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2013

I interviewed Vinicius Palerosi Ribeiro who discussed his views on organizational change and the challenges in Brazil. .

 

Please provide a brief background of yourself


I'm a professional of Import & Supply Chain in the Hardware & Software consumer market, specifically in the printers market. Graduated in Business Administration, Post-graduated in Business Intelligence. I have more than 15 years of development around the all supply chain, logistics, procurement, warehousing. I am a Latin American and get knowledge about LA & NA markets.

 

Dustin: What are your views on organizational change?

 

In Brazil, a country which is undergoing great changes as an emerging country entering into the world economy, leaders and businessmen need to develop themselves as Brazilian professionals, However, to ensure they can keep their positions they always want to hire for low wages, offering no resources and incentives for self-growth. In terms of the capability of professionals, there are so many people with robust backgrounds, pro-activeness and ambition, but without expectations to be winners. This is because the Brazilian soul and mindset is to harness oneself and not to go looking around for better things. Change is necessary and there should be a common movement to alert the board, shareholders and proprietors that their CEOs and staff take in gross margin and target achievements but without loyal sustainability.

 

What are the challenges faced?

 

The main challenge faced are different from what the media and publications say. There is a lack of able HR professionals. We need to hire leaders with technical knowledge and know-how, controls with a functional matrix of their employees, time control for critical issues aligned with a career plan, discussions about benefits in accordance with company growth. There is a lack of an educational basis for driving a leadership doctrine and the nuances of the process into the scope of organization. There is an excess of lobbying and political relationships with suppliers and customers. There is not fair play in the dispute of the market share. In terms of self characteristics, there exists a Third World mindset.

 

How can the challenges be addressed?

 

For me, the style of growth is wrong. It iss like a disoriented growth in a big city, the government goes on building, streets, bridges, condominium, railways, subways and so on, with no planning. Years later the city is a chaos, with large traffic jams, high prices, high tariffs and taxes, large noises, an environment drained and many many things out of sync. In other words, we need examples of capitalism like the Japan for example, a light growth but sustainable, with wellness and reliability, quality in their products, solid governance, fair play and union. I haven't visited Japan personally, but by my readings, feedback, books, TV and Internet, I'm sure that this culture is alive into of each Japanese citizen over there.

 

About Vinicius Palerosi Ribeiro


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Import & Planning Oversight

Lexmark International do Brasil

LinkedIn Profile


I interviewed John Talbot who discussed Developing Sales and Distribution Capabilities for CPG Companies in Emerging Markets.

 


 

 

 

Dustin:             Well, it’s good to speak with you today, John, to hear your views on developing sales distribution capabilities for consumer-packaged-goods companies in emerging markets. Can you start by providing a brief background of yourself?


John:                Personally, I’m a Brit but I grew up internationally. My dad is an airman, so I spent all my early life moving around the world. I ended up doing a master’s degree in logistics and supply chain in the U.K., emigrated to Australia—that would be back in 1986—spent four years with a start-up third-party logistics company in Australia. They then transferred me to Europe, where I lived and worked in Holland and Belgium for four years. Then they transferred me to Asia. I stayed with them a further two years there, and then shortly after I worked as an independent consultant for a year and a half and then started the company we have now, Logistics Consulting Asia, back in the year 2000. We’ve been doing this ever since.


Dustin:             Can you talk about what are some of the key points to consider when developing your distribution capabilities for consumer-packaged-goods companies?


John:                Okay, I’ll give you a little more background with the company. We started as consultants because we wanted to get into the supply chain software sector. At that time there was no opportunity, so we started consulting for anyone who would pay us at that time, so we ended up doing a lot of work for the third-party logistics, because this was back in the early 2000s, they were growing very rapidly, and when they’re growing, the wheels are falling off somewhere, so we ended up body shopping to them all across Asia, if they needed someone with warehouse expertise or someone to put in a warehouse-management system or direct cover, contract under crisis.


                        Over time we moved out of that, into working for, primarily, the regional trading companies, people like Zuellig Pharma in Thailand. These companies were going through a phase where they used to, essentially, just be buyers and sellers of products, but, essentially, they were now realizing they had to develop their supply chain capabilities—or their logistics and supply chain capabilities—because that’s what the market needed. If you didn’t get your logistics right, too many things were going wrong. In the last, since about 2005, we’ve essentially worked primarily for the consumer-goods manufacturers. Again, really in an era where they’re putting a lot more emphasis on getting supply chain right—I was speaking to one of the big consumer-packaged-goods companies recently, and he was making the point that even though his company is a global brand, the reality is, locally produced products these days are just as good. They might not be as branded as well, but the quality is there, and so what he’s got to do is compete in the supply chain basically to keep his position in the market. So, we’ve been in that area for the last seven, eight years, primarily working for these guys.


                        I suppose going on from there, the area that we particularly work in with these guys is what we call a general trade. Consumer-packaged-goods companies such as Nestle or Kraft or L’Oréal serve both the modern trade and the general trade. The modern trade, obviously, being the big supermarket chains—the Tescos, the Wal-Marts, the giants of this world—but the general trade being the traditional mom-and-pop stores. Twenty-five years ago there was really only a general trade in most emerging markets in Asia. Modern trade is coming very hard and aggressively, and in many markets like Thailand, Malaysia, they now control up to fifty percent of the market. Other markets like India, they’re still down at about four or five percent but growing fast. The problem for the manufacturers that the modern trade poses is that once modern trade gets into a dominant position in a market, they’re in a position to squeeze the manufacturers’ margins, and they’re very good at that. So, manufacturers, traditionally, in Asia—especially the international manufacturers who came in anything up to a hundred years ago.


                        A lot of people have been in this sector for a long time, European and American companies. They’ve had a fairly good run at it. Margins have been fairly healthy as these economies have gradually grown. Now, the problem now they’ve got is that the modern trade has come in. initially, that wasn’t a problem to them, but as modern trade takes market share, their ability to squeeze increases, and they’re definitely doing that now. At the same time you’ve got local companies developing, local manufacturers who’ve become better and better at what they do and become more effective as competitors. Now, that puts the manufacturers—and I’m really now talking about both the international players and the local players—in a position where, to compete effectively, they’ve got to be effective in the general trade. That is, in serving the mom-and-pop stores, because if they don’t, they risk having their margins screwed by the modern trade, and most of their business is with the modern trade, but, also, if they’re not effective in the general trade, they’re missing the opportunity to engage the new consumers coming into the market. In countries like Indonesia, where new consumers are coming at a rapid rate, unless you’re getting your product right down into the small villages, the chances are, someone else is picking up the consumer first, and it could be that if they pick up that consumer, they’ll keep that consumer. You’ve got to work much harder to win that consumer over.


                        A lot of manufacturers we talk to now, especially in a country like Indonesia, which, incidentally, is our biggest market, a lot of the manufacturers are very keen on extending their reach down as far as they can go into the general trade. So, both with protection against the modern trade in order to engage with the new consumers. Now, the challenge, then, is how can you be effective in this area? The traditional model that’s in place is, manufactures don’t deal directly with the retailers; they deal with distributors who act as middlemen and essentially buy the product and sell it on to the local retailers. Now, traditionally, these guys would’ve just be in a trade, they bought and sold. Over time they’ve moved into agreements where they were given a territory, so they were given exclusive rights to a territory in exchange for certain contractual obligations, and those contractual obligations became things like feeding back accurate information on inventory, accurate information on sales, accurate information on the retailer customers.


                        Now, while those contracts came into place, the reality was that actual visibility of all those things never materialized. For many companies, they still haven’t materialized because you’re dealing with a network with a lot of family-owned businesses geographically spread across a large area and traditionally not inclined to share this information because they’ve felt some of it, especially the customers, was confidential. Now, there’s been a gradual change as these distributors are being brought closer to the manufacturers and now understand more and more that they have a common interest with the manufacturer in building an effective sales-and-distribution network, but it’s still hit or miss. You still see very different ranges of capabilities. But our argument, I suppose where we spend most of our time when we’re talking to manufacturers, is to be arguing they’re not doing nearly enough in this area, because there are massive opportunities to be effective, there’s a business imperative to be effective, there’s a willingness by all parties in the chain—by the distributors and by the small retailers—to be more effective because this is their livelihood, but we still find manufacturers a little bit stuck with the notion that this is a traditional market and you’ve got to work traditional ways.


                        We’re arguing that while you don’t ignore tradition and culture, modern technology—and low-cost modern technology, if now available—to drive a complete sea change in how you address this market. We’re trying to argue that modern trade has been growing, taking market share, but, incidentally and something I didn’t mention earlier, even while modern trade is growing, the general trade has still been growing at the same time. Modern trade has been growing faster, but general trade is still growing in most countries at a healthy rate, ten to fifteen percent per annum. Maybe not so. Ten to fifteen percent per annum in places like Indonesia. Malaysia might be five to ten percent, but it’s still a healthy growth. So, what we’re arguing now is that manufacturers have to rethink how they approach this sector because, traditionally, everything’s been fuzzy. The distributor’s salesman out of the outlet deals with the retailers, but the information he repeats back to his supervisor or to the distributor is a bit fuzzy. What the distributor feeds back to the sales director of the manufacturer is a bit fuzzy. What the sales director feeds back to the financial controller is a bit fuzzy, and we’re arguing that technology has now made it possible to up systems in place, low-cost systems that take away all that fuzziness and essentially give all the players in the pipeline effective tools to their jobs, and if they use thee tools properly, all the relevant information to run that business is needed, and you end up with, what I see, yokels, one version of the truth.


Dustin:             Do you have any recommendations for people in the consumer-packaged-goods industry?


John:                Essentially, I put a little bit more meat on what I said when I said people have got to use the technology that’s available. Effectively, it comes down to four things. We’re not suggesting doing away with distributing networks; they are effective, they’re surprisingly effective considering the chaos that exists in this sector. Four things have to happen for a company to move from moderately successful to being very successful and building their general-trade sales, and those four things are, the first is effective fulfillment. They must have the capabilities in place, when an order is placed, it’s taken by our distributor salesman out of the small retailer, and that order will be delivered and in for next day.


                        Typically, our experience with people we work with is missed orders range between, say, ten and thirty percent missed opportunity here. Typically, a salesman will go out, the retailer will want a particular product, but the salesman won’t take the order for it because he knows it’s not sitting in the retailer warehouse. He knows he can’t deliver it, so he won’t take the order in order not to disappoint the retailer. These out-of-stocks literally, as I said, that’s been connected to about a thirty percent loss-of-sales opportunity. It’s the biggest loss-of-sales opportunity that’s out there, and it’s amazing how people don’t take it seriously. Quite often because it’s hidden somewhere, because if an order isn’t taken, it’s not recognized; the demand isn’t recognized. The salesman is not gonna take the order if he thinks it can’t be fulfilled the next day or the day after.


                        Effective fulfillment is fundamental. Then it’s driving an effective sales force because you’ve got a traditional sales force moving around on motorbikes or in their cars to visit all these retailers. It’s a relatively inefficient way to sell your products. It’s a guy who needs a car allowance; he needs to pay fuel; he needs to pay toll and so forth. He may only be making twelve to fifteen calls a day, and these calls do not generate massive orders, so it’s a relatively ineffective way to sell your product, but it’s the only way that’s out there at the moment. We’d argue, you need to be a lot more efficient in driving your sales force, and these days you can use technology like routing and scheduling technology. We’re doing an exercise with a big manufacturer at the moment, and we’re getting twenty percent more productivity out of salesmen basically by using technology that’s been around for a long time but never been applied to salesmen in emerging markets. You can use routing, scheduling technology to make these guys more effective, but to do that you need to map all the outlets. That’s the other option that’s becoming available to people at the moment, creating a universal map of all the outlets out there.


                        Let’s say, even in Malaysia, a big manufacturer could have a perspective customer base of, say, sixty, seventy thousand outlets, but very few are actually serving more than twenty to thirty thousand because a lot of these outlets are unknown to them or are relatively small, the distributors are not that interested in hitting them. But once you know these outlets are there and you can map them and then run optimization software, you can actually hit a lot more of these outlets at no more cost, and that’s what we’ve been doing with a client recently, is finding the outlets so they have a hundred percent outlet universe visibility and then optimizing it so that the salesmen can get more outlets without extra cost. It’s a win-win. The manufacturer wins, the distributor wins. The salesmen win because they get more bonus as well.


                        And then, finally, it’s the tools to drive the salesmen to be far more effective in tools. This is really sales force automation. This is giving the salesmen tools so that when they’re in the outlet, they do the job as you want them to do the job. It’s the workflow process that they have to follow all the time. these things have been around for quite some time, but the reality is that technology that’s available today—you know, for your Samsung Galaxies and so forth—make them so much more effective than they’ve been in the past. You really can, there’s been a sea change in how effective these devices can be. As apart from being a tool for these guys to just do their job, of course these days these devices can track the salesman wherever he goes. His supervisor knows where he is at any time. If a retailer comes up and says, “Where’ s my salesmen?” or “Where’s my delivery guy?” we can track it and we can let him know how long he’s gonna take to get there. But far more important than that is the background checking we’re doing in the system to basically track the cost of that salesman. We know every kilometer he drives and how long he takes to get from one outlet to the next outlet, how long he takes when he’s at the outlet to make his sale, how much revenue he takes in, how much returns have come back from that outlet, what credit terms he sold on, and then how long he takes to get to the next outlet. Now, because of knowing all that, we now have cost to serve.


                        We know what it costs us to serve each outlet, and that rapidly turns into profitability per outlet. So, we’re anticipating with a pilot distributor by the end of this year or maybe quarter one next year that we’ll be running a distributor in which he has all these capabilities that I’ve talked about and he actually knows his precise cost to serve every single outlet he serves. That’s a revolutionary change because if you’re not trying to get into a market like Indonesia and hit as many outlets as you can—so, basically maximize your product penetration. The challenge is that your distributors visit highly profitable fast-food outlets and push off your main products into them, not your extended-product range. Through these tools, we’re able to now apply science so that we can demonstrate to the distributor and to the manufacture the exact cost—real cost, not an estimate; this is the real cost day in and day out of servicing that outlet—and then you can do so much more about it. If a distributor needs a seven percent margin normally to operate, then you can say, “Okay, I’ll given you your seven percent, but for these outlets, because I want you to reach to another two thousand outlets, I’ll give you seven and a half percent, because I don’t mind paying for that extra reach and extra market penetration.”


                        So, essentially, as I said, that’s a revolution. The technology is all there. It’s coming together but my frustration is, I’m surprised that it’s as if, despite there being a desperate need for the general trade to be reinvented, there’s a reluctance to sort of go out and be first in doing this by everyone. Everyone’s still got a very traditional approach). What I’m predicting you are going to see one or two companies adapting or picking up, adopting this sort of approach and going forward very fast, really extending their reach into the general trade, and then I think a lot of others will follow, but at the moment it’s right at the beginning of the bell curve, where I think early adopters are just sniffing around, but we’re not seeing anyone really take the bull by the horns and say, “I can see what the potential is here. I’m gonna go after it.”



About John Talbot


 

 

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John Talbot

 

Partner at Logistics

Consulting Asia

LinkedIn Profile

I interviewed Kenith Poon, a CPO in Asia who discussed Supply Chain Talent Market in Asia.

 



   Dustin:               Thank you, Kenith, for spending your time today to share your views on the supply chain talent market in Asia. Can you start by providing a brief background of yourself?


Kenith:                  Okay. I work for Johnson Controls, as the director of purchasing and supply chain for Asia at the Building Efficiency BU. I manage the direct sourcing and project or filed sourcing for the branch offices and logistics. We cover twelve countries in Asia, all the way from Japan to Southeast Asia and from Australia, New Zealand, to India. We also have three factories across Asia—in China, one in India. We manage of spend about over a billion dollars, and we also manage global sourcing for finished products for global distribution. Johnson Controls is a forty-two billion company. We are operating in three business units. One is the Building Efficiency that makes  the air-conditioning products, as well as the building-control systems. We also have two in the automotive industry. One is automotive experience that’s manufacturing all the car seats and electronics for the automotive OEM vendors. Another one is the power solution division that makes the car batteries.


Dustin:                 What is the status of the supply chain talent market in Asia?


Kenith:                  In my opinion, the supply chain career is one of the best among different professionals in Asia. The reason why I’m saying this is as China has become a global factory and a manufacturing hub, more and more low-cost sourcing activities are happening in Asia, particularly in China. We can see that a sizeable volume of global-sourcing activities that are actually based out of China and Hong Kong among others. This trend offers the tremendous opportunities for supply chain professionals to advance themselves, to expand the job scope, and held global responsibilities. This is quite a unique situation compared to others  because supply chain is turning to the global center of excellence of many companies in the world, in Asia, and we see the trend that a lot of companies are moving their global-sourcing offices and even the Chief Procurement Officers to Asia and to expanding organizations. Again, I would say the supply chain market, will continue to bloom and whoever in the supply chain profession will really have a good time now compared to, say, ten or twenty years ago.


Dustin:                 Can you talk more about where you see the opportunities, as well as problems?


Kenith:                   I think we have more global-sourcing opportunities as we do a lot of low-country sourcing out of China, supporting other regions, including the components and finished goods, private labels and merchandising. The issue is in a couple of areas. First of all, it’s the communication between the head office, say, our U.S. or Europe, and the China sourcing team. I think we need to build much stronger communication and alignment to make these activities to be successful. Some issues that I’ve seen in the past is that the decision-making was made outside of Asia with little knowledge about the market, and that had a huge impact on the cost, on the quality, and the choice of supplier and product, et cetera, so there is a need for much stronger link between the sources of the products and services, as well as the decision-making out of the head office.

                                 The second issue is how to manage the lead time and quality. In many cases lead time is a problem for many sourcing activities. I think the solution for this is that we have to build a strong execution team, locally managing the suppliers and working with them to manage their source base. And also, some experienced quality managers that could do all the site audits with the suppliers and also help them to improve the quality system and program overall. This is still a continuous improvement process, and we need to really invest some time and resources helping those suppliers to improve. And the third issue is the escalating cost in China, particularly because of the inflation, the labor costs, and also the exchange rate and commodities as well. Over the time, China is seen as no longer a low-cost country. Many costs of manufacturing and the product costs are really rising pretty fast, but the competitiveness of China sourcing shall remain since the supply chain's breath and depth are there in China  that pretty much everything could be sourced within the supply chain network, no other countries are not able to match that at this moment. Although we have seen the issues in China sourcing, but there aren’t a lot of alternatives to replace the China sourcing today.


Dustin:                 How can companies get started finding talent in Asia?


Kenith:                  I think we have to rely on a lot of the networks and the associations, to build that supply chain community. I would say the strongest source of talent would still be in a few major metropolitans like Hong Kong, Shanghai, and South China. It’s traditionally the strong base of suppliers and sourcing offices, et cetera, and people are getting a lot of experience now from those sourcing organizations and manufacturing plants. I think over the years, the supply chain industry in China has developed quite rapidly and obviously the size of talent pool have grown quite fast as well. In terms of the international mind-set and international exposure, I would still consider Hong Kong as the best place offering  the right talent mix, combining international experiences and domestic relationship with broader mind set.

 

About Kenith Poon


 

 

 

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Kenith Poon

 

CPO

Asia Level Executive

LinkedIn Profile

I interviewed Jim Blaeser who discussed the Merging Domestic and International Logistics.


 

 

Dustin:             It’s good to speak with you today, Jim. I look forward to hearing your views on shippers’ needs and desires to merge domestic and international logistics, as well as the challenges they face. Can you start by providing a brief background of yourself?


Jim:                  Great. Thanks, Dustin, I appreciate the call and the chance to participate in your blog. I’m Jim Blaeser. I’m president of American Shipper. For those of you who don’t know us, American Shipper is about forty years old, and we were founded to serve the information needs of North American shippers predominantly who are involved in global logistics. We also serve the needs of all the other participants in the shipping network—forwarders, 3PLs, carriers, et cetera. Some of the interesting things I’d like to talk about today stem from results from our research studies. About five years ago we started benchmarking our readers on certain subjects like how they procure transportation or pay their freight bills. In the context of researching these subjects, we kind of built some overarching themes that I think are more interesting to your readers than any particular function.


Dustin:            Can you talk about why are you seeing this trend? What are the reasons?


Jim:                  Well, just to level set what we’re seeing here is more shippers that are looking to merge their international and domestic logistics operations. Again, we approach this from a U.S.-centric point of view, so just bear with me on that; I know your interests are probably a little bit more global in that respect. The shippers that we see doing this are merging these two classically disparate organizations in part because of desire and in part because of certain. Maybe I’ll just start with the desire. I think that in this day and age, it’s never desirable to have silos within a company, and many large shippers run their organizations in silos today, particularly being that the domestic group would be very much insulated from the international group. With many shippers, I see that it’s not uncommon for them to have an international department that’s responsible for getting that freight to a DC or an in-court hub, and then they kind of wash their hands of it and the domestic group takes over. Those two really don’t have a lot of collaboration between each other or visibility across the organization.


                        Clearly, I think that there’s an idea of a marketplace, and I think that there’s a lot of merit to this idea that there’s value to be had or saving to be wrung out of this by really collaborating across these two organizations and having a more well-orchestrated supply chain from origin to destination. Just to kind of borrow a sentiment from one of my advisory board members, no one ships from CY to CY, or container yard to container yard. In this day and age, shippers have to manage freight from origin to destination. Doing that with kind of a bump in the road is definitely not ideal. There’s, in part, the desire. And I think the other part, the circumstance I alluded to has to do with sort of the unfortunate reality of business in the last five years. Many shippers here in the U.S. were subject to cutbacks in the great recession. They lost headcount. And then we saw global trade values rebound in 2010 by about fourteen percent and then subsequent years by about four, five, six percent, something in that range. These volumes returned but the headcount never did.


                        What you’re seeing now is that these shippers are being asked to do more with less, and I see a lot of instances where our leaders, we’ll be responsible for international now, and they might give me a call the next month and say, “Hey, I have this whole new responsibility around domestic. Help me with that. Help me understand what’s going on in that market.” So, it’s not uncommon and also vice versa I see a lot. This is probably the more frequent, as I see domestic shippers who have recently taken over responsibility for international shipments, and that poses its own challenges. Really, again, just to recap bits and parts ’cause I think companies see a benefit to it but also in large part because they’ve been forced into this situation where a shipping guy is a shipping guy regardless of whether they have experience in international or domestic or whatnot.


Dustin:             You mentioned this rise in collaboration and orchestration in the supply chain. Can you talk about how is it done?


Jim:                  That’s a good question and I think, ultimately, the answer boils down to technology. These groups were distinctly different for so many years probably for a good reason. Nobody wanted to create them that way; it’s just that the technology didn’t exist to communicate across these different operations, these different functions, because they are just very different. They are very different challenges, very different, in many cases, standards, or just the means of doing business is different between international shipping and domestic shipping. What you’re seeing now and what’s enabling, I think, this trend toward bringing this together is the idea that technology can fit in between and translate, help connect the two in a way that was never feasible before.


Dustin:              When do you think this trend will be even more prominent or something that will make companies want to actually, then, take action and make these changes?


Jim:                  That’s a good question. I think the big trend is getting more from us is what we’re focusing on. I think that probably the tipping point or so where things pick up pace. What’s always more compelling is that there’s definitely a kind of follow-the-leader attitude in these enterprises. I think when there’s documented case studies that say that this has been successfully done in large enterprises or complex businesses and people take notice of that, that will probably spur more action. I think that it’s an increasing trend. There are companies who do connect the two, but I know firsthand many large U.S. states importers, and exporters, for that matter—who really have this classic, distinctly different organization right now with distinctly different segments or, as I mentioned before, the large separation between international and domestic. I don’t know that there’s one infraction point coming. I just think that this is a growing trend that we’ll see pick up pace over time, as they are more success stories documented.


Dustin:             Do you have any final recommendations?


Jim:                  I think I alluded to it before, there are a lot of challenges in this exercise, and I think that the recommendation I would have is: Regardless of what side you come from—if you’re a domestic shipper going international or if you’re an international shipper that’s going domestic, so to speak—don’t underestimate the challenges or the nuance that you don’t understand. You don’t know what you don’t know. Like I mentioned before, the majority of shippers who I see undertaking this initiative have a very strong domestic background and very little international background, and I think the pitfall there is to go and treat international shipping, international logistics as if it’s just trucking on water, as if it’s a domestic exercise just taken in a foreign market or in between markets. The reality is that that’s really not true, so you have to understand the complexity of the market. Just to name a few, if you look at kind of the concentration of capacity in the international routes, it’s a very different ballgame than domestic trucking, so you have to approach your procurement strategies very differently. And the list goes on and on.

         

                        I guess my suggestion for those who are undertaking this initiative would be to do their homework. I think that’s really the first thing you need to do. And understand where those complexities, the differences lie. And also to that extent, try to highlight the similarities, because from a function standpoint, international and domestic are actually, surprisingly the same. You still have to procure transportation and manage it and execute it and pay your bills. If you focus on where those points of similarity are, I think it’s going to allow you a better chance at being successful, so long as you’re well aware of what your differences are.



About Jim Blaeser


 

 

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Jim Blaeser

 

Publisher,

American Shipper

LinkedIn Profile

I interviewed Leona Charles who discussed How Small Businesses Can Get Government Contracts.

 

 

 

Dustin:             Can you start by providing a brief background of yourself?


Leona:              My background is, I run a management-consulting agency here in the Washington, D.C. metro area, and we cater to emerging businesses and businesses that are trying to get into the federal marketplace, and SBIRs is a great way to start that transition.


Dustin:             What is an SBIR?


Leona:              An SBIR is a small business innovation research grant. Basically, it’s a grant and it’s a way for small businesses specifically to reach out to government agencies and to start the process of building a relationship with them and it’s a little easier than the traditional route of kind of identifying one person in the agency and getting to know that person and then going kind of round of round. It has less wear and tear on a small business, if you will.


Dustin:             How can you get one?


Leona:              You can just apply. It’s really that easy. There are several agencies that participate in SBIRs now. The key to it is basically finding which agency fits your company and what you’re doing and applying to that company through their SBIR program. Mostly, it’s about—usually between two to three percent of their budget is allocated to SBIRs, so it’s just finding your fit with an agency.


Dustin:             Can you talk about how long does it usually take to get awarded?


Leona:               Usually, it takes anywhere from three to six months, depending on your response and your plan. When you submit a SBIR application, you’re going to have to submit a cost proposal, and depending on how well you’ve done that will effectively determine how quickly your award is. If they have to ask you a ton of questions and go back and forth with “How are you gonna do this?” and “How are you gonna do that?” then it’s gonna take a little longer.


Dustin:             Do you have any other insights or recommendations for small businesses that want to get involved with government contracting?


Leona:              The most important thing that I can advise is to know your agency. A lot of small businesses attempt to make contact with agencies thinking that, because there’s a push particularly with this administration to utilize small businesses that the is kind of just gonna open their doors and welcome them in, and that’s really not the case. Agencies wanna know that you’re capable of performing the work, that you’re gonna be stable, you’re gonna be around for a few years, and that when they have an increase in production or an increase in services that they need, you’ll be able to do that. So, when you approach an agency, those are kind of some three key areas to remember when you’re looking at them and you wanna start a conversation with them. You wanna tell them who you are, what you do, how long you’ve been around, why they don’t have to worry about you folding, and how you can handle increase demands for whatever it is you do. If it’s a product or service, however you can handle it.


Dustin:             What changes have you seen in government contracting over the last year or several years?


Leona:              Well, I’m sure, as everyone noticed, it’s a little tighter these days than it was in the past, but there’s been also a real push to validate experience. There’s a real push on past performance. I think in the past, if you kind of knew the right person, you could slide in and get a government contract and get your feet wet, but now they’re kind of honing in on that past performance and making sure that the past performance is something relevant to whatever contract you’re chasing now.



About Leona Charles


 

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Leona Charles

 

Owner

SPC Business Consulting LLC.

LinkedIn Profile

I interviewed Neal Click who discussed Talent Challenges for Logistics Service Providers.


 

 

 

 

Dustin:             Can you start by providing a brief background of yourself?


Neal:                Yes, I come out of the industry. I started back in the day with a large LTL carrier here in the States, Roadway Express. Later worked in the truckload industry with Schneider and followed work with several small- and midsize companies, investor groups. All in all, I’ve spent twenty-five years in the industry in executive positions up to a president’s positions. I then got into the headhunting world in 2000, joined this firm, which, at that time, was branded the Snelling Transportation Group, actually a franchise of Snelling Personnel Services. One of the other recruiters and I bought out the owner in 2003, formed High Road Partners. There are six of us actively recruiting in the firm—the two owners and four other recruiters, plus a couple full-time research people. We work primarily with service providers, be they trucking, rail, intermodal, freight forwarders, contract warehousing, and so forth principally in North America. We do work in the Continental United States, occasionally in Canada and also in Mexico. Probably the sweet spot for us is in the hundred to hundred and fifty thousand-dollar compensation range, but we’ve filled positions up in the four hundred thousand-dollar range. I would say we’re probably more in that mid-management-director level, and then with some VP and C-level type search work.


Dustin:             What are some of the talent challenges faced by logistics service providers?


Neal:                I think the biggest challenge right now is a lack of experienced talent. The industry, for a long time, was sort of fed by the pool of talent that was created back in the days prior to deregulation of the transportation industry in the United States. A lot of the people that have been in leadership roles over the last ten, fifteen years, even twenty years, came up from the old legacy carriers, be it trucking companies, the rails, and so forth. What’s really happened in the competitive environment post deregulation is that companies have had a hard time investing in people. There’s been a lot of turmoil, a lot of consolidation, companies have gone out of business, new companies have sprung up, and it’s become a very difficult place to attract talent, especially if you’re talking about positions that are involved in actually managing people. Starting out as people did years ago—you know, even with a college degree like I had, and I later on got an M.B.A.—but starting out, people would come out of college and go to work for a company, and they might be working second shift, nights, weekends, things of that nature. That’s just not very appealing to folks nowadays, and the money was much better then, relative to other opportunities. Now, for a lot of service providers, they don’t offer very attractive pay and benefits, the working conditions aren’t that great, and a young person’s coming out of college with a degree in business or transportation logistics, it’s much more attractive to go to work for a big consumer-products company or a technology company or some manufacturing company as a supply chain logistics manager as opposed to running an operation for a trucking company or a freight forwarder or a contract warehouse company. It’s just not been a place that draws much talent.


Dustin:             Who are the types of people that are in short supply?


Neal:                 It’s really across the board. If you’re talking about operations people, somebody that’s qualified to run a large operation, either a big-box warehouse or a significant trucking operation or intermodal operation or port terminal operation, those people, because that’s such a nitty-gritty position, not a lot of people with that background, if you get into a lot of the asset-based areas where you have safety, key safety positions, equivalent maintenance people are certainly in short supply, even high-quality salespeople, business-development executives can be tough to come by. I would say, generally speaking, people who get into the industry, they may work in operations a little while, and they’ll migrate to sales, so there probably is a little more sales business-development talent out there as opposed to operations maintenance, safety. There is a short supply of high-quality logistics engineers, and that’s kind of an umbrella that, in some cases, covers pricing, the design of solutions, and so forth. Those folks are in short supply on the service-provider side because, again, most of those logistics analysts and engineers tend to migrate to the shipper side, if you will.


Dustin:              Hw can this problem be addressed?


Neal:                 I think it’s obviously going to be one of those supply-and-demand situations, and eventually, companies will make the positions attractive enough that it will start to draw talent. We’re starting to see a little bit of that now, but companies are understanding that they’re going to have to make the investment and make the jobs more attractive. I think the culture in a lot of service-provider organizations is starting to change. There’s a little bit of an old-school mentality, I think, in transportation and distribution companies that maybe they’re not as progressive in the way they deal with employees. We’re starting to see some companies be a little more thoughtful in terms of some of the extras that they provide—just working conditions, maybe a little more flex time. The old days of just saying, “Hey, you’re gonna work here twelve hours a day and sometimes seven days a week and you’re just gonna take it,” those days are over, and I think companies are coming around and offering a better workplace. I think that’s really gonna be the key to it; it’s gotta be a more attractive place for young folks to work.


 

About Neal Click

 


 

 

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Neal Click

 

Executive Recruiter-Transportation,

Logistics and Supply Chain

LinkedIn Profile

I interviewed Mathew Gollop who discussed Talent Challenges in Supply Chain Market.

 

 

 

 

Dustin:            It’s nice to speak with you today, Matt. I look forward to hearing your views on the talent challenge in the supply chain market. Can you start by providing a brief background of yourself?


Matt:                Yeah, absolutely. Thanks, Dustin, for your time. My background is that I’ve spent many years, over fifteen years, in the recruitment and executive-search business. I came to Hong Kong in 2001, so I’ve been here for twelve years. I came to work for a company called ConnectedGroup, which I now am running and part of. ConnectedGroup is a multifunction, multi-industry, and executive-search business. We have offices in Hong Kong, in Singapore, Shanghai, Beijing, a small satellite in Dubai, and we employ over seventy people and run what I would call a big boutique in the recruitment world. My role is overseeing all of our operations, but I take a very hands-on approach, and I also run one particular division within the business, which is our manufacturing supply chain sourcing business, where I’m predominantly focused on North Asia, in particular, Hong Kong and China. Within that, we work across the manufacturing industrial—so, a sort of technical end of the market—all the way through the supply chain into corporate supply chain, so recruiting supply chain professionals for large corporates in areas like consumer, life sciences, et cetera. And then we also work within the sourcing industry. We work with major sourcing offices in pretty much all lines outside of food and beverage, so apparel, footwear, anything fashion-related, and then hard-lines, consumer electronics, toys, sports, pets. Really, anything within the sourcing realm.


Dustin:             How have market conditions impacted the talent market?


Matt:                Absolutely. I think that’s quite key in terms of timing where we sit in the market right now. We are at a point in the market where we’re coming off the back of probably one of the most volatile years the market has experienced in Asia for some time. Whilst the economic conditions last year were certainly more robust and more positive in Asia than elsewhere globally, the sourcing supply chain market, in particular, was heavily impacted by the drop in demand from the developed markets in Europe and the U.S. In addition to that, you also have the uncertainty surrounding the euro crisis, the U.S. debt issues, and what that created was a market where, even when recruitment was a potential requirement (and it very often wasn’t executed), maybe because of the high risk nature in the market.


                        What we found particularly in the last six months of the year was that recruitment was particularly repressed, so companies were not necessarily negative about market conditions and future prospects, but they were uncertain enough to delay the decision to hire. The senior market, in particular, was very, very quiet. We saw very little movement in the senior market, and we also saw a few organizations tightening belts, maybe cutting senior headcount, expensive headcount, expert headcount. We do see right now a few people with exceptional skills that fit the kind of senior strategic end of the supply chain business that’s out on the market, waiting for the change.


                        Right now we’ve headed out of the calendar year into 2013, and the Asian markets traditionally then sit and wait for Chinese New Year, which we’ve now just completed, and as we head into the Chinese New Year, we should now see some confidence return to the market. What I’m seeing at the moment is, generally, the accepted opinion is that the markets will be more consistent, more transparent, and generally more positive. Whilst it won’t be a boom as such, there will be certainly the need to recruit over the course of this year. However, it’s still too close to the Chinese New Year, a sort of breaking point for us to have seen the impact of that. we’re still very much in wait-and-see mode, and I think clients and candidates are kind of in the same position. We’re also post bonus time as well, and in the candidate market, that will create a little bit more movement out there. At this stage, it’s still kind of wait-and-see. I think that the risk averse nature of the market is still there, and there is more confidence—it’s an underlying confidence—but people are just kind of waiting to see who moves first.


Dustin:             Have you seen a mentality shift as far as a downturn in the market?


Matt:                I think so. I think I’ve been through a few downturns now here in Asia, and the first thing that happens is, obviously, the expatriate market tends to get squeezed. I’ve certainly seen companies localizing or restructuring and removing some of their senior expats that sit on expensive expat packages, and that happens in all industries every time there’s this kind of shift in the market. And then when the markets pick up again, the expatriate market, those that stick around will be reabsorbed on local contracts and some will return to home countries. And then as the markets continue to pick up, the companies will find talent squeezed in certain senior areas and then they’ll start to relocate people internally and that’s when you also see people coming out on those packages again. So, there’s certainly a mentality shift around that. Companies tend to localize, they tend to look at reducing those kinds of salary and benefit costs that sit heavily on the P&L.


                        I think the biggest mentality shift is real risk of this nature, i.e., it’s better not to make a decision than to make a decision and be caught out, be wrong, because of the market shift. And that’s the same for candidates as well. If we’ve seen less hiring activity from companies, but what we see is when companies do want to hire, in order to attract good talent becomes more difficult because those individuals that are performing well in their current companies maybe don’t want to take the risk of moving to another organization and being the last one in and the first one out if there’s a change in market condition. So, definitely, I would carve the mentality on both sides of the market, client and candidate, as highly tentative.


Dustin:             Do you have any recommendations?


Matt:                 I think that, I certainly, from a client perspective, so let’s look at some of my clients. Let’s look at the employees out there on the market. My recommendation is that those organizations that do have hiring plans for this year, that do have a strategy mapped out where they will have a talent requirement is that the sooner that they move in terms of trying to secure talent, then the greater choice they will have with some of the talent that’s currently available in the market. I do believe there’s gonna be a talent crunch in about two or three months’ time, as everybody starts ramping up and the slack gets absorbed in the market. In the meantime, because of changing strategy of a number of companies in the market and some of them have downsized and been through cost-cutting exercises, there’s actually some talented individuals across supply chain and in all facets of sourcing on he market, particularly the upper, mid, to senior end. Some great individuals that could be secured, so sooner rather than later would be my advice for organizations if you don’t have that strategy already mapped out.


                        I would also advise organizations, regardless of what their strategy is, is that there will be a pressure on talent in the market in two, three month’s time, so for those companies that are focused on cost cutting for the last twelve, eighteen months, perhaps the message to the business has been more negative. Now’s the time to start focusing on how you’re gonna retain your talent through the next three to six months, because you really need to retain talent over the last eighteen months because people don’t necessarily want to move, and that is gonna change. I think it’s important for organizations to realize that now’s the time to start trying to lock those people down and make sure that your communication strategy is built around ensuring that your talented individuals understand what their career path is for their move.


                        I think for candidates, my advice is: Be ready. My advice is that although there will be an upturn in the recruitment market, we’re still not talking about a booming recruitment market, so it’s important that you have your CV prepared and a true understanding of what it is that you’re looking to achieve with your next move, so that when the opportunities do come up, you can grab them. My advice is not to put your CV out to every agency in the market and send it to every job because the attitude that that potentially creates among employers when they see the same CV numerous times coming off the back of markets that have been fairly fractious can create a brand issue for individuals in terms of their résumé brand. Be targeted, selective, focused, and ready, because there will be some interesting opportunities that come up in the market, but there won’t be a huge amount of them, so if you are looking to make a move, then you need to be prepared.


 


 

About Mathew Gollop


 

 

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Mathew Gollop

 

Executive Recruitment

& Search Business Leader

LinkedIn Profile

I interviewed Mary Pat Freeman who discussed New Pallet Changes Affecting Manufacturers.




Dustin:             Thank you, Mary, for spending your time today to share your views on the pallet industry and some of the trends that are going to affect manufacturers and people in the supply chain. Can you start by providing a brief background of yourself?


Mary:                Certainly. I’m Mary Pat Freeman and I am fairly new to the material-handling industry. I actually became interested in material handling a few years ago, when Tylenol had to have a recall in the ipallets.pngmarketplace. My background, I started my early career as a med tech, specializing in infectious disease. Epidemiology and root cause of a problem has always been of interest to me. When fingers started getting pointed toward pallets as a major contributor of the problem, I got interested in material handling. That’s how I got involved into this product line. Today I’m responsible for bringing a new product into the market that, for the first time, I think, offers a real hygienic pallet solution.


Dustin:             What changes are occurring in the U.S. market that is prompting an increase in interest in aluminum pallets?


Mary:                Probably the biggest is the Food Safety Modernization Act. In January of 2011 President Obama signed a new law in the United States called Food Safety Modernization, and it’s an act that actually is shifting the responsibility of responding to contamination to preventing it. Manufacturers have a different focus today. It’s truly, looking at now what are the root causes and going to attack, preventing it. Food manufacturers and distributors are going to have to take a look at the pallet, and because of the last three to four years, wood pallets have become very well-known as a source of the complications. The U.S. National Consumers League did testing on pallets, I think in 2010, and what they ended up showing is about ten percent of pallets tested positive for E. coli and three percent for listeria, both of which are significant health hazards for individuals. Plus, some of the Food Safety Modernization Act grants the FDA enforcement powers, the authority to actually prohibit them from distributing food. That’s the first time in FDA history. Not only do they have guidance and the capability of a law that they want individuals to follow, but they’ve got the empowerment to do something about it if they don’t comply. These documentations are certainly changing the industry in the United States and will affect the global distribution of products as well.


Dustin:             What effect do you see the new regulation having on the global market? Do you see it affecting any other industries?


Mary:                I certainly do. Globally, there’s already been FDA notification that they are going to turn their eyes toward the international distribution, and, certainly, coming in is going to be their first area that they’re going to scrutinize and take a look at how things are transported and what effect it will have on the products being made available to the U.S. consumer. As far as the industry itself, the contamination issue that you see as it relates to food is also a complication in the pharmaceutical industry. Many of the problems, as I alluded to at the beginning—Tylenol is one prime example—where the product itself within the bottle wasn’t contaminated, but because of the supply chain activity with contamination entering into that process—it just needs to get on a finger, get on a lid, get on it, and then the next thing you know, the entire product has been contaminated. So, I see it affecting both of those industries.


Dustin:              What makes i-pallets different from other pallets in the market?


Mary:                i-pallet is one of the only hundred percent hygienic type of a pallet. All of the other pallets manufactured today pretty much mirror the design of the old wood pallet, so you still have top crossbars, and you still have the design looking like the pallets of many years ago. The i-pallet has been designed with a solid-plate top, so we use laser stamping to stamp it out, for design, for embossing in order to control the weight of the product. Because it’s a solid top, there are no well joints, there are no fasteners, there are no areas in which contamination can get into the top of the pallet. That will completely protect whatever product is put on the pallet. All of the wells that are associated with the pallet or fastening associated with the pallet is done under the surface, surface-mounted under the top of the plate. That’s a new design that’s been patented for the food and pharmaceutical industries.


Dustin:             And why is aluminum a good choice for a pallet? Isn’t aluminum too costly?

 

Mary:                Aluminum’s a perfect choice. Five really good reasons. First, it’s very, very  lightweight. It also has a naturally generated protective coating so that it’s very highly corrosion-resistant. It’s a hundred percent impermeable, it’s nontoxic, and it’s a hundred percent recyclable, so it’s eco-friendly as well. It’s ideal for storing food and pharmaceuticals. As far as the cost, it actually is very cost-effective. When you take a look at the use of pallets, instead of buying multiple pallets annually, the key to an aluminum pallet is that it will last a long time. i-pallets are ones that come with a ten-year warranty, yet the pricing of it has been priced specifically so that you have a break-even point approximately three years into using the aluminum pallet, and, yet, it’s going to last for at least ten years, probably twenty. The key to the pricing is that if you really look at a cost justification over time, you’ll see that it’s half the cost of a wood pallet over the same ten-year duration, so that’s actually a cost savings, not too costly.


Dustin:             And my last question is: What should a buyer look for in a manufacturer to know that they’re picking the right product?


Mary:                As far as a manufacturer goes, I think they need to kind of shift their minds in how they buy pallets. What I see is, pallets are considered a commodity today, and, realistically, you should look for a manufacturer that has the ability to make sure you’re buying the right product, because if you’re gonna buy it, you want it to last for a long period of time. Let’s make sure it’s gonna be for the use that you need. It shouldn’t just look at the lowest-cost, readily available alternative. Companies like i-pallets or another company, Premier Handling, who is a company that provides pallet-moving company, they’ll work with you to identify and understand your use of the pallet, how you move it, what your needs are before actually recommending a product to you. The specialization that i-pallets has is they will customize a pallet for your specific solution so we’re positive it has the right weight, the right sides, the right edges in order to accommodate how you’re gonna physically move that pallet around and use that pallet to store your product internally. That way, we’re certain that it will be a cost savings for you over time.



 

About Mary Pat Freeman


 

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Mary Pat Freeman

 

Vice President

Sales and Marketing

i-pallets. Inc.

http://www.youtube.com/watch?v=VTJLIK0hLHc

LinkedIn Profile

I interviewed Kevin Coomes who discussed Supply Chain Integration.


 

Dustin:             It’s good to speak with you today, Kevin. I look forward to hearing your views on integration and supply chain integration. Can you start by providing a brief background of yourself?


Kevin:               Yes, definitely. It’s good to talk to you too today, Dustin. I appreciate it. My professional life was spent mostly in China. Three and a half of the last six years, I’ve lived in China. Most recently, I spent the last two and a half years building a company, importing energy-efficiency products from the U.S. and Israel to China, which is actually still operating at this moment. It’s called Phoria Energy Solutions. I recently, within the last couple of months, returned from Chain back to the United States and took a position developing business sand developing strategy for a new Web  site called XpressRate.com, which basically is the Travelocity of the international shipping world. Currently, we operate to and from the United States, import and export, to anywhere around  the globe. We offer online rates instantly through our Web portal, similar to Travelocity and Orbitz, and you can book those rates online. We look to expand that to global, international-to-international coverage as well, not just the United States.


Dustin:            Why is there a need to integrate in the supply chain?


Kevin:               I think currently, with supply chain and logistics in particular, it’s a very old-school type of mentality right now. You have your manufacturer, who may work with shipping agents wherever they’re at in the world within their own countries overseas that then transfer that freight from their domestic to an international freight forwarder, who then, they move it to another country, who then transfers it again to another domestic carrier in that country, and then moves it again to the warehousing for whatever company requires the product or whoever the buyer might be that might’ve purchased from this supplier. Currently, that process is very bogged down, and, obviously, as I described it, there are a lot of middle men in the process, and there’s a lot of time and cost added when you add all of those different pieces into the process.


                        Iintegrating a supply chain and allowing one forwarder to be able to directly work with a factory or directly work with a domestic character so that it’s all integrated into one system greatly reduces lead times. It cuts costs significantly in terms of not only communication and transferring freight, but also general administrative costs between transferring bills of lading, transferring purchase orders, that sort of thing. Today it’s all done through e-mails, phone calls, personal interaction in doing that, whereas in the technology world we’re in today and the information age that we have, I think that’s a market where it’s very underserved by technology, and it’s very underserved by technological advances in terms of cloud-based computing, in terms of networking, in terms of management systems, and Web portals to be able to transfer that information quickly, to be able to integrate all those processes so that they’re processed faster rather than just done manually, and be able to greatly, as I said, reduce those costs and, as lead times, to get product from the manufacturer through the supply chain, to the customer or to the buyer.


Dustin:             Who can benefit from integration?


Kevin:               I think throughout the entire supply chain, everyone benefits from integration. Obviously, the manufacturer will be able to more quickly move their products that they’re manufacturing out to those that are buying the products. And then for those that are buying the products from the manufacturer, greatly decrease their cost and, again, lead times so they can quickly fulfill orders to—whether it’s retailers that are purchasing their products, whether it’s businesses that are purchasing their products—and quickly reduce those lead times to their customers and then also cut their costs both administratively and in terms of product costs, which, then, can add margin for them, or they can pass those costs on to their purchases. And then the consumer at the far end of the supply chain, who might be using those products or services that are created through that supply chain are then seeing a cost benefit because it reduces the cost of the product or service that’s being offered to them. All along the supply chain, you’re gonna see cost advantage through technologically integrating and increasing the efficiency of that supply chain.


Dustin:             And how can technology be used for supply chain integration?


Kevin:               It really expands end to end, again, throughout the supply chain. Enterprise management systems are becoming very important in terms of product manufacturing and in terms of supplier-to-buyer relationships so that we can manage exactly what is being created, the materials that they’re using to create the product and then getting it out so it could be shipped. And then from the shipping side, the logistics angle, which we’re involved in, there’re very technological advances now that are, again, as I said, underserving the market at this point. They’re not being utilized to fully integrate that supply chain, whereas you have “management systems” for large, anywhere from large freight forwarders and shipping carriers all the way down to domestic trucking companies, intermodals, and rail lines, where they may only do a certain amount of shipments or they may only do a very small amount but in a certain region of a certain country.


                        There are management system that will manage all of their quotes and their rates where they can pull those instantly and greatly decrease their times in terms of getting those shipments booked and put on the ocean or put on a truck or a rail to be moved to where they need to go. And then on the other side, for smaller- and medium-size companies where globalization is becoming increasingly, increasingly important so that they can stay competitive in the marketplace with larger corporations, corporations that have more money to spend on logistics and supply chain, technology can be utilized for them with Web-based portals that are becoming available with, again, management systems that are scaleable to be able to use for their application so that they can quickly and easily manage the logistics processes and the supply chain processes from the manufacturer, all the way through to, again, the buyer or the consumer. Whereas right now, especially in the freight and logistics world, moving those products is very, very difficult for some of those smaller- and medium-size companies that don’t have the money or the time or the resource to be able to fully understand their entire supply chain process. Whereas technology and information sharing, cloud-based computing, integrated, as I said, management systems for not only enterprise management for supply but also for logistics can greatly, greatly increase their competitiveness in the market against much larger companies that can spend the time and resource to do it all internally, in-house.


Dustin:             Where have you seen some results?


Kevin:               There are several different results across the United States especially right now. The domestic market is becoming increasingly more adaptable with the technology market. There are several different companies popping up every day that are providing quote-management systems for domestic, LTL—less-than-truckload, full truckload—and intermodal transportation, and it’s actually becoming a very saturated market at this point because there’s such a big market to be served. There are several different companies across the nation that are starting to serve their respect regions and markets in that regard. In terms of Web-based portals, currently, you look at Alibaba in China or you look at Panjiva, which is a domestic U.S. Alibaba basically. Those companies allowing suppliers to reach straight to buyer, straight to smaller companies, manufacturers to reach straight to those, the market that they serve through those Web-based portals where they can post their MOQs and they can post their volume pricing online and immediately connect with those purchasers has been massively successful. Alibaba has grown significantly over the past ten years that they’ve been in business, to become one of the largest companies in China, privately held companies in China. And then also in terms of, as I said, with freight forwarders and with shippers, carriers, there’s been a massive increase in technological advances so that they can manage their quote systems. They serve a hundred million shipping lanes. Well, how are they managing those quotes? Cell sheets are kind of a thing in the past, obviously, as those are very time-consuming to be able to sort through those quotes and those shipping lanes and those rates. Well, quote-management systems, cloud-based computing has allowed them to instantly pull those quotes from end to end and serve their customers and serve their supply chain that way. There are numerous examples out there that are starting to serve this market, but at this point the success is there, but I think the share of the market is still very small for the technology companies. They’re still underserving the mark in a large way. As people similar to Panjiva and Alibaba start to integrate with some of these other technological advances to be able to fully, as I said, realize and visualize the entire supply chain from the supplier to the shipper, to the domestic back in the country where the purchaser is, and then all the way through to the buyer, the consumer, it’s really exciting. It’s actually, it’s an exciting time to be a part of all that in supply chain management.


 

About Kevin Coomes


 

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Kevin Coomes

Business Development Manager

XpressRate.com

LinkedIn Profile

I interviewed Chuck Intrieri who discussed a paradigm shift towards collaborative supply chains.

 

 

Dustin:             It’s good to speak with you again, Chuck. Today I look forward to hearing your views on what you call a paradigm shift, which is moving from an individualistic segment in supply chain to a more holistic, collaborative supply chain. Can you start by providing a brief background of yourself?


Chuck:             Yes, I have been in logistics my entire career, starting with the Schwinn bicycle company in Chicago for twelve years and moving on to the General Binding Corporation in Northbrook, doing logistics all of this time, and then going on to Troy Bilt, a large rototiller company in Upstate New York, also in materials, purchasing, and supply chain. Eventually, I got into consulting with a company, split from them, and started my own business in western Michigan in supply chain purchasing, logistics, third-party logistics, and have done all the theory and practice of all of it. Now I’m currently consulting for a company in San Francisco, doing cold supply chain, frozen-food supply chain logistics. It’s a redistribution system and this demand-driven logistics, or this paradigm shift we’re talking about, going from individualistic segments to holistic collaboration really helps a cold supply chain redistribution system, Dustin.


Dustin:            Can you talk more about what is demand-driven logistics?


Chuck:             Yes, I can. It’s going, really, from individual segments, as you indicated, a paradigm shift from a reactive approach to a more proactive approach and empowers shippers to drive collaboration across different functional areas where you engage your customers, suppliers, and third-party provider intermediaries more closely and broadly drive out costs and efficiencies within their supply chains. We’re talking about controlling decision-making and dictating actions downstream so that the suppliers, the 3PL, and the customer all work together and gain visibility through systems and control their inventories and cost. I think the first paying point is that controlling inventories is very important and costs are important, so with this system, you can control inventories and cost.


Dustin:             And can you talk about why is demand-driven logistics important?


Chuck:              It’s important because the customer then gets their needs filled through what’s called a pull system. It’s really the customer who pulls the inventory from the supplier and the third-party logistics and gets their inventory when they need it, and they don’t have to have the volume of inventory they had in the past, because a lot of demand-driven logistics has to do with using your tools like a transportation management system, TMS—WMS, warehouse management system—using these tools and purchase order tools to properly get the right amount of inventory to the customer, driving down inventory costs, time, and all the efforts that were used for additional inventory. You can do this by looking at consolidations. In the past most shippers decided that they had to fill a container full of goods in order to get the best rate for a container. The best rate for a container is a full container, which is logical, but using this demand-driven logistics, you can partially fill containers and have consolidated containers. Even when I was with Schwinn many years ago in Chicago, Illinois, we had suppliers all over France that had smaller amounts. We gathered all these individual suppliers all over France into the shipping point, put them all together into a container, and shipped them to Schwinn, each one being a small amount of inventory than each supplier having to fill their own container. So, it’s a consolidated container. The same works for domestic transportation. If you have a truckload, that’s the best thing to do get the best rate, but you can pool your inventory and consolidate it with other customers and ship smaller amounts so that your customer gets, and the whole supply chain gets reduced total inventory, therefore, reduced cost. It’s driven and demanded by the customer and pulled by the customer to reduce inventory.


Dustin:             Who can benefit?


Chuck:              Every member of your supply chain benefits in that the supplier knows exactly hat the customer wants, the third-party logistics provider knows what the supplier should ship to them, and they can pool to the customer so you have a complete demand-driven system totally integrated and holistic in that total collaboration. They all work together to see and orchestrate the supply chain for all of their benefits. Any customer who does logistics shipping and importing or domestic shipping can benefit from demand-driven logistics, ’cause it’s a paradigm shift from individual, departmental supply chains to a holistic approach. We’re not talking about generalities; we’re talking about specifics using specific transportation-management systems, purchase-order IT systems, and general IT systems to help visibility to see what shippers are doing all along the holistic supply chain. All functions are reacted to demand in real-time, together.


Dustin:             How can companies get started with demand-driven logistics?


Chuck:              The way to get started is to meet, work together, and have a conglomerate discussion on how the suppliers work with the third-party logistics company and the customer as a group, working together, meeting those goals. It’s going to take working downstream from the origin to the 3PL, to the customer, working together. That’s how to get started. To understand goals and objectives; to understand the tools that are necessary; to control their inventories and costs; and eventually get to continuous improvement and a lean supply chain. It’s everybody having the same goals. That means initial contact, communication, and setting up goals, creating the paradigm shift from a reactive supply chain to a holistic supply chain through communication.


 

About Chuck Intrieri


 

Chuck_Intrieri.jpg

Supply Chain/3PL/Warehousing Consultant Believing In Trust And Collaboration With All Providers

LinkedIn Profile



I interviewed Michael Demberg who discussed Demand Management.

 

 

 

Dustin:             Thank you, Michael, for spending your time today to discuss demand management. Can you start by providing a brief background of yourself?


Michael:            Thank you, Dustin, it’s a pleasure to be here. My name is Michael Demberg. I’m the founder of a company called SimTrak Systems. This is a company that’s dedicated to enabling corporations, no matter what their size, to interpret their point-of-sale information, which is available for most major retailers. It’s really a requirement in accordance with business plans that have been deployed. SimTrak has evolved into a company that’s focused and dedicated, that enables corporations to interpret their point-of-sale in order to help them increase their sales and improve their bottom line. This information that’s readily available should be cost-effective in nature, and we feel that if we give people the ability to acquire such information at a relatively inexpensive cost, then they’re able to play with the bigger boys—like the IBMs of the world—in dealing with their retail partners. One of the things that SimTrak does, it understands, it tries to put together two bits of pieces of information: data that is called from a retailer, plus their own. It creates information and, therefore, it creates intelligence. During the past fifteen years, when SimTrak has been available to the general populous, we note that with the increase of intelligence, there is an increase of profit.


Dustin:             Can you talk about what is demand management? How do you define it?


Michael:            Demand management is, we call it the back door to supply chain management. It’s understanding what the populous wants, and it tells that to the retailer. It tells that to the retailer based on the fact of how their product is selling in the store. If we create supply, we need to create supply based on the demand for any specific retailer. It’s always nice to have tons and tons of inventory available to you, but you have the right inventory in the right place. That’s good for the retailer. On the other hand, the distributor or manufacturer, when he has that information, he can now adjust his production cycles in order to meet that demand and, therefore, not carry * (3:01—unclear) or carry too much inventory. What we call this in SimTrak is establishing your business IQ. Business IQ is defined by SimTrak as the inventory quotient; the ability to maximize your inventory levels in order to reduce higher turns and greater profits based on existing stock levels.


Dustin:             Is there any more you could say about why it’s important?


Michael:            It’s important because what it does is, it keeps both the retailer and the supplier on an effective communication grid. By doing that, you now have more than one head that’s looking at specific issues in order to increase profit across all schemes of the supply chain.


Dustin:             Who needs it?


Michael:            Who needs it? Anybody who does business in an environment where supply and demand is required. It’s one thing to produce an order; it’s another thing to actually manage the inventory after that order has been produced and delivered.


Dustin:             Do you have any recommendations for how companies can get started?


Michael:            One of the issues that companies have is that they do not have a sustainable IT scenario that will allow them to do this. Most companies come to the table with designs and development, but they really don’t understand the use of data mining and how it could benefit their business. One of the things is that this data-mining environment can be very, very costly. SimTrak is, one could say, simple, it’s effective, and, most importantly, it’s economical.


 



About Michael Demberg



President / Owner

SimTrak Systems

LinkedIn Profile




I interviewed Eric Gauthier who is the president of an innovative company called MyTLA Transportation and Logistics / transport et logistique Inc.

 

 

 

Dustin:              Thank you, Eric, for spending your time today to discuss your innovative business model. Can you start by providing a brief background of yourself?


Eric:                 Certainly. I’ve got twenty-four years of experience in the industry. I started with a small U.S. customs broker called John V. Carr at the referral of a school chum of mine; he was a drummer in my band. I managed the band’s affairs, and when his father was looking for somebody to take on as an apprentice with a good business acumen, my drummer friend recommended me, and that was my entry into the market, believe it or not. So, from John V. Carr, I went to Fritz Starber. Fritz Starber was acquired by UPS-SCS, and from UPS-SCS I was recruited to manage the regional sales team for Schenker of Canada in eastern Canada. About four years ago I decided to launch MyTLA, as in My Transportation Logistics Agency, which is an agency in transportation logistics, not unlike a real estate agency or a recruiting agency or a talent agency. Based on the customers’ requirements, I’ll scour the industry for the best service provider and support the rate negotiations and service solutions and implementation.


Dustin:             So, how is it different? How is your business model different?


Eric:              I think it’s different…in our industry, as you know, there exist commissioned salespeople, and there exist consultants, and there exist 3PLs and forwarders and brokers, but the relationships and solutions tend to be more or less—what’s the word I’m looking for? — exclusive in that the objective is to not to find value but rather to win business  . MyTLA’s business model is to bring shippers and service providers together based on cost, core competency, and corporate culture. By that nature or in that context, we are not limited with what service provider we’ll solicit on behalf of the shipper, based on cost, core competency, and corporate culture.

 

Dustin:             Can you talk a little bit more about why your business model is important?


Eric:                 I think it’s important because—I’ve seen it time and time again, and I’m sure my fellow sales, marketing, or even operations people in the industry recognize that there’s a lot of shippers that are misaligned with their service providers in the industry. For example, a small-, medium-size company might not have the leverage or buying power to use the services of a large forwarder-integrator like a UPS or a FedEx. At the same time, there are hundreds of service providers to whom a crumb to UPS would be a feast to them. I’ve got here a list in front of me, a publication from Canadian Transportation and Logistics magazine, listing seven hundred service providers in Canada alone, be they brokers, forwarders, carriers. I promise you that if you call any one of them and ask them if they can do your imports from China, your distribution from Canada to within North America, and your imports from Mexico, regardless of the vertical market the shipper’s in, the service provider will respond, “Yes, we can do that,” and they’ll proceed to build some sort of solution. Meanwhile, I maintain that every one of these service providers has got one thing that they do better than everybody else in the industry. Perhaps it’s born out of a legacy of importing automotive parts from Detroit into Toronto; or maybe it’s importing garments from India into Canada for distribution throughout North America; or maybe it’s Mexico into the U.S. The point being that each one of these companies has something that they have developed as a core competency born out of a legacy. My objective is to find the right fit between the service provider and the shipper. The service provider, at the same time, is very encouraged by my efforts because they don’t pay a salary, they don’t pay me benefits, they don’t pay for my car allowance or my travel, but should I introduce them to the right client, they pay me a commission based on the money that they earn from the client.


Dustin:             And who can benefit the most?


Eric:                 I think both sides benefit. The shipper benefits because they’ve got a very transparent and very true consultative sales approach, where, based on their requirements, we’ll turn around and we’ll find the right service provider for them. At the same time, the service provider benefits because we’re introducing them to a more profitable client who’s perfectly fit for their services based on their price points, their core competency, and their corporate culture. Oftentimes, I’ve seen shippers brought on to a given service provider, and at the end of the day, the service is just not what that service provider is meant to be providing, and, invariably, it ends up in a lack of service and conflict between sales, operations, the service provider and the shipper.


Dustin:             And do you have any final recommendations?


Eric:                 Well, I’d encourage my fellow executives in the industry all over the world to consider this new model. I suggest that if you’re in the industry and you know of a given shipper and you know there’s a service provider in the industry for whom there’s a perfect fit, then by employing the MyTLA model, there’s a way that you can make money and develop a business for yourself. I use the term agency by design. My model isn’t to develop just one segment of business just for me alone. My hope is to someday partner and cross-reference opportunities with similar, like-minded individuals who have their own shipper clients and their own service provider contracts. 

 

Dustin:             Thank you, Eric, for spending your time today to discuss your innovative business model. Can you start by providing a brief background of yourself?


Eric:               Certainly. I’ve got twenty-four years of experience in the industry. I started with a small U.S. customs broker called John V. Carr at the referral of a school chum of mine; he was a drummer in my band. I managed the band’s affairs, and when his father was looking for somebody to take on as an apprentice with a good business acumen, my drummer friend recommended me, and that was my entry into the market, believe it or not. So, from John V. Carr, I went to Fritz Starber. Fritz Starber was acquired by UPS-SCS, and from UPS-SCS I was recruited to manage the regional sales team for Schenker of Canada in eastern Canada. About four years ago I decided to launch MyTLA, as in My Transportation Logistics Agency, which is an agency in transportation logistics, not unlike a real estate agency or a recruiting agency or a talent agency. Based on the customers’ requirements, I’ll scour the industry for the best service provider and support the rate negotiations and service solutions and implementation.


Dustin:             So, how is it different? How is your business model different?


Eric:                 I think it’s different…in our industry, as you know, there exist commissioned salespeople, and there exist consultants, and there exist 3PLs and forwarders and brokers, but the relationships and solutions tend to be more or less—what’s the word I’m looking for? — exclusive in that the objective is to not to find value but rather to win business  . MyTLA’s business model is to bring shippers and service providers together based on cost, core competency, and corporate culture. By that nature or in that context, we are not limited with what service provider we’ll solicit on behalf of the shipper, based on cost, core competency, and corporate culture.


Dustin:             Can you talk a little bit more about why your business model is important?


Eric:                 I think it’s important because—I’ve seen it time and time again, and I’m sure my fellow sales, marketing, or even operations people in the industry recognize that there’s a lot of shippers that are misaligned with their service providers in the industry. For example, a small-, medium-size company might not have the leverage or buying power to use the services of a large forwarder-integrator like a UPS or a FedEx. At the same time, there are hundreds of service providers to whom a crumb to UPS would be a feast to them. I’ve got here a list in front of me, a publication from Canadian Transportation and Logistics magazine, listing seven hundred service providers in Canada alone, be they brokers, forwarders, carriers. I promise you that if you call any one of them and ask them if they can do your imports from China, your distribution from Canada to within North America, and your imports from Mexico, regardless of the vertical market the shipper’s in, the service provider will respond, “Yes, we can do that,” and they’ll proceed to build some sort of solution. Meanwhile, I maintain that every one of these service providers has got one thing that they do better than everybody else in the industry. Perhaps it’s born out of a legacy of importing automotive parts from Detroit into Toronto; or maybe it’s importing garments from India into Canada for distribution throughout North America; or maybe it’s Mexico into the U.S. The point being that each one of these companies has something that they have developed as a core competency born out of a legacy. My objective is to find the right fit between the service provider and the shipper. The service provider, at the same time, is very encouraged by my efforts because they don’t pay a salary, they don’t pay me benefits, they don’t pay for my car allowance or my travel, but should I introduce them to the right client, they pay me a commission based on the money that they earn from the client.


Dustin:             Who can benefit the most?


Eric:                 I think both sides benefit. The shipper benefits because they’ve got a very transparent and very true consultative sales approach, where, based on their requirements, we’ll turn around and we’ll find the right service provider for them. At the same time, the service provider benefits because we’re introducing them to a more profitable client who’s perfectly fit for their services based on their price points, their core competency, and their corporate culture. Oftentimes, I’ve seen shippers brought on to a given service provider, and at the end of the day, the service is just not what that service provider is meant to be providing, and, invariably, it ends up in a lack of service and conflict between sales, operations, the service provider and the shipper.


Dustin:             Do you have any final recommendations?


Eric:                 Well, I’d encourage my fellow executives in the industry all over the world to consider this new model. I suggest that if you’re in the industry and you know of a given shipper and you know there’s a service provider in the industry for whom there’s a perfect fit, then by employing the MyTLA model, there’s a way that you can make money and develop a business for yourself. I use the term agency by design. My model isn’t to develop just one segment of business just for me alone. My hope is to someday partner and cross-reference opportunities with similar, like-minded individuals who have their own shipper clients and their own service provider contracts. 

 

About Eric Gauthier


Eric_Gauthier.jpg

 

President

MyTLA Transportation and Logistics / transport et logistique Inc.

LinkedIn Profile

I interviewed John Manners Bell, the Chief Executive of Transport Intelligence. He discussed the role of logistics in reducing post-harvest food losses in the developing world.

 

 

 

Dustin:             Thank you, John, today for spending your time to discuss the role of logistics in reducing postharvest food losses in the developing world. Can you start by providing a brief background of yourself?


John:                Sure, Dustin, yeah. My name’s John Manners-Bell and I’m chief executive of Transport Intelligence. We’re a U.K.-based market research company with operations in Hong Kong and Atlanta. My own background is very much from within the industry. I started off working within operations, within the family of freight forwarding and logistics company. Since then, I’ve developed through working for a UPS supply chain as a marketing manager in Europe and went back to university, got an M.S.C. in logistics, and then I established Transport Intelligence just ten years ago now.


Dustin:             Thank you. Can you talk about what are postharvest food losses in the developing world? What is the problem?


John:                Postharvest food losses is a really major, major problem. I think everyone realizes that feeding the world population is going to be a major issue over the coming decades. The world’s population has already reached seven billion, and we’re struggling to feed that number of mouths throughout the world. Some of the major population boom areas are in the developing world, such as in Africa and many parts of Asia. Really, to date, a lot of the focus has been on, actually, production—production technology, food technologies—to help grow more food, but what people don’t realize is that probably somewhere between a third to half of food which is produce actually gets lost between the farmer and the final market.


                        To my mind, that really is a criminal situation, because it’s really down to the logistics industries in the developing world to enable the goods to be able to market and to get from market, also, into the consumer. I think a lot more should be done to develop logistics systems to help with transport networks—warehousing, for example—which ensures that food actually makes it to the hungry people rather than spending more and more money on agricultural technologies, for example, which, at the end of the day, it produces more goods, but that means more goods actually perish or get lost before they reach the people they’re designed to.


Dustin:             Is there more you could say about where this is happening?


John:                I’m part of a group working with the World Economic Forum, with the Logistics and Supply Chain Global Agenda Council. We’re really focusing our efforts on Africa for a start but also in other areas, Southeast Asia, for example. India is another area where, really, far more needs to be done on the transport and logistics side to actually move goods to the consumer. It’s in these developing world where we’re seeing a boom in population, but agricultural production is not keeping up with demands, so far more needs to be done, far more investment needs to be done, made into road networks but also into warehousing—the cold chain, for example, and technology surrounding that if we’re going to be able to move these goods to the people who need them.


Dustin:             Do you have any recommendations on how to approach the problem?


John:                Yeah, absolutely. Well, first and foremost, if we divide the problem, as you put it, into various parts of the supply chain, road infrastructure, it can be as basic as actually investing in new roads, making sure the roads which are there are built and developed. In a lot of cases, they’re very much rotted, so if you’re moving goods in trucks, a lot of them are open-sided trucks. The quality of the road is so poor, the product gets harmed before it gets to market. Investing in roads is one major area. Helping governments and private sector establish distribution centers. Warehousing is also a priority area because that’s something the governments certainly take a role in helping the development of better-quality warehousing.


                        For example, with perishable goods, they can help facilitate the investment in temperature-controlled warehousing. In many cases it could be that you just need utilization of the warehouse rather than allowing goods to be stored out in the open, where they’re more prone to disease or from pests. Warehousing and distribution centers, transport networks are all very important in this. But in addition to that, we also want to develop better-quality services. In all of these developing world and emerging markets, the market is very much fragmented, and there’s very weak transport services being provided. If we can encourage training, for example, to enhance the quality of services so, therefore, the goods are loaded on vehicles in a sympathetic way rather than actually thrown on or helping develop a more robust logistics supply side where they have better-quality vehicles, which can included, also, chilled distribution, for example, then that would have a very big impact on the industry.


Dustin:            Thank you. Do you have anything to say in conclusion?


John:                Yeah, the last thing I’d like to say in conclusion is that we’re not talking about a lot of money. For example, a minimal amount of packaging can actually make a huge difference and can dramatically increase shelf life by using very, very cheap packaging, for example. We’re not talking about a massive amount of money; in many cases we’re talking about training people to use the resources they have in a better way. So, I would say, yes, there is an element and investment needed by governments and by logistics companies and manufacturers, and we want to facilitate that. Also, there’s a lot that can be done with very little resources but through, say, training, for example, but can already a huge amount of difference.


 

 

About John Manners Bell


john-manners-bell.jpg

Chief Executive

Transport Intelligence

LinkedIn Profile

I interviewed Long Wong who discussed how to sell your products online in China, including considerations for logistics and fulfillment.

 

        

 

 

Dustin:             Can you start by providing a brief background of yourself?


Long:              Thank you, Dustin, it’s a pleasure talking to you too. I used to work for Amazon in the U.S., and then when Amazon acquired a local company called Joyo.com in China, I was tasked with evaluating different options of integrating and it was decided that I would be assigned back to China. I was head of logistics and supply chain for Amazon China from 2005, for a couple years.


Afterward, I’ve been involved in various e-commerce startups in China. Some of them were pretty big and some of them small startups, including selling vegetables online.I’ve also been the head of supply chain for local retailers.


Currently, I am the COO for United Cosmetics. We help different cosmetics brands sell online. Selling online is primary on Taobao.com. I also provide logistics consulting and software for e-commerce and logistics companies.


Dustin:             Great, thank you. My first question is: What are the difficulties of doing e-commerce in China?


Long:                There are many difficulties, of course. China always offers some unique challenges. First and foremost, if you’re planning to set up a Web site, China has strict Internet controls. That means that you need a special license, ICP, to set up your own Web server in China. As web server owners, you’re also obligated to monitor and control the content that goes on it, including anything that may deem offensive to the government.


Second, payment is an issue in China for a lot of the major B2C companies Cash On Delivery is essentially the dominant way, as much as over 90 percent in some cases. On the other hand, if you’re selling on Taobao or on the other Tencent/QQ platforms such as Alipay.


Online payment on banks credit cards has a unique challenge in China. It’s different than Europe or the U.S., where you preauthorize the payment and then you can charge the card. When they ship in China, the credit card-charging system just doesn’t work that way, so that creates a lot of challenge for some of the U.S.-based or European-based e-commerce systems.


Localization is also an issue. The Chinese language is a lot different than Latin-based language. That means your whole style and how you present and as well as, of course, the deeper marketing message and presentations could offer some challenge to some of the companies.


On-line chat is dominant for customer service for B2B and B2C Web sites. Fulfillment and logistics setups are more manual labor. This will create a unique set of challenges compared to a more European and American style. Logistics is often highlighted as one of the difficulties for launching online in China.


Dustin:             How do you get started selling online in China?


Long:                From a business point of view, you have different options of starting online, so as I mentioned before, lots of companies choose selling on TMall or Taobao. If you are a brand, you can set up shop on TMall. TMall is kind of like e-Bay in the U.S. and Europe, but TMall in China is much more dominant.


It’s estimated that over 70 percent of B2C traffic is on TMall. You get summary reports about starting just over close to 30 billion U.S. dollars in one day in 2012 November 11. They have a lot of traffic, a lot of people selling on TMall, and for a lot of well-known brands, that may be a good option, because people could be already buying your product on TMall. The traffic is already there; they’re just buying from different sellers right now. Setting up a flagship store on TMall is a good option to consider. The cost as a percentage of sales; is relatively low. That’s option number one.


Of course, many companies will choose to set up their own branded B2C web site, their independent web site. As I mentioned earlier, you have the government control issues that you have to get through, and beyond that when you set up your web site online, you have a translator. Then sending traffic to your Web site is a little bit more difficult.


In China, by my own experience, the search traffic to shopping web sites is more costly compared to the U.S. and in Europe. The Chinese consumers, they don’t use search as much when they start their shopping experience online. They usually go to, some customers like to go to TMall or Taobao, as I mentioned earlier, and some go to their trusted Web site.


For example, they may start with QQ or whatever landing page they’re comfortably with and point it to a shopping Web site. Getting traffic to your own Web site even though you may be the brand owners sometimes is not as easy as one may think, particularly in China.


But there’s an option which may be particularly important if branding is important to your company. You could also sell through one of the major B2C platforms in China, like Amazon. Amazon is not the biggest, but it’s one of the major ones. There’s Jingdong, which is 360buy.com. There’s also Yihaodian which has been acquired by Wal-Mart. Suning is a local retailer trying to set up a platform. DangDang.com is a listed company. These are major platforms that allow you to open shops within their Web site, or you can sell as suppliers to them, and they will acquire product based on the common merchant terms.


There are also clearance Web sites. Particularly for the last years in the clothing industry, inventory has been a big issue and the clearance Web sites could help you. For example, VIP shop is one of the popular, the IPO it is a listed company. All these are different options of getting yourself started online in China.


Dustin:             If you’re selling on Taobao, for example, how would you get traffic to your Taobao account, to your page?

 

Long:                That’s a good question, Dustin. On TMall or Taobao, there’s already a lot of consumer traffic. Now, attracting traffic to your page is an art and science. The basic things you can do to capture the traffic that is already wanting to buy your product include: search optimization just like how you would do on Google. Taobao has its own algorithms on how to optimize the search ranking.


What would impact this is relevancy based on price, based on locality, and also service level of your shop. All these and including past history will be factored into when the customer searches for an item or brand, what listing will show up on their results page. Besides that, you can also buy ads. There are targeted ads, search-based ads and keywords ads. There are also display ads of various properties on Taobao.


You can also participate in different sales campaigns, theme sales, and different things that you could organize and could join. There are different rules about that.


Navigating Taobao and  trying to maximize the resource you could get from the Taobao platform requires a lot of experience and work. That’s why a lot of the brand owners will choose what we call TP, Taobao Partner, to help them operate their Taobao store. For example, our company, United Cosmetics, we help some of the leading cosmetics companies to launch their TMall shops online, and we offer the total package, including marketing, fulfillment, operations, logistics, and customer service.


Dustin:            Why should companies consider selling online in China? What is the opportunity?


 

Long:                I think by a lot of the measures, China is already the biggest e-commerce market in the world. The online population is close to four hundred million online users, and, of course, this is a country of close to 1.4 billion people. Online spending also is increasing and is targeted to overtake the U.S. in a few years, if not sooner. Obviously, this is number one. It’s a big market and it’s still growing. And number two, for a lot of brands, retail brands starting into China, the offline presence is not as easy anymore. Most of the first-tier and second-tier cities are already quite saturated and now going to third-tier, fourth-tier, fifth-tiers, could be more costly. It costs more in terms of logistics and in operations, finding the right shop locations or finding the right partners. Online offers a unique way of providing, setting up your brand presence, and offering your product to whole of China in a relatively low cost relative to going through all different thousands of third-tier, fourth-tier, fifth-tier cities in China. That’s why both in terms of the market size and in terms of the online presence, and last but not least, the consumers’ behavior. Chinese consumers, just like everywhere else in the world, in the major online world, anyway, are moving on line, and it’s not slowing down. The online share of retailers in China is still in single digits. I believe it is somewhere close to 5 percent, but it’s just like, anything like South Korea and United States, it will be over 10 percent, close to 15, 20 percent in no time. These are all good reasons for companies to set up their online presence.


Dustin:             What about logistics? Any final, maybe a conclusion about logistics and fulfillment in China, some recommendations since a large part of this audience is in the supply chain and logistics field?


Long:                Definitely. I think I will highlight a few interesting things that may draw your audience’s attention. One is that in China, most companies set up their fulfillment centers close to the metro cities. This is very different from U.S. or in Europe, where people set up a warehouse somewhere in a rural area or in the middle of the country. This is because most online orders, are mostly concentrated on the coastal areas and in major metropolitan areas. That’s why setting up close to the major cities will make a lot of sense logistically. I think that’s very different from the rest of the world.


Second, as I mentioned earlier, if you’re going the non-Taobao way, Cash On Delivery is still a key to your logistics operations. Cash On Delivery offers the challenge in China of the cash security, how to make sure that the money comes back to you. UPS and FedEx are not dominant in China. You’re dealing with a lot of smaller companies, and sometimes it is even a concern to know when you will get the cash or money back. Thirdly, the logistics market or the delivery or the parcel-delivery market is a lot more fragmented. Choosing the right partners or a number of different companies that complement your delivery offerings is very important as well. You need to cover different risks; cash risk is one of them.


There’s also service risk and also various customer service issues that may come up and that’s why how to select your vendors for your delivery offering is very important. The delivery itself is still fairly manual. Visibility and data tracking is not as good as it is in the Western world, so monitoring the service standards for your delivery partner sometimes may not be as simple as it seems. I could go on and on, and that’s what I’m helping our customers do, and I’m more than happy to share more if your audience is interested.



About Long Wong


long-wong.jpg

China eCommerce, Supply Chain & Operations Expert

Strategy and Operations Consultant at (Freelance)

Advisor at China COD Delivery Company Alliance

LinkedIn Profile

I interviewed David Johns and Biles who discussed increasing supply chain efficiency with automation and change management.

 



 

Dustin:             Thank you, David, for spending your time today to discuss supply chain efficiency and change management. Can you start by providing a brief background of    yourself?


David:               Certainly, and thank you, Dustin, for the connection. Lee Biles is here with me as well, part of the Quarant group. I’m originally from Montgomery, Texas, currently live in Conroe, work in Houston. I’ve got a beautiful wife there in Conroe and five children. I have over fifteen years of supply chain experience with multiple disciplines, including time served in the U.S. Marine Corps, freight forwarding, customer brokerage, and, most recently, with an oil well services company. Lee, you wanna give your intro?


Blade:              My background’s a little bit different. My name is Lee Biles, I’m in the * (00:59—unclear) area as well, and my background’s more in behavioral sciences and HR change management.


Dustin:             Thank you. My first question is: Can you discuss the issue of the lack of automation utilization?


David:               Certainly. Over the years I’ve observed a multitude of processes that could be automated with very little effort, similar to the Western Union that I learned about through a Six Sigma course and studies. They basically had a process where they would on-board new agents who wanted to be Western Union reps, and, possibly, we can post some links to the videos with the transcript of this. Basically, in summary, the old process took about nineteen days to on-board a new agent, and, after they made a few small changes that didn’t really cost very much at all, they were able to get that nineteen days down to thirty minutes. I’ve seen this over and over in supply chain, similar to the quote by Ben Trogue. He says that doing very efficiently that which should not be done at all is a particular waste of time. When you approach change and change management, which is something that Lee deals quite a bit with, some examples that I’ve seen in my experience are some manual export logs that we do, which basically is taking information from a database screen, transferring it on to manual form, and then that form follows through the process—similar to what you can see on that Western Union video, but, ultimately, this piece of paper ends up to another data entry person, who then rekeys in the information that was originally pulled off the screen. Another example of that same thing is manual dispatch tickets or manual bills of lading. Sometimes there’re just reasons for these manual forms, but at some point, they could be converted to an OCR PDF document or something for easy retrieval later on. Paper-based filing logs, export logs, and import brokerage, it’s a major deal too. Paper is just…widely used and necessary, but I think you could make some small changes to automate some of these processes.


Dustin:             What types of technologies exist to increase supply chain efficiency?


David:               That’s a great question, Dustin. I’ve observed a huge focus on these manual, paper-based forms in my supply chain involvement. Industries and agencies have changed. Carriers, ocean carriers, air-freight carriers, they do now have the ability to do a paperless booking request, paperless airway bills. There’s, in ocean freight, what’s known as express release. With U.S. customs, we have automatic broker interface, where we can electronically transmit entries to customs. Lots of things exist that are moving toward more automated technology, but the adoption is fairly slow in what I’ve seen. Maybe Lee can comment on that toward the end here as to why, but it’s kind of frustrating when you can see better ways that would improve. Some suggestions are to look at the process and utilize the technology that already exists or reengineer the process. Maybe the steps could be reordered to provide a more smooth process. And consider removing steps or standardize to reduce step variations for when you have different receivings or different types of shipments that you’re doing. Consider batch processing or breaking the processes down into smaller steps. Technologies, those databases that I mentioned, there’s RFID that exists now—radio frequency identification for warehousing and supply chain—lots of stuff out there, GPS tracking, just a multitude of things that exist technology wise to help supply chain efficiency.


Dustin:              What about change-management techniques that could increase user adoption?


David:               I’ll let Lee take over from here ’cause change management is his specialty.


Lee:                  It’s hard. First of all, in change management you have to admit, you can’t change anyone; you can only introduce ideas and procedures that ensures them benefits and have them adopt the change. You can enforce by policy adoption, but that’s gonna create inefficiencies as well than to back off of what you were expecting to get as return. People find their workarounds; they cheat to find, to make things back the way they’re used to it. Change doesn’t have to be always painful. It can also be a relief. I was just telling David earlier that you don’t have to tell somebody to take their hand off a hot stove. If they’re understanding that’s where their pain is coming from, they usually adopt the change pretty quickly. But I’ve found in my experience and * (7:44—unclear) new technology that the technologist who did the collection requirements missed usability, or they missed some things that they didn’t consider about in the field. I know when I’m dealing with paper, the lively issues we have with adopting processes that involve eliminating paper is that it often creates more paper. You get the form to be online in some sort of fashion, and then everybody prints. Really, you’ve made the problem worse, because instead of passing the same document through a process, now no one’s working off the same version ’cause the online version doesn’t match the version that’s in my hand that I printed out. In some cases, when you’re talking about controls, paper is best because there’s only one copy of it. So, we end up with issues. I’m seeing more adoption of eliminating paper devices now that tablet PCs are out, because the one thing that laptops and computers fail to do is, when I’m out in the field, how do I get access to this information? Well, the answer is to print it out. Tablets have helped and we’re seeing tablets everywhere these days.


David:               And iPads.


Lee:                 And iPads and smartphones and devices and that reduces the reason to print it out.


David:              Yeah, my beef is that in supply chain, they’re rarely utilized.


Lee:                 Yeah. Well, iPads are expensive. There are still a lot of managers where…I think there was in the news recently, the one company that ordered twelve thousand iPads to turn around and have to send them back because no one knew what to use them for. The question is: Is this a fad or is this here to stay as far as tablet PCs? Not thinking through the process is usually the problem. There’s also the other problem I see when you roll out new technology, is you’re eroding at the experience of the manager. The manager knew how to do things, and when you roll out new technology, he no longer knows how to do those things. So, the manager will not buy in because he doesn’t have time. He’s not the one who does it anymore, so why does he need to learn the new way? Well, the only reason why he needs to learn the new way is ’cause you told him there’s a new way. So, no, the old way’s fine, and I’m gonna stick with it. You have to give managers also, even though they’re not the ones who are actually doing the work, buy-in as well, because they need time to understand what their people do, and they often get left out of the loop in training programs ’cause training’s not high on their priority for something I’m not gonna execute. Executive-level training is important.


David:               Do you have any ideas on how to get them to understand that? Because if they’re not doing the work, then, obviously, they don’t understand how much time it could really save.


Lee:                 Yeah. Role-playing is often, I usually like to use old terms to explain new things so they’re like, “Okay, I have to understand a process.” Back in the day when you were in charge, this is what you did. Well, now this is online.” Another situation I found is to make it physical, to, okay, put a device, a ball in the room that says here’s this piece of information. Let’s pass it around the room as if it was a game of catch. Managers are highly visual, I find. To visualize what’s going on, they can connect the dots.


David:               Process flow, right?


Lee:                 The process flow, yeah. Let’s take the technology out of what’s going on, and let’s get back to their expertise, and their expertise is their process.


David:               I’ve seen that done, too, with sticky notes and *(11:41—unclear) events.


Lee:                 Whatever connects—


David:              —voice or the customer.


Lee:                 Yeah. I usually find myself in rooms of sports fan. If I bring that ball of that choice, of whatever sport that is, it gets them…


David:               Thinking.

 

Lee:                 Sports analogies always work.


David:              I guess we’re back to you then, Dustin.


Links to Western Union Case Study


Old Western Union Process: http://www.youtube.com/watch?v=RMZs0j2BZSw

New Western Union Process: http://www.youtube.com/watch?v=zgRRU_Ny4jY

 


About David Johns


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Baker Hughes

Sr Logistics Analyst

LinkedIn Profile


About Lee Biles


 

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Korinth Group

Principle

Change Management Consultant

LinkedIn Profile