Monthly Archives: December 2011

Key Takeaways from the UL Product MindSet Study, Part II

A couple of posts ago, we discussed some Interesting Facts and Figures from the UL Product MindSet, a recently released study that quantitatively surveyed 1,195 manufacturers and 1,235 consumers across a range of export and import markets in high-tech, building materials, food, and household chemicals. Then, in our last post, we reviewed four key takeaways from the UL Product MindSet Study. Today we are going to discuss our fifth, and final, takeaway from the study.

MANUFACTURERS NEED TO GET A GRIP ON REALITY!

They need to take off those rose-coloured glasses, put them on the floor, and stomp them to bits. And then they need to take the bits and grind them into dust. The findings illustrate that manufacturers are so far out of touch with reality that it’s downright scary.

First of all, let’s review the standard Gaussian curve. In a standard curve, only 31.8% of the population is one standard deviation from the norm. If we accept that only one standard deviation from the norm is enough to be “ahead of the curve”, then, at most 15.9% of the population can be ahead of the curve (and, similarly, 15.9% of the manufacturers will be behind the curve). However, the report found that an extreme majority of manufacturers believed they were ahead of the curve in safety, reliability, sustainability, and innovation. In short, this means that:

  • 81.1% of manufacturers are out-to-lunch when it comes to product safety
  • 81.1% of manufacturers are day-dreaming when it comes to product reliability
  • 78.1% of manufacturers are high-on-fumes when it comes to sustainability
  • 73.1% of manufacturers don’t-have-a-clue when it comes to innovation

The reality for the majority of manufacturers (68.2%) is that, they are, at best, on the curve. But since the reality is that, if they don’t continue to progress as their supply chains evolve around them, it won’t be long before them are behind the curve, they should just assume they are behind the curve, because 15.9% of them are and 68.2% of them aren’t far from being among that 15.9% without continued improvement efforts. So when they are done grinding those rose-colored, haze-inducing, glasses into dust, they need to get to work!

Furthermore, I see no evidence that the majority of manufacturers understand sustainability. I know it’s hard with all the greenwashing out there, but if one just ignores the hype and uses a little common sense, one can define sustainability as that which sustains operations and the environment at the same time. With this definition, it is easy to see that if an organization is not reducing its environmental footprint and at least maintaining, if not increasing, profitability at the same time, it is not sustainable. So 69% of manufacturers are wrong when they say that environmental products aren’t profitable — because, defined (and designed) right, they are.

And those manufacturers who do understand some of the basics of sustainability obviously don’t understand it’s importance. First of all, it’s not just about sustaining the environment, its about sustaining operations for generations to come. If the resources available are depleted before they can be replenished, there’ll be no materials to make new products. No products, no profit. No profit, no business. It really is that simple. As a result, sustainability should be as important as safety and reliability, not only one-fifth as important. Secondly, with even the majority of consumers in developing countries (such as China where four-fifths of the population would buy a truly green product over a non-green product if proof of claims could be provided), an organization is leaving what is potentially the biggest gold-vein available to it untapped. And finally, if manufacturers as a whole don’t change their understanding and their views, then the lot of them are are being hypocritical! (It is impossible to be ahead of the curve in sustainability, as 94% of manufacturers ridiculously claim to be, while not placing the same importance on sustainability as is placed on safety and reliability.)

Yes this is harsh, but face it, manufacturers are not going to move forward if they continue to believe the all-rainbows-and-roses picture that some other misguided (or is that money-grubbing?) analysts are painting for them. But there is a bright side. Whereas a typical organization would probably pay five, or six, figures for that rainbows-and-roses report, this post is 100% free.
(So, to any manufacturer reading this, stop calling me a downer and get to work! If you do, maybe you’ll be one of the 15.9% that is truly ahead of the curve and reap the rewards that come from earning that status.)

Key Takeaways from the UL Product MindSet Study, Part I

Yesterday’s post conveyed some Interesting Facts and Figures from the UL Product MindSet, a recently released study that quantitatively surveyed 1,195 manufacturers and 1,235 consumers across a range of export and import markets in high-tech, building materials, food, and household chemicals. From these findings we will attempt to interpret where global manufacturing is going — and needs to go.

1. Global Manufacturing is going to continue to rise.

Not only did the top 10 export markets produce approximately 9.489 Trillion in exports in 2010, not only did growth rise an average of 13% in developed economies and 17% in emerging economies, and not only did manufacturing supply chains continue to increase to the point that an average product required 35 different global contract manufacturers, but 50% of manufacturers are still projecting, and endeavouring to increase, sourcing from additional countries. The reality is that many large multinationals, despite the increases in transportation costs brought on by the rising cost of oil, are still finding ways to make global sourcing profitable (and won’t leave the bandwagon until it breaks down to the point that it is irreparable).

2. Global Manufacturing, like Global Trade, is a Two-Way Street.

If one looks at the top exporters and top importers list, 9 of the top ten 10 countries on each list match. If an organization is going to manufacturer and trade globally, then the organization has to walk both sides of the fence and master both the importing and exporting game.

3. Going Global for Healthcare is Making More Sense by the Day

Not only is healthcare often cheaper and better in developing countries like China and India (where they have four times as many geniuses as the US), but when one considers that most of the medical devices and medications are coming from there anyway, and that the rich industrial centres have doctors that have training and equipment that rivals the training and equipment available to leading doctors in North America (and Europe), maybe an individual should go to India and pay out of pocket rather than risking his or her health (as he or she waits for 6 months to get treatment) and his or her financial solvency (as he or she waits to see if his or her co-pay coverage will kick-in or not). And if he has heart issues, the world-class Narayana Hrudayalaya Hospital in India probably beats the hospital down the street.

4. Selling Globally Is Starting To Make More Sense Than Selling At Home

China and India have four times the consumers, and China in particular is spending more on high-tech (and luxury) items than the US. And the general commitment to saving and financial solvency in Asia (as compared to the general commitment to borrowing from tomorrow to enjoy today that is prevalent in North America) means that that they have the money to spend if there is a product they want.

Come back tomorrow where we share our fifth, and final, takeaway from the Interesting Facts and Figures from the UL Product MindSet.

Interesting Facts and Figures from the UL Product MindSet

UL* (a safety science company) just released a new annual study on Navigating the Product MindSet — which resulted from quantitative interviews with 1,195 manufacturers and 1,235 consumers across a range of export and import markets in high-tech, building materials, food, and household chemicals — that had some interesting facts and findings that we should all be aware of. These include:

  • On average, manufacturing companies rely on more than 35 different global contract manufacturers to create a single product.
  • In the US, 50% of medical devices, 80% of medication ingredients, 75% of seafood, and 60% of fruits and vegetables come from other countries.
  • In the last year, global trade flows increased:
    • 12.9% in developed economies
    • 16.7% in developing economies
  • Per person, Chinese consumers are outspending US consumers 3 to 1 in High-Tech purchases
  • 81% of Chinese consumers would buy more green products if environmental claims could be substantiated
  • The majority of manufacturers believe they are ahead of the curve in:
    • safety (97%)
    • reliability (97%)
    • sustainability (94%)
    • innovation (89%)
  • The majority of manufacturers believe their quality and on-time delivery are the best-performing aspects of their supply chain with
    • 79% claiming consistent product quality
    • 71% claiming on-time product delivery
  • While 49% of manufacturers believe that product reliability & product safety are key factors in effective global competition, only 9% believe that designing sustainable products is a key factor (and only 8% believe operational sustainability is a key factor).
  • Only 31% of manufacturers consider environmental products to be profitable
  • 50% of manufacturers will increase sourcing from other countries

The Top 10 Export Markets are:

  1. USA
  2. China
  3. Germany
  4. Japan
  5. France
  6. UK
  7. Netherlands
  8. Italy
  9. South Korea
  10. Hong Kong

The Top 10 Import Markets are:

  • USA
  • China
  • Germany
  • Japan
  • UK
  • France
  • Italy
  • South Korea
  • Netherlands
  • Canada

So what does all this mean? Our next post will reflect on these findings.

* Underwriters Laboratories Inc.

CBTM #5: Fighting the War for Talent – Focus on Career Management!!!


Today’s guest post is from Anne Kohler of The MPower Group and is the fourth in a series of seven posts on Competency Based Talent Management.

We’ve been hearing about the “War for Talent” in the Sourcing / Supply Chain space for quite some time and it does not seem to be improving. In our previous posts, we explored how the lack of a holistic approach to competency based talent management (“CBTM”) is the root cause of the problem. In addition, we have advocated that to be sustainable, CBTM must cover ALL five phases of an employee’s journey through a company — recruiting, performance evaluation, training / development, career management and succession planning.

Let’s focus here on one element – Career management. According to Wikipedia, Career Management is the combination of structured planning and the active management choice of one’s own professional career. While career management should ideally be the responsibility of the individual, it MUST be driven by the organization. To start, employees need to know which skills / competencies are required to be successful today and how those skills /competencies need to grow and develop in order to progress within the company. These can only be defined by the organization and are the foundation for CBTM. A well-defined competency model, which is critical here, can also be used and integrated into the other four phases of CBTM. In addition, individuals need to see the career options (career path) and the expectations associated with moving through the path. How many Sourcing / Supply Chain organizations have actually taken the time to not only define the competencies but also lay out a career path for their employees? Not many. By the way, the first people to leave because of the absence of career management are the people you most want to hold on to — your high potentials. They are off listening to other companies who seem to be able to articulate a career path – can’t all companies do this during the recruiting phase even if it is all smoke and mirrors?

Without a Career Management process in place, you will:

  • lose your best people
  • constantly be recruiting (this is an expensive proposition)
  • never realize the full ROI of your asset (your people) base
  • lose the opportunity to infiltrate (love that word) the rest of the organization with Sourcing / Supply Chain thinking
  • never get beyond tactical contribution (real value comes thru competency growth)

The consequences of ignoring Career Management as part of your talent management program (if you have one) can be devastating to an organization. While the official definition of Career Management places the responsibility with the individual, the organization needs to put the infrastructure (process tools, metrics, mentors, etc.) in place AND drive the adoption and execution of the process. If we look at Career Management as benefiting both the employee and the organization then we MUST ensure that it is happening — tools are of no use unless they are being utilized.

What do you need to do to fix the career management void? Here are a few Next Practice tips:

  • Develop a competency model which allows employees to see their path for success
  • Tie career progression to competency growth
  • Ensure that competency growth is NOT about “what you know” but more about “what you DO with what you know”
  • Link career paths across functions by competency
  • Ensure career management is integrated into ALL phases of CBTM
  • Create a “success culture”, providing organizational mobility and access to new opportunities
  • Provide employees with “stretch” assignments to further competency growth
  • Ensure your organization is the “place to be” to ensure professional growth
  • Provide ongoing feedback and coaching so that employees can grow and take advantage of new opportunities

If you are interested in getting involved or would like to follow this topic further, here are a series of critical activities coming up:

  • Release of the results of the Executive Forum we just facilitated at the IACCM Global Forum for Contracting & Commercial Excellence on Talent Management.
  • A major research project to not identify the problem one more time but to identify Next Practices to solve the problems.
  • A webinar with IACCM on CBTM.
  • A White Paper to focus on Next Practices in CBTM.

Please contact Crystal Jones at crystalj <at> thempowergroup <dot> com for more information.

Remember, Energy Efficiency is the First Step in Energy Conservation!

If you’re a buyer of computers, electronics, machinery, automobiles, buildings, or anything else that requires power, the first thing that should still be on your mind these days, with petroleum and oil prices about to go through the roof again, is energy. It now costs more to power an average desktop workstation for its expected life-span than it does to buy it, just as it does to power and cool your average server. Getting 40% off MSRP on a pick-up truck that only gets 15 mpg isn’t a great deal anymore if it’s going to be driven 30,000 miles per year, because, at current fuel costs, you’ll be spending 45,000+ in fuel costs over 5 years … over two times what you’ll be paying for the truck!

That’s why it needs to be said again that energy-efficiency technologies can reduce energy consumption by 25% or more, as per the results of a McKinsey study from 2008 that also found that improved energy efficiency can cut energy requirements by 25% in many developed countries, as I noted in my post on Cutting Carbon Footprints on the Country Level.

And remember the 2008 The Industry Week article on “Growing the Energy Efficiency Market” that focussed on a 2008 ACEEE (American Council for an Energy-Efficient Economy) report on “The Size of the U.S. Energy Efficiency Market”: Generating a More Complete Picture. The report, which was supported by the Civil Society Institute, the Kendall Foundation, and the North American Insulation Manufacturer’s Association, found that:

  • The U.S. has the potential to reduce energy consumption by an additional 25% to 30% through strategic use of energy efficient technologies
  • Energy-Efficiency has met about three-fourths of the demand of new energy related services since 1970, proving that it works
  • Investments in more energy-efficient technologies could result in an efficiency market worth more than 700 Billion by 2030

So do what you can to drive for energy efficiency. The operating cost reductions to your Supply Management organization that will follow will be well worth it.

Editor’s Note: This is an edited reposting of a 2008 SI blog post on how Energy Efficiency is the First Step in Energy Conservation. It’s a good message to remember at this time of year when many people put up those energy-inefficient holiday lights and displays from ten and twenty years ago without thinking that can, when overdone, create quite a strain on the grid.