The Panama Canal might be the best-known man-made artificial waterway, but before the Panama Canal, there was the Kiel Canal, which is the busiest artificial waterway in the world that is a 98km long freshwater canal in the German state of Schleswig-Holstein that was officially opened 120 years ago today (even though it wasn’t really finished until the widening project was finished in 1914) and connected the North Sea to the Baltic Sea. This was, and is, an important canal because it saves an average of 460 km and allows ships to avoid dangerous storm-prone seas.
As a point of comparison, the Panama canal, which was initially started in 1881, was put on hold until 1904 when the US took over the project abandoned by France and not opened until August 15, 1914, almost twenty years later.
In shipping and logistics, we take these canals for granted, but most are rather new in the grand scheme of global trade.
Monthly Archives: June 2015
Environmental Damnation 18: Natural Disasters
Natural Disasters are on the rise. As per a 2011 publication from THINK Executive, from the 1970s to the 1990s, the number of natural disasters occurring worldwide has tripled. It is predicted that both natural and man-made disasters will increase five times in the next fifty years. Ouch!
Why? First of all, we’re still polluting and major energy and raw material consumers, including the USA, China, and India still won’t sign the Kyoto Protocol. This means that continual extreme climate change (which is better terminology than global warming because that’s only one * of extreme climate change) which brings category 5 hurricanes, tsunamis, deadly heat waves, and blizzards with snowfalls worse than any in recorded history are going to continue to occur on a regular basis.
Secondly, while there have been a number of earthquakes above 8 in recent years, there have only been two really deadly earthquakes since the 1976 Tangshan earthquake – in particular, the Kashmir quake of 2005 and the Haiti quake of 2010. But the tectonic plates are in constant stress and while it can never be predicted when they will slip, they will slip and the quake will be devastating. And not only is it likely that hundreds of thousands or millions of people will be seriously injured, or killed, but the region it hits will be entirely devastated. An entire city can be destroyed over night. Every office, every plant, every warehouse, and every truck when the road they are on is swallowed up.
Thirdly, and following on the last point, a considerable portion of the worlds population lives on the ring of fire — the west coasts of North and South America, the east coasts of russia and China, and a considerable part of Australasia. About 12% of Canada’s post population lives in BC; about 16% of US population lives on the west coast; Chile, Peru, Columbia, and Venezuela are almost entirely coastal; Korea, Japan, Taiwan, Philippines, Vietnam, Cambodia, Thailand, Laos, Myanmar, Malaysia, Singapore, Indonesia, Papua New Guinea, Bangladesh, Sri Lanka, New Zealand, and habitable Australia are almost entirely coastal; and a considerable portion of India’s and China’s population are coastal. Not only is this area at high risk of quakes, but it’s at high risk of devastating volcanic eruptions as well. The 2010 eruptions of Eyjafjallajökull were nothing in comparison to the devastating eruptions that have happened in the past. While there are not that many disastrous eruptions on record, the Krakatoa eruption of 1883, which was heard up to 3,000 miles away, destroyed most of the island, unleashed tsunamis which killed more than 36,000 people, and spewed clouds of ash into the sky more than 6 miles high which lingered for months. And almost everyone knows the story of Pompeii which was buried by an eruption. While the most devastating eruptions are a lot less frequent than devastating earthquakes, occurring as infrequently as every 50,000 years as compared to every 50 years or so, even an eruption as powerful as Krakatoa could disrupt supply chains in the region for a year or two.
We could go on, but you get the point. Disaster you can’t prevent, and likely can’t even predict, is always in the shadows, waiting for the worst possible time (when everything else is going wrong) to strike.
Organizational Damnation 60: Human Resources
Does the doctor even have to write this post? I’m sure many of you are already cringing from the title knowing how an overly process driven human resources department, free of logic and common sense, can ruin the best and worst of plans and inspire your best talent to run to the hills and run for their lives.
Why do human resources often bring damnation to Procurement? Simply put,
- They exacerbate talent tightness. (Societal Damnation 51)
- They drive talent away. (Societal Damnation 50)
- They think they know what Sourcing is.
They exacerbate talent tightness.
HR will insist on owning the talent recruitment process. Now, it’s true that, in most organizations, HR should own the process because most departments wouldn’t know how to go to market for talent if the market came to them and bit them on the thigh like a boghog of NowWhat, but a good Procurement organization knows how to go to market for talent. In fact, a good Procurement organization knows how to go to market for everything the organization needs, and, more importantly a good Procurement organization knows what defines talent to the organization.
But this isn’t the problem, it’s the way that many non best in class Human Resource organizations go about the talent hunt. They blast a poorly written advertisement with a list of requirements no living or dead human can meet across multiple channels, collect hundreds, if not thousands of resumes, and then go through a last-man standing vetting process. They create a ridiculous checklist, a set of arbitrary rules for checking the boxes (because they don’t understand what the boxes are), and then eliminate every resume that doesn’t check every box. They then interview the last men, or women, standing, eliminate those that they feel won’t be a good organizational fit (based on gut instinct), and pass you the candidates that remain.
This is almost guaranteed to eliminate a large number of good candidates, if not the best candidates, because Procurement doesn’t need a candidate that checks all the boxes, training can often handle that, it needs a candidate with the aptitude to learn what he or she doesn’t know because organizational needs are always changing and no Procurement professional will ever know everything he or she needs to know.
They drive talent away.
Many HR organizations institute policies that are so onerous, they will drive every individual in the organization insane. These will typically take the form of expense claims and pre-performance review. In the latter case, these will take the form of ten page questionnaires asking the individual to update their resume in detail and list all changes since the last review, describe all of their accomplishments since their last review, list the top ten reasons they deserve a 2% raise, do a 360-degree review on their boss, rate the HR process, etc. until they want to scream and jump out the 10th story window. In the former case, since the review agony comes at most once a year, they will insist on nonsensical requirements for even the simplest of rebates. For example, some organizations have a policy that, in order to get an expense claim reviewed, every employee had to send in an envelope with their expense receipts (and their name on it) stapled to the expense claim to get a refund. This sounds like a good policy, since good fiscal accountability means that receipts should be provided for any expense over a nominal amount, until it’s enforced to the extreme. And some organizations enforce this to the extreme. For example, as described by Sigi in his recent book (reviewed in Gettin’ Sigi With It), one organization refused to honour an expense claim without an envelope, even if their was no receipt. For example, Sigi recounted the story of when one of his team members came to him with a printed e-mail that said an empty envelope with the team member’s name on it was required to be sent in by the team member to get his mileage claim reimbursed. Wow!
They think they know what Sourcing is.
In some organizations, it is HR that thinks they do the Sourcing because, as far as they are concerned, Sourcing is the process of acquiring talent and nothing else. So if you say you do Sourcing, they try to beat you down and kick you unconscious. It’s crazy.
the doctor could go on, but you get the picture. Human Resources is yet another damnation Procurement has to live with. They are the gatekeeper and we are still waiting for the key.
Technology Damnation 89: IP & Patents
Intellectual property and patents are a good thing, right? They protect your inventions and prevent your competitors from stealing your innovation and making money off of them, right? Wrong. That’s the theory, anyway, but the reality is considerably different. They don’t stop your competition from stealing your ideas and inventions, they only give you the right to go after your competitors in court for damages if they steal your inventions. And moreover, they make it easy for your competitors to duplicate your invention.
Remember, in order to patent an invention, you have to completely define the invention in enough detail for someone to easily reproduce it. (And it clarifies why many companies would like to keep as much as they can trade secret for as long as they can.) It’s like handing a car thief the keys to your brand new custom made Ferrari and asking him if he’d like a joyride.
But that’s not the worst part. Let’s say your competitor fully replicates your invention and starts selling it to your customers and making all the profit. Your only recourse is a lawsuit, and if your competitor is bigger than you, has deeper coffers, and more expensive lawyers, it’s going to be an expensive lawsuit. Even if you know you are in the right and there is a very good chance that you could recover legal fees in the award (after multiple appeals), you might not be able to afford the suit. In fact, even initiating a lawsuit might bankrupt you.
But this is far from the worst of it. The worst of it is that many companies file, or buy, patents not to protect their IP, but to prevent you from selling yours (and this has been going on for a decade as per SI’s classic post on how the patent pirates will plunder away. Since patent clerks are not experts in anything but the rules associated with filing patents, and the reviewers are typically not experts either, many patents that are much broader than they should be, and that actually patent innovations that exist in prior art as part, or all, of the invention, get pushed through by firms with big pockets and persistent lawyers. These patents are then used by companies, known as patent trolls, with no intention of actually developing or selling such products to go after companies with similar technology, like yours, for patent infringement, even if these technologies and companies are not actually infringing the patent. The idea is that, since you know how much a patent lawsuit will cost, you’ll simply cave and pay a small license fee to “license” the patent you are not already using. These patent trolls know that all they have to do to bring you to court (in Marshall, Texas) is make a reasonable sounding (not reasonably effective) case to a non-technical judge who will allow them to bring you before a jury. Now, it is true that the US is finally trying to put a stop to these trolls (who make the nasty trolls who live under bridges look like oversized benevolent gnomes) with a a new bill (S. 1137) that requires that trolls not only stipulate what patents are being infringed, but precisely how, before a case can be filed (and prevent filing of vague claims that are enough to get you on a Texas or Delaware docket on-demand) (and also requires that all claimants be listed and expensive discovery delayed until prosecution has progressed). It’s a good start, and will minimize the tens of billions of dollars of damage these trolls do every year (as these trolls do over 1 Billion in damage to the economy every two weeks as summarized in this post on how the US is still letting the patent pirates plunder away), but you know that, since the bill already passed the US Senate Judiciary Committee, the patent trolls already have their legal team looking for loopholes to use against you.
The reality is that the US is just not as smart as the EU Parliament, which quashed the Computer Implemented Inventions Directive 648 to 14 when it was introduced (and a significant portion of bullsh!t patents these days are computer related), and, for a big enough payday, the patent lawyers will become more and more creative and manipulative. Since the US allows business process patents (which, in the doctor‘s view, is a bullsh!t patent), this insanity is here to stay. So, you’re damned and you have to play the damnation game (and spend tens, if not hundreds, of thousands filing your own bullsh!t patent just to prepare a defense against the bullsh!t claims you know are coming if you get big, or threatening, enough).
Your SRM is in a State of Flux. Shouldn’t You Find Out Where?
Last week we reminded you about State of Flux, a provider of Supplier Relationship Management (SRM) software and services, and the initiators of the SRM Research Report that we highlighted in our 3-part series on why you should focus on essentials, plan against the pillars, and be a customer of choice.
Your supply chain success is ultimately dependent on your supply base and their failure is your failure. Your customer doesn’t care why the order is late. He just cares that the order is late. Your customer doesn’t care why the product is crap. He’s just upset that he forked over good money for bad product and only cares what you are going to do about it. Thanks to omni-present supply chain disruptions that are increasing at a rapid rate (to the point that less than 15% of companies will not experience a major supply disruption over the next 12 months), something is going to go wrong. And the question is, do you have a good relationship where your supplier will proactively notify you of a potential disruption so that you can collaboratively work together to prevent it, or a not-so-good relationship where you won’t know the shipment isn’t coming until it’s two days late and someone calls the supplier who admits that, because of a missing raw material shipment, production line breakdown, or simply poor scheduling (which lets you know how important you are to them as a customer) it just isn’t coming.
Unlike RFX or e-Procurement, for which there are a plethora of good platforms that walk you through good workflows by the hand and make it hard for you to do it wrong (although they don’t prevent you from designing the process or event wrong), there are not as many platforms for SRM, and SRM cannot be fully automated. SRM is more than just performance monitoring and corrective action management, it’s also nurturing, development, and partnership. It’s a good process, with appropriate best-practices embedded within, that focusses on the soft factors as well as the hard factors.
But what the the best-practices that are appropriate for your organization? What’s the right process? How do you get started? And, more importantly, how badly are these needed? Unless you want to wait until a major disruption or disaster occurs, that could have been prevented with a better supplier relationship, the only way to find out is to measure up against your peers. Probably the best way to do this is to proactively participate in the 2015 State of Flux SRM Research Report and get the full results ahead of the market. Time is running out to complete the SRM Survey, which, in it’s seventh year, is focussed on helping you get executive sponsorship and support for your SRM initiative.
Follow the bright blue hyperlink today and take the 2015 SRM Survey today. Given the depth (and breadth) of work consistently produced by State of Flux (compared to the average over-priced and under-researched analyst report), the 45 minutes of time that is required makes the effort infinitely more valuable than the cost.
