Author Archives: thedoctor

A Digital Transformation Requires At Least Five Critical Factors, Not Three!

A recent article over on Chief Executive on Digital Transformation that asked “[If] CEOs [are] ready for the Challenge?” caught my attention. And it kept it when it said less than 20% of the companies surveyed are truly reshaping their businesses for digital and many are only partially fulfilling their potential because, as a technophile, I know this to be all too true.

But I screamed NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO with @rantinggirl when I read that you need three factors in place — top-down vision, clear governance and investment — to deliver a true transformation. While these factors are a necessary condition, they are not a sufficient condition, and if all you have is vision, a governance model, and the willingness to invest current resources into the problem, then you should pack it in now as your days as an organization are numbered.

You see, a successful digital transformation requires at least the following Five Critical Factors:

  1. Top-Down Vision
    that emanates from, is communicated by, and is embraced by the top
  2. Clear Governance
    that consistently communicates and enforces the vision, ensures the allocated resources are directed towards the effort, and that keeps the vision on track when fires threaten to cloud the business with smoke or people want to return to the old ways
  3. Investment
    in resources and dollars, as money will need to be spent requiring the right infrastructure
  4. Technologically Adept Talent
    since going digital requires being digital
  5. Transition Commitment
    since there will always be those that fight the transformation and, more importantly, since some of these resources may not be able, or willing, to adopt to the new way of doing business and have to be let go

Anything less is like skydiving without a properly packed parachute. You had a clear vision of jumping out of the plane, you invested in the plane, and you convinced the pilot to take off, but you forgot about the nature of the landing and that if the chute doesn’t properly deploy, you’ll be hitting the ground at 195 km/h (or 122 mph) — without much chance of survival. Mr. Boole may have survived, but chances are you’ll end up like the skydivers on CSI.

As the article points out, the transformation journey is full of roadblocks, including organizational skill gaps, culture, and legacy IT (that is more antisocial than your average arrogant PhD, and I should know).

I Am The Infotainer

I am the infotainer
and I know just where I ebb
Another social blogger
on another social web
Today I am your favourite
I may have earned your likes
But I know the rag, you’ll forget my tag
And I won’t be here in another year
If I don’t maintain the spikes

I am the infotainer
and I’ve had to pay my price
The sites I did not join at first
Now make me post it twice
Ah, but still they come to taunt me
Still they want their say
So I’ve learned to blog with an eye on the log
I let ’em scrawl my wall and I follow ’em all
Then they go their merry way

I am the infotainer
Read all around the world
I’ve graced all kinds of forums
And blogged about the squirrels
I can’t remember topics
I don’t remember tags
Ah, but what the hell
You know it’s just as well
‘Cause after a week and a thousand tweets
It all becomes the same

I am the infotainer
I bring along my pen
I’d like to write a page or two
But you can’t wait ’til then
And I’ve got to meet expenses
I got to stay in line
Gotta place those ads for new brake-pads
and online gaming and picture hanging
So I just don’t have the time

I am the infotainer
I’ve come to speak my mind
You’ve read my latest blog post
It’s part of my timeline
It took me days to write it
They were the best days of my life
It was a beautiful piece
But you found it obese
If you’re gonna get a tweet
You have to make it neat
So you cut it down to one-three-five

I am the infotainer
The idol of my age
I don’t make any money
When I become the sage
and post with the Technoratti
and the LinkedIn messiahs
If I miss a day, I’ll fade away
I’ll drop off of the page like I had the phage
Like another pariah

I am the infotainer
and I know just where I ebb
Another social blogger
on another social web
Today I am your favourite
I may have earned your likes
But I know the rag, you’ll forget my tag
And I won’t be here in another year
If I don’t maintain the spikes

Did Descartes Miss the Point in Its List of Four Things You Can Do Today To Reduce Fuel Costs?

Given that Gas Prices are Too Damn High and that this situation is not about to change anytime in the near, and even not-so-near, future, a recent white paper by Descartes on “Reducing Fuel Costs”: Four Things You Need to Know and Can Act on Today caught my attention. However, while their suggestions are good, I think they kind of missed the point. Going straight to the section on What You Can Do Today, Descartes suggests that you should:

  • Decrease the Total Miles/Kilometers Driven by the Fleet
    Since the vast majority of fleets still drive inefficient routes to serve their customers, this is a good suggestion on the surface, but it’s easy to take this too far. For example, while the shortest route from Birmingham, Alabama to Indianapolis, Indiana might be straight through Nashville, Tennessee, driving through there at rush hour is not the best move as the trip could take an extra 3 hours and every hour the engine is running, gas is being consumed. This requires some smarts. Sometimes longer trips are more efficient.
  • Minimize Idling
    This is a great suggestion. Not only does this burn fuel, but it harms the environment. However, when a conscientious driver is idling, it’s not when he’s making a delivery, but when he’s waiting to make a left hand turn. The right routes don’t have left turns. That’s why UPS does it’s best to eliminate them. However, this can slightly lengthen a route, which is in conflict with the last suggestion.
  • Change Driver Behaviour
    If driver behaviour is a major cause for fuel inefficiency, then this is obviously a good thing, especially if the driver is excessively speeding (well beyond the fuel efficiency zone), (too) rapidly accelerating, and hard-braking on a regular basis. But the driver’s behaviour might not be entirely his fault — it could be a fault of your training program, which might be mentor-driven by your senior drivers who have had bad habits all of their driving career and pass them on. The first step should be to check your training programs and requirements and make sure your drivers get the right behaviour day one.
  • Implement regular maintenance monitoring plans.
    Vehicles with properly inflated tires, well maintained engines, and good braking systems do maintain less fuel, but don’t go overboard with preventative maintenance. An overly aggressive maintenance plan will replace parts needlessly and eat up the savings you get in decreased fuel utilization pretty quickly. Monitor aggressively, but maintain sparingly.

In other words, it’s suggestions for what you can do today were good, but not great. However, the section on how technology can help was much better. In this section, it made four recommendations, and three of them were on the money.

  • Route Planning and Optimization
    This optimizes the routes to balance minimum driving distance and minimum run time (by adding in right turns to reduce idling and slight detours to bypass commonly congested areas) across the fleet and, as the paper notes, can result in a reduction of total route length by 5% to 30% when done properly.
  • Mobile & Tracking Solutions
    This allows you to track your trucks and know the exact location of your drivers, the routes they have taken and, most importantly, how the fleet is performing against the plan.
  • Telematics
    A constant measurement of engine data and driver performance can allow engine problems to be identified immediately and bad drivers to be singled out for training to improve their performance.

The last recommendation, not so much. Basically, the paper recommended a cloud-based solution for all the standard reasons, but clearly forgot that the cloud is not a fluffy magic box and not all of the promised advantages will materialize.

If you track, measure, and optimize, you will minimize fuel requirements while improving performance, but no one tip is going to save you and over-simplifying the problem can cause as many problems as it solves. The only way to truly save fuel is to reduce delivery requirements. Do you need as much? Do you need it as often? Can you get the product from a geographically more proximate supplier at a comparable cost? These are the real questions you need to ask!

If You Are Using a 3PL, Should You Focus on Outcome-Based Pricing?

Yesterday we discussed whether or not you should hedge your transportation costs, given this recent article in Canadian Transportation & Logistics (CTL) that found “global shipping lines grapple with plunging rates, overcapacity, and faltering recover”. Today we discuss another recent Canadian Transportation & Logistics article on “why it pays to focus on outcomes rather than transactions in procuring supply chain services”.

While an outcome-based focus is starting to take hold in some leading Supply Management organizations in their strategic sourcing processes, it’s often focussed on more traditional services where outcomes are easily defined and well understood by the organization. For example, procurement back-office functions where it’s all about throughput improvement (in terms of invoices processed), customer service (where it’s all about trouble-ticket resolution), and preventative maintenance (where it’s all about reducing downtime).

But back-office, customer service, and system up-time are not the only things that can be measured as outcomes. So can 3PL. As per the CTL on global shipping challenges, only 56% of containers delivered on time globally. Fifty-six percent! For those of you going for the perfect order, that’s 44% of your orders that rely on globally sourced products that won’t be perfect as of day one! (That’s why Maersk launched its Daily Maersk service in late October of 2011 which, with daily cut-off and built-in safety margins, allows it to guarantee virtually total reliability between select ports in Asia and Europe.)

Of course, this will require a shift in mindset in both buyers and 3PLs, but if both parties are willing to share greater risks, both parties could reap greater rewards. Current trends seem to indicate that. For example, by focussing on outcomes, Microsoft saved $30 Million by outsourcing its procure-to-pay operation to Accenture One, which doubled profit by focussing on value add activities. And Proctor & Gamble saved $1 Million in the first year of outsourcing $70 Million of facility management to Jones Lang LaSalle.

When the 3PL focusses on process and productivity improvement, and not price reduction, the efficiencies that fall out will most likely lead to cost reductions in the long term. For example, just getting the on-time delivery rate to 94% from 56% will likely decrease expediting costs 86%. And reducing “empty miles” will reduce costs (and likely speed up delivery time-frames as well, shortening lead times).

Reasons The US Post Office Isn’t That Important

The US Post Office is important, but the recent cut-backs aren’t as bad as some people are making it out to be. One article on the subject that recently caught my attention was “10 Reasons the Post Office is Important to Us” over on “Change of Address” because it didn’t really give the full picture.

For example:

  1. There are other ways to get medication to housebound patients.
    Private Shipping Services and Local Delivery Companies do the job just fine. Not every country has six-day mail service. Canada has five-day mail service and we survive.
  2. The economy will rebalance.
    The $1 Trillion dollar mailing and shipping industry won’t go away, the work will just go to the providers who can do it the most cost effectively.
  3. It’s not ending the postal service.
    There is just not as much need for as many offices or for six-day mail service now that so many documents can be delivered electronically and other private services provide other options.
  4. Shipping companies can still use the postal service.
    And they can partner with other companies that offer complementary services.
  5. Physical Goods Can Still be Delivered
    Just not on Saturdays.
  6. Publishers can still get their print publications out.
    They just have to adapt to no Saturday service and different printing deadlines to make different drop-off deadlines. Not a big deal.
  7. Rural Americans will still get their mail
    The Post Office isn’t taking away this service, and since most private delivery companies don’t operate in rural areas, this market will exist for years to come because of
  8. The Universal Service Option
    which still applies.
  9. Most communities with a sense of community have a community centre.
    That is independent of, and does not rely on, the post office.
  10. Major carriers can provide security as well.
    UPS and Fedex and similar companies are setup to track shipments along every mile and every individual who has access to those shipments because they import and export and this is a requirement to be in that business (10+2, etc.) and they use the same system across their business.

There’s nothing wrong with right-sizing an institution to stem massive bleeding, and while this will, unfortunately, result in some job layoffs, as the article notes, the need for document and parcel delivery still exists and it’s a given that the private sector will expand to meet this need and create new jobs to balance most of those jobs that are lost. It’s sad that the Post Office took so long to take action, and now has to take a massive action, but the Post Office is not going away and the mounting losses are more important than losing a day of service. Let’s just hope that they rebalance their operations the right way and don’t have to do this again.