Monthly Archives: April 2011

Transportation Network Optimization Requires Technology

Although it saddens me that most companies will not adopt optimization technology until they realize they cannot “solve the transportation network puzzle” without it, totally missing the savings opportunities that lie in sourcing, I was glad to see that the recent article on “solving the transportation network puzzle” in Logistics Management relayed the need for optimization technology in transportation network optimization. It is the case that that the sheer size and complexity of these networks means technology is required to perform the analytics that enable harvesting the value.

Furthermore, it is no longer the case that a carrier will give you discounted rates just because you have lots of freight. Given the current, and almost continually rising, price of fuel, the cost to maintain their fleet, and the relatively low rates many of them quote the first time around (to try and shave a round or two off negotiation and keep their trucks moving), many providers are no longer able to offer deep discounts unless they want to go out of business, like many of their financially weak breathren have done over the past few years.

Unless the carrier has excess capacity to fill, chances are the buyer will not be ble to wrangle the deal they’re looking for. And, as the article points out, unless the buyer exposes enough information about their needs, and allows the carriers to bid on specific lanes or flows, the buyer will never know that a carrier could have offered a better price in that region and the carrier will never know that they can be guaranteed the specific slice of the business that they can serve cost effectively — and keep quotes down.

And unless the buyer has the right tool to analyze the bids at the lane level, the buyer will never be able to slice the award properly as a large model will have hundreds, if not thousands, of lanes and dozens of carriers bidding on lanes in one or more groups. This generally results in tens of thousands of quotes, depending on volume, which is impossible to analyze in a spreadsheet when regional or volume discounts are also being offered by larger carriers for a minimum percentage of the business. But a modern decision optimization solution can analyze such a scenario in minutes, and allow the analyst to build and solve dozens of “what if” scenarios to understand the impacts of a given decision.

Is It Time To Dust Off the Resume?

The annual salary surveys are reporting that salaries are rising again. In addition to Next Level Purchasing’s survey, which was discussed in yesterday afternoon’s post, we have the Logistics Management 27th Annual Salary Survey, which found that median salaries increased for the third year in a row. And even though the average increase was only 2.2%, that’s still good given the economy, and a 12.5% increase since 2007.

The article notes that a number of search firms are saying, including Kimmel & Associates, are saying that the time is right for seasoned pros looking for a new job, but is it? While I agree that your average manufacturer and retailer is as lean as they can get and that they are not going to be able to build their top lines if they don’t staff up their supply chain departments, I still don’t know if the average company is ready to hire. While it’s true that the impending crunch for seasoned supply chain and logistics talent is going to put any seasoned pro with a good education at a premium, I still don’t see a plentiful job market. But I guess it never hurts to be ready with a polished resume when it does return. Any thoughts?

MiniTrends: A Book Review, Part II

In Part I we began our discussion and review of Minitrends: How Innovators & Entrepreneurs Discover & Profit from Business & Technology Trends because minitrends, which are often the leading indicators of emerging megatrends, can be very vaulable to their discoverer in the short term and, sometimes, provide the foundations for new billion dollar enterprises. Starting by noting that a minitrend is an emerging trend that promises to become significantly important in the next two to five years but which is not widely recognized or appreciated, we noted that minitrends are doubly important because failure to recognize them could also lead to the downfall of a billion dollar organization.

We then indicated that a mini-trend can often be identified by applying a mix of the following seven strategies:

  • Follow the Money
  • Follow the Leaders
  • Examine Limits
  • Consider Human Nature
  • Watch the Demographics
  • Analyze Frustrations
  • Search for Convergence

So where do you begin your search? According to the authors, you:

  • Utilize Public Sources
    start with printed material including books, periodicals, and newspapers and use editorial assists to scan for the most relevant sources
  • Utilize Electronic Sources
    as more and more print goes online and more and more electronic search tools become available
  • Engage Key Associations
    and the membership that might have insights into emerging trends
  • Establish Social Networks
    both physical and virtual to get exposed to a wide range of ideas and opinions
  • Identify Experts
    and engage with them in thought-provoking and informative manners
  • Examine Patents and Patent Applications
    especially recent patents and applications
  • Review PhD publications
    from top schools and labs in particular
  • Pay Heed to Television
    and the educational and technology oriented networks like the Discovery Channel, History Channel, Science Channel, National Geographic Channel, and the Smithsonian Channel in particular
  • Examine the Platforms of Losing Presidential Candidates
    often ahead of their time, they often come back with a life of their own in the near to mid term

The right mix of printed sources, electronic sources, assocations, social networks, experts, patents, and tv documentaries will often yield a multitude of potential minitrends to the emerging eye. So how do you know when you have a good one? Based on my review of the nine minitrends presented in the book, a good trend will be easy to understand, improve upon a current situation or offering, and present a viable business opportunity. The following examples exemplify this:

Example 1: Support for People Working at Home

Given that as much as 25% of white collar work is now being done in private residences by people who take advantage of flex time, telecommuting, and self employment opportunities, this is a valuable minitrend for anyone who can help overcome the (perceived disadvantages), such as the loss of nearby coworkers to bounce ideas off of, the lack of (high-end) office facilities and equipment, and administrative support. This is why we’ve seen a rise in business hotspots such as Starbucks, Hubs, and rooms you can rent by the day or hour; e-fax capabilities and business centers at office supply stores; and virtual receptionists / virtual office locations.

This trend is easy to understand, associated offerings improve upon a current situation in one or more ways, and the offerings present a viable business opportunity as many self-employed individuals or virtual small companies will take advantage of services designed to help them succeed.

Example 2: Evolution of Meaningful Maturity

For a variety of reasons, be it financial situation, desire for daily human contact, a continued ambition to do something useful, or an inability to just sit still, the aging populace is staying in the workplace longer, but not always in a traditional full-time 9 to 5 role. Also, many enterprises are starting to recognize the importance of the wisdom in their aging workforce and the need to explicitly capture the implicit knowledge in their heads. Furthermore, appropriate mind training can often enhance the mental actuity of the aging workforce and add years to their employment effectiveness. Thus, any advance that will improve knowledge capture, increase the useful life span of the aging workforce, or enable flexible work arrangements will have value and sustain the minitrend.

This trend is also easy to understand, dictates the need for services that improve the well being of the people involved as well as the organizations, and offers a number of viable business models that small businesses can adopt to be successful in one or more markets.

Example 3: Advances in Digital Manufacturing

Accompanying the improvements in thermoplastics, ceramics, semiconductors, and pharmaceuticals that we take for granted on a daily basis are improvements in the underlying manufacturing technology including stereolithography, selective laser sintering, shape deposition manufacturing, 3D printing, bioplotting, and layer object modelling that, combined, define an overall trend of continuing advances in digital manufacturing.

While the technical specifics may be beyond the average person, when one looks at the continued advances in consumer devices and pharmaceuticals, one can understand that there must be a corresponding advance in manufacturing techniques, even though one may not know what it is. In addition, one can see that any organization that can create a better manufacturing technology or process can advance the mini-trend and create a viable business selling the advancement to large corporations that rely on such technology. Thus, this is also a good minitrend to take advantage of if you are able.

So, now that you know how to find minitrends and identify good ones, how do you select one for exploitation, develop an exploitation strategy, put it into action, and capitalize on it? That’s the subject of the third and final post in this mini-series reviewing Minitrends: How Innovators & Entrepreneurs Discover & Profit from Business & Technology Trends.

How Relevant is Africa to the Purchasing Equation?

Quickly reviewing Next Level Purchasing’s “2011 Purchasing & Supply Management Career & Skills Report”, one statistic jumped out at me — 37.5% of the respondents are from Africa. Considering that the GDP of Africa is only 2 Trillion, give or take a few hundred billion depending upon whether you prefer the IMF, World Bank, or CIA Factbook calculations, or about 3% of global GDP, as compared to the roughly 16 Trillion for North America, 18 Trillion for Asia, and 20 Trillion for Europe, the first question that jumped to my mind was relevancy. (And the fact that Europe only accounted for 6.7% of respondents didn’t help.)

It might be the case that Purchasing managers in developing areas are a lot more interested in surveys since they are trying to establish the importance of their profession, and it might be the case that most of Next Level Purchasing’s students and/or association members are from developing areas since they would be the least likely to have access to local training and eduction options (and Next Level Purchasing’s courses and certification is completely web based), which would account for a strong showing from these areas, but it makes one wonder how relevant the results are to Europe and North America, which are still the dominant locales for international purchasing (even though Asia is rising).

While it likely doesn’t affect the responses to skills, education, and certification related questions, as the top answers to the most important skills response are typical, the expected results from certification trend normally, and people who study for certification generally believe in its importance, it does put some suspicion on the applicability of the average annual cost savings & avoidance results. While I do agree that savings will increase by years of experience, annual hours of training, certification, and degree status, I’m not sure that I would trust the unweighted averages, especially since the average cost savings go from about 800K in Africa to 3.7M in Europe. It would be nice to see the savings and avoidance statistics broken down by continent, or at least weighted by continent, to clearly illustrate the impact of education and training.

Relevancy aside, it is nice to see interest in professional purchasing spreading through Africa and Asia.