Free Market? What Free Market?

In the developed world, we supposedly have a free market, defined as a market structure in which the distribution and costs of goods and services, wage rates, interest rates — along with the structure and hierarchy between capital and consumer goods — are coordinated by supply and demand unhindered by external regulation or control by government or monopolies. (Dictionary.com) However, every time you turn around these days, governments are imposing new policies to restrict free trade (which allows for a free market on a global scale) or failing to abolish old policies that allow monopolies to persist in this day and age.

For instance, after taking steps to bust up the telco monopolies, the U.S. has now made it illegal to unlock your cellphone. (Read the full decision if you like.) In other words, instead of being forced to use one monopoly, you now get to choose between six mini-monopolies. (Now, it’s true that the FCC will investigate the U.S. mobile phone unlocking ban, but it’s no guarantee they will reverse the decision.) The absurdity of this cannot be put into words. (Imagine if you had to buy your TV through the cable company and you couldn’t use the TV again if you switched cable providers. Does this make sense? Basically, the law is saying a telco carrier gets to choose how you use YOUR phone.)

But this isn’t what I’m ranting about today, as this is a Supply Management blog after all. My rant today is about the fact that it’s 2013 and we are still subject to captive shipping in the railroad and inland barge industries because there is no mandated reciprocal switching (in the United States). So, not only are you forced to use the carrier that owns the line your port/warehouse/etc. is located on, but you cannot ship to a destination if that carrier does not service it. Not only does this increase shipping rates by an average of 20% by some accounts, but it forces many shippers to use long-haul trucking way more than they would otherwise need to.

The fact that captive shipping has not been eliminated is costing the U.S. economy billions of dollars each year. As per a recent report issued by the National Industrial Transportation League (NITL), and summarized in DC Velocity, the introduction of new switching rules that would allow for limited reciprocal switching between the nation’s four major railroads could save rail customers up to 1.2 Billion a year. Simply allowing a (truly) captive shipper or receiver to gain access to a second rail carrier if the customer’s facility is located within a 30-mile radius of an interchange where regular switching occurs would shave up to 1.2 Billion off of shipping costs according to the accepted Revenue Shortfall Allocation Method (RSAM) formula. (So imagine how much could be saved if reciprocal shipping was mandated across the board or more freight shipped rail instead of truck!)

The Surface Transportation Board (STB) could use the powers granted to it under the Staggers Rail Act of 1980 and order the railroads to create reciprocal switching agreements between each other to eliminate captive shippers, but since they’ve had thirty three years to do this, and have made zero progress, it’s not likely to happen. So we’re going to have a monopoly until, as the DC Velocity article notes, angry shippers descend on Capitol Hill and demand that Congress update the Staggers Rail Act to include mandatory reciprocal switching. Maybe then we’ll finally have a free market on the rails two-hundred and fifty years after the first railroad* (Montresor’s Tramway) was built in the US.

* Note that the first railway in North America, drawn by horses, was not built in New York, but in Nova Scotia forty-four years earlier to support the construction fo the Fortress of Louisbourg in Cape Breton! (Source: Nova Scotia Railways)

Supply Chain Planner — Here are Three Solutions to Nearly Every Problem

A recent piece over on Supply Chain Cowboy on “Three Silver Bullets to Solve Nearly Every Supply Chain Fire” simultaneously enthralled and shocked me because I cringe every time I hear that air freight is one of the three solutions to your current supply chain dilemma, as it is a prime indicator of a major supply chain issue — specifically, lack of planning.

But there are ways to avoid the issue. The first one is:

Supply Chain Forecasting Systems

A good, modern, supply chain forecasting system is the best way to figure out not only what you are going to need, but when you are going to need it and when you are going to have to get the orders in and production started in order to meet shipping deadlines and avoid the need for air freight.

The second way to avoid the issue is:

Supply Chain Visibility

(Near) real-time visibility into where your stuff is from your suppliers, their suppliers, and their raw-material suppliers. All delays have ripple effects, and the best way to prevent a hiccup, or disruption, that will force you to have to use air-freight is to have real-time visibility all the way through your supply chain so you can be aware of a potential issue as soon as it happens.

And the third silver bullet, I’m sad to say, is:

Standby Air Freight

Good forecasting will significantly reduce the number of emergencies and the number of times you have to ship air-freight to meet a deadline, and good supply chain visibility will reduce this number even further as you will be able to order from secondary suppliers or ship through back-up carriers when hiccups or disruptions do arise to meet the deadlines laid out in your forecasting system. That being said, no technology will completely eliminate the need. There will always be unexpected events that will cause interruptions at the last minute where the only recovery option is to air freight reserve stock. If the Super Panamax ship gets delayed a week in port because of customs issues after your cargo is loaded, there’s nothing you can do. Or if a second tier supplier gets cut off because of a civil uprising and you have to arrange for the first tier supplier to get replacement product from another second tier supplier further away, there may be no other way to get the product fast enough. That being said, the number of instances where there is no way but up should be few and far between with good supply chain planning and visibility systems.

WOW! Finally a Decent Piece on Higher Education!

A recent press release over on Brookings.edu that summarizes a recent paper by Robert D. Atkinson and Stephen Ezell, who are calling on Congress to “Support the Designation of 20 ‘U.S. Manufacturing Universities”, is a breath of fresh air where the debate on (higher) education is concerned.

Despite what some academics might think, including Mr. McAfee who published this unbelievable post on the HBR blog site calling for us to “stop requiring college degrees” when every single job that doesn’t involve serving food is going more high tech every day, we need more college education, not less. The problems we have are a) it costs too damn much (which should not be the case because an educated society is a productive and innovative society, and if anything is going to be subsidized, it should be education) and b) we are giving too many people the wrong education. As those who follow me on Twitter will know (as I try to avoid the crushing weight of the fail whale), I do not lament the fact that “Liberal Arts Colleges are Disappearing”. How many English literature and classics PhDs do we need anyway? (The answer is not that many.) As long as we save the historians, so we don’t repeat the mistakes of the (recent) past, it wouldn’t hurt to have the number of literature and the philosawfical majors approaching extinction levels compared to the counts for science and engineering majors. (I’m not saying we shouldn’t study these disciplines, as we all should study them to a degree, but graduating tens of thousands of students when there are only so many teaching jobs opening every year is just a waste of money and potential all around.)

We need people focussed on science and technology and other pursuits that benefit the economy and them, especially where jobs are concerned. And to this point, after a decent grounding in the basic theory has been conveyed, we need programs with a strange focus on the practical. Even in Engineering, we only need so many designers — after that, we need manufacturers and maintainers. We need people with a grounding in the practical. Now, I know the academic among you will argue that university is about improving the mind and increasing the mental potential of the individual, the real world be damned, but lets face the fact that, right now, for the most part, we have no trade schools, we have no apprenticeships, and we have, in many industries, no other way of identifying someone who is likely to be intelligent and educated enough to do a job. The College / University degree is the passport to a job in today’s world, and its about time we had programs that were appropriate.

So the suggestion by Atkinson and Ezell that Congress should establish an initiative to designate 20 institutions of higher education as “U.S. Manufacturing Universities” as part of a needed push to strengthen the position of the United States in the increasingly innovation-driven global economy is one of the best, and most logical, suggestions I’ve seen in a long time. And since we are not going to return to the way of apprenticeship (which is the answer), let’s finally create the outputs that industry wants from Colleges and Universities. This doesn’t mean that all programs have to be practical, just that there should be practical options where they are needed and required by today’s society. It just makes sense. (So, as you all know, you can bet that Congress won’t do it. Especially since this would mean raising taxes to beyond the point necessary to prevent the budget reductions that are coming into effect that could cost America up to 1 Million jobs because the Republicans refuse to allow the rich to pay their fare share of taxes. But still, it’s nice to know that somewhere there are still some level, practical heads.)

Ping Me Now

I’m just an instant message online
You can pop up a window any time
And ima listen to all you got to say
Cause I’m the type of man that never turn a demo away
Think of this as an invitation
Your brain to mine in a conversation
So when things get to much to bear like the twitter sphere
I’ll be there
Just message me on the internet
Hit me up when you’ve got no air
And I’ll give you an online review
Until your brand rings true
Or if you want to you know what you could do, why
You could always get on the train, take a chance and sponsor SI

Ping me now, ping me now
(Ping me now, ping me now)
Ping me now, ping me now
(Ping me now)
Pi-i-ing!!!

I hate to see you flounder while the media
Acts like your product is a game
I know their types and they’re all the same
Playing fast and loose without a care
Co, if I was in you shoes they’d be outta there
PR is whack, good for nothin’ but flack
I’d tell them to pack and hit the road jack
Who loves ya baby? I do not know
But they don’t care about you, let them go
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Layin’ on the beach just out of reach
Just let me write, you know I will get it right
Cause yo I’m the best and the stats will vow
That I’ll be here, so ping me now

Ping me now, ping me now
(Ping me now, ping me now)
Ping me now, ping me now
(Ping me now)
Pi-i-ing!!!

Now I know this sounds like a fairy tale
But know this ain’t no children’s book
I’m here for you, so take a look
Open your eyes and see what SI entails
And if you blink then you might miss
Something great, don’t make a mistake
Pay attention to what we’re doing
Marketing’s full of pitfalls, ups and downs
Its own type of mission
You’re on a rocky road
You could turn off, just make that decision
You want the blog that will review you fair
If you’re ready to not be disavowed
Then you can ping me now

This one is to the Fresh Prince’s classic, Ring My Bell