Good morning and Happy Mothers Day to all of the women who are dedicated to the health, happiness and well being of their children!!

I’ve been organizing my rather substantial library of material that I’ve collected over the years and came upon a presentation that I gave that dealt with change management. The words “learn to forget” jumped out and reminded me that I used this mantra to help communicate the importance of meaningful change.

We all have learning experiences as we go through our careers, some of which should be forgotten!! The attitude of the golden rule, i.e. “she who has the gold rules” was something I learned early on. This attitude was typically found with those with the responsibility of managing a supplier of products or service. Requirements were often unreasonable as were the expectations.

Confrontational  relationships were the rule, to include cross functional relationships between departments within a company. Siloed compensation, often times determined by performance metrics that were not tied to company goals, but those of the individual/department.

If this is what we learned, it is time that we ‘learned to forget” !  What worked (?) in the past will not serve any purpose in today’s networked world of 12k mile supply chains and a complex and challenging global economy. Forget about the power of the position and think about how to build trust, with integrity and competence as the foundation for collaborative relationships that add far greater value.

Learn to forget that which is of little value, while holding on to that which is critical to individual and team success, i.e. to be trusted to deliver on commitments, with integrity and sound purpose.

Have a great day…. Joe

Benetton is coming back, according to a recent Wall Street Journal article. It’s got the latest design in supply chain. And financial results suggest its on the right track.

Interestingly, Benetton was super hot in the 1980s, when its vertical supply chain and solid colors enabled a state-of-the-art supply chain. Benetton would dye products just prior to shipment in whatever colors were selling better—increasing in-stocks in the hot items while reducing overall inventory. It could replenish stores in only a couple months. Sales and profits soared.

Since then a host of faster-fashion competitors such as Zara pounced on the market. They could replenish in weeks, not a couple of months. Benetton’s sales and profits sank. Over time, many stores were closed. The company tried new brands and designs, but they did not do well. In 2002, Benetton filed its first net loss.

In 2003, the company hired a new CEO (Silvano Cassano) to revamp its supply chain. He did. He outsourced to China, broke up orders into smaller ones that could be adjusted according to sales trends, revamped its DC for high-speed sortation and enabled re-allocating orders in transit. Now Benetton ships to stores every two weeks (not every two months), and every week if an item is really hot.

Benetton’s supply chain is near state-of-the-art again. 2006 revenues increased 8.4% to $2.5 billion; profits rose 10% to $165 million—its best financial performance in a long time.

Perhaps there is a pattern here.

As one of VICS prominent members said, referring to the growing need for speed and shorter fashion seasons, “The apparel supply is broken.� Those who leap ahead to fix it first will reap the lion’s share of benefits.

It will be particularly interesting to follow Benetton over the next couple years. A new CEO, Gerolamo Caccia Dominioni has come aboard. Will product design and marketing catch up with a strong supply chain and results skyrocket? If supply chain suffers, what will happen to results?

Stay tuned.

Suffice to say that every organization has a culture and approaches their business in a fashion that is somewhat unique. At the same time successful companies have found that the path to success is in finding their formula to success in applying business guidelines, processes and standards that are common across their industry. We can’t imagine managing a business today without the use of the ubiquitous bar code, or having a standard as to what side of the road on which to drive our autos.

But as organizations grow organically, or through acquisition, they tend to go through cycles of increasing the size of departments, the number of departments and divisions, only to right-size at some future date. In the process of right-sizing, departments are rationalized, positions consolidated, functions outsourced, until the financial number or head count objective is achieved. It is a scenario that is repeated time and time again.

It’s been my experience that the successful manager recognizes that there is great strength in an organization that takes advantage of technology and uses the smallest number of team mates with the flattest organizational structure as possible.  Based on the talent, commitment and experience of the team, there is no optimal number of direct reports and each member of the team is empowered to make decisions that will meet the department’s goals and objectives.

Each department goals and objectives are directly related to the goals and objectives of the company, so there is no question as to alignment.  In this small, but powerful structure, decisions are made rapidly, without a hierarchy of approval, with takes time and invariably requires the opinion of every layer of management to be included, whether it adds value or not, but is a political necessity.

So the message of today is for department heads not to measure their importance by headcount or number of direct reports, but to think of the principle of small is big, or less is more, and success will follow.

 

This is about basics! There isn’t an organization that can be successful without being able to adapt to change. It doesn’t matter how large, how small, public, private, state, federal, military, et.al organizations have a propensity to resist change. Many organizations and individuals also have an aversion to new ideas as well. What a deadly combination, avoid change and reject anything new. One word describes this situation and that is UGLY.

Companies and individuals are harnessed in business practices and responsibilities that aren’t adapting to the dynamic world in which we live. How terribly boring it must be to be stuck in a position in which each day is much like the last. For a company whose existence is dictated by financial analysts who have to make decisions to meet numbers that may, or may not, contribute to the long term health of the business.

One of the most relevant and nationally important change management challenges can be found in the modernization of the US Military by Secretary of Defense Donald Rumsfeld. The Secretary has a vision for what the future demands will be on the Armed Forces and believes that a smaller, more mobile military will be better adapted to meet the challenges of the future. He has been steadfast in implementing his strategic plan, encountering public and private obstacles, holding true to his beliefs.

Put aside Iraq and all of the political implications for a moment. In my opinion, the Secretary’s biggest challenge is getting the military infrastructure to change their way of thinking and to open their minds to new ideas. Individuals who have been using the same SOP (standard operating procedure) for 30 years are slow to come around, if they ever do adapt.  Hamm seems like there’s a Marine Corp motto about adapt, improvise and overcome….

Obstacles are many. For a number of years I have taught a VICS CPFR® class at Penn State University that was part of a Marine and Army training program. For the longest time I was told that the military couldn’t collaborate with their suppliers because of government regulations. Not knowing any better, I suggested that internal collaboration could be powerfully effective and half a loaf was better then none.  A new general was appointed to a position of influence, who believed that CPFR could bring value and was immediately informed about the prohibitive regulation. Not wanting to violate any regulation, the general asked for it to be brought to him. You guessed it, there was no regulation….it was an excuse that was dredged up to avoid changing procurement practices that had been in existence for years.  How collaboration take place will have to be carefully managed, but the importance of sharing information is critical to supply chain success.

I am proud of the progress that Supply Chain Management has made over the years. On the other hand I am dismayed by the number of companies who are still grappling with issues that have been solved years ago by forward thinking, change management experts.  If you are going to be successful, be sure to understand the dynamics of change and how to become a change agent. Understand how to meld change management and collaboration together into a strategy for success and the rest is a slam dunk

I was recently asked to review a book that dealt with supply chain management. In this book, and in numerous other articles that I have read over the years, the authors took the opportunity to make a disparaging remark about Efficient Consumer Response. Apparently the folks that write this stuff, how else to describe it, feel that their point is more compelling if they find something negative about some other initiative, in this case ECR, but there are others.

After making my point to the authors, i.e. back off the negativity, I went to my files and reviewed the 37 documents produced by the ECR Operating Committee. Wow, I’m as impressed today as I was when this efficient industry machine was utilizing the talent and experience of industry leaders to write detailed and comprehensive reports.

This is an example of some of what was published:

• EDI Business Process Survey, An executive call to action
• Category management, 4 reports
• Continuous Replenishment
• DSD
• ECR Alliances, Scorecard & Roadmap, etc.
• Integrated EDI
• Management of Large Scale Organizational Change
• Performance Measurement
• Standard Interchange Language, An ECR Best Practices Report
• Transportation and Consolidation
• A Universal Consumer Goods U.P.C. Catalog—White Paper

I think you will get the gist of the work that was done that covered much of what is included in managing retail, from the perspective of the buyers, sellers and service providers. What was produced is just a relevant today!! Many companies would do well to use this material to educate their organizations as there are many that are 10 to 15 years behind where the leaders are today.

We were fortunate to have industry leaders who saw the value of ECR and who devoted a substantial amount of their time. They contributed their many years of experience as successful merchants and suppliers of consumer goods. They are icons, in my mind, that didn’t get the respect and admiration that they deserve.

David Jenkins, Don Dufek, Ralph Drayer, Danny Wegman and so many others that had a commitment to excellence and to improve the way business between trading partners was being managed. There are too many to recognize in this limited space and I will invariably miss someone, so we’ll stop here.

We are living in a contentious society, with most news having a negative spin, regardless of the subject. Perhaps we can turn the dial, just a bit, and recognize that contributions to progress come in different packages and to avoid casting doubts and aspersions on whatever, just to make a point.  Let’s set an example for those who are new to the industry and meet each idea, new or old, with an open and positive mind set.

Cheers and have a Positive Day!! 

Joe

Over the weekend I read about a recent study conducted by IGD, an international food and grocery information specialist. Executives from 50 international companies completed a survey in November of 05 that dealt with several keys areas.

Characteristics of a leading retailer, include; sales and profits, a strong customer focus, an integrated supply chain, a distinct business model and strong collaborative relationships.

Characteristics of a leading supplier include; innovation, brand management, speed to market, excellent customer management, and scale and agility of the supply chain.

Sixty four (64) percent believed supply chain to be of high strategic importance and a key in driving competitive advantage, organizations capabilities and business integration.

Demand Planning and forecasting are chief challenges, according to 72 percent of respondents. The report says collaborative planning can improve on shelf availability and increase sales.

Issues facing the industry going forward include; demand planning and forecasting; cost management; inventory management; customer service; production; warehousing and transportation, availability and retail packaging; and data issues and IT improvements.

What I find interesting is the fact that demand planning and forecasting are still top of mind, yet both have been the center of the supply chain puzzle for what seems a millennium.  Is it because category management has not been considered part of the customer deliver mechanism, commonly referred to as the supply chain? Are there supply chains within supply chains within individual companies, which means the timeliness and integrity of data is compromised and that the safety line, called safety stock, is long and deep.

A retailer has recently made a public comment about the inability of their suppliers to use POS data, forecast and/or manage their product flow. I’m sure the big guys get it, or at least many of them, but the SME’s are still struggling with understanding the basics, much less implementing them.

Recent studies by Oklahoma University, Accenture, UPS have all confirmed that collaboration is the name of the game. The younger brother of CPFR® is Eddy Education, i.e. the companies that make an effort to learn about CPFR and how it can benefit their business, ultimately learn more about themselves, their trading partners and what is important to improving their performance.

I’m simply amazed at the doubting Thomas’ who make public statements about the slow growth or demise of CPFR® while implementations across a broad range of industries and companies is taking place on a global scale.
Hey Tom, come along, we’ll collaborate with you whenever you decide to get in the game, its part of our collaborative spirit.

Everywhere it’s the same: claims of “but we are different!� ring out—hollowly. It’s human nature to resist change, and it’s human nature to believe that “we are different�—and therefore do not need to undergo change.

Not surprisingly, claims of “we are different� enable organizations to avoid or delay needed change, which allow competitors to catch up. Ironically, claims of “we are different� lead to lack of differentiation. And brave dissidents who say “our claims of being different are false� enable surpassing the competition.

In my past life, I went though a significant number of mergers, acquisitions, divestures and the largest LBO in history. In the case of the mergers and acquisitions, it was important to integrate the new business into the existing systems, and in each case we found strong resistance. The management of the company to be integrated always, without fail, could not survive without the features and functions of their existing system. They claimed that it would be absolutely impossible to meet sales and profit objectives, meet customer expectations, unless their system ran their business.

This inevitably led to a laborious and time-consuming examination of each of the business requirements and to determine how they matched up with the acquiring company. We would pain-stakingly go through each feature, function and requirement for each business entity. We interviewed and collected functional specifications and needs from sales, marketing, data base management, finance, accounting, customer service, manufacturing, logistics, procurement, etc. After thorough analysis, we consistently found that 95% of the business was the same. The clarion cry of “we are different� did not pan out.

Executives in other organizations have told me the same story. Management consultants have told me the same story. Software company executives have told me the same story. It is like a land of ostriches, most sticking their heads underground and squawking their pretended differentiation to the dirt.

Perhaps the key to real differentiation entails admission of 95% sameness—and achieving maximum efficiency there—then achieving further innovation on the 5%.

VICS helps achieve maximum efficiency in the 95% area—and thereby differentiating those firms with the vision and change management talent to get beyond “but we are different.� Improving efficiency in the 95% area as one’s competitors continue to proclaim “but we are different� will set a company apart in the eyes of its customers.

True differentiation requires admitting 95% sameness.

While it’s good to get ahead in the 95% area of our businesses, it’s bad not to bring the industry along with us. Most of today’s best opportunities for improving in the 95% area deliver increased benefits only when sufficient industrywide participation is achieved. Unfortunately, claims of “but we are different� continue to inhibit our progress in gaining optimum benefit from VICS guidelines and best practices.

Our experience with CPFR® specifically and collaborative commerce in general, continues to be hampered by claims of being different. Companies, trade channels, industries and countries all push back to the cry of “but we are different�.

Occasionally, another smart and open-minded manager steps back, becomes the dissident voice and achieves major gains by moving forward with CPFR®, Collaborative Transportation Management, data synchronization or some other collaborative effort. By admitting sameness and maximizing efficiency in the 95% area, those brave champions are differentiating their companies with operational excellence and superior customer relationships.

Those successfully differentiating dissidents have superseded the obstacle of “but we are different.� They know the hurdles of change management, which require substantial energy and resources, but are very doable for a well-educated executive. That level of change management is not a secret.

However, there is another level of change management needed. There is another major issue within the “we are different� mentality: the false pride of the manager/executive that put in the existing system. All too often, a new system or process change is sold to an organization as a “competitive advantage.� That claim is usually false. However, through repetition, that claim of competitive advantage becomes believed.

Similarly, the new person in a position, or the person who is newly promoted makes a change that helps the business but does not really set the business apart from its competition. However, the person who made the change is very proud of it, uses it for self promotion, and will fight fiercely any suggestion that the change no longer matters a lot. In these cases, pride prevents progress.

Admitting sameness requires suppressing pride.

We need to help each other get beyond false pride to see the 95% sameness in our processes and systems functionality. We need to help each other get beyond false beliefs that “we are different� to enable true advancement in performance. We need to work together to improve efficiencies in the area of sameness so we can achieve superior business performance. Now that’s something to be proud of.