Author Archives: thedoctor

Pre-Package vs. Post-Package? Or How About No Package?

Amazon wants to pre-package goods and ship them to a location near you in anticipation of your upcoming order (as per our recent post on how anticipatory demand planning is good, but anticipatory shipping?) It’s an interesting idea, but the shipping companies are going to have to upgrade their systems to make it work (as per our recent post).

However, if you’re talking about the Food & Beverage Industry, as per this recent article over on Inbound Logistics on Packaging Postponement: A Game Changer for F&B Companies, by positioning product packaging further downstream in the supply chain and closer to the consumer, food manufacturers can take advantage of different selling opportunities. If the product is selling better in a certain retail location, major restaurant chain, or even through a set of strategically-deployed vending machines, you want to get it where it’s selling best in the quantity that can sell. This will generally require the right packaging, since a vending machine portion will generally be smaller than a store portion which will be smaller than a restaurant portion as the restaurant will order in bulk to prepare in bulk.

Packaging is a conundrum. But do you even need packaging at all? (At least at the individual product level.)

Let’s consider the Amazon situation. Do they even have to package the products they are shipping in bulk at all? While it’s true that they are not a traditional store where you can walk in and pick up the item, this doesn’t mean that you can’t walk in to a “store” and pick up the item. Nor does it mean that you need packaging to affix a shipping label.

Consider Amazon’s expanding Locker service. If a good is placed in a locker, it doesn’t need a package. Neither does any good placed in any neighbouring locker. All of the goods going to the lockers can be shipped in a single “package”, and then put in the appropriate lockers. But the “package” doesn’t have to be a package — it can be a reusable shipping container. Then there’s no packaging, no waste, and shipping is on its way to becoming a sustainable business.

Basically, Amazon can re-invent the mail-order model developed by Sears, Roebuck & Co. where “mail-order” is replaced by “e-mail order” and “counter pickup” is replaced by “locker pickup” and bring back the “reusable crate”, only this time it’s probably a “eco-friendly heavy-duty plastic crate” that will last much longer.

And while you might think that this concept cannot be translated to Food & Beverage, challenge that notion. The Bulk Barn‘s entire business model is built on bulk, package-free, purchases. And all of the food and beverage products they sell can be shipped in reusable containers. (Now, I know it doesn’t work for liquids in the current business model*, but it works fine for most dry goods.)

What’s the point? You can package when, where, and how you want, but first think about whether you even have to package at all, and, if you do, if you can use re-usable shipping containers. Environmentally friendly and cost-effective, it will save you money and image points on an ongoing basis.

* But even then, we can bring back the classic milk delivery model where you return the reusable models, but update it such that you pay a high deposit each time you buy a reusable bottle, which is waived each time you return a reusable bottle, just like the eco-conscious micro-breweries are doing.

Top 12 Challenges Facing India in the Decades Ahead – 05 – Sanitation

Sanitation in India is a major problem. The fact that India is 13th among a list of the 16 countries outside of sub-saharan Africa that are poorer than it in the rankings does not do the severity of the problem justice. As we noted in our post on Poverty, in India, 55% of households practice open defecation. In comparison, in Bangladesh, which has half of the GDP of India per capita, only 8.4% of the population practices open defecation.

Moreover, only 88% of the population has access to an improved (clean) water source (for drinking). In rural areas, the statistic is even worse — 84% (compared to 96% in urban areas). That’s 16% of the population without even access to clean water. For an emerging country, this is a disgrace. In China, a country with three times the land area, the statistics are 98% and 85% (and 91% overall). Why is it so bad? Well, for starters, as of 2010, only two cities in India — Thiruvananthapuram and Kota — get a continuous water supply (which is a situation that needs to change).

This is a huge problem. Even worse than the health care situation. When you get right down to it, if more people had access to sanitary conditions, communicable diseases and infections, which account for a percentage of deaths that is (at least) 20 times the percentage of deaths that communicable diseases and infections should account for, wouldn’t be so widespread. (People can’t die from a communicable disease or infection they don’t get, and the number one way to stop the spread of communicable diseases and infection is better sanitary conditions and sanitary practices.) With respect to diarrhoea, 88% of deaths occur because of unsafe water, inadequate sanitation and poor hygiene.

Sewerage, where available, is usually in a bad state. In Delhi, for example, the sewerage network has lacked maintenance over the years and overflow of raw sewage in open drains is common, due to blockage, settlements and inadequate pumping capacities. The capacity of the 17 existing wastewater treatment plants in Delhi is only enough to process about 50% of the waste water produced. Across India, the most recent estimate (in 2003) was that only 27% of India’s wastewater was being treated, with the remainder flowing into rivers, canals, groundwater or the sea. Abysmal!

Just how bad is the situation? Consider this passage from Wikipedia:

For example, the sacred Ganges river is infested with diseases and in some places the Ganges becomes black and septic. Corpses, of semi-cremated adults or enshrouded babies, drift slowly by. NewsWeek describes Delhi’s sacred Yamuna River as “a putrid ribbon of black sludge” where the concentration of fecal bacteria is 10,000 times the recommended safe maximum despite a 15-year program to address the problem. Cholera epidemics are not unknown.

Plus, the continuing depletion of ground water tables and the continuing deterioration of ground water quality are threatening the sustainability of both urban and rural water supply in many parts of India. India can’t afford to pollute any more of its water supply and needs to get waste water treatment under control rapidly. Otherwise, health care problems are just going to get worse, and the repercussions will be substantial.

Nine Rules for Insuring the Dash For Cash

CFO World recently published a short piece on “ending the dash for cash” in which they outlined then steps to success that an organization can take to help shrink working capital in which they got it all wrong.

Good working capital management doesn’t shrink working capital, it enlarges it. So, in the spirit of Mark Perera’s “Nine Rules for Stifling Supplier Innovation” (Old St Labs), Sourcing Innovation gives you nine rules for insuring that you will eventually have to dash for cash to keep your business afloat.

  • Focus on recently overdue accounts. If the customer has a history of paying on time, but just missed a payment or two, even though chances are they just screwed up because they haven’t implemented proper e-Invoice Management and temporarily misplaced your invoice, call them up and give them a stern lecture on how deeply disappointed you are in them.
  • Insist that there is no acceptable excuse for late payment. Even if the excuse is that the customer is disputing the amount you charged them because you failed to apply a discount or mistyped the quantity they actually received (because there is no integration between your shipping system and billing system and a data entry clerk has to key in quantity). Insist they should pay now and you will resolve the dispute later.
  • Never change your standard payment terms. They worked ten years ago, why shouldn’t they work now?
  • Pay on your terms, no matter what. Who cares that the supplier has to borrow at 20% annual compounding interest to float your 120 day payment terms. That’s their problem, right?
  • Don’t fret the inventory. If sales ordered it, they’ll move it when they’re good and ready. It’s not your problem, it’s the COO’s.
  • Forget next quarter. Wall Street is only going to judge you on this quarter, so do whatever you can to put the books in the best possible light, especially if it’s year end. You’ll figure out next quarter when next quarter arrives.
  • Link performance measures to year-over-year profit. Again, that’s all Wall Street cares about, so forget about those pesky savings targets, sustainability initiatives, or long term cost reduction measures. They never materialize anyway, right?
  • Focus on quarter-over-quarter cash on hand and net income reporting. Reporting on increases in current and future liabilities just dampens everyone’s mood unnecessarily.
  • Don’t be a sucker for early payment discounts. It lowers your cost, but it lowers your cash on hand even more — and that’s what Wall Street will judge you on.

Follow these rules and I ensure you that, sooner or later, you will be making a dash for cash.

One Hundred Years Ago Today, China Made Global Trade Easier

One hundred and forty years ago this October 9, a precursor to the United Nations formed the Union Postale Universelle (UPU), a specialized agency that coordinated postal policies among member nations. Prior to the UPU formation, each country had to prepare a separate postal treaty with other nations it wished to carry international mail to or from, which resulted in the US calling for an International Postal Congress in 1863. Thus led to the formation of the General Postal Union as a result of the Treaty of Bern on October 9. Four years later, the name was changed to the Universal Postal Union. The UPU established that:

  1. There should be a uniform flat rate to mail a letter anywhere in the world,
  2. Postal authorities should give equal treatment to foreign and domestic mail,
  3. Each country should retain all money it has collected for international postage and

Furthermore, as a result of the treaty, it ceased to be necessary to affix the stamps of any country though which one’s letter or package would pass in transit. Stamps of the member nations were now accepted for the entire international route.

Even though the UPU now has 192 members, in the beginning there were only 20: the German Empire, Austria-Hungary, Belgium, Denmark, Egypt, Spain, the United States, France, the United Kingdom, Greece, Italy, Luxembourg, the Netherlands, Portugal, Romania, the Russian Empire, Serbia, the United Kingdoms of Sweden and Norway, Switzerland, and the Ottoman Empire.

But over the years, that number increased and one hundred years ago, China joined the UPU. And trade with China became a little easier …

Energy and Utility Procurement – Where Do You Stand?

Before ProcureCon released their recent “State of Indirect Procurement Benchmark Report”, they put out a study on “Energy and Utility Procurement” that summarized responses from 39 survey participants. While it was by no means an empirical study and the be-all-end-all to energy and utility sourcing, it does allow you to compare your own program to some extent and may inspire ideas for program enhancement.

One of the most interesting points of this report was that there doesn’t seem to be a single approach to any aspect of managing energy that respondents agreed upon. Like many other aspects of non-direct sourcing, companies are all over the board. This is likely due to the relatively new involvement of procurement, the sheer complexity of the category and variety of energy requirements on a company-by-company basis.

This is one of the many areas where, due to the varying degrees of regulation in different locales, the different types of energy (production) available, and the different views on the need for green, it helps to get with your peers and get different ideas, best practices, and perspectives — as well as the inside information on what works, and what doesn’t.

Fellow Canadians, your options for events have been limited, but now that ProcureCon has come North, you have one more option. Join the doctor at the inaugural ProcureCon Canada event (and register with code PCA14SI) and share your experiences.