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2013

I interviewed Jack Anderson who discussed Emergence of Design Science as a Next Step to Traditional Drivers of Innovation?

 

 

 

1. Please provide a brief background of yourself


I have managed people and programs and products for over thirty years now. Most of this work has been in information technology or technology organizations. I am currently a senior innovation capability strategist in Chevron’s Global Innovation Services Group. My goal in Chevron is to leverage innovative tools, techniques, processes to enable emerging technology transfer, solve business problems, and advance Chevron’s ingenuity capability. I’m also a principal of the Innovation Value Institute, which, the abbreviation is IVI or IV. I chair an innovation-management working group that’s composed of industry practitioners like me and researchers and academics. It’s a very interesting world. The bulk of my career, as I mentioned earlier, has been in technology organizations, but I have always been interested in the people side of business, and I have a real passion for leadership and technology and creativity in the workplace and working with people in programs to help reach their goals. You might even see this from a negative side, I’m really interested, also, in what demotivates people and what gets in the way. Business-and-technology-focused innovation has been my career focus. I have been blessed to have a this job focus for the past thirteen, fourteen years now. That’s a little bit about my background.


2. How does collaboration in business play a role in innovation?


I’m going talk first about collaboration and business and how that plays a role. When I look at what we do—and I’ll focus on what I’m currently working on at Chevron—but I mentioned earlier that I’m a part of the Innovation Value Institute, and, through that, we’re looking across companies at best practices for innovation and how that works, but I will focus on some of my direct experience at Chevron specifically.


We’re very lucky here that we have a corporate value of ingenuity. How do you overcome barriers. How do you break through problems? One of the core values or one of the core descriptors in that ingenuity value has to do with collaboration and communicating internally and externally so that you can actually work together and overcome things together. Funny thing about innovation and work, a lot of people think that innovation is kind of serendipitous, it just kind of happens. It’s just like part of who we are as human beings to be agile, adaptive, creative, innovative.


While I do believe that’s true, the problem is that when you try to do something, especially in a business environment, you likely need to work with other people, and very unlikely you’re producing some product or service for yourself; you're doing it with someone else. What I’m getting at is, when you’re involved with more than one person, you need to kind of look at it, especially in the complex corporations like I’ve been working in in my career. You need to have processes, procedures by which people can easily communicate, collaborate, creatively respond to things together.


One of the core things we are looking at here at Chevron is collaborative processes, collaborative tools, collaborative behaviors. It’s interesting, Dustin, you asked the question: How does collaboration play in the business deals? I would say you cannot have business if you don’t collaborate. I mean, to put it into practical terms, we’re looking at ways by which we can share ideas together.


How can we leverage and build upon the ideas of others? How can we build upon the learning of others? It’s a very interesting process by which if we openly can share ideas and you're able to look at them, well, maybe we’re able to collaborate on a problem together and look at that from our different perspectives. These are things that help overcome challenges. And look at what we’re trying to do in terms of business: speed up the supply chain, speed up the decision-making processes that happen and so forth. All of this, I believe, comes from the core of collaborative process.


Let me go back to what I do at Chevron here. I work with a team. Our focus is around processes and tools to bring people together, overcome barriers, or think creatively about problems. We looked at processes and tools to make that happen. A lot of our tools and processes are around design thinking and how we can draw out ideas but do them in a purposeful way designed with the customer, the end user, in mind. We leveraged an innovation cycle that goes from clearly understanding a problem to observing how that problem enacts in the real workplace with real customers, to then ideating and then prototyping the ideas that surface from the ideation and then working on practices to help get these things into production easily and kinda shepherd them through. That’s the cycle that we use. You could picture there are tools and practices in each one of those steps, and I’m always out there scanning for more and better practices, best practices.


And I have to say, something I’ve really learned in my career. I’m doing this now at Chevron for the last five years, and before that I worked for twenty years at Intel. Before that I worked at Lockheed Missiles and Space Company way back when, and now that’s just Lockheed Martin or whatever, but, anyhow, here my age goes. In all these creative companies and so forth and all these complex companies, practices by which we can enable and move things forward with quality, with excellence, and now, in most recent years, in ingenious and creative and adaptable ways are very, very, very important.


One thing that I’ve learned is that you can go out and find great tools, but you need to adapt them or modify things to your own environment. I currently work in a very conservative company, as opposed to when I worked at Intel, which was a very more radical company. Some of the practices I used at Intel wouldn’t fly here, or some of the language maybe even used wouldn’t fly in a conservative company like this. For example, there are practices by which you can share ideas or you can test ideas, and in a company like Intel, failure was an okay thing. If you tested something and it failed fast, you’d actually save a lot. It’s not really a failure if you learn.


That whole in-your-face kind of get it out there, try it, don’t worry if it’s perfect, that approach needs to be modified a little bit in a conservative company like I work in right now. We have a real focus here on safety and an injury-free environment, so there’s a whole undertone that it’s very important in an industry like this, where there can be problems because there are some areas of our work that’s very dangerous. At any rate, we don’t tend to go the in-your-face route here, but we do retain the learn from trials that don’t go the way you thought. I don’t know, what would I say? That’s a pretty high-level example. My core point is: You need to adapt things to the different environments by which you work.


3. Can you talk about the emergence of design science as a next step to traditional drivers of innovation?


I mentioned our design cycle, our innovation cycle that’s based on design thinking, and if you go out and look at the literature, there’s a ton of thought about this design thinking and how you can enact that in a work environment. I have been watching the last couple of years the emergence of design science, which is a very interesting thing.


Design science, which looks at the way the human mind thinks about and creatively adapts and designs things—that artistic part of our brain -- the science part of it is, are there things we can do to make things more predictable, more measurable, more scientific. Think about that. If we were able to tap in to some of our designed thinking processes and be able to implement activities that we could have more predictable outcomes, maybe we could tighten in the way that we receive input about ideas in more scientific ways. Maybe when we do ideation processes, we can leverage some of the latest scientific thinking around the way the mind works and so forth.


Anyway, I’m beginning to be pretty convinced that design science is the next step where our innovative processes, practices, tools are going. I’m not saying we are going to move away from design thinking; it’s been very, very, very helpful and is framing things for innovation practitioners. But I believe that there’s something that we can do to tighten it up now. We’ve been kind of cowboys running innovative processes for a long time, and it is something we can do with design science.


I’m currently exploring that and I’d like to put out a call to action for anyone that is listening to this or reading this. If you’d like to talk to me about this, I’m really interested in anyone interested in this topic of design science.


4. What are your recommendations?


My last point was going to be about what are my recommendations. I mentioned my design cycle, the innovation cycle. It goes from truly having ways of getting a group and people to understand the problem and then observe it in the real environment with customers and then ideate on solutions. The next process is prototyping and then move to production.


The thing that I’m spending a lot of time now in is that observation step. How can we get people, especially technical people or functional experts who are trying to come up with better solutions for problems or customer needs, how can we help them observe the actual problem in a real environment better? Observation skills and observation techniques are something I’d highly recommend people focus on.


There are some problems when you think about standard ways that people observe something. It’s only natural if I’m an expert in something, if I’m a tech expert or a functional expert, if I’m looking at something, I’m gonna look at it through the lens of my bias of my expertise. Sometimes what that provides is the same old answers or kind of predictable answers from what I already know. I’m not saying there’s anything wrong with that, but if you find that your organization is coming up with the same old stuff or whatever, it might be because of that bias of expertise.


There are other biases that we naturally have that we try to train people to overcome, and we have processes by which we can help them. Just think out of the box or observe, even, out of the box. There are some great techniques out there, but this is also an area that I’m very, very interested in focusing on, and I’ll put out the challenge to everyone listening to or reading this. If you have good observation techniques or you're interested in talking to me about this and thinking it out with me, I really would love to do that.


Before I go too much further, please feel free to contact me at my e-mail. My e-mail is Jack.Anderson@Chevron.com. Please contact me if anything I said piques interest. I’m specifically looking for communications and ideas around this design-science thing that I briefly brought up. I’m very interested in observation techniques.


Dustin, you asked for me to talk about my recommendations. I read that as current recommendations, so what am I working on currently or what would I recommend a group do? It’s the observation skills.


I do have some other worries. My biggest worry that I think will carry me the rest of my life is around the ability of people to communicate their ideas so that other people can get it. I think this is probably another thing that’s basic in human nature. The most successful people who are creative in the workforce or who have been given breakthroughs have some kind of ability to take their idea and make it so understandable that I can use it, you know?


How can we help make that better? In particular, I keep mentioning experts. I work with technical experts, and God bless technical experts because they tend to be analytical folks. Tend to be. Some are not; most are, though. Analytical people sometimes have a hard time articulating their ideas, especially in inspiring ways. I’m also focusing on that.


I imagine that one’s probably gonna carry me the rest of my life, working on that. I hope the observation stuff, though—’cause there are great techniques out there—is an easier nut to crack. We’re making some breakthroughs with my work right now, but really interested in more of that.


Okay, with that, I’m going to close for now. As I said when I first started, I’m super eager to answer more questions or say more if you’d like me to clarify something more. And I am very serious about it: Anyone listening or hearing this, please e-mail me, and I’ll be happy to follow up with you. Thank you very much. Bye now.


 

About Jack Anderson


 

 

 

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Jack Anderson

 

Senior innovation Capability

Strategist at Chevron

LinkedIn Profile

I interviewed Thomas Tanel who discussed Supply Assurance in Uncertainty.

 


 

 

It’s good to speak with you again, Tom. I look forward to hearing your views on a topic called Assurance in Uncertainty. Can you start by providing a brief background of yourself?

 

Yes, I’m Tom Tanel. I’m the president of CATTAN Services Group. We are a consulting and touring firm that conducts logistics and supply chain management from a strategic and tactical level. We do this on a global basis. I have been involved in this area for at least thirty-eight years.

 

Can you talk about what is the meaning of assurance in uncertainty?

 

Well, I think ever since 9-11 and as we moved into the twenty-first century, we seem to fall on the fact that what we used to rely on in the past to forward ourselves as far as the forecast of what happens was just look at past history. Now we’re dealing with a future that’s really based upon more weight on what’s happening presently than what’s happened in the past, and I guess that has created some uncertainty, especially when you’re talking in continuing supply. And as we’ve expanded where things that become more global, we’ve extended and stretched our supply chains to the point where assuring a continuing supply may not be viable.

 

Can you talk more about why is it needed?

 

I think for anyone here purchasing, suppliers who are sharing vital information or resources, today you have to have a good working business relationship. In particular with your allies, your partners, your preferred suppliers. When I mention those types of categories, I would suggest from our experience approximately five to twenty percent of your supply-based accounts or seventy, eighty-five percent of your purchase spend or value. Those are probably the ones that you're most likely to worry about because they have the most impact on your success. It’s really more of a process here, and we’re talking promoting trust, support, and there’s some type of codependency there.

 

Are there specific areas that you should focus on?

 

Yes. We feel that when you're forming contracts with suppliers, vendors, and contractors that may not be aligned with your organization, one of the things that—and it may not be able to grow your organization—that ultimately creates bottlenecks. That adds to your internal costs and considerably can really hurt your company, so it’s very important that you look at those four areas. We look at them as being supplier relationship management, otherwise known as SRM; strategic sourcing and category managing, which isn’t new; spending management and your analytics that go along with that; and supply

performance management, also known as SPM.

 

Can you talk about how this is implemented?

 

Yes. Let’s start with supply relationship managing first. Supplier relationship managing focuses on the development of highly effective, mutually beneficial relationships with a handful of the organization’s main suppliers. That could be by commodity group or commodity group or service group; it can be across your supply chain. The main emphasis is what is your total value of your of your decisions across the extended supply chain? And probably, according to KPMG, it’s not the universal corporate practice. Their research indicates that only half of all procurement functions currently do something like supplier relationship management. That really entails a tiered procurement to create a closer, as well as more collaborative, relationship with the key suppliers that supply your goods and services. And that should, in essence, uncover and realize added value but reduce your risk between you and your supplier base.

 

Who should care about these four topics in particular?

 

Well, basically anybody involved in a procurement function and anybody at a CEO or COO level, including CFOs. Today, with the advent of the chief procurement officer or chief purchasing officer, it’s become important. I think what a lot of companies don’t realize is that suppliers are a source of knowledge, expertise, and essence that a company can leverage to gain competitive advantage when the proper relationships are put in place. If your success is directly tied to your supplier, you should invest in those relationships. I think another area that we should be concerned with is risk. Everybody talks about risk and that’s become the buzz word for the twenty-first century, but it’s frequently overlooked in sourcing processes. It’s even overlooked when people merge or acquire other organizations; they don’t look at this. I guess from a procurement or purchasing view, I would look at that there’s a number of risks we should be considering, financial risks. For example, what is the financial health in long-term liability of your supplier? Especially if you're engaged with them in a long-term relationship. A commercial risk; specific business and culture risk you need for that source of supply, especially what they’re providing you and what’s happening. Technical risk; is this something you’ve done before or that you have expertise, or is this something that’s a new product or a new service? Logistics; what was the risk having gotten less then increased?

 

As you extended the supply chain, it increased things like, issues like packaging, the lead times, shipping modes that you can choose from. Even scheduling. What is my risk if the item is lost, delayed, or damaged? Today something that we all have to consider is climate-change-related risk. What are those climate-change risks related to the supplier? What are those physical risks? I think most people could probably think about how unpredictable things are today. The Icelandic volcanic eruptions that resulted in ash clouds that blinded the airspace over many parts of Europe back in April, May of 2010. Something that had never really happened before; certainly not predicted. The effects of the earthquake and tsunami that happened in Japan and the ongoing nuclear cleanup and power situation that’s happening there. According to Automotive News, they said that supply chain management at Honda was stress-tested, given that at least a hundred and thirteen of its suppliers, key suppliers, were located in some of those affected areas. What do you do? How do you handle that? And the last risk I think that’s of more concern today and becoming even more so is importation and regulatory issues, changes in different countries’ legislations, the different free-trading groups that might exist out there, as well as the application of commercial law, everything from the Convention of International Sale of Goods to your own country’s law, to even, in some cases, in Muslim countries, Sharia law that’s likely subjected to.

 

My final question is: Why is market intelligence important?

 

One of my favorites. I think sometimes people in purchasing really don’t realize that when you’re looking at market dynamics, your objective is to create a competitive leverage to figure out how best do I use my organization’s strength to adjust the market? For example, if we’re talking buying a commodity like paper, is that a direct or indirect type of a purchase? That’s gonna have an effect on your organization’s major objectives. Are we talking someone who’s an off-set printer? Well, that’d be a direct type of purchase. And if you’re talking a financial institution, it’s more of an indirect type of purchase. Cost indication as to direct or indirect procurement is another way to categorize that purchase. Market intelligence allows you to get a clear differentiator in your ability to deliver savings and value to your company. The reason that it’s important will depend on various reasons that might be happening that are out there. I think the big one that we should be concerned about is identifying who your top suppliers are and also looking at the * (9:58—unclear) forecasted cost strikes. I would venture to say that most people involved in purchased and procurement probably since 2008, when you're talking what was known as a budgeted cost are probably most likely blown out of the water simply because people didn’t forecast where cost was going or what was happening, simply because they’re in a very volatile, uncertain environment. The other thing I think that’s important is the market size or how you understand, how you can leverage potential individual suppliers and what is their current market share and what opportunities may exist or don’t exist out there. I think for everybody that’s out there, the questions that are most important that you need to ask and have answered is: For whom are we buying? Who are your internal customers? From whom are we buying? What suppliers, contractors, vendors are we currently using? Who’ve we also used in the past? How are we buying? That could be anything from a purchase order to a contract or a blanket order. And what are we actually buying? Commodities, goods services, et cetera.



About Thomas Tanel


 

 

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Thomas Tanel

 

CEO of CATTAN

Services Group

LinkedIn Profile

I interviewed Patrick Pecorilli who discussed a flexible SaaS solution for supply chain issues.

 


Dustin:             It’s great speaking with you today, Patrick. I look forward to hearing your insights on supply chain and how you have a solution for addressing a specific problem. Can you start by providing a brief background of yourself?

 

Patrick:            My name is Patrick Pecorilli, and I am the CEO of Virtual Process, a software company based out of Montréal. We come from a manufacturing background, and over the last twenty years, we’ve been consultants in different manufacturing companies, seeing how they operate from A to Z. We found that most companies suffered from the same challenges and left to consulting world to create software that simplifies and eliminates the problems and headaches associated with manufacturing productions and supply chain.


Dustin:             What is the problem that you're addressing?

 

Patrick:             In a nutshell, the Virtual Process software enables any company the ability to plan, organize, create, execute, and track any operational procedure in real time. Most software out there—the ERP, the MRP systems of the world—are not able to track tasks and/or what actually happens on the floor at any given work station. They are more macro in nature and manage enterprise activity and not individual employee activity unless the company customizes its own solution. In almost every instance, employees and/or supply chain are not always accomplishing a procedure or a task the way it was intended to be accomplished.  With supply chain, or if you are outsourcing control becomes almost nonexistent. What we’ve done, is create a solution that ensures employee compliance with every task. Not only that, but because our software is cloud based, each and every employee and each and every task is tracked in real-time and can be monitored anywhere in the world. It solves this problem of a lack of control over supply chain literally within days of implementation.

 

Dustin:             Do you have any final recommendations?

 

Patrick:             In addition to solving problems associated with managing supply chain, companies that use our software experience an increase in worker productivity, a decrease in the amount of defects, and increased profits.

If anyoneis interested, don’t be shy, and give us a call.  We can show a live demo of the software in 10 minutes or less over the web.  You can reach us info@virtual-process.com. The Web site is www.virtual-process.com.

 

About Patrick Pecorilli

 






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Patrick Pecorilli

 

CEO

Virtual Process

LinkedIn Profile


Connect with me on Linked In


Client Testimonial Video

Webinar Demand Video

VP Test  & Measurement Video


Link to General Overview video.

http://www.youtube.com/watch?v=_RXrqzFelnI&feature=youtu.be

I interviewed Nicholas Hardman who discussed Future Factories whereby 3D Printing or Additive Manufacturing methods are opening up new opportunities for supply chain entrepreneurs and executives.

 

 

 

 

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Dustin: Thank you, Nicholas, for spending your time today to share your views on something called future factories. I’ll be interested to hear more about this. Can you start by providing a brief background of yourself?

 

You’re welcome, sure. My name is Nicholas and I’m an industrial designer. I studied industrial design, as well as a science degree in psychology. I’ve worked as project manager in the construction industry, and recently, I started my own little company called Hardmarque with the intention of exploring the future of manufacturing using advanced manufacturing technologies in conjunction with advanced design techniques, such as 3D CAD design.

 

Dustin: That sounds interesting. Can you talk about what do you see as the future of manufacturing?

 

I’m really interested in what I call the Amazon approach to manufacturing. When Amazon started out everybody said that they would not succeed and they would not be profitable, and Jeff Bezos, the guy, the founder, agreed, and that was his strategy right from the outset. After about a few years, they pretty much overtook and supplanted a lot of the bricks-and-mortar stores like Barnes and Noble and Borders. I think, fundamentally, it was because they shortened the chain between supply and demand. I remember round about nearly 2000; I would go into a bookstore, looking for a book. It wouldn’t be available and the person behind the desk would say, “We can order it for you, but you’ll have to wait for a few weeks, or you can just go and look for it online.” So, exactly what I did. I found the title of the book or the author, and I just searched for it online and Amazon came up. I just ordered straight through Amazon. Right there that pretty much made the trip to the store redundant from that point onwards, and I think that pretty much sums up Amazon’s success. I see a future that similar type of strategy taking place within manufacturing. The kind of product I guess has to suit the model, so that’s what I’m sort of exploring right now.

 

Dustin: Would you see the Web as being an important part of this?

 

Absolutely, absolutely. One of the main reasons is the flexibility it gives you to target your customer to find out who the customer is, how big the market for the customer is, where they are, et cetera, et cetera. It’s just so much more intelligent than the traditional methods that you would’ve employed, say, I don’t know, ten, fifteen years ago. There’s also the cost factor involved as well. Instead of having to invest in a physical footprint of bricks-and-mortar stores, you can just set up an online store and start that way, penetrate the market that way. And using additive manufacturing and digital design, there’s a niche or a gap that can be filled with this approach that you wouldn’t be able to necessarily fill going the traditional route.

 

Dusitn: And how would you do this? How would you pursue the Amazon approach?

 

I’m not too sure just yet; something I’m working on. I see it maybe if you start out by identifying products or markets where you can, I don’t know, ship a product or an end product or a finished product to an end user through the Web, there are products that already exist, such as aftermarket automotive products. That’s quite a big industry, I think, in the U.S. It’s worth 29.9 billion dollars. The online side of that market, that industry, is a growth market, and it’s getting larger and larger. It really suits people who are looking for something specific for their particular needs—and in this case, their car—and it isn’t necessarily available on the shelf, so they have to look for it online anyway. If it’s available online to purchase, chances are, they’ll go ahead and purchase it with their credit card and get it shipped to their door, which is what’s happening. That’s a possible way in I think.

 

Dustin: And you mentioned, was it additive manufacturing did you say?

 

Yes.

 

Dustin: What is that?


Additive manufacturing is also known as three-D printing. I guess the basic, most common method is using a three-D CAD file. You can manufacture the object of that file out of a bed of powdered methyl using an electron beam or a laser beam. What it does is the machine splits the object into multiple layers, and then the machine melts each layer successively, building each layer upon each other until you get the finished object. Three-D printing, have you heard of that before?

 

I’ve heard of it, yes.


Yeah, the cool thing about 3D printing is that, well, one of the cool things—there are lots of cool things—one of the cool things is that you can make really intricate, complex shapes like…undercuts that you wouldn’t be able to do through casting; you can do complex mesh structures; and you can do unitized forms. For instance, traditionally, you would make maybe two or three parts and then have to assemble them together into a whole. With editor manufacturing, you can just make the fully assembled part in one hit; that’s the cool thing about it. The other cool thing about it is that, let’s say you have a customer who only wants one or two particular products; you can just print those two products without any sort of penalty for having to produce only a low volume. I guess what I’m getting at is this is how the manufacturing industry is rough from the industrial revolution, has been geared toward mass production. It’s through making lots and lots of things. Efficiencies are found through repetition and economy’s scale is what’s achieved. But with editor manufacturing, you don’t need to stick to that dogma; you can just make one or two of highly specialized designs, whereas traditional manufacturing wouldn’t be able to do that.


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Dustin: How will you find out the needs of your market? What do they need to make?

 

That’s a good question and one I’m still sort of working on. There are a number of ways—for instance, in the automotive industry weight is a key factor. If you can make something lighter, then you have an advantage over somebody else who has made it heavier. An existing product that is heavy; if you can make a product that is lighter, then you have an advantage. With editor manufacturing, because you can make complex shapes, you can strip, let’s say, a block of metal for, say, a brake caliper. You can strip that brake caliper down and remove up to sixty cent at least of the material that’s normally there. For instance, a brake caliper; you can remove a lot of that material and leave just the material you need for the brake caliper to function and then print that form. That wouldn’t be possible using the traditional way, like casting, because it would introduce a whole lot of things like undercuts and impossible to cast forms. But with editor, that’s possible. Right there you’ve got, I guess, a technical advantage to using editor manufacturing through your printing to produce products or objects like brake calipers that have a much higher material economy. In this case, material economy equals weight, which gives you an advantage performance wise for the car, so that there is, I guess, a benefit for the technology and the approach.

 

Dustin: Where would you say that the future of manufacturing takes place? Where are things made?

 

I still think, well, there’ll always be the need for mass production of, I guess, toothbrushes and computer parts and things like this, but for that segment of the population that wants something specific, something that isn’t available off the shelf, then I see the future of manufacturing in digital manufacturing, which is 3D CAD design and 3D printing. I see a future in that to meet the needs of these people. I think they’re called, the new term for them, they’re called prosumers, prosumer market; people who sort of have something specific in mind that isn’t quite available off the shelf. I think the future of manufacturing is gonna move toward being able to meet the needs of those kinds of people, the one marketing to individuals and manufacturing individuals.

 

Dustin: Do you have any thoughts on how the supply chain would be set up for this type of business model?

 

This is what I’m planning to make, to develop myself. You’d have a Web store, you’d have a Web site, and perhaps you’d have some predesigned products available, like some brake products or some car products. And you have those on your Web store, and perhaps you sell options for customization of those products. Let’s say in the case of a brake system, you offer good, better, best. And in the case of good, better, best, it’s weight. You have a standard weight caliper, then you offer a better one. If you want a slightly better one, it’s gonna be lighter, which requires a bit more design work to make it lighter. And then you have, I guess, the deadlocked version. Customers can, I guess, come in and choose, select which options they want just using a standard Web-car system. Once they click “Order” and have paid for the product, the job gets send to the manufacturing line, which, in this case, is a 3D printer, and their part is manufactured in real time. Once it’s finished, I guess there might be a little bit of handling or postprint finishing, and, of course, packaging and dispatch. The whole idea is that the customer goes online to the Web store, buys the product, the product is manufactured after they’ve paid for it, and then it’s shipped to their door within, say, I don’t know, two weeks or something like that, two weeks.

 

Dustin: This sounds fascinating. I look forward to hearing how things are progressing. If you’d like to speak more about this in the near future, that would be interesting.

 

Yeah, sure, absolutely. I’m getting involved more in the groups on LinkedIn just to, I guess, get a feel, get a test for what people are talking about. I’ve run the idea past a few people here, and they think it has legs. Amazon was successful because…a book is a book whether you buy it from one store or another. If you go online and you search for the book you want, you know you're gonna get the book that you want, so in the case of manufacturing, I think the product that you're selling has to sort of meet that criteria in some way. I’m still planning the idea; I’m still sort of working on it. I think it’s gonna take off sooner or later. It’s gonna reach the tipping point at some point.

 

Dustin: Any recommendations for other people who are interested in this area? Should they contact you on LinkedIn? Do you have any recommended Web sites or groups?

 

Absolutely. By all means, contact me on LinkedIn. I have also a company page on LinkedIn under the company name, Hardmarque. Also, if they’re interested in learning a bit more about 3D printing, I suggest they visit the Arcam Web site. Arcam is a Swedish company that makes 3D printers; they make pretty much the state-of-the-art metals 3D printing machine on the market right now. There are also some groups on LinkedIn that I think you belong to…Industry Week Manufacturing Network; that’s one of the groups that we’re currently involved with, discussing ideas with people on. They seem to be a good bunch of people.

 

Dustin: And thanks again for sharing your insights today.


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About Nicholas Hardman


 

 

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Nicholas Hardman

 

Director

Hardmarque

Future Factories

LinkedIn Profile

I interviewed Tom Lee, Jr. who discussed whether industrial OEMs should sell online

 

 

 

 

Dustin:          Well, it’s great to speak with you, Tom. I look forward to hearing your views on selling online and should industrial OEMs sell online. Can you start by providing a brief background of yourself?


Tom:                My main company, Great Northern Products, is an industrial sales and marketing agency basically known as manufacturers, reps. The company was family-owned, family-created back in 1978. I came on board in the ’90s. It really has focused on industrial commercial sectors working with the U.S.-based industrial OEMs selling through regional distribution. We ended up experimenting about five or six years ago by trying to move some of these industrial OEMs online. That’s why we started the discussion on LinkedIn, to try and get some feedback. Lo and behold, a lot of the feedback echoed a lot of the frustrations that we had encountered in trying to move some of these people online and trying to get them to be what we call just be digital.


Dustin:          Great. And my question, then, is: Should industrial OEMs sell online?


Tom:               I think the answer to that is: Why should they not? That was the big issue that created the firestorm not quite that bad on LinkedIn was, as I said in one of my posts, well, if you do nothing, you're going backward. The downside to not doing anything is obviously not moving ahead with the tools that are available. The arguments that came forth were interesting. One of the things, Dustin, that came out was there was an awful lot of disagreement about the term of a) OEM; b) selling. From that I think we started saying you don’t have to sell online by being transactional; you can certainly start selling online by marketing yourself. This was another area that we found that a lot of the industrial OEMs weren’t prepared to move online to the digital world. The concept of selling to everyone was saying, “Okay, well, that’s a transactional issue.” The argument we have is, you certainly can enhance your digital presence and start working on requests for quotes. One of the things that we realized as a rep agency was, we migrated into reselling, actually as what we would call wholesale distribution online, where we actually had the invoice relationship with the end user, but then we also found there was an awful lot of opportunity moved some other OEMs who had more diverse and complex products that weren’t really lending themselves to a direct transaction. That certainly could migrate into the digital world by being able to accept requests for quotes and establishing a presence online. In my mind, selling is also marketing, but there was an awful lot of pushback about whether it was transactional or not. We still maintain that you need to do something; you need to up the presence, whether it’s actually accepting funds online versus still having a more enhanced presence about your product and how it might fit into the supply chain.

 

Dustin:          What would you say would be some of the challenges of selling online?


Tom:               Well, I wrote down a note in front of myself that I think has really come out to be the biggest part of the digital divide for the industrial OEM manufacturers. They live in a print, fax, and phone world. The emphasis is really, what we’ve realized, is that if they lived in a print world, everything they’ve done has been with different software—print software, for one—but, more importantly, the print material or collateral has been a leave-behind item; it isn’t a standalone piece. When you migrate to a twenty-four-seven world, you need to have standalone data. Standalone data has to be much more comprehensive. The concept of sales-marketing print collateral is usually just enough to entice somebody to call a sales rep and then get pushed into the sales phone. What we’ve discovered is that the OEMs that are struggling, the ones that we tried to migrate, haven’t yet digitized. They do not have a digital library. As we backed up and started looking at some of these gaps or bottlenecks, our advice to them is: First, you need to create a digital library. You need to look at your PDFs, and you need to make sure that they’re: a) standalone documentation; b) that they are able to be uploaded and used on a Web presence or as attachment documents or something like that. And we’ve just found that this is a big issue, that the next phase is something that so many of us are taking for granted—you and I both—that everyone is accomplished in e-mail. They are not. I go back to the fact that they live in a print, fax, and phone world, so there hasn’t been a need to migrate toward being digital. We use that term a lot. Whenever I use it I put it in quotes because it’s the name of a book written by Nicholas Negroponte back in ’95 or ’96. I didn’t get my hands on the book until the early 2000s, but it talks extensively about his first experience in understanding about bits and bytes and atoms and what is necessary to be able to transact online. We find that there’s a trove of areas for improvement with a lot of the basic industrial OEMs that everyone needs to recognize as print, fax, phone mentality. They aren’t ready to migrate. So, what we assumed and took for granted when we started trying to migrate them, we realized that their assets weren’t digital, so my first recommendation is: Create a digital library.


Dustin:           And do you have any other suggestions on how they can do it, or how can industrial OEMs get started with selling online?


Tom:                It’s interesting; starting isn’t that difficult. Obviously, you need to scan your print documents and get them online as PDFs. That’s not difficult. One of the, I don’t wanna say humorous, but one of the things that we found was an issue was there are a lot of things that if you just start throwing documents into a scanner, the default software’s gonna start certain naming conventions: Document 001, Document 002, Document 003. When you have images of your process and you put them online, there are also size, resolution, and naming conventions that need to be thought about, so it’s one of those areas that, early on, when we said, “Can we get a snapshot of this or that?” we would get images that were twenty-four hundred pixels, we’d get other images that were two hundred pixels, and then we’d have to go through and edit for proper naming conventions. I’d really wanna hit the naming conventions; it’s pretty important because this isn’t just a case of getting organized. If you and I were to set up, let’s say, Dropbox—I’m assuming you're familiar with Dropbox.


Dustin:          Yes.


Tom:               And I were to put a bunch of files into your Dropbox and say, “Dustin, can you move these online for me?” Every one of them, first of al, was named Document 001, 002, 003, whether it be a PDF or a graphic image, you would have to manually go through there, look at it, and then assign some kind of a name to it. Well, that’s part of the organization, but it’s also part of making your Web site searchable. When you have documents that are named properly— What I said was, when you wanna build a digital library, when you asked about how do you start a digital library, the first thing you have to do is pull together everything that you own, and then you have to scan them. But then what you wanna do is start putting them into some kind of a structured naming convention so they can organize and upload it properly online. This applies to PDFs, technical documents, CAD drawings, things of that nature. But then the other part of it is, it’s not just an organizational issue; it’s also a search issue. If you have something that says Document001.pdf versus CADDrawingXYZ product, it makes it infinitely more searchable when you finally do move your presence. So, again, the leap to getting from print, fax, phone toward being digital is still a big part, from what we’ve stumbled upon, of the digital divide. Consequently, I think, I shared with you the term that we ended up realizing that we were creating a digital stress test. The digital stress test was if somebody’s ready to move online, are they ready from a standpoint of migrating from the print, fax, phone world, and it starts with documentation and then, obviously, it goes into the fact that they’re comfortable with the fax and the phone; they’re not comfortable with the e-mail and other things of that nature. There are many granular steps that we believe need to be addressed or we’ve found that we go back and we do address before we take on a project.


Dustin:          Well, thank you, Tom, for sharing your insights today on industrial OEMs and their issues, the challenges of selling online. I look forward to hearing your news in the future. If you’d like to continue to discuss, we could go into more detail.


Tom:                Absolutely. I think what you’ve got and what you guys are doing is a huge, huge arena, and I think, if you look at it from a thirty-thousand-foot view down, there are many, many areas to drill down on and then build back up that’ll certainly help people reinventing themselves and getting them ready to basically unlock the digital economy.



About Tom Lee, Jr.


 

 

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Tom Lee, Jr.

 

Founder Cloud Werkes

Managing Partner at Great Northern Products

LinkedIn Profile

I interviewed Peter Balbus who discussed How S&OP is Changing the Face of Advanced Supply Chain Management.


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My guest today is Peter Balbus, Managing Director of Pragmaxis LLC.  Peter specializes in assisting clients with their strategic innovation and performance improvement initiatives, with a focus on Strategic Supply Chain Management.

In this segment, Peter and I will be discussing some of the key learnings he has gained through his consulting work on how S&OP is changing the face of advanced supply chain management.


Welcome Peter – and please provide a brief background on yourself for our listeners.


Thank you Dustin – great to be chatting with you once again.

 

I would describe myself as a consultant who specializes in strategic innovation management, with an emphasis on strategic sourcing and supply chain transformation.


I help clients accelerate their achievement of world-class operational performance and customer fulfillment capabilities.


My educational foundation includes an undergraduate degree from MIT in chemical engineering and completion of the University of Chicago executive program  in finance and strategy.


I also hold professional certification as a master business innovator through a great program offered by Illinois Institute of Technology.


My clients are varied in terms of their size and industries. Most are mid-to-large scale firms with complex global operations, and are spread across multiple industrial segments including manufacturing, chemicals, energy and electronics.


I’ve also done some significant recent engagements for clients in the food & beverage and office products segments, as well as working with the portfolio companies of a couple of leading private equity firms.


Prior to founding Pragmaxis in 2001, I held senior practice leadership positions with KPMG, CSC Index and Booz Allen & Hamilton.


How would you define and summarize what S&OP is – and what it means?


In my work, I generally define S&OP as a set of integrated corporate-wide planning processes that enable senior management to strategically direct operations with the intent to achieve superior levels of performance on a sustained, long-term basis.

 

It means integrating customer-focused sales plans, historic trend data and predictive analytics with supply chain management to enhance customer fulfillment capabilities, drive efficiency, improve resiliency and maintain agility to respond rapidly to changes in customer, market and supply dynamics.

 

Successful S&OP processes align operations with the corporate business strategy. As companies have become more global and face rising complexity, volatility and uncertainty, the importance of S&OP is increasing. Especially in those industries that are well-served and where we see growth is flattening, S&OP becomes critical to competitive survival.


 

Seems like a reasonably simple and straight-forward concept … why then are so many companies struggling to design and implement effective S&OP processes?  What do you see as the key to successful S&OP initiatives?


In most companies, senior management believes they have made great strides in reducing costs, improving inventory turnovers, managing complexity and enhancing customer satisfaction.  The reality is that data from their own financial statements tend to say otherwise.


Solving supply chain challenges by building effective S&OP processes is a complex and highly detailed undertaking. In my work with supply chain managers – and corporate executives – I emphasize paying particularly close attention to five key aspects of 21st century advanced supply chain management:


1. Longer Supply Chains.

 

    • Managing the complexities of global markets and global sourcing means building and maintaining extended supply chains, both in terms of geographic reach and in terms of deeper integration strategic suppliers.
    • Global corporations increasingly are becoming vertically integrated in their supply chains – a distinct reversal from 10-15 years ago when companies were striving to become modular and decentralized in their operations -- essentially outsourcing anything not deemed core to the business.
    • Extended supply chains also mean greater risks.  In 2012, over 85% of supply chain leaders experienced a significant disruption in their operations.

 

2. Multiple Supply Chains

 

    • The second key aspect is the existence of multiple supply chains.
    • For a variety of reasons including multiple core businesses, global markets, growth through acquisition -- and the continued existence of legacy IT systems -- many companies today, and virtually all global corporations have multiple supply chains.
    • By itself, the existence of multiple supply chains is not really a problem, especially if these multiple supply networks are logically segmented by end markets, regional operations or technologies.  The problem is that too many companies with multiple supply chains also have multiple S&OP processes – often one per supply chain.
    • According to a recent market research report I read, over 63% of companies surveyed reported having multiple S&OP processes.  In fact, today the typical global company has no fewer than five S&OP processes -- with each process often based on different operating and governance models.
    • The inevitable conflicts and disruptions that result from this kind of patchwork approach are sometimes worse than having no S&OP processes at all.

 

3. Planning Must Be Tied to Execution.

 

    • The third key aspect I’d like to emphasize is that planning MUST be tied to execution.  This is especially crucial for supply chain agility and efficiency.
    • One would think that this is an obvious operational imperative. The problem arises over the fact that traditionally, planning and operations have always been in separate organizations – typically planning at the corporate level while operations has been managed at the divisional functional level.
    • In this same market research report, over 90% of companies responding believe that a strong S&OP process improves supply chain agility and efficiency.  All well and good.  But only 13% of these same companies report having effectively tied S&OP planning to execution activities!


4. Significant Gaps in S&OP Delivery

 

    • While the overwhelming majority of companies today have ongoing S&OP initiatives, significantly fewer have fully implemented these planning processes and even fewer are reporting successful outcomes among those that have.
    • There are large often gaps in the effectiveness of S&OP from planning to execution – as much as a 60% gap between the performance levels a company seeks to achieve and the actual performance delivered through these S&OP processes.

 

5. Strengthening Horizontal Processes.


    • Horizontal processes tie the organization together and give it structure, connectivity and a sense of common purpose.  In my view, S&OP is the single most important horizontal process there is.  In today’s companies horizontal processes are not nearly as strong or well managed as vertical processes

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Interesting observations, Peter. Why do you think that companies are having such a difficult time achieving success in these 5 key aspects?


Historically, organizations have focused on building vertical strength: making the basic vertical processes of sell, source, make and deliver efficient, effective and predictable.

 

Instead of aligning, core corporate functions have competed – for resources, for priority, for attention. This lack of functional alignment impedes the ability of an organization to orchestrate trade-offs across the company to maximize business opportunities, optimize corporate performance and mitigate risks.

 

As companies have shifted from a vertical to a horizontal focus, there has been a shift in focus from inside-out (that is, organization out to the market) to an outside-in perspective (that is, from external markets back into the organization).

 

This market- and customer-driven focus, which we also call an adaptive or demand-driven approach, helps companies more rapidly sense and adapt to market and channel changes -- and orchestrate integrated processes to help mitigate supply risks.  This is also the broad definition of “agility”.


 

Are there specific ways that supply chain and general managers can drive their S&OP initiatives to achieve tighter integration between planning and execution, but more importantly make their organizations more demand-driven?


The key to any successful S&OP initiative is the ability of the organization to align demand, supply, inventory and financial plans easily and seamlessly against the overall business strategy.

 

This requires a technology layer to enable demand translation -- that is, the modeling of changing product mix, and the visualization of equivalent units. This technology layer then becomes the system of record tying together the multiple S&OP plans.

 

However, this alone is not sufficient to sense and define a response to buy- and sell-side market changes. All too often, plans are built on enterprise data – and not external market data. In addition, the process definition is inside-out (where enterprise data is used to predict future market shifts) rather than outside-in (where market data used to sense and shape responses based on market shifts).

 

The most effective S&OP processes use both buy- and sell-side market data to bi-directionally align the organization from market-to-market. As the company shifts from inside-out to outside-in, data models must to be redefined and the technologies re-architected to reflect this profound change in orientation. These are fundamentally different data models.

 

Another common barrier to achieving S&OP excellence is that companies are not sufficiently deliberate in their statement of goals, definition of governance practices, or the definition and alignment of key performance metrics.

 

While companies universally state that they want to improve their S&OP processes and want to be agile, they often struggle to define what this means specifically for their company to make it “actionable”.

 

Wow! That’s a lot of information to digest! How would you wrap up and summarize what we’ve covered during this interview?


Like many aspects of business planning, the devil is in the details.  Supply chain concepts such as agility, resilience, efficiency and economy are goals that are easy to talk about, but difficult to achieve.

 

The principles of Sales and Operational Planning offer management a disciplined approach to achieving these organizational goals.

 

But S&OP is not a simple solution or a short-term effort.  It is a multi-year journey and creating a demand-driven value network requires aspirational and highly advanced thinking.  The good news is that companies who are the most advanced in S&OP also see the greatest improvements in corporate agility.


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About Peter Balbus


 

 

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Peter Balbus

 

Managing Director

Pragmaxis LLC

LinkedIn Profile