Category Archives: Miscellaneous

This is Scary! We Have To Fix This!

Last month, MSNBC published an article on “Why American Consumers Can’t Add” that’s frightening. Look at these statistics:

  • Only 2 in 5 Americans can pick out two items on a menu, add them, and calculate a tip.
  • Only 1 in 5 Americans can reliably calculate mortgage interest.
  • Only 13% of Americans were deemed “proficient”. That means
    less than 1 in 7 American adults are “proficient” at math.

Furthermore

  • 20 M Americans — roughly 1 in 9 of Americans aged 18-65 — pay someone to fill out their 1040EZ: a one-page tax form with around 10 blanks to fill out
  • The U.S. Ranks 25th of 30 industrialized nations in math scores, down near Serbia and Uruguay!
  • 50% of American 17 year olds couldn’t do enough math to work in an auto plant

And if this isn’t bad enough,

  • In 18 US states, not even one elementary math class is required for teacher certification
  • Some U.S. teaching colleges allow admittance as long as students have math skills equal to their future students — that is, as long as they could pass a grad 5 math class. (Are they smarter than a 5th grader? You have to wonder!)
  • In some states, you can pass the teacher certification exam without answering even a single math question correctly!

Not only did our collective lack of math skills contribute to the current fiasco — after all, if you’re paying $100 to a tax preparer for 3 minutes of work, taking out 250% APR payday loans, and agreeing to 1,000% overdraft protect loans from your bank, how could you possibly see through the consequences of an (unpredictable) adjustable-rate mortgage or make a sound bet on their future earnings potential or fight with financial planners over fees that are swallowing one-third of your retirement savings.

We can forget about a recovery and any hope of regaining former glory if we don’t fix this — and do it fast. Math is becoming more and more necessary in just about every profession, and supply chain in particular. How can you do an analysis, break down a cost model, or even know whether or not the offer you’re getting is any good if you can’t do enough math to figure out a total landed cost per unit?

I don’t know what the answer is, but it has to start at the foundation. No more teachers who don’t know at least 1st year University math, and no more curriculums that don’t give math at least the same level of importance as every other subject. We need to get back to the three R’s, Reading, wRiting, and aRithmetic … because Math is now the common language of the world. If you can’t read and write math, at the rate the information revolution is progressing, there might soon come a time where you can’t communicate at all!

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Where’s Our Leonardo da Vinci?

Leonardo da Vinci, the brilliant Italian scientist, mathematician, engineer, architect, inventor, painter, botanist, musician, writer, and the archetype of the Renaissance man, defined an entire movement almost single-handedly and inspired countless scholars to new and dizzying heights. He probably understood the connection between art and science better than any man alive during the last millennium and even conceptualized inventions (such as the helicopter and the tank) that could not be realized for almost 500 years. He was a leader and a visionary and someone who could serve as a focal point for an intellectual revolution.

Now, it’s true that the 20th century produced its fair share of great minds — Einstein, Feynman, Hawking, and Penrose who helped redefine the very universe we live in, to name a few — but most were fairly specialized, and these minds in particular focussed heavily on the fundamental sciences. In the arts we had the likes of Pollock, Warhol, and Lynch and in philosophy we had the likes of Wittgenstein, Russell, Rand, and McLuhan, but, like their physicist counterparts, they never crossed the divide. The only people who attempted to really bridged the divide were the science fiction writers like Asimov, Clarke, Adams, and Gibson. But even the greats never really crossed the line into the “world” of business which would, of course, at least as far as a scholar is concerned, sully true academic pursuits.

When you meander over into the world of business, in which most of us live in today’s mostly privatized world (where the market capitalization of six private corporations exceed 5 Trillion, which is an amount greater than the current GDP of every country in the world except the US, and the top corporation, Race World International, has a market cap that is three times the annual GDP of the US), and you look at the great business minds like Drucker, Kroc, Porter, and Ford, you see little connection to the sciences, except for Ford, who was an engineer.

We’re supposed to have reached a point where the world is flat but executing global trade, travelling internationally, and crossing the cultural divide seems to be harder than it has ever been. Technology is supposed to be simplifying the supply chain but the sheer proliferation of e-Sourcing — spend analysis, RFX, e-Auction, decision optimization, contract management; e-Procurement — P2P, EIPP, e-Document Management, e-Invoicing and e-Billing; logistics — transportation optimization, LTL marketplaces, and 3PL management; warehousing — inventory optimization, warehouse (layout) optimization, demand planning and forecasting; supply chain finance — discount management, receivables trading, and factoring; visibility — EDI/XML, RFID, and tracking; manufacturing — production planning, lifecycle management, performance management, and collaboration; compliance — regulatory, environmental, and carbon management; and other supply chain technologies is challenging even the most technologically proficient of us to keep up. And the new and improved “paradigms” the consulting firms unleash upon us every decade usually end up in the trash by the next one.

Furthermore, while the modern supply chain is, in some ways, more efficient than it’s ever been — at least at the handful of industry leaders, in many ways, it’s in shambles. We need a visionary who understands the art and science of the modern supply chain and the trillions of dollars in global trade it supports every year. Someone who understands the technology it requires and the science behind it. Someone who sees the architecture on which the supply chain is based and how to engineer a better chain based on that architecture. Someone who is comfortable with the underlying mathematics of modern supply chain models and how to use this knowledge to optimize the supply chain. Someone who hears the melodic, almost musical, patterns of a smooth flowing supply chain. Someone who knows the long history of the global supply chain which actually dates back to pre-history (and the realm of the archaeologist) … centuries before the spice trade in the 16th century and at least as far back as the 9th century during the time of the Vikings who traded with the Franks, Baltic, and Byzantine empire and pioneered trade routes down the Volga and Dnepr and to Northern India and China and essentially traded with the entire known world at the time. And someone with the vision to take the best that the art, science, and business schools (of thought) have to offer and take us firmly into the twenty-first century. Because, when you think about it, we’re still operating like it’s the 20th century, and it’s 2010.

It’s unfortunate that da Vinci lived 500 years ago, because if you take a long, close look at the world we’re supposed to be powering, it quickly becomes clear that we could sure use someone like him today.

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If You Really Want a Renaissance Education …

then Get Back To The Classroom!

While I was pleased with the fact that the recent article on “Supply Chain 2010” noted that a Renaissance education was needed in the supply chain because, in many ways, it is … I was very displeased to see that “employers are finding short term education most attractive as it doesn’t keep employees out of the office as much” and “can’t justify them being out of the office even for a full day”.

I’m sorry, but these are among the most imbecilic statements I’ve ever read. The cost of an employee being out of the office for a day is nothing with respect to the value a better educated employee brings to your organization, especially in supply chain. In fact, the cost of an employee being out of the office for three months is still literally nothing with respect to the value a much better educated employee will bring to your supply chain organization.

For example, let’s say that employee, who is well paid and makes 100K a year, is about to renegotiate a 10 Million dollar buy. Let’s say the price of the primary raw component is 10% higher than last year and you usually end up accepting price increases that equal 50% of the rise in the raw material index. This says you would be expecting a 10.5 Million contract renewal. Now let’s pretend that there’s a one day class on supply chain finance where your employee learns how, in some situations, companies can save big by financing supplier’s raw material costs. Let’s also pretend this smart employee comes back, does some research, and finds out your supplier is constantly carrying a credit line at 24% to finance the raw materials for the 60 days it typically takes to produce and ship the product and the 60 days it typically takes your accounts payable to pay. And let’s pretend that the raw material is 40% of the cost and that the supplier’s margin is only 10%. This says that the supplier is financing 40% of roughly 9M for 120 days at 24%. Doing some simple math, this says the supplier is paying roughly 288K (0.4 * .24/3 * 9M) in finance fees, or almost 3% of the sale, to service you.

Now, if your buyer figured out that if you bought the raw material on behalf of the supplier and charged them 0% interest that you would be saving them 3%, she could go back to the supplier and say “we know that your raw material costs went up 10% and that you’d normally expect a 5% price increase to cover this cost, but we also know we could take 3% off of your bottom line by buying the raw material for you and charging you 0% interest.” “So, since we also need to keep costs down, we’ll do this for you if you hold prices steady for another year. Your margin will be unaffected and we get better prices that allow us to outsell our competition. It’s win win.” The supplier, who we’ll assume is also well educated, agrees, and your buyer saves you almost 5% with respect to what you expected to pay, which equates to about 500K. Let’s assume this was an expensive one day seminar that cost 2K and tack that on to the 400 in salary and 150 in benefits it cost you for that employee to be out of the office for one full day. That says that the return on your employee being out of the office for one whole day was approximately 196:1. This says the author is purporting to tell me there are still managers out there who can’t justify a 196X return. Ouch! I was hoping their sorry asses would have been the first to be shown the door Fresh Prince style* because you can’t afford managers like that now that we’re returning to the old normal.

Now, this isn’t to say that I’m not a big fan of focussed half-day workshops or online self-study courses, because I am, but that you can’t overlook the value of a classroom education which cannot be equalled. While you can learn a fair amount from self-study, and should learn as much as you can to supplement and enhance your classroom education, you’re only going to learn so much from an on-line class. They’re great for learning the basics and will help you get the most from your classroom experience, as you’ll go to class prepared to engage in a real discussion and learn the advanced applications and deep concepts behind the material (and know what questions you really need to be asking), but they’ll never replace the education you get from a true sensei (which literally means “one who has gone before”). Plus, how much are you really going to learn at work, where you are interrupted with another “fire” or “emergency” every 5 minutes? To really learn something, you have to get out of the office, turn off all your electronic gadgets, and focus on the material. Then, you need to go back to the office and apply what you learned under the guidance of an old pro or a mentor. It’s as simple as that.

*This is how you show Maury the Management Moron the door, Fresh Prince style:

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Is it Time for a New Renaissance in the Supply Chain?

The Renaissance was a cultural movement that encompassed a resurgence of learning based on classical sources and a gradual, but widespread, educational reform. It was also known for the humanist method of study, which focussed on the study of grammar, rhetoric, moral philosophy, poetry, and history by Latin and Greek literary authors, the development of techniques to render perspective and light in a natural way, and a scientific revolution that began with the likes of Leonardo da Vinci who intermixed art and science in remarkable ways.

After reading a recent article on “Supply Chain 2010” in the Supply Chain Management Review which noted that a “Renaissance” education is needed, I’m wondering if it’s not high time we brought a new renaissance to supply chain. I’m not saying we should dig out the dusty Latin and Greek texts (after all, how many of us could read them? I know a few Greek roots and could probably refresh myself on grade school Latin if I had to but beyond that …), just that we should look back a few decades to when growth was slow and steady, the market didn’t change overnight, and crashes didn’t come faster than we could log them. The Old Normal Is Coming Back, and it wouldn’t be a bad idea if we knew how to deal with it … especially those of us who weren’t working in the real world 20 years ago.

We have a rapidly expanding discipline. Sourcing, Procurement, Contract Management, Global Trade Management, Compliance Management, Green, Sustainability, Logistics Management, 3PLs, Asset Management, Supply Chain Finance, Inventory Management, Warehouse Management, Demand Driven Forecasting, Marketplaces, Supply Market Insight, Warranty and Returns Management, Service Management, IP Management, Talent Management, Supplier Information Management, Supplier Performance Management, Negotiation Management, and dozens of other self-contained disciplines that are impacting every aspect of the supply chain. In addition to having deep expertise in one of these areas to differentiate yourself and offer value above and beyond your peers (to ensure you keep your job in these lean and mean times), you also have to be reasonably well versed in each of these other areas to understand your role, where it fits in your organization’s supply chain(s), and where you fit on the cross functional teams. You literally have to be a jack of all trades and master of one.

We have technology platforms proliferating even more rapidly on a wide array of deployment options that leave even experienced IT pros dizzy. Traditional installed, single-instance ASP, multi-tenant SaaS, single-tenant Cloud, multi-tenant Cloud, Virtual Beowulf Clusters, and so on.

And it’s finally being recognized that not only is Supply Chain the core of the business, with the ability to contribute much more to the bottom line in a slow-growth (or flat) economy than sales and marketing ever will (as every dollar saved is equal to between 5 and 20 dollars of additional revenue as far as the bottom line is concerned), but an opportunity for revenue generation. Robert Rudzki (Beat the Odds: Avoid Corporate Death and Build a Resilient Enterprise) and David Jacoby (Guide to Supply Chain Management: How Getting it Right Boosts Corporate Performance) have written entire books about how the supply chain can boost your revenue and corporate performance.

And that’s just the tip of the iceberg. The experts are realizing that Supply Chain Process is Art and Science, that Collaboration Innovation is required for success, that we’re in for energy and water shortages if we don’t revolutionize our supply chains, that the 106 steps discrete steps to global trade are only going to multiply as more and more environmental and security regulations come into play (as we try to figure out how to truly trade across global boundaries), and that inefficiencies are costing the global supply chain hundreds of Billions of dollars each year.

When you try to achieve a coherence, you realize that we need a way to render global supply chain perspectives in comprehensible ways, a more humanist approach that links the man with the machine — which is extremely unlikely to acquire the true intelligence we have in our lifetimes, that integrates the morals of sustainability and responsibility into everything we do, that uncovers the poetry of an optimized supply chain, that outlines a philosophy for how an ideal supply chain should flow, and that scientifically revolutionizes how we produce and consume throughout the chain. And if that’s not a Modern Renaissance, I don’t know what is!

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Google may have ended voting on Project 10100 …

… but that doesn’t mean that you can’t change the world!

If you can come up with something that:

  • improves the Community
    and connects people, builds the neighbourhood, and protects unique cultures
  • increases individual Opportunity
    and lets people provide for themselves and their families
  • reduces Energy consumption
    and helps move the world toward safe, clean, and inexpensive energy
  • sustains the Environment
    and promotes a cleaner and more sustainable global ecosystem
  • improves Health
    and helps individuals lead longer and healthier lives
  • furthers Education
    and helps people get access and
  • ubiquitizes shelter
    and ensures everyone has a safe place to live

then, even without Project 10100, you too can change the world.

And if you’re not in it for the money, why not take part in the IEEE Humanitarian Technology Challenge (HTC)? The HTC is an innovative, collaborative endeavour that will develop and implement technological solutions to selected humanitarian challenges in developing countries. It’s mission is to create sustainable, scalable, and adaptable solutions that can be implemented locally within the environmental, cultural, structural, political, and socio-economic conditions that will

  • generate reliable electricity,
  • connect rural district health offices with central facilities, and
  • generate and tie individual ids to health records to provide potentially life-saving access to accurate health information for remote, mobile populations in underdeveloped nations.

Getting involved is easy. Just request access to the online collaborative platform or contact one of the leaders of the movement. For example, in Canada you could contact Alfredo Herrera (Ottawa) and in the US you could contact Narendra Mangra (Washington, DC). You can find more leaders on Linked-In or contact your local IEEE section to help you find someone closer to you.

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