that's critical. So for example, I don't have a mobile phone turned on because I'm talking to you. I don't want the outside world to impinge on the conversation we're having."
(Quote published in New York Times on Feb 27, 2010)
Bill Drayton and Valeria Budinich at the HBS blog wrote the following paragraph in a blog entry earlier this week-- it really resonates with me.
"To be effective in this new world, you will need to master the skills of empathy and teamwork, as well as leadership and driving change. You will need to know how to function in a world that is not a hierarchy but a kaleidoscopic global team of teams, with no boundaries between sectors and change that happens at an escalating pace."
I am so glad that empathy and teamwork are acknowledged as keys to success!
They are important characteristics that I see in many successful business leaders and are critical for strong business relationships.
Click to read to blog entry, Get Ready To Be a Changemaker.
(Excerpt is from Get Ready To Be a Changemaker, 2 Feb 2010)
As we move to more global environments, teleconferencing, or phone conferencing is becoming a norm. Here at Franklin University, we have opened new campuses in Poland, Macedonia, and will be opening in other countries in 2010. While the course delivery will be face-to-face, the collaboration necessary prior to the beginning of courses is essential. And, while face-to-face collaboration is preferable, it is not always possible so phone conferencing, or teleconferencing, has become the mode of collaboration.
Here is a laundry list of points you might consider before and during your conferences from a distance:
Prior to the conference:
1. Ensure that all participants have a copy of the agenda. Define any necessary vocabulary, or jargon that the participants from a distance might not understand. If you have a point person at a distance, you might want to have them review/add to the agenda items.
2. Do a set up of technical tools prior to the meeting. Make sure that everything is working without difficulty.
During the Conference:
1. Do introductions and specifically introduce anyone who might be new to the group.
2. Ask each person to identify themselves when they speak, especially if it is a large group.
3. It may be difficult for non-native speakers, or speakers with a different accept in English to understand a person, especially if the conference is by phone. It will be important that you remember to speak clearing and slowly (not too slow though) so that others understand. It is also important that you refrain from using slang expressions that may not be understood by speakers of other languages.
4. Provide for pauses in the discussions and ask if participants have questions.
5. Engage as much as possible, the audience at a distance.
6. If there is lag time between locations, slow down the conversation. Also, if you are using translators, provide for translation time. Plan for additional time (about 1/3 more) if a translator will be used.
7. If possible, use easily-seen graphics, drawings, or other illustrations to accompany presentations.
8. Keep a record of action items that need to be completed by all concerned in the conference. Review these items at the end of the meeting.
9. In a timely way, follow up the conference with a summary of the action items and other points.
The Economist, which steadfastly continues to call itself a newspaper rather than a magazine, recently ran a provocative - in the sense of provoking - column. The October 1st Schumpeter opinion page (www.economist.com/businessfinance/displayStory.cfm?story_id=14540023) discussed elements of thriving on adversity. It cited several cases of companies that havelearnt how to prosper in difficult times, and have even started up with transformational busniess concepts during recessions.
The column cited some positives from leaders that distinguish them from industry laggards, including ground-breaking product innovation, customer/product re-focus, and prior good management that husbanded resources - including cash - against a rainy day. It regrettably went on to include using "muscle" to "squeeze" costs, a tactic that is short-sighted on a good day and destructive to effective high-trust business relationships in the end.
Curiously, several of the titans mentioned are among the global leaders in supply chain management (and supply chain relationships), e.g., Cisco, P&G, Coca-Cola, Nokia, IBM, PepsiCo, and the like. Leveraging the creativity and power of intimate relationships with supply chain partners was not mentioned.
I am generally mad with admiration for The Economist for the quality of its writing, for the substance of its content, and because it is one of the few "newspapers" that really understands about supply chain management - and assumes that its readers also do. Schumpeter, with some excellent content and research, went only halfway on this topic, then missed the boat on what might be the most important element for success in tough times, the quality and caliber of business relationships in the supply chain.
What's your take?
Actually, there are many roads out of Chaos. The one that leads to Conformance is called Collaboration. It is full of twists, turns, and surprises, and takes longer than one might imagine to reach its destination. Two cases from the world of logistics and supply chain managment come to mind.
One is the 'umble wood pallet, a staple in any distribution center and indispensable for moving products on a more-than-one-at-a-time basis. Fifty years ago there were no particular universal standards for pallet size and construction. A food company pioneered the development of a "standard" pallet, which later became known as the GMA pallet. 48"x40", it is today the dominant pallet size in North America, and correlates closely with the 1.2mx1m European pallet. (There are still other sizes surviving, notably the 42" pallet used in telecommunication industry.)
The struggle to achieve this relative uniformity across a spectrum of companies and supply chains was tough, and initial resistance to the notion delayed serious collaborative development for several years.
More recently, the marine cargo container ("shipping container"), which has made efficient global supply chain execution possible, and piles of which crowd freight yards and intermodal terminals across the country, has undergone a remarkable journey to get from Chaos to Conformance. The painful birth and development of the "standard" shipping container is detailed in the soporific, but vitally important book, The Box, by Marc Levinson.
The basic concept originated in 1953, with the first container shipment going from Newark to Houston in 1956. But, the multiplicity of container sizes (and backers) threatened to shut down the emerging trend by the late '50s. It took until 1970 for ISO to publish the first complete draft of its standards. Although considerable progress was being made while standards were still in development, there were still holdouts involving two major shipping lines in the late '60s.
The lesson here is that the relationships required to successfully navigate from Chaos to Conformance can be incredibly more complex, sensitive, and fragile than those involving supply chain partners, or even an end-to-end set of supply chain collaborators. They tend to be transient, but intense. They necessarily include governments and labor unions, and they often have international ramifications - and participation.
Many of the participants in the debate and resolution play roles that transcend the usual picture of supply chain relationships, such as seaports, railroads, air cargo carriers, and airports. Further, the operating entities involved may be bitter competitors in all other aspects of supply chain execution, suspicious of one another, as well as skeptical about new thinking.
In summary, the Collaboration Road from Chaos to Conformance may be a bit like Maui's Road to Hana. Difficult, and on some days seemingly impossible, full of pitfalls and opportunities to crash, but in the end, the only way to drive there.
What do you think? Do you have other examples?
A high-tech global manufacturer decided to set up a global accounts program. They targeted their 200 top customers and were ready to pilot the program. Then some unknown genius had asked: “Shouldn’t we find out if they want to be treated as one of our global accounts?” The other decision makers agreed and so representatives went out to ask that very question of the targeted accounts.
What they found surprised them. Of the 200 global customer targets, 73 of them didn’t want such a relationship. What they wanted was cheap product and they tended to say, “Take the money that you would be spending on making us a global account and deduct it from your prices.”
Just asking that simple question saved the high-tech company millions of dollars in relationship management costs. And it strengthened the relationships with the more transactional customers.
The Moral? Just because you think it’s a value to the customer doesn’t mean it is. Ask before investing.
No, this is not another political rant. But, it's time to re-visit green initiatives to see if and how they might affect business relationships. So, put aside any predetermined positions on the reality or unreality of global warming, and, if real, whether caused by humankind or not. Whatever the outcome of that debate, we still have serious responsibilities to husband resources and nurture the planet. And, unlike a couple of generations ago, business gets the picture.
Today, in the supply chain world, it’s not enough to get smug about your own progress and accomplishments in the realm of green. Your green is nearly worthless if your upstream suppliers aren’t equally green. And, you’re both in trouble if the ultimate downstream customer doesn’t care.
As we’ve often said, our world is populated by competing supply chains. So, to be sustainably green, the entire supply chain needs to be pursuing green objectives in sync with one another. In fact, the Council of Supply Chain Management Professionals (CSCMP) defines sustainable supply chains in those terms.
Others are catching on. Inbound Logistics magazine just published a list of green supply chain partners. They may not have gone quite far enough, but they’re going in the right direction. And they’ve enlisted their printer and their suppliers to join in the elimination of waste in their own supply chain. Eyefortransport has issued a Carbon & Sustainability Report to go along with their Sustainable Supply Chain Summit. The report isn’t focused on what a company ought to do, but on what supply chains need to do.
I think the emergence of this issue is a huge net positive; I also think it will tax business relationships, as supply chain partners figure out how to link their individual green initiatives. It may also be stimulating “greenwash” claims by those who’d rather talk the talk than walk the walk.
How is your company being affected by a supply chain-wide green direction? Have you had to re-prioritize your efforts to match up with those of your key relationship partners? Has the difficult economy impacted your ability to pursue green progress and keep pace with competing supply chains? Are you running into supply chain partners who are greenwashing?
I’ve written a couple of time about the status of green in the supply chain, and particularly how hard times might affect programs. An update will soon be available at www.artvanbodegraven.com. A fresh outlook will also soon be resident on www.s4consulting.com. Cited sources are www.inboundlogistics.com (August 2009) and www.eft.com.
"Ha um Ford em su futuro!"
That's Portuguese, more or less, for "There's a Ford in your future!" Good news for Ford, maybe not so much for the North American auto industry. A Detroit writer has suggested that there may never be another auto assembly plant built in the USA by a domestic manufacturer. He may not be absolutely correct, but he's definitely on to a trend that may become a movement.
Ford has just built its most advanced assembly plant in the world in Camacari, Brazil. It's in Bahia, not even in the more industrialized south. The plant, one of the leanest on earth, shows visible signs of best practices from all over - flexibility in multi-platform assembly; egalitarianism in dress, appearance, and food alternatives; and seamless, nearly invisible, integration of suppliers into physical operations and flows. All that, and they've got their own port facilities, too.
Defying stereotypes, this isn't one more case of American jobs being lost to low-wage/low-benefit exploited workers in some impoverished third-world outpost. It is all about the potency of business relationships when their power has been unleashed.
I'm guilty of some level of passion about the potential to do better - lots better - when suppliers and outsourced service providers have been embraced with progressive relationship management programs and practices. Camacari may provide a global examplar of what I've been feebly trying to illustrate.
Suppliers - outsourced parts and assembly providers - don't merely deliver their goods to production lines just in time in the correct sequence, a common practice in the US, presuming they haven't been driven into bankruptcy. They put together their products and deliver components and assemblies, in a synchronized flow, to assembly lines. You can't tell who's Ford and who's Lear or Visteon without looking very closely. They and their work are totally integrated into overall manufacturing flows. Just imagine the mutual trust and confidence involved.
The operation is highly automated, with robots galore, adding to quality, speed, and flexibility performance. How is this possible? Relationships. Relationships with the workforce that not only permit, but encourage and celebrate innovation. Business relationships with suppliers and service providers that not only knock down walls, but act as if they were never there.
These, despite marginal advances on the domestic front, are what we don't have - and aren't likely to anytime soon - in the domestic North American industry. We may simply have too much baggage. The bloody days of organizing the UAW, followed by nearly 70 years of contentious dealings. The unrelenting cost pressures on outsourced independent suppliers and parts supplier spin-offs.
Replace those with genuine business relationships, and we might have a fighting chance. But, we're behind the wave. The future seems to look more like Brazil. Or, maybe Mexico, where Ford also makes excellent vehicles, and has more-or-less insourced supplier activity by bringing it back from Asia to "near-shore" locations to serve assembly in Hermosillo.
What's your take? Am I too pessimistic? Whether or not it's too late for us to take advantage of serious and positive relationship building, is the quality of relationship management a key to global success in this industry?
View the new Ford plant in Brazil.
Resilience is a hot topic these days as people try to figure out how to bend with the winds of economic change without breaking. What can you do when your resilience is getting low? Here are a couple of suggestions that seem to work well throughout business relationships.
The first and most fundamental thing to do is to keep your body healthy. For decades we have been hearing about basic stress management techniques: get enough sleep, exercise, eat well. Guess what? It's all still true. The latest research tells us that normal adults need 7 - 9 hours of sleep a night, as in EVERY night. No macho points for surviving on 4 - 5 hours. Sooner or later, it will catch up with you as reduced immune strength, difficulty concentrating, anxiety...the list goes on. Exercise is pretty basic. If you get 45 minutes of heart-pumping exercise, which could be something as simple as fast walking, walking up and down steps, or playing volleyball, four times a week, you're there. Eating well means keeping caffeine to 1-2 cups/cans a day (you won't need it if you are getting enough sleep), cutting out trans-fats and high-fructose corn syrup and eating some fresh fruit and vegetables every day.
The next step in developing resilience is to pay attention to how you talk to yourself. If you flood your mind with negative talk all the time, you significantly reduce your ability to deal with change and adversity. Often we keep ourselves stuck by ruminating over things in the past or worrying about worst-case scenarios in the future. Our scope may be too narrow, like improving sales revenue at all costs, or too broad, like trying to solve the global economic conditions instead of thinking creatively about how to update your products. For one day, try telling yourself that the challenges your are experiencing are normal and healthy, and the current problem is a doorway to an innovative solution. Don't roll your eyes, just make a genuine effort and see what happens.
Finally, to improve resilience, improve your communication. Learn to say things as simply, clearly, and honestly as you can. Listen attentively to others. Make it safe for others to ask you questions by avoiding routine answers. When in doubt, share information. Except for a few explosive outbursts, most business communication suffers from too little, too late. You don't have time? Well, to quote an old advertisement, "Pay now, or pay later." Investing time in good communication pays off in the long run.
The best thing is to choose only one thing to do differently and actually make the change consistently every day for at least three weeks. I'd love to hear from you to find out how it works.