… and heat treating a few million pallets is going to stop the spread of insects across the Canada – United States Border. Really? No wonder the CTA takes no position on the science behind the decision to eliminate the exemption that allows wood packaging materials (WPM) crossing the Canada-US border to bypass heat treating and marking requirements — because there is no science. Insects don’t respect borders. Heat treating a few million pallets is not going to stop the spread of insects across the border. Trust me.
As per this recent article in Canadian Manufacturing, all removal of the exemption will do is disrupt border crossing because it’s going to take quite a while to individually check Three Hundred and Twenty (320) Million pallets to find the millions that don’t meet the requirement. So while it’s not necessarily a bad idea, since an insect-laden pallet could accidentally find its way to a foreign country and introduce a foreign bug to the local ecosystem that could be harmful, like the CTA says, elimination of the exemption (and subsequent enforcement) shouldn’t begin until APHIS and CFIA, working with industry, are satisfied that there are enough WPM compliant pallets in circulation to meet the demands of Canada-US trade. Otherwise, we’ll have lineups at the border from Detroit to Toronto (which is about 244 miles), and that won’t help anyone.
In yesterday’s post, we discussed CAPS’ Value Focussed Supply (VFS) and how it represents a valid methodology for taking supply management to the next level. Given that many leading organizations are seeing decreasing returns in their supply management efforts, it is becoming clear to leading analysts, providers, and thought leaders that this decade needs to see the introduction of Next Generation Sourcing and Supply Management Techniques if Supply Management (and Procurement) are to have a hope of getting, and keeping, their seat at the C-Suite table.
In addition to discussing the four levels of VFS in their recent report on Linking Supply to Competitive Business Strategies, the report outlined a high level process that can be used as a starting point. As noted in our last post, this process can be broken down into a seven-step program that will get a company on its way. Specifically:
- Understand Customer & Supplier Markets
- Identify Directional Changes
- Link Insights into Directional Changes to the Business Strategy
- Evaluate the Company’s Strategic Options
- Set Holistic Value Focussed Goals
- Evaluate and Select Strategic Supply Options
- Identify and Implement Levers
To understand this process, we’ll start with an example that’s easily understood. To do this, we’ll have to travel in time and space and go back to Cupertino circa 2006. Apple, having just conquered the mobile music device industry with the iPod, is looking for the next market to conquer. They make computing hardware, the iPod was a natural progression, and they are looking for the next killer product. Where should they go?
- Their suppliers are great at supplying leading-edge computer components for compact and mobile devices and good at innovation.
Their customers are interested in cool gadgets and entertainment and keeping in contact with their peers.
- These two observations quickly lead the organization to two potential markets, gaming platforms, which was a very lucrative market for Nintendo and Sony and which their competitor (Microsoft) had entered five years previous, and smartphones, which was a quickly growing market as cell phones were already in the hands of 1/3 of the global population.
- The business strategy was continued growth and market leadership in any computing device or mobile market that was entered. Both the gaming marketplace and smartphone marketplace had a number of big players with well established market share, including Sony, Nintendo, Microsoft, and Sega in gaming and Nokia, Motorola, RIM, Samsung, and LG in smartphones. Both could be hard to break into, but ( a) the mobile market is more fractured, ( b) there are more similarities between smartphones and iPods then between generalized computers and specialized gaming systems, and ( c) the market for smartphones is growing rapidly with projections that half of the global population will have cell phones within two years.
- The strategic options are to fight it out in the mature and relatively flat gaming market and go head to head with their main competitor on another platform, or fight it out in the growing smartphone market where platforms are not as mature and there are more opportunities for innovation.
- The obvious goal is to enter the smartphone market with an innovative new product and capture a leading market share, especially among current, discerning, Apple customers.
- Apple evaluated it’s supply chain and locked in a sufficient supply of strategic components to ensure it could meet projected demand.
- Knowing that a phone was useless without a carrier, Apple signed a strategic agreement with one of the largest carriers who would see the 3 years of exclusivity it was granted as a way to significantly grow its own market share and, in turn, aggressively promote the new product for Apple.
Now, we’ve made a few assumptions and taken a few liberties, but it’s easy to see that Apple obviously used some type of VFS strategy when they decided to introduce the iPhone and enter the mobile market, because, within 2 years, they were the top selling mobile phone on the market.
In our next post, we will begin to dive into the steps in more detail.