Daily Archives: September 30, 2012

Federalist No. 1

Elections are coming on both sides of the border, and while this is not a political blog, politics does have a considerable impact on the supply chain when the political parties introduce new trade legislation or economic policies. Since this blog is an educationally focussed blog, it’s a fair topic in that respect. And while the Federalist papers do not have much to do with Supply Management, they do provide the underpinnings upon which the United States was formed and the basis for nearly every republic* that was formed since. Thus, it is the case that much of the free (trade) world owes its philosophical foundations to the work.

So why are we reviewing these now? Basically, the doctor is starting to think that, in recent times, people around the world are losing their way and forgetting the role of the representative AND the role of the represented. So, given that election time is coming up in the U.S., now is as good of a time as any.

In Federalist No. 1, (Alexander) Hamilton writes to the people of the state of New York and states that, AFTER an unequivocal experience of the inefficacy of the subsisting federal government, you are called upon to deliberate on a new Constitution for the United States of America which has, in its consequences nothing less than the existence of the UNION, the safety and welfare of the parts of which it is composed.

In this seminal piece, Hamilton asks whether societies of men are really capable or not of establishing good government from reflection and choice, or whether they are forever destined to depend for their political constitutions on accident and force, especially considering the obvious interest of a certain class of men in every State to resist all changes which may hazard a diminution of the power, emolument, and consequence of the offices they hold under the State establishments. After all, we are not always sure that those who advocate the truth are influenced by purer principles
than their antagonists
and a dangerous ambition
more often lurks behind the specious mask of zeal for the rights of the people than under the forbidden appearance of zeal for
the firmness and efficiency of government

And then, after noting that he is asking his fellow-citizens, after attentive consideration, to adopt the new Constitution, as he is convinced that this is the safest course for your liberty, your dignity, and your happiness, he states that he will not only frankly acknowledge his convictions but lay before you the reasons on which they are founded. His arguments will be open to all, and may be judged by all.

Philosophers and political scientists may disagree, but I think this is the key takeaway from the first Federalist publication. A true politician asking you to ratify something will not only acknowledge his convictions, but share with you the reasons why so you can understand whether or not it is truly in your best interests and why. He or she will present his or her arguments willingly and openly, and let you come to an informed decision on your own. A republic is an open form of government, not a closed one.

* Why am I using the word republic and not democracy? In the literal sense, the US is a republic. A republic is a form of government in which the country is considered a “public matter”, not the private concern or property of the rulers, and where offices of states are subsequently directly or indirectly elected or appointed rather than inherited. In comparison, if you look at the definition of (the original) democracy (in ancient Greece), it is a form of government in which all eligible citizens have an equal say in the decisions that affect their lives, but the definition of eligible citizens was restricted to Athenian males at least 20 years of age (as women, slaves, foreigners, and men under 20 could not vote). Furthermore, in this first Federalist publication, Hamilton refers to the true principles of republican government (where republican refers to the type of government, and not a particular party, just so we’re clear).

Want to discuss? Join The Federalists on LinkedIn. The open group has been created specifically to discuss the philosophical underpinnings of the governance of nations and their ramifications on the national and international economics and global trade.

How Do You Identify Tomorrow’s Supply Chain Paupers?

They still use paper today.

Although I don’t understand how any supply chain focussed business, and a logistics carrier in particular, could still be paper-based. It blows my mind that the WT 100, in their recent article on Rounding the Optimization Curve, reports that there are still a significant number of carriers that keep their records on paper. How can you survive in today’s cost-competitive, just-in-time, value-conscious supply management landscape and work on paper?

And while we’re at it, let’s talk about how you can identify the dead men walking of the day after. They use Excel. We’ve known for years that errors in spreadsheets are pandemic. Needless to say that it boggles my mind that Microsoft Excel continues to be the application of choice for supply chain and logistics management around the world. Fidelity lost 2.6 Billion as a result of a spreadsheet error, Fannie Mae made a 1.13 Billion honest mistake, and RedEnvelope lost more than a quarter of their value in a single day after they warned of a fourth-quarter loss due to a budgeting error that resulted in an overestimate of gross margins. How long is it going to be before someone accidentally uses a plus sign instead of a minus sign in a profit formula and forgets to uncap an inventory calculation and instead of ordering 100,000 units of a profitable product, instead orders 1,000,000 units of a product that actually results in significant losses at the target sale price, for which the market demand is weak, ties up all of the organization’s working capital, and essentially bankrupts the company? My guess, with the steadily increasing complexity of S&OP, JIT inventory management models, and supply chains, not much longer. But, maybe after a few companies are brought to their knees from spreadsheet errors, we’ll see the day when Excel is sh!tcanned along with the dinosaurs who still think it has any more use than a HP or TI calculator.

It’s time for anyone still on paper or Excel to wake up and realize we don’t live in Walt Disneyland and that the story of the prince and the pauper is a fairytale. A pauper is not going to become the benefactor of princely riches just by looking like a bigger, richer, company. In today’s uber-connected world, appearances don’t account for much. It’s not long before someone digs deep and uncovers the truth.

There’s a reason why customers are demanding end-to-end visibility of their supply chains, including those of their supply chains logistics’ partners. And a reason customers ow expect all of their suppliers and business partners on the supply chain (including logistics providers) to participate in a supply chain social network. It’s because they know that the only way they can accurately manage their supply chain is to keep on top of it, that the only way they can build accurate models is with accurate data gathered from partners, and that the best reports they are going to get are going to come from supply chain visibility and planning software plugged into these “social networks” (where, in reality, these are “enterprise communities” that allow the necessary collaboration, not “consumer networks” where you can poke, prod, and shake your buddy for no apparent reason).

In other words, paper is dead, and Excel will be the new paper, and then, someday, it too will be dead. So if you don’t want to be the pauper, move off of these technologies and onto solutions designed for your supply management needs. With a plethora of Best-of-Breed solutions on the market, designed for large and small providers, it’s extremely likely that there’s at least one solution that meets your needs almost exactly with minimal tweaking. If you look hard enough, the doctor would bet that there’s at least three, or will be before you can look twice.