Category Archives: Blogologue

What Your Supply Chain Can Learn from Starbucks

A great post over on the HBR blogs on “Why I Appreciate Starbucks” summarized some of the fundamental differences about Starbucks when compared to other multi-national corporations. These differences are part of its success story and contain best practices that can be used to improve your supply chain.

The author identifies the following fundamental differences between Starbucks and your average corporation as follows:

  • it sees itself as part of a larger community,
  • it tries to balance profit with social responsibility,
  • it creates a “third place” between home and office where people can connect comfortably,
  • it trains its employees to brew the perfect espresso in order to insure the quality of its signature product is not sacrificed,
  • it doesn’t let major disruptions delay important actions and events that need to be done,
  • it understands that employees feel far more committed to companies whose values and mission they find inspiring, and
  • it understands that customers and clients increasingly prefer to support companies whose values are consistent with their own.

These lessons can be easily translated into supply chain organization success.

  • The supply management organization must see itself as part of a larger company.
    In a successful business, all of the individual units cooperate and act as one larger business unit.
  • The supply management organization must balance cost reduction with social responsibility.
    The media and consumer backlash that can result if the organization cuts cost by buying from third world factories that employ child labor, for example, can cost way more than the amount the organization will save.
  • The supply management organization must create an atmosphere of collaboration
    and provide a comfortable meeting area where cross-functional teams can meet and work together towards success.
  • The supply management organization must train its employees to source the perfect bill of materials,
    where cost, quality, reliability, and all other important factors to the business unit that needs the product or service are appropriately balanced and the end result is overall better than what the organization would have negotiated on its own.
  • The supply management organization must be able to work through major disruptions quickly and without significant impact to overall commitments to its end customers.
    The supply management organization should regularly be gathering market intelligence and updating its contingency plans and be ready to get the job done no matter what, even if it means a lot of extra elbow grease now and then.
  • The supply management organization must hire an A-Team that believes in the mission and values of the organization.
    A team that is not committed will never achieve the level of success as a team that is.
  • The supply management organization must put the needs of the organizational units they serve between their own.
    The needs of the many outweigh the needs of the few, or the one.

Follow this advice and your supply management organization is on its way to becoming world class.

200 Billion


Water go down the hoooole.
Toilet paper go down the hoooole.
Diaper go down the hoooole.
Nana go down the hoooole.
Ducky go down the hoooole.
Toot Toot go down the hoooole.
Kitty go down the hoooole.

The Potty Years

According to this recent article in Fortune, telecom investors might be “the 21st century’s biggest chumps”, and they might be right. Since 2000, the United States’ telecom tab is down 22% in inflation-adjusted dollars. In other words, the telecom networks have destroyed nearly 200 Billion in value over the last ten years — despite the fact that cell phone use has tripled, that high speed residential internet connections have jumped from 2 Million to 24 Million, and that wifi is almost ubiquitous.

So what happened? The article puts forward three hypothesis that, taken together, paint a compelling picture.

1: Internet protocol networks are like Pac Man. Eventually they will eat everything.

The days of expensive, custom-built communication networks for a single purpose — radio, telephone, cable tv — are over. Now, everything flows over the internet in packets. Packets here. Packets there. Packets, packets everywhere.

2: If a customer likes it, then it doesn’t matter what it does to your economics — it’s going to happen.

The cell carriers fought wifi tooth, nail, and claw for years to prevent cuts to their (sometimes ridiculous) margins, but it happened anyway. Eventually a carrier realized that offering wifi would result in a huge increase in customer base, it happened, and now every cell carrier supports hybrid wi-fi devices in an effort to keep their customers.

3: Anyone who relies on the fact that they own a scarce distribution resource is going to face ten years of turmoil.

It’s a new age for telecom and no longer are networks analog, expensive, and single purpose. Now they are digital, ubiquitous, and multi-purpose.

The question is, will the telecoms adapt? How much more will be lost as they try, competing with each other for a consumer base that becomes less profitable by the day? And will it be worth it in the end? Is it a situation where last man standing wins a defacto monopoly, pumps up prices to cover the losses, and profits big in the end (just like Google, who won the search engine war)? Or will an entirely new type of network provider emerge and wipe out the telecom industry as it exists today.


Water came back.
Water came back.
Water came back.

But will the 200 Billion come back?

Is The New India Greedy?

Some of the greediest business people that the doctor knows, especially in sales / marketing / business development roles, are Indian, but I’ve never looked upon India as “greedy” compared to, say, us — especially since these individuals often have a generous side where friends and family are concerned. But a recent article over on BBC News on the good, bad and ugly of Indian life seems to suggest that, in the New India, greed is good.

I know India faces greed from the west (led by the good ol’ U.S. of A.), the east (in China where greed allows you to be creative in business and put melamine in the milk, lead in the paint, and diethylene glycol [antifreeze] in the toothpaste and be seen as a successful business person who should be admired), and the north (led by the U.K. and a few of its money-grubbing European neighbours), but I had hoped it would hang on to its Gandhian heritage with dear life and balance the need for greed with the desire to make the (business) world a better place.

The article notes that when the head of the government’s main anti-fraud body, Pratyush Sinha, retired last year, he estimated that one in three Indians is corrupt. I know bribery is rampant, but that’s just the way business was done for a long time. People were underpaid, so if you wanted something, you paid a bribe. It might not be “ethical” in our world view, but at least when you paid the bribe, something got done. (And most of the time, the bribe was just to facilitate a legal service.) Here, you pay a service fee and wait to see whether or not a government worker will get around to your paperwork. He also said that “When we were growing up, if somebody was corrupt, they were generally looked down upon. There was at least some social stigma attached to it. That’s gone now. There’s greater social acceptance.”

According to the author, Pratyush was right. Recently cabinet ministers, wealthy businessmen, members of the armed forces, and politically well-connected organisers of the Commonwealth Games have come under the microscope. According to the author, one day his morning paper ran five different major corruption stories on its first eight pages. And now, even Ratan Tata, is speaking of the dangers of a “banana republic”. It doesn’t sound very positive. We certainly can’t wait for a commission of inquiry lasting 20 years. What do you think? Is it a short term blip or a long term problem? And if the latter, what is this going to do to your supply chain? India is already one of the most expensive countries in the world where logistics is concerned due to its bad roads and lack of airports. The last thing you want is greed in this industry.

Making You Smarter

One of Sourcing Innovation’s primary goals is reader education. If you don’t learn something on a regular basis, SI is not doing its job. While some bloggers simply spread the latest gossip to come their way, the editor of Sourcing Innovation slaves over a lit keyboard day-in and day-out to make sure that fresh new insights are delivered to you on a regular basis. But has it all been for naught?

According to this recent article that asks if “this font will make you smarter” (Globe and Mail), jaunty childish font[s] will improve your memory retention, help your kids do better in school, and make your wife love you more. Seems that all the editor had to do was find some random drivel, wrap it in a Comic Sans font, and you’d be better for it.

As per the referenced article over on LiveScience.com, research conducted at Princeton University has discovered that funky fonts may help students learn. In a research project, which presented two different groups of volunteers with the same list of words (one set in a common font and the other in a funky font), the groups were distracted for 15 minutes after studying the lists for 90 seconds and then tested. The group with the funky font averaged 14 percentage points higher. Now, the research project has not yet been repeated and it was led by an undergraduate, but it was reviewed by a faculty mentor and then peer reviewed before publication in Cognition, so the study can’t be discredited with the wave of a hand. The reason for the better performance may not be understood, but the message is clear. If SI wants to make you smarter, less knowledge, more funky fonts.