Happy Tuesday; 

I’m sure you have noticed the number of Toyotas’ on the highway and have read that this Japanese company is about to overtake GM’s number one position in the auto industry. Undoubtedly their passion for quality and connecting with their customers has played a major role in the success this company has enjoyed.  They have a well designed product that exceeds expectations from the standpoint of performance, comfort and dependability.  Being somewhat of a critic, i.e. not being complimentary about my cars until they earn their spurs, I can say that the Toyota and Lexus perform quite admirably. They are also highly rated in Consumer Report. 

Now you must be asking yourself, “what does this have to do with VICS ?”  Glad that you asked.  You may recall that in a prior blog, I suggested that you can expect the subject of trust to be raised.  Toyota has earned the trust of their customer because of the results that they have produced.  I’ve learned that Toyota concentrates on building long term relationships with their suppliers. In “Speed of Trust” written by Stephen R. Covey, you’ll find the following. “Toyota models a different-in-kind approach. They focus on building long-term relationships with and among their suppliers, who, in turn, collaborate with Toyota and with one another. Although product knowledge is treated as proprietary, process knowledge is expected to be shared within the value chain. Toyota’s approach could not work without abundant transparency from all participants, and it is this transparency that is at the core of Toyota’s supplier relationships.” 

To those of you who are familiar with the VICS Vision and Mission, you will immediately see the uncanny similarity in the collaborative approach to sharing process knowledge. I’m sure if we dug deeper we would find something very similar to CPFR(r. We are working on Collaborative Product Development, which is all about creating a better way of planning, without sharing proprietary information that has to do with cost or design. 

It is so gratifying to find a auto manufacturer, of the first class, who has found the magic of collaboration that has turned it into a global leader with  a competitive edge that is going to be hard to overcome. We’ll be sure to use the Toyota story when asked about companies that have entered into the realm of collaboration. 

More to come on trust, integrity, transparency and lots more.  

My best to you in all of your current and future endeavors… Joe

The VICS Logistics committee met in Knoxville this week and did a deep dive into Collaborative Transportation Management and Global Logistics Management. This is a working session that took the better part of two days, with VICS members volunteering their time, talent and experience to; develop Business Implementation Guidelines for domestic electronic transportation and a model that identifies every EDI transaction set that is involved in global logistics.

As the team of subject matter experts drilled down into each subject they quickly identified the current gaps that inhibit the efficient and effective exchange of information and the movement of product.  It was quite obvious that there was an impressive depth of knowledge and an understanding of what needed to be done to improve current business practices.

Companies and individuals, regardless of their size cannot bring about the necessary changes. They can, and do, develop individual proprietary systems, which may be productive, but inefficient for the industry, as one off solutions must be developed.  VICS has brought about change, by developing guidelines and solutions that have been adopted by the retail industry.

The magic of VICS is in the membership that trusts the organization to do what is best for the industry, which it has done for twenty plus years in developing new and improved methods in supply chain management. The magic is in the individuals who contribute their time and talent, while holding down full time and demanding positions. The magic is in the support that VICS gets from senior executives of leading companies, who truly believe in the VICS vision and mission.  I’m very fortunate to be a part of a great team that creates magic, every day….

Cheers, Joe

The January/February edition of “Chief Executive� includes an article titled, “Deep-Sixing Six Sigma� written by Charles Holland PhD, CEO of QualPro.

The article immediately caught my eye as I am a fan of Jack Welch and the results that GE had with Six Sigma.  I also had an inside view of the GE program as a relative of mine was one of the first Black Belts who traveled the world as a key trainer.  GE enjoyed significant improvements in quality and delivering products to customers on time.

So with this as background, I was amazed to learn that Holland’s research revealed that of the 58 companies that announced broad Six Sigma programs 51 stock performances below the S&P 500 index since their announcement.  Only five of the 58 exceeded the index.

He went on to site examples; Ford committed 2K Black Belts across business divisions and since that time Ford stock has under performed the index by 60%; GE underperformed the S&P by 30% over the last 6 years; Home Depot has lagged 30% behind the S&P.

Obviously there is much more to success than improving quality and service to meet the expectations of Wall Street and the investment community. However, to move to programs like Six Sigma takes a significant commitment of resources AND the ability of a company to adapt to another culture. Change management plays a key role as does senior leadership support.

There are alternatives and one that delivers the greatest value with relatively small investments in technology and human resources is CPFR®.  Company after company has delivered case studies that reveal increases in sales, both for themselves as well as their trading partners, reduced working capital as inventory is reduced, improved profits and there are fewer exceptions that lead to unnecessary expenses and dramatically improved working relationships with their partners.

Compared to Six Sigma and other similar approaches, the cost of CPFR is lost in the rounding and the pay back is measured in months rather than years.

Research done by Accenture, IBM and Kurt Salmon Associates has proven collaboration to be a winning proposition. Senior executives have acknowledged that collaboration is the key to unlocking resources that can now be used successfully in a non-siloed business environment.  Six Sigma, or what is now referred to as Lean Six Sigma, still has a role to play, perhaps in collaboration with CPFR.

The work that the Hanger Sub committee has produced over the years is absolutely amazing. The Hanger guidelines, that can be found in the Guidelines and/or the Floor Ready Merchandise Committee sections of the VICS website, is an example of experienced and knowledgeable individuals, representing their companies, coming together in a collaborative way to write hanger guidelines. These comprehensive guidelines provide the retailer, the supplier and the hanger manufacturer with very specific information, with the end goal to ensure the retail supply chain effectiveness and efficiency.

 

Kudos to all of the dedicated and contributing members of the Hanger Sub Committee, who demonstrate the value of VICS, i.e. making a difference and adding value.

 

Joe

Thomas L. Friedman’s national best seller The World is Flat names collaboration, supply chain improvement, and information sharing as among the drivers transforming the world economy and human society today.  He is right on!

Friedman lauds work in standards, collaboration, Web-based processes/workflows, global logistics, and global supplier and customer relationships. Friedman mentions collaboration 469 times in his book—another indication of the importance of its importance in the emerging world economy.

The work of VICS’ members not only increases the success of their own companies in the marketplace, it becomes part of the driving forces shaping the future. VICS’ members have an impact on effective and efficient supply chain networking, far beyond what was ever originally imagined.

We found it interesting that Friedman’s view of the importance of standards, technology, collaboration and thinking outside the box, provide an objective confirmation of the work in which VICS has been engaged over the last 20 years. While he is not a supply chain professional, Friedman remains a highly regarded observer of international trends in human society. He understands the competitive value of processes, organization, collaboration, technology, and information sharing. Friedman’s perspective is a worthy read.

Friedman’s book cites numerous companies that have adapted to the evolving economics and thrived. He also warns about other, formerly dominant organizations that steadfastly held onto yesterday’s assumptions and are now faltering or failed. Companies can succeed in today’s networked, globally collaborative, “flat� world.

The book lists the “Ten Forces that Flattened the World.� They are:

1. Fall of the Berlin Wall, which freed millions of people to think globally and to embrace standards. (VICS was one of the organizations that led the original standards charge).
2. Browser-based World Wide Web, which simplifies transporting data and running applications around the globe instantaneously.
3. Work Flow Software, using Windows and web browsers enable people and software to connect and collaborate.
4. Open Sourcing (e.g., Apache and Linux), which has changed the competitive landscape of software development and design.
5. Outsourcing, in which business functions are contracted to third party providers if they can do them better (e.g., Procter &Gamble cut its 4,400 employee IT workforce nearly in half under a 10-year contract with Hewlett Packard).
6. Off Shoring, in which entire operations are re-located where they can be done more cost-effectively (e.g., manufacturing goods in China).
7. Supply Chaining (i.e., supply chain management), which uses information and planning to streamline logistics and create superior customer-supplier relationships.
8. In-sourcing, a whole new form of collaboration in which a third party performs mission-critical functions while remaining invisible to the end customer (e.g., managing returns, repairs, re-shipment, and customer relations for a brand or product line).
9. Informing, in which Internet search engines and online buying level the playing field by providing consumers and business buyers with easy access to information and pricing.
10. The Steroids—the digital, wireless, and mobile technologies that combine and strengthen the previous nine forces so each enhances the others, and collaboration is made even faster and easier.

The work of VICS’ members enables or improves many of Friedman’s 10 Forces, including outsourcing, in-sourcing, supply chaining, off-shoring, and informing. VICS members are helping each other up the stairs to e-collaboration (see chart) and to competitive advantage in a “flatâ€? world.

Some leading companies understand and act. For example, according to Proctor & Gamble’s CEO A.G. Lafley, “P&G is introducing a set of desktop applications to foster real-time collaboration among its worldwide workforce of more than 100,000 people and with its vast network of customers and partners. We’ve collaborated with outside partners for generations, but the importance of these alliances to P&G has never been greater. We want P&G to be known as the company that collaborates—inside and out—better than any other company in the world.� (InformationWeek, Nov. 14, 2005).

Other companies have more difficulties. We realize that internal collaboration is the main barrier to overcome. The “not invented here syndrome� still prevails, as well as “we’re different� or “we can’t trust them.� Friedman points out companies who have gotten over such barriers to gain an advantage.

There is so much more to be done to drive toward optimal solutions that include collaborative machine-to-machine business planning. We much enable inclusion of all supply chain players, not just those with the largest volumes. But most of all, we have to continually educate ourselves and work together to create the next best practices—and the next competitive advantages.

In today’s global economy, the only way to grow is to know how to become “flat.� Those that don’t learn flat, will be become flattened.