Joe’s Corner Blog

Joe asked me to write this blog based on a conversation we had about the challenges of initiating change in organizations in a wide range of applications. Change management is a hot topic in many business school programs. At a minimum, students will be exposed to a class session or two on the realities of corporate culture and how that culture opens up to change or stifles it!

It is also important to recognize that this is not a NEW issue. Change in organizations is a constant in competitive organizations in our economy. For example, the “millennial” generation is embracing “sustainability” as one of their business mantras. Well in reality, this is not a new issue. The young “boomer” generation of the 1960’s and 1970’s had similar environmental concerns, such as petroleum shortages, zero population growth, air pollution, etc. However, during that time period, the economy (and those who lead it) could not figure out how to create economic benefit from the ideas (in most cases, economic benefit is viewed as direct in other words – how do I make a profit from this today?)

In the 90’s companies faced opposition to change as they tried to implement warehouse management systems, and obviously, we see to this day, the challenges the companies face in implementing SAP / ERP systems. Some of the challenges companies face in these environments are the result of the willingness (or lack of willingness) of people to embrace the change.

Today, sustainability is hot, and we (the business community – and business academics) are beginning to see economic benefits – due to established reductions in movement of inventory which is not necessary or inefficient. Therefore, very similar changes to those of the 60’s and 70’s are being more embraced by senior management today, because we see economic benefits evolving from the initiatives.

However, what makes sense and what is realistic are two completely different things. The efforts to initiate further changes in the accomplishment of these social / economic goals are driven through current popular management applications of collaboration between parties. Unfortunately, the change in a competitively grounded economy occurs at a “snails pace,” not at the “speed of light.” The reason for that is that first we have to focus on our core business, and if there is time, then we can consider new ideas. Unfortunately, in today’s world of “WE WILL DO MORE WITH LESS,” there is NEVER time for the new ideas.

I believe part of the problem with initiating change in organizations is the “collaborative / consensus” driven culture that has arisen throughout our society. Now all decisions must go through committees, sub-committees, and other groups for input. By the time ALL of the feedback is compiled, the issue has passed, or those that thought it was important, have given up and don’t care anymore!!

In a previous generation, management had self-confidence that they could make “good” decisions, and made them! I believe we have lost that ability today. That does not mean that managers should not seek input from others, but they should also know the difference between “right” and “wrong” and decide on those feelings and senses. Let me offer an example based on a story that I heard, second hand, about Ken Monfort (then Chief Executive of Monfort of Colorado – at one time the largest supplier of steaks to restaurants in the United States). For those who may have traveled through Greeley, Colorado, it used to be known as “Cow Town” because of the aroma that transcended from the massive feed lot north of town toward Greeley about four miles to the south. The story goes that Monfort’s board of directors discussed the consideration of moving the feed lot operations from the original location to another location further away from Greeley. At the end of the discussion, ALL of the board members recommended that the economics did NOT justify the move, and voted against the decision. Mr. Monfort, then made the decision to execute the move, and a drive on US 34 fifteen miles east of Greeley today, indicates it was the right decision, especially if you talk to “old timers” in Greeley who will confirm that Greeley does not smell like it used to! My point is that managers need to know the difference between “right” and “wrong” decisions, and then make the “right” decisions and execute them. Unfortunately, we are seeing various industry sectors, where it is obvious that mangers do not know the difference between “right” and “wrong” and their decisions reflect that lack of decision making skill.

Two things come from this discussion. One is that we have to change the mentality that ALL decisions must be made in open consensus environment. However, companies must insure that the managers “in charge” have the ability to make the “right” decision. That means that those managers must take the initiative and “direct” the organization. I don’t like to call it dictatorial, but sometimes the only way to get things done is to look the subordinate in the eyes and say “consider this a directive – and DO IT!” Unfortunately, too many times people at the top of organizations like “external” concepts and ideas, but assume that a general expression of interest will transcend into action at lower levels of the organization. Without, what McGregor called “Theory X Management Control,” many ideas get lost in the organization and never generate the benefits that could be derived.

This failure is due to a lack of understanding of the process that is being executed. Now, for those of you who know me, you know what is coming next, and for those of you who do not know me, brace yourself!! The process being executed, to varying levels of success is: NEGOTIATION!! Regardless of whether consensus is being pursued, or a manager makes a decision for implementation, a negotiation takes place to execute the decision. However, if we look at these two strategies as end points on a continuum, as presented below:

Management decision ——————————————————– Group Consensus

the closer the strategy is to an “authoritarian” managerial decision the more “power” the manager has in the organization, which reflects the decision making and “negotiation” process used to move the initiative forward. However, the closer the strategy is to the “group consensus” strategy, the more the parties share power in the decision making / negotiation process.

Personally, I don’t care where organizations fall on this continuum!! However, I do care that “things get done” and I sense that there are TOO many managers out there who think that ALL of our economy is collaborative and consensus driven, and that doing nothing (or maintaining the status quo) is a better option than making unilateral decisions based on their power position in the organization.

In concluding, every manager must recognize that every decision is a negotiation, and if they fail to pursue execution of initiatives (that they like) that they “expect” subordinates will carry out automatically when in reality they don’t, then those managers are giving up the power in the decision making / negotiation process as it relates to the initiative. Therefore, every manager must determine how much power they want and how much power they should delegate to subordinates (and others) if strategies are to be executed.

If you would like additional information concerning the negotiation process, several books are available through the Council of Supply Chain Management Professional’s Book Store at: www.cscmp.org. Below are the book titles:

Creating Reality Based Relationships Through Effective Negotiation: Academic Concepts and Research Support

Creating Reality Based Relationships Through Effective Negotiation: Understanding the Negotiation Process - A “Road Map” to Successful Negotiation Performance in Business, Non-Business, and Personal Applications

Effective Negotiation: Understanding the Negotiation Process - A “Road Map” to Successful Sales and Purchasing Negotiation Performance in the Value System

Understanding Effective Negotiation in Business Operations: A “Road Map” to Successful Negotiation Outcomes for Operations Managers

Achieving Success in Personal Negotiations: A “Road Map” to Success in Managing Personal Consumption and Relationships

I hope these thoughts stimulate discussion (both pro and con) that may advance the quality of decision making in your organizations.

Respectfully,

Lloyd M. Rinehart, Ph.D.
Associate Professor of Marketing and Logistics
The University of Tennessee, Knoxville
Rinehart@utk.edu

This was written by my friend and colleague Professor Lloyd Rinehart of the University of Tennessee. He is passionate about education and understanding that which drives sound decision making. I think you will find this a refreshing perspective of how decisions are made.

Joe asked me to write this blog based on a conversation we had about the challenges of initiating change in organizations in a wide range of applications. Change management is a hot topic in many business school programs. At a minimum, students will be exposed to a class session or two on the realities of corporate culture and how that culture opens up to change or stifles it!

It is also important to recognize that this is not a NEW issue. Change in organizations is a constant in competitive organizations in our economy. For example, the “millennial” generation is embracing “sustainability” as one of their business mantras. Well in reality, this is not a new issue. The young “boomer” generation of the 1960’s and 1970’s had similar environmental concerns, such as petroleum shortages, zero population growth, air pollution, etc. However, during that time period, the economy (and those who lead it) could not figure out how to create economic benefit from the ideas (in most cases, economic benefit is viewed as direct in other words – how do I make a profit from this today?)

In the 90’s companies faced opposition to change as they tried to implement warehouse management systems, and obviously, we see to this day, the challenges the companies face in implementing SAP / ERP systems. Some of the challenges companies face in these environments are the result of the willingness (or lack of willingness) of people to embrace the change.

Today, sustainability is hot, and we (the business community – and business academics) are beginning to see economic benefits – due to established reductions in movement of inventory which is not necessary or inefficient. Therefore, very similar changes to those of the 60’s and 70’s are being more embraced by senior management today, because we see economic benefits evolving from the initiatives.

However, what makes sense and what is realistic are two completely different things. The efforts to initiate further changes in the accomplishment of these social / economic goals are driven through current popular management applications of collaboration between parties. Unfortunately, the change in a competitively grounded economy occurs at a “snails pace,” not at the “speed of light.” The reason for that is that first we have to focus on our core business, and if there is time, then we can consider new ideas. Unfortunately, in today’s world of “WE WILL DO MORE WITH LESS,” there is NEVER time for the new ideas.

Cap and Trade has been passed by the USA House of Representatives. Its next stop is the Senate and pundits don’t expect the bill to pass, without major revisions, until 2010 or even as late as 2011.
I’ve read several articles, searched the web and this is my take on this bill. Those in support will find what they believe is positive; steps that will help clean up the environment and are truly sustainable. A point well taken is about those companies who pollute the environment, but the cost is absorbed by governmental agencies if cleanup is addressed at all. Consequently, the price of the finished product or raw material is understated as it doesn’t include all the costs!
I don’t know how the government will determine the level of pollution by company, industry, i.e. the cap portion of the bill. This seems to be a mountain of a task that may never be climbed. What I haven’t seen is the cost of establishing these “caps”, how reporting by companies of their activities will get them to the point where they can “trade”. There has to be an infrastructure in place in the private sector as well as with the government, to manage these important features of the bill.
Linda Fisher, Chief Sustainability Officer, DuPont believes that cap and trade that gives emission permits, rather than sells them in the early years, is a good system. She believes cap and trade is complex, but solid. She favors it over taxing companies. She also believes that the legislation passed by the House needs a lot of work.
She doesn’t believe it will become law in 2009, but there is a very good chance for 2010. If not then it will be 2011 or 2012.
What concerns me is what else is in the bill that is not being talked about. For example, I recently received an excerpt from the bill that states that homes will be subject to an energy inspection prior to resale. The home will have to be brought up to whatever energy standard is established before the sale can take place. Now think this through. There will be a cost for the inspection, which will be one of several others, there will be a government agency that will have to establish the guidelines and conduct the inspections. The time it takes to close on a home will be extended and obviously the cost to the home owner will be higher. And the beat goes on.
So there has been some information shared on cap and trade, what else is in the bill? When implemented, will it really increase transportation costs by 6 % to 8%? What will it cost the taxpayer to establish another federal agency?
We are all for sustainability and truly support programs that having measureable affects. However, with the focus on health care and Afghanistan, bills such as these are working their way through congress without being completely vetted and understood. Therefore, it’s up to each and every one of us to become informed and to let our voices be heard.

VICS is committed to supporting sustainability and a recent article in the Philadelphia Inquirer peaked my interest regarding a very sustainable program. There a few industrial composting companies, but they seem to have a bright future.

The U.S. Environmental Protection Agency estimates that 25 percent of the prepared food in the nation is never eaten. In 2008, about 31 million tons of food waste was simply thrown away!!

The science of composting is simple. Mix organic wastes in the proper proportion, add, air and water - and nature takes over. Microbes reduce it to rich dirt that can be returned to the land.
A rule of thumb is that it costs 25 % less to compost food waste than to landfill it.

The biggest hurdle is trying to find a place to do industrial composting. This is a challenge that will be addressed and if composting takes hold, it will become affordable as transportation costs per ton are reduced.

The other opportunity is for individuals to begin to compost their unused food, leaves, etc. Since I’m committed to improving the environment, I will purchase a compost machine, (there are many on the internet) and begin walking the talk.

Who among you are willing to sign up for composting with Joe? Cheers, Joe

Trust
Joe’s Corner Blog
October 9, 2009
The attribute of trust is at the foundation of what forms most personal and business relationships. Every day we make decisions based on whether we trust the store we shop at, the garage that repairs our car, the day care center that takes care of our children. We may not stop and ask ourselves the trust question as the decision we are making may be pre ordained based on our previous experience. Trust is learned or in the case of family relationships, part of our DNA.
However, just recently a prominent trade magazine ran a front page story on how the consumer no longer trusts well known brands. How this became a national phenomenon and how so many of well known companies who have been selling well established products are suspect is a bit of a mystery. But, then again, is it?
Perhaps it started with the problems with the banking system and the real estate melt down. So many individuals lost so much, including investments that were to fund retirement. Certainly Bernie contributed to the spirit of distrust with his world renowned Ponzi scheme. Employees of companies that spanned generations terminated, compensation and benefit programs significantly changed.
All of the above has had an impact on the trust factor! However, I’d suggest that trust is at the basis of most business relationships, whether it has to do with the quality of the product or the ability of the supplier to meet or exceed the expectations of their customer. There is also trust within each company, between departments, between individuals within departments.

How many promises are made and not kept, that contribute to the spirit of distrust? What may seem like minor commitments, e.g. a missed phone call, information that didn’t make the deadline? Or how about not making a planned meeting or making the meeting and not being prepared with information that is needed to make an important decision.
Basically, doing what you say you are going to do, when you say you are going to do it forms the foundation of trust. So trust begins with the individual and a company can establish a culture of trust. That culture of trust can permeate the entire organization, which is critically important as companies are global and are dependent upon acting as a single company and not a series of companies acting independently.
Trust begins with the individual and is typically learned behavior based on the values exhibited by the leadership of the company. It’s like stringing a set of lights on a Christmas tree, with the first set being the establishment of a single trust requirement, e.g. being on time. As each element of trust is added the tree gets brighter and more beautiful, more inspiring.
Trust is also built based on appearances. A well organized plant, production line, store, product presentation, emanates a message of trust. An individual that is well dressed, neat, shoes clean, shined, groomed, has an image of a person that can be trusted.
So if companies are going to win back the trust of the general public, it starts with establishing the basic expectations for each organization, establishing metrics that can be used to measure key performance criteria, both within companies, with trading partners and just as importantly with service providers.
The USA has a great opportunity to understand that trust can be a competitive advantage. We can’t sustain ourselves based on services, but have to regain our ability to compete on the manufacturing front. Product innovation is important, but that is but one step in the right direction. Trust is where it starts and it starts with each and every one of us to set a stellar example.
Trust me, it works. Sincerely joe

I’m going to take a wild guess that there have been more books, articles and interviews written on the subject of team work than any other subject. Team work goes from sports to the operating room, from the military to space exploration. There is unequivocal agreement that success cannot be achieved unless individuals, organizations, industries and countries come together to work toward a common goal.

Yet there are as many, if not more, examples of failures than successes. The one major failure that comes to mind is the United Nations, which consists of numerous constituencies and silos, each with an agenda that works against the very purpose for which the United Nations was established. One only needs to understand the plight of millions who live in abject poverty and children who will never be educated.

Well I didn’t intend to go down this path when I started writing this piece but it flowed naturally as I thought about how to establish a collaborative culture, a team spirit that drives each and everyone to meet established goals and objectives. Not to anyone’s surprise, leadership plays a key role. The next question is: Who are the leaders?” Does it need to be the CEO, or the chair person, or someone in the top floor?
It doesn’t need to be a C-level leader. However, a C-level leader has to provide the opportunity and support for a leader at a lower level to step forward.

During our 6th Nabisco Alumni gathering, which was essentially attended by those who were part of the Nabisco Sales and Integrated Logistics, it was a pleasure to see friends come together to share stories of days gone by and to revel in being part of a team that was considered to be one of the best in its era. When numerous Nabisco alums proceeded to compare our Nabisco experience to their current companies, many felt that their current companies were not where they could be, or should be, in terms of systems, processes, execution—and teamwork.

It might have reminded those with military experience of lessons learned in boot camp. Those lessons that were ingrained during boot camp stayed with many for the rest of their lives: Discipline, excellent execution, dedication to the team, etc. They are all key lessons that, if established in a person’s first position, becomes part of the person’s identity and translates to superior performance throughout their career. Moreover, when a few leaders who have learned those lessons work together, they will begin to develop those lessons into a culture that grows and translates into superior performance for their organization.

Some of the experiences shared by the Nabisco Alumni took us back 25 plus years. For example, recent university grads who accepted challenges to build information sharing capabilities, with primitive technology, and made them work. Productivity was substantially enhanced; trust was established between Nabisco, their service providers, and the Sales organization. Most importantly the customer could count on Nabisco to deliver and to communicate if problems were encountered.

Each alum was a winner and a team player back in the days we worked together. Each is a winner and team player today, and this in no way excludes those who couldn’t make the reunion. When an organization is built with winner/team players, the value they produce is greater than the sum of the parts. Each made their team mate better than they could have been individually. It wasn’t all Utopia. As with any family, there were disagreements, arguments, etc. The magic is that we never strayed from what was important – to diagnose the root cause, fix the problem and exceed the expectations of the customer. In the hustle of daily work, it might be worthwhile to step back occasionally and assess our own organization’s culture of teamwork, focus on what’s really important, and helping the next generation of leaders blossom.

More to come later on about “Pressure Up” and “Who’s the Customer.”

Sincerely Joe

I don’t often make requests of this nature but I strongly encourage you to take note of the recent developments on the Waxman-Markey American Clean Energy and Security Act (aka ACES).

The Waxman-Markey comprehensive energy bill, also known as the American Clean Energy and Security Act – or ACES, for short includes a “cap-and-trade” global warming reduction plan designed to reduce economy-wide greenhouse gas emissions 17 percent of 2005 levels by 2020 and to reduce greenhouses gases by roughly 80% before 2050.. Other provisions include new renewable requirements for utilities, studies and incentives regarding new carbon capture and sequestration technologies, energy efficiency incentives for homes and buildings, and grants for green jobs, among other things.

The bill has already been passed by the House of Representatives – albeit by a small margin – and is now awaiting a vote by the Senate.

Not surprisingly, the bill is sharply divided across party lines, but this isn’t about taking political sides – it’s about understanding how it will impact our businesses, our industries, and our competitiveness globally. Many special interest groups, labor organizations, and major corporations (some of whom are on our board) have expressed an interest in wanting to see this bill become law. And as you would imagine, many other organizations and industry sectors have different opinions. But again, regardless of your personal or your company’s political leanings, it’s imperative to understand the impact the bill could have on your business and develop a plan to respond accordingly.

Be Informed
The bill is comprised of wide range of elements which impact business and consumers. Here are a few of the highlights.
o Emission Cuts - The bill would put a cap on emissions of planet-warming greenhouse gases, and would require high-emitting industries to reduce their output to specific targets between now and the middle of the century. (This is the “cap” part of the “cap-and-trade” program.)
o Emission Permits - Regulated industries would need to acquire permits for their emissions. Emission permits are also referred to as “carbon credits,” If a company cuts its emissions so much that it has more permits than it needs, the company can sell excess permits to other companies or bank them for future use. If a company doesn’t have enough permits, it can buy more or borrow its future credits and pay interest on them. (This is the “trade” part of the program.)
o Renewable Electricity Standard – The bill calls for large utilities in each state to produce an increasing percentage of their electricity from renewable sources such as wind, solar, geothermal, biomass, marine and hydrokinetic energy, biogas and bio-fuels.
o New standards for industrial energy efficiency would be set - The bill would set new energy-efficiency standards for lighting products, commercial furnaces, and other appliances. For example, new energy-efficiency standards for buildings would require 30 percent improvement by 2010 and 50 percent improvement by 2016.
o Smarter cars and smarter grids - The “cash-for-clunkers” program is actually included in the ACES bill. There are a number of other provisions to support electric vehicles and plug-in hybrids as well as provisions to help develop “smart grid” technologies and build better transmission infrastructure.

Develop an Action Plan
It’s a fair assumption that some form of the bill will pass through the Senate and I believe it’s also fair to assume that the impact will result in additional taxes.
It’s imperative that we develop plans to minimize the impact. By implementing sustainable practices, retailers and suppliers can become more efficient and save money in the process. While the cost to implement some initiatives may make you think it’s not worth going green, the fact is there are many common-sense, low-cost approaches that can have a huge impact on the environment and your bottom line.

Be Responsive
Once a plan has been developed, it’s time to put it into action. There are a number of avenues companies can look to control their energy consumption. Often the first place many companies start is with electricity. Reducing the power consumed in manufacturing plants, office lighting, and using more efficient appliances are good opportunities to explore. Green data centers are another option. Most companies find that focusing on their data centers results in savings in electricity, air conditioning, and paper consumption.
Perhaps the most impactful area, however, is the supply chain. Taking empty trucks off the road can have a huge impact on profitability and the environment. In fact, the savings extend far beyond the cost of fuel, to include expenses associated with labor and maintaining assets.

VICS Empty Miles is a low-cost / high-impact, simple approach to reducing fuel costs, lowering carbon emissions, and saving money. Many other green solutions pale in comparison to the impact Empty Miles has on your bottom line and the environment.
Consider a single lane of 500 miles where a driver returns from a delivery point with an empty trailer. Had that truck been full,
o over 70 gallons of diesel fuel would have been saved
o and nearly 1600 lbs of CO2 emissions would have been eliminated
o …. and the cost of the empty lane would have been avoided!
VICS Empty Miles reduces fuel; reduces emissions; saves money – and now may even help to reduce taxes.

Whatever your plan, make sure it’s right for your organization, but please, make sure you’ve got one.

Be informed. Be prepared. Be responsive.

Howard Schultz vs. Howard Schultz
Business week, August 17, 2009
We have to admire Howard Schultz and the success that Starbucks has enjoyed, well up until the business started to go south in 2007 . Mr. Schultz came back as ceo in January 2008, to a company that desperately needed to be revitalized.
There are several key points in the article that I’ll make and then tell a short story and make a few observations.
Business week quotes.
“Mr Schultz had to acknowledge, however grudgingly, that the company needed to change almost everything about how it operates” Wow, quite an admission.
“He concedes the strain of trying to stay true to his shareholders and his original vision, I’ve had to change my own mentality and thinking, he says”
“As he leads Starbucks into the next era, Shultz’s biggest struggle may be with himself” For a moment, reflect on how he believes the company has to dramatically change, yet it is observed that his struggle is to embrace change. More to come on this point.
“Schultz hasn’t cared much about costs. He didn’t think he had to because Starbucks was opening thousands of stores a year. Advertising, that was what other companies did.”
“We got swept up Schultz says. “We stopped asking: how can we do that better? We had a sense of entitlement” “But it’s hard to overstate just how much Schultz has been forced to retreat from the practices of the past” “We’ve gone through huge change “says Alstead, who has worked for Starbucks since 1992. “And somewhere in the mix (were) stages of grief”
Starbucks also went the route of improving their supply chain and by bringing in a IS professional to improve getting the necessary information in the right hands. New to Starbucks but common place with most retailers.
Now here’s my Starbucks story. Several years ago I was working with a large consulting company. Two of my friends had landed mid level management positions with Starbucks and provided the opportunity for me to visit and speak with several members of the management team.
Since I had learned a bit about retail systems by working with OMI ( since acquired by Retalix) I thought I could add some value. And of course I talked about the value of collaboration, sales planning, how to meet/exceed retailer expectations, because at that time Starbucks began to sell their coffee to retailers. I had no intention of giving advice about their stores as I could add no value. However, as I got the scene of little emphasis on supply chain management or IT, I began to get a feel for Star Bucks
If I described the reception as cool, it would have been an understatement, as it was more like frigid. Talking across the desk to a person, folded arms, with no expression, made me most uncomfortable I was persona non grata. To be clear, they were courteous and affable, but not at all willing to discuss the way their business might be managed differently. They were on a role and woe on to him who suggested another approach.
It was obvious that this was wasted time and wasted travel expense, because I wasn’t making any impact. It was really about the Star Bucks culture. To prove the point, my colleagues, very talented and experienced professionals didn’t last very long with Star Bucks. They attempted to introduce some basic supply chain management practices and immediately met resistance. The message was, you people are Johnny come lately as if you weren’t a long timer with the company, the chances of acceptance were somewhere between slim and none.
Flip back to the responsibility of the CEO to establish the culture of the company and to realize that regardless of the success enjoyed that the market will change and it’s critical to stay in touch with what’s changing and to stay ahead of that change.
Fast food restaurants found a gold mine in breakfast and coffee has huge margins. Some changed hours, serving breakfast at all hours, including 2-3-5 am. Sales grew, margins grew and Star Bucks market share began to suffer. Their competition learned that they could offer similar products at prices much lower than Star Bucks. The Star Bucks cult began to wilt, while their competitors enjoyed increasing sales in a poor economy.
The Business week article goes on to say that Mr. Shultz may have a harder time with change than anyone else. It’s like he can’t let go of his idea, regardless of what’s happening around him. this is not unusual, which is why the majority of companies don’t last much longer than 25 years! Isn’t that amazing?
Leaders, especially those who are company founders get locked into the model that made them successful and try to force that model to work, even though the business world around them is changing. The result can be disastrous, depending upon how soon they become aware that they have to accept change in the way the company operates, is organized, embraces technology, becomes customer focused and becomes open to ideas.
A senior leader needs to establish an environment that embraces sound business practices that lead to ongoing improvements that align with anticipated changes. Yes, don’t wait to change until there is a crisis, but plan and anticipate what is going to happen, be willing to be wrong, but for crying out loud, don’t fall asleep at the switch.
Through VICS CPFR® I have been involved in and aware of numerous situations where the biggest barriers are taking down internal silos. Without establishing a culture of internal collaboration, with an outside view toward collaborating with suppliers, technology providers, third party providers and customers, the results will be less than optimal and may lead to oblivion.
From the people side of the business, it’s not fair for individuals to dedicate their lives to a company and find themselves without a job as a result of managements short comings. Some 6000 people are gone from Star Bucks, but this is a small number compared to any number of companies that have reduced the size of the company by tens of thousands. It just isn’t right, but we cycle through this time and time again and never learn from history.
As you read this you will think, there’s nothing I can do to change what is going on, even though I know the symptoms of oncoming disaster. To that I can tell you that from VICS experience most change happens when mid management takes ideas to senior leadership and is willing to get kicked out and told to knock it off, yet be willing to go back time and time again. Eventually if you have strong case for action, with a value proposition, you will be successful. Imagine the satisfaction you will feel, knowing you made a difference.
It won’t be easy to stand up to the MAN or WOMAN, who will rise up and talk louder than you and glare when you challenge his or her proven business practices. Do you have the courage of your convictions? Have you prepared to argue your point and make sense, sense that will increase sales, improve the p&l, reduce working and or fixed capital?
We should all learn from the last 3 years and when the economy improves, as we know it will, do our best not to repeat the mistakes of the past. I wish you all the best of luck and success. Remember, your education doesn’t stop when you graduate from college. Cheers, Joe

The challenges facing companies in general—and supply chain professionals in particular—keep growing dramatically. The whole chain that supplies consumer demand is about to have more demands put upon it, and supply chain professionals will have to meet new requirements with innovative solutions.

Consumers want a cleaner environment, one that is avoiding the threat of climate change. When consumers want something (e.g. more environmentally responsible actions), retailers and brands will respond, and retailers will make demands on their suppliers. When voters want something, politicians will respond, and we will get more environmental legislation.

It seems inevitable that supply chain professionals will eventually have to measure carbon emissions along the supply chain accurately, report them appropriately, and reduce them over time to remain competitive. Supply chain professions must do that, of course, on top of efficiently delivering to customers with greater visibility and faster speed to market.

Consider the consequences of environmental legislation such as the Waxman-Markley comprehensive energy bill entitled the American Clean Energy and Security Act of 2009 (ACES), also referred to as the cap-and-trade emissions control bill.

Companies and their supply chains will be required to measure and reduce their emissions a little more every year—or pay a new cost. The current bill, which passed the House and is in the Senate, mandates a 17% reduction by 2020. Companies will be required to measure their emissions level and report to the government. Undoubtedly, some will face audits to ensure accurate compliance. If companies don’t cut emissions, they will be forced by the government to bid for and pay for “pollution credits” via a government-controlled marketplace.

With the added costs of emissions measurement and control, the effort to improve supply chain productivity will become more demanding. We will have to do more while using less.
Try visualizing your global supply chain, where products are being handled by multiple companies before they reach their final destination. Will conventional business practices and supply chain networks be capable of meeting the demands of cap and trade? Will standards for measuring and reporting supply chain environmental metrics be needed?
One thing will be needed for certain: New best practices that reduce emissions. VICS is in the vanguard, developing the new best practices that reduce emissions across the supply chain. Some of these best practices are available to you today; some are yet to be developed by the volunteers in VICS Committees.

Empty Miles is part of the solution to emissions reduction. With an estimated one quarter of trucks on US and Canadian highways running empty, the elimination of many empty return trips by using the VICS Empty Miles system can substantially reduce emissions—and it typically pays for itself the first time it is used.

DC ByPass is part of the solution. When companies eliminate one or two entire legs of transportation along the supply chain by shipping goods direct from ports to retail distribution centers, DC ByPass significantly reduces emissions.
The more extensive consolidation being performed by companies like States Logistics (See article Regional 3PL Shipment Consolidation Saves Substantially Below) is another better practice that will reduce emissions.
Do not assume that the consumer/voter-driven push for more responsible action by business will stop at greenhouse gas emissions and energy consumption. There will be similar concerns for solid waste, recycling, water usage, packaging and materials use.
Work in the VICS Packaging and Hangers Sub-Committees will be delivering new best practices in those areas.
Managing supply will become more demanding. VICS will continue to supply solutions for your more demanding world.

Imagine a transportation management tool that measured carrier performance, provided operating information to carriers and distribution centers, reduced manual intervention, improved customer service, improved carrier profitability, and reduced operating expense and customer returns due to shipping errors.

Just think of the manual effort and time that goes into shipment planning and execution on the part of the shipper, the carrier, and the receiver.  Wouldn’t it be great if there were supply chain systems that eliminated the unnecessary manual effort that is involved in shipping an order on time, meeting delivery requirements, and actually making a profit while doing so.   Freight claims are a pain for everyone, but do they really have to be managed as they are and have been for years?  Think of the impact on the customer’s logistics operations and accounts payable, the carrier’s claims department, the shipper’s logistics operations and accounts receivable.  Not one aspect of the above adds value to anything.

Imagine if there was automatic reporting of deliveries and reports that included reason codes for orders that didn’t meet the customer’s requested delivery date.  Imagine if reports included enough information so that both the shipper and the carrier could determine ordering patterns and conduct advanced planning for labor and equipment.

Benefits would include speed of delivery, elimination of errors and multiple phone calls, customer returns tied to shipping errors, and a host of other issues that dramatically add to the cost of doing business.

What a wonderful world it would be if we could use technology to provide all the players in the supply chain with the information everyone needs to flawlessly execute.    What’s that?  These systems already exist?    Hmmm.   So the companies who invested in these systems must have maximized their productivity and eliminated all unnecessary manual effort?   What’s that?   They haven’t?    I know the tools are out there.  Cross-enterprise data integration, alerts, messaging, real-time visibility, RFID – you name it.

What’s the point?  The point is that this way of doing business was done in 1989!!!  Yep, the Nabisco Distribution Operations Control System, affectionately known back then as DOCS,   was an inexpensive piece of technology (very low-tech by today’s standards) that moved information and created operating reports that were used to measure service and handle problems before they became critical.   

DOCS started out as a way to combat rising claims costs resulting from OS&Ds (Overages, Shortages, and Damages).     Nabisco then expanded DOCS to measure carrier performance.  Under this program, the carriers and pool distributors entered their actual customer delivery dates into the PCs.  This critical service information was transmitted to the Nabisco Foods mainframe.   Using this delivery data, the distribution department developed an “On-Time Delivery Performance Audit.”  This computerized report allowed Nabisco to identify actual and potential trouble spots quickly  —without time-consuming phone calls and cumbersome manual reporting. The report measured delivery dates entered by the carriers  against the customer’s requested dates to automatically calculate delivery performance. The carriers and pool distributors also used reason codes to explain any issues they experienced. 

The smaller carriers perhaps made the biggest leap.   Nabisco required that they obtain PCs with modem capability.  In many cases,  these were the first PCs to enter their building and many didn’t know how to turn them on.     Nabisco helped them get up and running and in time, they were provided automated load plans that enabled them to efficiently schedule their day.   The system even provided them a means to compile their activity for freight bill submission.

DOCS was designed and built by a great Nabisco Logistics Team who truly understood what partnership meant and the importance of serving the customer.  Carriers and DC operators were treated as partners, and they were expected to make a profit on every shipment they handled. Nabisco had award programs that recognized above-average service.  There were over 135 carriers in the contracted fleet that were on the DOCS system. It was truly amazing as we had close working relationships with all the carriers, who were managed by five regional customer service centers.    Thanks to the diligent efforts of Steve Kingsbury, Marilyn Brown, Tom Rice, Charlie Ryan, Al Yasalonis, Joe Wisdo, Demi Lappas and so many others,   DOCS allowed us to thrive in an era when “rightsizing” and doing more with less was the mandate.       

If all of this was capable on PCs with 20 megabyte hard drives and 1200-baud rate modems – (essentially the computer stone-age) –  why is it still so difficult to achieve the perfect order using the latest technology?      It surely begs the question:   maybe it’s not as much about the technology as it is about establishing operating partnerships between shippers and carriers that result in bonds of trust and substantially reduce the cost of quality.     Maybe it’s about a world where everyone wins – the supplier, the carrier and the customer.    

The technology is important but it’s secondary to trusted relationships between supply chain partners.    DOCS was great,  and probably ahead of its time, but the collaborative environment that it created was the real magic.    If the best supply chain tracking and execution systems aren’t delivering on their promises,  then it’s time to consider,  maybe it’s not about the bike.