Monthly Archives: December 2010

How Will India Become The #2 Economy …

… if it can’t get control of the rampant bribery that plagues the entire country? From what I’ve been reading, the situation hasn’t improved any since KPMG did their 2008 study that found that 84% of Indian Businesses pay Bribes. According to this recent article over on NDTV, India [is still] among the top bribe paying country (according to a recent Transparency International study). According to the recent study, 1 in 2 Indians (54%) have had to grease the palm of authorities to get things done. Even more worrying is that bribes to the police have almost doubled since 2006 and bribes to judiciaries for registry and permit services are up as well. In other words, it’s not the private sector that is the problem, it’s the public sector!

And if the public sector is the problem, which is especially true in Bangalore which tops in India’s bribery chart, how are they going to continue to grow in a global economy when country after country is adopting anti-bribery laws, like the Foreign Corrupt Practices Act in the US or the Bribery Act in the UK (that follows the recommendation of the OECD Anti-Bribery Convention that is attempting to eradicate bribery in all of the 34 member countries). Especially when the problem is so bad that it’s said that even [the] blind are witness to bribery in India?

I don’t have any answers. Some people are suggesting that legislation may be the answer, but if officials can be bribed to ignore it, it won’t solve the problem. If you have any ideas, please feel free to leave a comment.

          


Bribe, bribe, everywhere a bribe
Preventing the transaction, breaking my bank
To do this or do that, you must make a bribe

It’s Not Risk Management If You Just Trade One Risk for Another!

Especially if the second risk is just as risky, or, even worse, more risky than the first.

After reading a number of articles that claim IT Outsourcing reduces cost AND risk, including this recent piece over on Global Services on Operational Risk, IT, and Outsourcing, I am getting nervous about the mad dash to the cloud that these articles are directly or indirectly promoting.

While SaaS is often the best choice for many SMEs and large scale industries without a lot of technical know-how, it’s not always the best choice, and some systems are a lot safer to outsource than others. It’s one thing to outsource an ERP/MRP, especially if you don’t store your bank account access information in the ERP/MRP, but another thing to outsource user account management if such management contains credit card information and/or detailed financial profiles that are sufficient for an average criminal to commit identify fraud in his sleep. In the first case, just about any SaaS provider will do. In the latter, you need one who not only hosts in a secure data centre, but understands security and built security (and encryption) into the application (and database) from the ground up — especially if they are hosting in a shared data centre that uses a true multi-tenant architecture. Otherwise, a hacker could break in through a weakness in the application layer, dump the database, and get unencrypted credit card numbers, bank account numbers, SINs, etc. if the application wasn’t designed right from the bottom up. This could be financially devastating to you and your customers (who, for starters, would never buy from you again and who would probably take you to court).

The requirements for outsourcing and maintaining financial systems are much greater than for Supply Chain and Inventory Management. So what if they get your inventory database. Unless you’re storing nuclear material, who cares if they know for sure that you have 250 outdated PCs, 100 rolls of steel, and a warehouse full of binders. If they were doing a competitive intelligence project and really wanted to know that much about you, they’d check one of the import/export trade data monitoring services (or just watch what went in and out of your warehouse from across the street) and know it anyway.

Before you outsource financial systems, you have to be sure that the provider and the hosted application is at least as secure as the applications and environment you’d build in house, or the outsourcing effort will come at the expense of increased risk. And if risk increases, the decrease in cost may be inconsequential.

And if you don’t have the technical savvy to make a fully informed decision, bring in a consultant who has that knowledge. Trust me when I say it will be one of the best investments you ever make.

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To Be a Good CSCO, Don’t Forget the Don’ts!

A recent article over in eyefortransport on the DOs and DON’Ts for Chief Supply Chain Officers had a good list of things to do to be a successful CSCO (or CPO) but what really got my attention was the list of things not to do, because it’s so easy to do five things right and then watch everything unravel when you do only one thing wrong. Here are some of the most important don’ts from the article:

  • don’t create a separate KPI team
    KPIs should be created by the people who are performing the functions they measure. Otherwise, you’ll have good-meaning people who don’t truly understand the function deciding that the right metric is average order completion time and not on-time shipments as you can have a great average order completion time but still be late for 30% of your orders.
  • don’t create a function without a well defined purpose
    Just like you shouldn’t outsource to China because the company down the street is doing it, you shouldn’t create a new function because the company next door is doing it. Your team is already overworked, so don’t add something unless you know why you’re adding it and what benefits it’s going to bring.
  • don’t cut the training budget
    This cannot be stressed enough — you need highly skilled and educated people to make it in this knowledge economy. (That’s why we can have 15% unemployment and still have millions of jobs unfilled.) If you’re people don’t have the necessary skills, they won’t get the job you need done.
  • don’t speak supply chain language with other departments
    They won’t understand a word you’re saying and will think that you need a “vacation” at the local “resort“. That’s why you need to learn to lean to speak the language of the CFO.
  • don’t let the board think supply chain is just about cost
    If you do, they’ll have you cut, cut, cut until the quality falls through the floor and there’s melamine in the milk, salmonella in the spinach, lead in the paint, or asbestos in the insulation and your supply chain falls apart.

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Are You Really a Futurist if You Predict a Future That’s Already Here?

I found a recent article over on SupplyChainBrain on Five Fearless Visions of the Future very entertaining, and not just because I found a few of the predictions to be out of left field, but because some were not really predictions at all … as the predictions were simply describing the current state of affairs.

Consider the following:

  • The cloud is upon us.
    The “cloud” has been hovering over us for a few years now. There’s been a strong movement to SaaS for the last five years. When even companies like Ariba buy SaaS players and start converting all their legacy systems to SaaS, you know its time has come.
  • Companies that blindly outsourced their manufacturing to Asia will start bringing some of that capability back to the U.S.
    Already happening. I’ve been reading articles all year about companies that are pulling manufacturing back to North America, and not just Mexico. Area Development had a good article back in January. Yes, there are still more companies on the outsourcing bandwagon than off it, but it’s already started. Outsourcing will continue, but not for items with high shipment costs or low production costs where it makes more sense to produce them locally. Also, we’ll start to see more service outsourcing. With goods, you have to deal with ever-increasing shipment costs, but with services, it’s just the cost of the pipe that carries the bandwidth.
  • We are in the midst of a transition to electronic software delivery.
    This was my favourite as you’d pretty much have to be Rip Van Winkle to come up with this one. When was the last time you bought software that came in a box? That wasn’t out-dated the minute the CD was burnt? If this were 2000, it would almost be timely. But this is 2010!

When you get right down to it, the only good prediction that wasn’t either already happen or mostly obvious to anyone knee-deep in supply chain was Jim Miller’s (of Google) prediction that Fifteen years from now, the world will realize that China is not the juggernaut that we make [it] out to be. The nation faces a number of systemic problems, including the prospect of the mother of all real estate bubbles. Here, here! They won’t be #1 GDP for another 2 decades, and then they’re going to have to face all the problems the US has faced since WWII. They’ll always be a major player, but they won’t be the only one.

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Why Haven’t You Put a Knowledge Retention Policy in Place Yet?

While reading a recent article in Corporate Executive on solving the problem of the aging workforce, I was shocked at a statistic they quoted from a 2008 study conducted by the Institute for Corporate Productivity (i4CP) that noted that 30% of companies admitted they retained knowledge either poorly or not at all and 78% of companies admitted that they did not have anyone responsible for organizational knowledge retention. In other words, 4 out of 5 companies do not have an individual responsible for insuring knowledge in their company does not get lost!

Without anyone responsible for insuring knowledge retention, a knowledge retention policy will not be created and knowledge will not be captured. As a result, as your aging workforce retires, key knowledge will retire with them. With between 29% and 36% of your workforce eligible for retirement within the next 9 years, that’s 1/3rd of your corporate knowledge at risk of disappearing. Given the amount of knowledge that’s already been lost in the outsourcing craze, where many companies just handed functions over to outsource providers in their entirety — without any thought as to how key knowledge would be retained in case the tasks needed to be reassigned, brought-back in house, or managed internally — can you really afford to lose 1/3rd of your corporate knowledge? I doubt it.

It’s time to put a knowledge retention policy in place … before it’s too late!

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