Category Archives: Miscellaneous

Value is a Two-Way Street

A recent article in Reliable Plant on how survival depends on delivering value and not just cutting costs pointed out that, to survive, you have to focus on your value proposition because, these days, customers don’t just want costly products, they want valuable services such as warranty, care, and customization.

It also pointed out that if you wanted to sell value, you had to

  • define “value” in terms everyone on your executive team understands and
  • define “value” in terms your customers can understand.

This is too true. Not only will your customers not buy what they don’t understand, but management probably won’t support you in your efforts to create it if they don’t understand what it is.

More importantly, it points out that value is a two-way street. For something to be truly valuable, it has to create profit for you and your customer. It’s not value if you lose money making your customer happy. And it’s not value if it doesn’t keep your customer happy, because they’ll just go elsewhere if they can find something that does. Value is that which benefits everyone. So remember to take the holistic view next time you are updating your value proposition.

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The Three-Pronged Core of the Modern Supply Chain

A recent article over on Supply Chain Digest purported to tackle “supply chain at the core”. I thought it would be about the core of the supply chain, but instead it was about how the supply chain is now the core of most companies. For example, GM just attributed it’s 7% increase in gross margins to manufacturing & distribution (supply chain), a 2B consumer goods company has realized that their supply chain is the key to their success, and the lack of supply chain sophistication is what allows private-equity firm Frontenac to buy companies at a discount and make profitable ventures out of them (by installing proper supply chains and supply chain management).

I was curious as to what they’d say about the core of a modern supply chain. A Google search for “supply chain core” turns up core disciplines, planning and optimization, and lean six sigma, which, while important, all miss the point. Which is very simple.

The three-pronged core of the modern supply chain is the same as it’s always been — people, process, and platform. The only difference is that the people are more skilled, the processes are more involved due to the truly global nature of the modern supply chain, and the modern platform is a sophisticated tangle of modern technology. But the core is still the same — good people, good processes, and good platform. Everything else is just a layer.

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Why We Need Trusted Sources

Some people think that everyone should be a blogger because they believe that the wisdom of crowds will find and filter the best content to the top and this, in turn, will give us better news, opinions, and commentary.

Well, I for one don’t. First of all, not everyone can write well. Secondly, even most of the well written stuff would probably be about Amy or Britney or Christina etc. Thirdly, the internet crowds (or at least the heavily active ones) are not very wise. Just ask Zach Braff who was scrubbed yesterday by crowd wisdom and had to post an impromptu video on YouTube to assure his fans, and his mom, that he is indeed very much alive.

Now, while I welcome the commentary of those more brilliant than myself, and sincerely hope that some of the former sourcing blogger heavyweights like Dave Stephens and Doug Hudgeon will make a triumphant return to the space, I don’t want to read the fantasy of the average moron or the debris that the “crowd wisdom” currently floats to the top on many of the social news selection sites. I want credible, reliable, and intelligent sources, not candidates for Zach’s Douche of the Day Award.

It’s Still All About the Pentiums, Baby!

It was exactly 3724 days ago today, or 10 years, 2 months, and 10 days ago today that Weird Al Yankovic proclaimed that It’s All About the Pentiums. I wonder if he knew that when he proclaimed:

 

My new computer’s got the clocks, it rocks

But it was obsolete before I opened the box

You say you’ve had your desktop for over a week?

Throw that junk away, man, it’s an antique

Your laptop is a month old? Well that’s great

If you could use a nice, heavy paperweight

 

that the trend was only just starting and that ten (10) years later it would still be about the latest generation of the Intel Processor (the Core 2 Duo), that your database would still be a disaster, that windows would still take a “day-and-a-half” to boot up, or that, regrettably, supply chain managers would still be king of the spreadsheets?

I’m wondering because 3724 happens to be the RFC on The Rise of the Middle and the Future of End-to-End: Reflections on the Evolution of the Internet Architecture. The end-to-end principle just happens to be the core architectural guideline of the internet. Addressing concerns of openness, reliability, robustness, user choice, and ease of new service development, the end-to-end principle, which was originally a question of where not to put functions in a communication system to insure that applications could survive partial network failures, is still as relevant as it ever was. While not a standards proposal, like most RFCs, it put forward some good questions as to how the internet should evolve, questions which are becoming increasingly important with the rapid proliferation of the internet across a wide range of wired and wireless devices on which you will want to seamlessly access your supply chain applications.

Simply put, you’re going to want to be able to run your apps whether you’re working on your server, working on your desktop, working on your laptop, or working on your mobile, and you’re going to want to be able to do it using an open architecture built on open standards. This is because you don’t want to be spending thousands upon thousands of dollars for proprietary products that use proprietary APIs on each platform that do nothing more than convert your data from proprietary format A to proprietary format B so your mobile can talk to the server. You just don’t.

So remember, it’s all about the pentiums, baby.

All Brands are Niche Brands

I loved the title of this recent article in Strategy + Business. All Brands are Niche Brands. It’s true. It doesn’t matter what you sell — automobiles (which the article was about), computers, music players, clothing, fast food, etc. You name it, it’s niche. It doesn’t even matter if the industry has a clear “market leader”, like Microsoft in operating system software, because, when you get right down to it, even though Microsoft might still have 85% of the OS market, they have so many versions that there is no true majority leader. Furthermore, as Linux and Mac OS X gain market share, their market is shrinking.

As Stephen Dubner and Steven Levitt, authors of Freakonomics, and Chris Anderson, author of the Long Tail, have noted, with a global population approaching Seven (7) Billion, two standard deviations from the mean is fast becoming a sizable market in its own right, with a potential market size of up to 280 Million (as only 95.4% of the global population is within two standard deviations of the mean). If we subtract the 39% living in poverty, and then restrict our market size to the middle class (about 45% in non-third world economies), that still leaves a potential global market size of up to 76 Million. And if even only 1% of that market would be interested in your product, that’s still a sustainable business for a small company.

Plus, with product proliferation almost out of control in some verticals — such as cell phones, media players, and clothing — it should be easy to see that niche markets are fast becoming the norm.

So next time you’re sourcing, remember that you’re not just sourcing a commodity, you’re sourcing a niche product for a niche market and, sometimes, differentiation does help.

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