320 Years Ago The Bank of England Was Established …

It’s establishment is very important as it was the first bank to initiate the permanent issue of banknotes (which were initially offered to raise money to fund the war against France) …

And 200 years ago today, the Netherlands Bank issued it’s first banknote, bringing the Netherlands into the modern age of money de-coupled from the coinage they were originally a substitute for, 48 years before the Federal Government of the United States entered the modern monetary age (and 121 years before the Government of Canada did the same).

I’m sure our good friend Gert van der Heijden, author of Spend Matters Netherlands over in Amsterdam is very pleased about this, because it’s yet another reason why Europe, and Scandinavia in particular, are so far ahead of us in e-Commerce, e-Procurement, and even e-Government — as they are 50 years ahead of us in commerce practices.

For those who are interested, Wikipedia has a good history of the bank note. We all take paper money for granted, but it is only recently that it has become common place around the globe.

The Board Gamers Guide to Supply Management Part XIV: Le Havre

You’ve mastered Agricola and feel that you are an agricultural supply master and after sailing Upon a Salty Ocean, you feel you are also a master of logistics and market timing. But can you handle the full meal deal? Especially when you not only have to balance food and resource acquisition with trading and energy needs? Le Havre, an economic construction strategy game, adds a new dimension to put your supply management strategies to the test: having to balance the use of resources for food and the use of resources for energy to power ships, brickworks, iron mills, abattoirs, bakeries, and smokehouses which allow you to acquire and trade resources, convert raw materials into useable building materials, and turn raw fish and grain into food.

You win Le Havre by acquiring the most wealth over the course of the game, and you acquire wealth by collecting, selling, and using goods and by buying and constructing ships and buildings which have a monetary value. This sounds easy enough, but it is a significant supply management challenge as you have to continuously make enough money to cover the entry costs to the buildings you need (but don’t own), acquire enough raw materials that can be used to produce energy to power the buildings that produce food and building materials, and produce enough food to feed your constantly growing workforce at the end of every round (just like your payroll for an increasingly growing workforces increases in real life), which requires more and more food as the game goes on (just as your corporate workforce also grows as your company grows and you acquire more property and trade more resources).

Although you want to focus on acquiring buildings and building ships, as this is generally what helps you accumulate the most wealth (especially if you leave out the special buildings), you’re constantly having to interrupt your strategy to acquire food to feed your workers, raw materials for future buildings, and energy sources. The last thing you want to do is run out of food, because then you have to buy food, and if you don’t have enough money you either have to fire sale a building (if you have one) at half of its value or borrow, and every loan accrues interest every round (and there’s no limit on debt or interest, just like there’s no limit in the real world).

The game consists of a fixed number of rounds (defined as 14 rounds for 2 players, 18 rounds for 3 players, and 20 rounds for 4 or 5 players), each of which consists of 7 turns. On each turn, you take one of two actions:

  1. take an offer from the harbour or
    on each player’s turn, new goods arrive in the harbour and are added to the appropriate offer space, which the player can take
  2. use one of the available buildings
    which can include the construction firm that allows you to build up to buildings of your own

The base goods that are available as offers for the player to take are:

  • fish
    a food source worth 1 food or 2 food if smoked in the smokehouse
  • wood
    used to construct buildings, ships, or supply 1 energy (via fire); it can supply 3 energy if converted to charcoal in the charcoal kiln
  • clay
    used to construct buildings, it can be upgraded to brick in the brickworks to build more buildings
  • iron
    used to construct buildings or iron ships, it can be upgraded to steel
  • grain
    a harvest good that can be baked into bread (worth two food) at the bakehouse, or used to grow 1 more grain (at the end of the round)
  • cattle
    a harvest good that can be upgraded to meat (worth three food) at the abattoir and hides (for every 2 cattle slaughtered); also, 2+ cattle produce one more cattle at the end of every round

All other goods have to be produced. These include:

  • charcoal: an energy source worth 3 energy produced from wood in the charcoal kiln
  • coke: an energy source worth 10 energy produced from charcoal in the colliery
  • brick: produced from clay in the brickworks
  • steel: produced from iron in the steel mill
  • bread: produced from grain in the bakehouse
  • smoked fish: produced from fish in the smokehouse
  • meat: produced from cattle in the abattoir
  • leather: produced from hides in the tannery

There are 33 standard buildings (and 36 special buildings, which you should ignore until you’ve built up some experience with the base games). In addition to the 9 resource conversion buildings already mentioned, specifically:

  • Abattoir
  • Bakehouse
  • Brickworks
  • Charcoal Kiln
  • Cokery
  • IronWorks
  • Smokehouse
  • Steel Mill
  • Tannery

The following 8 buildings are also available, and necessary:

  • Building Firms: necessary to build buildings
  • Clay Mound: a source of clay
  • Colliery a source of coal
  • Construction Firms: necessary to build buildings
  • Fishery: a source of fish, which is a vital food source
  • Shipping Line: necessary to trade
  • Wharf: necessary to build ships

In order to use a building, you have to pay the entry fee (if you don’t own it), have the energy sources to power it, and one or more of the base goods required to use its ability. In order to build a building, you have to have the resource cost, just like in Agricola. Not to mention, it has to be available. This is the challenge of Le Havre, not only do you have to balance food production (to feed your workers) with resource acquisition (to build), energy production (to power buildings) and ship production (to acquire fish and trade), but you also have to build at the right time, use the buildings at the right time, and trade appropriately. Especially since, just like in the real world, only one player can use one building at a time, take an offer from the harbour and the resource type associated with it, or get points for a particular building or action. And the increasing food costs make the game quite challenging if you don’t adequately prepare for food production from round one. In a four player game, you will need to produce 113 units of food and in a two player game, you will need to produce 177 units of food! A growing workforce needs to be fed (paid)! And you just can’t borrow willy nilly, as the bank only lends money to cover the cost of food (as in Agricola, you can only beg for food).

If you really want to test your supply management mettle, Le Havre is a good game to test it on. While it will likely take twice as long as Agricola to get through a session, it puts your thinking skills and ability to balance supply (offered resources) with demand (building [utilization] costs) in a way that maximizes overall value generated (as the winner is the one that acquires the most wealth by the end of the game). So give Le Havre a go. You might just get more than you negotiated for. (And get one step closer to the ultimate supply management challenge.)

P.S. If you want a good guided introduction to the game, try the iOS version and see if you can become Le Havre’s next titan of industry. The tutorial is good as is the gameplay. (But it won’t give you the challenge of going head to head with your team-mate — all AI’s have preferred strategies and predictable responses when you play them enough.)

Mid-Market Manufacturers and Distributors Need an ERP That Works!

If you’re a mid-market manufacturer or distributor, times are tough.

Your big customers are adopting e-Procurement, Supplier Networks, and e-Invoicing and want to implement end-to-end Procurement and Invoice Automation to streamline processes and reduce operational costs.

Your component and raw material suppliers aren’t always on time, and if you are not on top of your inbound supply chain, a single missed delivery can put you weeks behind and cause you to lose critical orders with big customers.

And if demand suddenly surges or shipments get delayed, sales people and account managers need to know what can and can’t be promised or the company will look bad if multiple account managers collectively make delivery commitments beyond what the organization can deliver.

How do you meet these needs?

If you’re a mid-size organization, you probably can’t afford a full SAP, Oracle, or other Enterprise-class ERP solution with all of the bells and whistles because they come with a seven figure price tag, which leaves you with few choices. Either you choose a lesser ERP, with a price-tag in your price-range, or you go open source, and pay someone to configure and link it to your systems (as most open source never works “out-of-the-box”).

However, all you get with a basic ERP is basic enterprise resource planning functionality. There is no support for e-Invoicing and order automation, no support for advanced real-time forecasting and material planning, and no supply chain visibility.

As a result, in order to service your big customers, you have to either join a Supplier Network, and probably pay a fee for every invoice you send, or use the buyer’s e-Invoicing portal, and have your Accounts Receivable clerk create every invoice twice. After all, while there are lots of e-Procurement and Invoice Automation solutions for buyers, there’s few for distributors and manufacturers because e-order fulfillment systems just aren’t sexy.

In order to keep on top of your supply chain, you have to buy a separate inventory management system on top of a subscription to a real-time supply visibility system to get a grip on what you have, what’s coming in, and where your supply gaps are.

Then, because material planning is not real time and not integrated with order management, you need to buy a separate forecasting system. That’s even more dollars on top of the dollars that you need to spend for inventory management, order management, and the Supplier Network. If the organization could afford all that, the organization could afford the 7-figure ERP system that it couldn’t afford in the first-place.

That’s why mid-sized manufacturers and distributors need an ERP option that works. It has to be affordable, serve as the counterpart to buyer e-Procurement and invoice automation solutions, allow for visibility-based inventory management, provide full order management functionality, and allow for dynamically updated forecasts based upon changes in material availability, delivery dates, and buyer order forecasts.

It’s not sexy, but in order to have an efficient supply chain, all players in the supply chain have to be efficient. If solutions are produced for some players, but not others, the supply chain will continue to only be as strong as the weakest link.

Top 12 Challenges Facing India in the Decades Ahead – Epilogue

As we have chronicled in the past 12 posts, India has a large number of significant and imposing challenges ahead of it — challenges it has to face, and conquer, to rise to the glory it aspires to. Moreover, the identified challenges of:

are just the biggest challenges that SI has identified as being the most important to solve; they are by no means the only challenges that lie ahead of India. Pick a topic. Any topic, somewhere, somehow, India is facing a challenge. Maybe it’s just minor and restricted to a small percentage of the population or a few states, but it’s there. And until the major challenges are addressed and reasonably solved, progress is going to be slow and India is not going to surpass the US to become the number two producer of GDP as some economists and futurists are predicting. In fact, if it doesn’t make progress on a number of these challenges, India, which was ranked 10th in GDP production at the end of 2012 (Source Wikipedia), is not even likely to surpass Japan, which currently holds the number 3 slot according to the UN (United Nations), IMF (International Monetary Fund), and WB (World Bank). (However, it is quite likely to pass Italy, Russia, Brazil, the UK, France, and, a few years after France, Germany to take the number 4 slot even if it doesn’t make much progress on the challenges, simply by virtue of the growth that its middle and upper classes, which constitute about 30% of its 1.2 Billion people, can produce on their own.)

But it’s not all doom and gloom! As SI will discuss in a future series, it has as many opportunities as it has challenges and if it conquers its challenges, it will have opportunities that are only equalled by the opportunities before China (and, with China, control approximately 1/3rd of the global economy in the latter half of this century)! What future lies in wait? That’s up to India to decide, but a future blog series will discuss aspects of one possible future. Stay tuned.

Don’t Be a Smeghead! Adopt the 3 Rs Now Before You Yourself Become Scarce!

Starting today, your new mantra is Reuse, Recycle, Remanufacture and all of your sourcing efforts revolve around Design for Recycle because the raw materials your supply chain runs on are running out faster than oil and fresh water.

As per this recent article over on BBC Future on what is the world’s scarcest material, China, which produces up to 90% of the world’s rare earth metals that are vital in electronics production claims that its mines might run dry in just 15-20 year. At current utilization rates, we could be out of silver in 20 years (which is only good news if current lore is correct and you are a werewolf), platinum in 15 years (which is bad news for aspiring musicians everywhere), and indium, used in electroluminescent panels, LEDs, and semiconductors, in as little as 10 years!

Why? Because we don’t reuse, recycle, and remanufacture. Currently, US residents recycle a mere 25% of TVs and Computers and less than 10% of movie phones — which is where the majority of the rare earth metals mined every year end up! If we reclaimed all of the metals that went into all of the electronics we produced, it would likely be at least a century before we’d have to worry about running low on materials, as we’d only have to mine to meet incremental demand.

So if you think rare earth metals are expensive now, think about how expensive they are going to be as supply becomes even more restricted! Until SpaceX and Virgin Galactic have solved the everyday problems of space flight, merge to form Jupiter Mining Corporation, and build Red Dwarf, you’re going to have three choices:

  1. Completely switch product lines to something that doesn’t require rare earth metals — like fashion or low-tech household goods,
  2. Pay the ever increasing premium until your customers can’t absorb it and you go down with the corporate ship, or
  3. Spearhead a reuse, recycle, and remanufacturing effort with your customer and supply community to reclaim as many rare earth metals as you can and reduce your newly mined raw material requirements to the point where they can double in price and not affect your operating cost.

Obviously, choices #1 and #2 will both result in your position, and you, becoming a thing of the past — so unless you’re looking for a career change, only a Smeghead would choose anything but option #3.