Category Archives: Market Intelligence

Your Transportation Costs Are About To Go Way Up!

Mary C. Holcomb of The University of Tennessee and Karl B. Manrodt of Georgia Southern University, in partnership with Con-way Inc., Ernst & Young, and Logistics Mangaement, just released their Annual Study of Logistics and Transporation (The Masters of Logistics Report), and the findings, summarized in this recent article on Study of Logistics and Transportation Trends: Navigating transportation’s Bermuda Triangle that had some scary findings. Namely that, in the average supply chain, there is:

  • a lack of planning for the impact of rising fuel prices,
  • a rigid network that is incapable of flexing when uncertainty occurs, and
  • a myopic internal focus that limits the enterprises’ ability to achive the desired performance results.

Furthermore, the most mature actions being undertaken by study respondents are

  • use of core carriers
    which doesn’t deal with the fact that they will tack on fuel surcharges when prices get high enough
  • use of dedicated transportation
    which generally only helps with core routes
  • carrier tracking
    which keeps on top of rates but does nothing to mitigate or control rates
  • load planning
    which increases fill rate and minimizes shipments, but doesn’t necessarily optimize the network
  • shipment consolidation
    which helps, but only if done in conjuction with S&OP planning because, otherwise, there’s a chance that this could increase the probability of costly stock-outs

And none of these are optimal. As the authors indicate, logistics managers need to be looking at route planning in conjuction with network optimization and redesign with respect to overall supply chain needs. This is the only way to adequately mitigate the risk of (rapidly) rising freight prices in the years to come. And any company that keeps doing the same-old, same-old, which is the majority of companies by the looks of things, is in for a rapid rate increase as soon as the (global) economy bounces back.

Finally, A Good Consumer Use for RFID!

I’m sure many of you will have arguments to the contrary, but this is the first use of RFID to enable the end consumer that I have to outright applaud.

Who doesn’t want to pour their own draft, when, how, and in the amount they want? It’s Frackin’ Awesome!

For details, check out this great article over in the RFID Journal about how the “wall of beer lets patrons draw their own drinks”. It’s … wait for it … Le-gen-dar-y!

How Corrupt is Your Country?

Transparency.org recently released the results of its 2010 Corruptions Perception Index, that ranks countries according to perception of corruption in the public sector, on a scale from 10 (very clean) to 0 (highly corrupt). I’m pleased to say that Canada is 6th at an 8.9, outranked only by New Zealand and Singapore (tied for 1st at a 9.3) in the Commonwealth.

The ten most corrupt countries, in order, are:

  • Somalia
  • Myanmar
  • Afghanistan
  • Iraq
  • Uzbekistan
  • Turkmenistan
  • Sudan
  • Chad
  • Burundi
  • Equatorial Guinea

But more interesting is where the BRIC, and the US and UK, fall in the list. The UK and US are 20th (with a 7.6) and 22nd (with a 7.1) respectively. South Korea pegs in at 39 (with a 5.4) and Mexico at 98 (with a 3.1).

  • 069th: Brazil
  • 078th: China
  • 097th: India
  • 154th Russia

As Abdul Khadar commented on SI’s recent post on Buy India, Sell China, maybe you should also consider the level of corruption when making investment decisions. If things go bad, and you want local help, you may need a fair amount of bribe money set aside to get it.

Is Globalization Hurting You?

A recent article over on the McKinsey Quarterly on “Understanding your Globalization Penalty” is very thought provoking and a must read for any organization — or supply chain — looking to extend its global reach. Not only does globalization bring with it a risk for every opportunity — creeping complexity, culture clashes, and courageous counters from local competitors to name a few, but, high-performing global companies consistently score lower than more locally focused ones on several critical dimensions of organizational health — direction setting, coordination and control, innovation, and external orientation. This is backed up by data from McKinsey’s organizational-health index database which contains the results of surveys of more than 600,000 employees who assessed the health of nearly 500 different corporations.

This is scary. We’re in a knowledge economy driven by innovation, which requires direction, coordination, and external collaboration with suppliers and partners. Everything that globalization appears to be putting at risk!

Given that at least 50 percent of an organization’s long-term success is a function of its health, this is doubly troubling. Especially since McKinsey restricted the study to 20 “local champions”, which had outperformed their industries over the previous ten years, and 18 “global champions”, which had likewise outperformed their industries and met the composite criteria for full globalization — the cream-of-the-crop, if you will.

So what’s the problem? According to interviews McKinsey conducted with executives, it’s the familiar challenge of balancing local adaption against global scale, scope, and coordination, often hindered by existing internal networks and linkages [that] are ineffective for managing global-local trade-offs and instead just add costs and complexity. For example, many companies can’t identify transferable lessons about low-income consumers in one high-growth emerging market and apply them in another while others struggle when local entrants undermine traditional business models and disrupt previously successful strategies.

So what can you do? Get a health check and find out if it’s hurting you, where, and why. Then you can craft an appropriate action plan which may be to pull back and focus more on local sales. Sometimes your best market is down the street.

Your Manufacturing Is Lean, But Are Your Communications?

A recent article over on Industry Week on how “Lean Communication Strategy Can Bolster Marketplace Position” asked a great question:

How does a manufacturer implement external communication initiatives without compromising performance or proprietary information?

Because, as the article points out, those companies that can elevate their brands and voices can also leverage incremental revenue streams.

So how does a company implement these external communication initiatives? According to the article, the answer lies in a lean model that unites functions; mirrors the manufacturer’s approach to efficiency and effectiveness; and utilizes QC initiatives that ensure accurate information is dispensed while trade secrets are not. In other words, through a lean communication strategy.

So how does one implement a lean communication strategy? According to the author, it’s effectiveness, prioritization, and ongoing analysis to ensure that the answers to the following questions are always available so that the correct message is always conveyed.

  • What is the value of the story?
    Will it support new business initiatives, influence public policy, establish the brand, burst with innovation, or echo CSR?
  • Who needs to hear the story?
    A niche market, the entire industry, or the public at large?
  • What is the best way to tell the story to the intended audience?
    General press release? Senior officer? One-on-one interview with the innovator?
  • What is the best channel for the story?
    Traditional news sources like radio, TV, or newspapers? Industry specific magazines? Social Media? Sales collateral through targeted channels?
  • Is there a strategic time to tell the story?
    That would enhance a new product launch or business expansion?
  • Who forms the review, vetting, and approval team?

The answers to these questions allow for the development, and deployment, of focussed communications that gather attention without wasting time and resources (to flood the market with messaging that is indistinguishable from the rest of the background noise).

It’s a logical application of lean. And hopefully Supply Management is involved to direct Marketing to the right innovations to focus on.