Category Archives: Miscellaneous

Headline From the Land of D’oh: Notorious Somali pirate quits: Now is shipping safe?

A recent CNN article which noted that the retirement of the pirate leader Mohamed Abdi Hassan, also known as “Afweyne,” has generated much media coverage, but the real significance of his announcement is the indication it gives of how Somalia’s pirates currently view their business model and that it appears that hijacking vessels in the Indian Ocean and the Gulf of Aden is no longer seen as a relatively risk-free affair concluded that while piracy off the country’s coast will not be ended conclusively … it might be contained to a manageable level.

Depending on what you conclude a manageable level to be, that might happen, but shipping is NOT safe. If a pirate can make 10 times the average annual salary in one hijacking, and one hijacking can command a 5M ransom, even with the introduction of international naval ports, armed guards aboard vessels, and best practices, piracy is not going to stop. First of all, it’s still way too lucrative when the right ship is passing through. While it is true that an average shipment of consumer goods is many times safer, the risk for high-value petroleum, weapons, pharmaceutical, and hi-tech shipments is still there. If there’s a 100M worth of easily-moved cargo on the ship, and pirates know about it, the risk is there — especially with more organized crime getting involved in supply chain thievery. Secondly, when a void is created — there’s always a rush to fill it. Recent warfare against gangs across North and South America has shown us that if multiple gangs are vying for a territory, and the biggest one is wiped out, violence escalates as the smaller gangs jockey for position.

The reality is that, for some of you, shipping is now more dangerous than ever. And any article that tries to insist otherwise is giving you a false sense of security that is even more dangerous. Especially when your cargo is more valuable than drugs and guns.

Blue Friday

Apparently this Monday was Blue Monday, the most depressing day of the year, as determined by the following non-sensical calculation:

[W + D -d]TQ

MNa

where d, D, M, Na, and TQ are a bunch of random variables arbitrarily considered to be correlated to mood.

But if you really want to be depressed, consider the following stats:

  • 64% of companies do not have a person responsible for managing supply chain risk, down a whopping 1% from 2008, but 80% of companies are vulnerable to a major supply chain disruption!
  • companies without e-Sourcing and e-Procurement solutions are over spending by 170 Million on every 1.17 Billion of spend (a rate of 14.5%), and when you consider that less than half of companies out there have either solution, less than 25% have both!
  • and up to 17 Million of this overspend is due to over payments, duplicate payments, missed rebates, missed dicounts, lost credits, and fraud because they don’t even have a decent e-Payment / Recovery solution in place!

In short, chances are that your organizaton is grossly overspending, paying your richest suppliers twice (while bankrupting your poorest suppliers with your 200 day payment terms), and at risk of a major supply disruption that will financially ruin you because you won’t see it coming! That’s a real reason to be blue.

Let’s hope this is the year you stop sitting on that cash reserve and:

  • implement integrated end-to-end e-Sourcing and e-Procurement
  • put a solid monitoring and recovery solution in place to make sure every negotiated cent of savings is captured
  • hire a risk manager and get a grip on risk so you can identify, and if needed, source around it before a disruption costs you every dime of savings you negotiated over the past three years and
  • actually get some training on modern processes and technologies so you implement and utilize the new systems properly.

Sourcing Innovation’s Big Prediction for 2013, A Summary

Over the past week, Sourcing Innovation has revealed its big prediction for 2013. In particular, it predicted that a variant of the conversation detailed in Parts I and II between a CEO and a CFO will happen in more than one Global 3000 firm this year. What was the jist of that conversation?

In Part I, we found out that upon his return from a luxury vacation, a CEO discovered, in his first conversation with the CFO, that the sales on the new product line were zero … because the product never arrived! The new distribution deal with Automated Crossdock Co — negotiated to take the goods direct from the manufacturer’s warehouse to the retail stores — turned out to be worthless as the supplier refused the trucks entry. When the CFO tried to find out why, he was continually given the runaround. And, at least three weeks after product was supposed to hit the shelves, there’s no product in sight.

In Part II, we find out that after repeated calls to the overseas law firm, the CFO finds out that the supplier has gone bankrupt. At first, the CEO thought this would be no big deal, as demand could just be shifted to the next supplier on the list, but this wasn’t the case because the product required a special machine to produce, that only the supplier had. And while another machine could be ordered, it would take about 6 months to custom build, ship, and install at a new supplier location. So it turns out to be a very big deal because, not only is the product line essentially shelved, but the company could end up filing for bankruptcy as sales on existing product lines had declined to the point where the company was losing money. And, despite expectations to the contrary, thanks to a lawsuit settlement, a severe IT upgrade cost overrun, and big management bonus, the company doesn’t have the cash reserves to last six months. As a result, the CFO is already starting to prepare for a bankruptcy filing as they see a proactive planning as their only chance of survival.

In Part III, we reviewed the learnings from parts I and II to try and discern if the company’s predicament was really the supplier’s fault, as indicated by the CEO, or if it was the company’s fault. We reviewed the seven major learnings and determined that, on their own and together, the facts were pretty damning against the company. But we concluded that, despite all of the company’s failings, which were numerous, had the supplier not failed to deliver the product before going bankrupt, the company would have survived. So who was to blame?

In Part IV, we offered you more insights into the situation by giving you a piece of the conversation that took place between the supplier’s CEO and CFO weeks before and a piece of another conversation that took place between the CEO and the CFO that took place months before. And then … we said you had to wait for part V for the answer.

In Part V we gave you the answer. The blame lied entirely with … to the delight of the Grinch … the company! Why? Re-read the entire series to understand!

I Hope You’re Not Paying a Wealth Investment Advisor!

Because if you are, the only person getting wealthy out of the deal is the investment advisor on your money! Especially when your LOLCat can do a better job, and will work for temptations and catnip!

As per this recent article in the The Observer, a ginger tabby named Orlando beat a team of professionals and a group of students in a year-long stock-picking experiment summarized in a recent article on how Orlando is the cat’s whiskers of stock picking. The cat, who selected stocks by throwing his favourite toy mouse on a grid of numbers allocated to different companies, beat Justin Urquhart Stewart of Seven Investment Management, Paul Kavanagh of Killick & Co, and Andy Brough of Schroders who had decdes of investment knowledge.

So if you really want to beat the market, replace your stock analysts with cats who are just as accurate (and don’t put much faith into predictive analytics no matter how much big data you have).