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2014

I interviewed Hakan Andersson who discussed Warehouse Design in the Real World.

 

 

 

 

 

 

The title of today’s discussion comes from the fact that we just finished a project where the outcome, though not revolutionary, really points to a lot of basic truths when you’re a designing warehouse.

 

Project Background

 

Just a short background. This company is a food company; they produce consumer food for retail. It’s high-volume goods and, relatively speaking, few SKUs. We have one or two hundred SKUs we’re handling here.

 

The Challenge

 

The challenge in this project was they just acquired a new brand, so they wanted to host double the production volumes; the facility should host that. We would like to do this, and this is then the outcome as well, because we succeeded in having very low investments. It turned out that we could handle double the production volumes with just marginally expanded workforce when it comes to material handling.

 

Then, as is for most companies, there was an urge to have this be very flexible.

 

Lessons Learned

 

Separate inbound flows from outbound flows

 

The first major lesson here was when we did all the analysis and we tried out a lot of different scenarios.

 

What made a huge impact was to separate the flows, inbound from outbound. With the original layout, there was plenty of dock doors but they were all at the same place. In this instance we made a design where we opened up doors that were coming in directly to the production line.

 

The reason we did that is we wanted to minimize the crossing traffic. When you have that high volumes as we have in this case, when you have a production, you have all the packaging material, the driving distance quickly adds up to be very much.

 

Automate where the flows are big enough

 

The second takeaway here was that when the volumes are high enough, it makes sense to automate. In this case this is true for the inbound material, packaging material.

We have very high, repetitive flows. We put dock doors close to where you feed the production lines.

 

With packaging material, we put drop trailers and used them as storage. The ingredients would come in through pipelines, so we didn’t have to handle that at all; pipelines and conveyors. By having the drop trailers with the packaging material, we could then unload them directly from the trailers. One touch on to gravitating conveyor belts that were feeding the packaging machines.

This took away a lot of handling, and it also helped a lot with disconnecting the feeding of the production line from material handling. Then we had a robot that was emptying the totes in the production lot.

 

Abundance of dock doors to enable live loading into drop trailers

 

The third takeaway here was that it made a lot of sense to install an abundance of dock doors. This way we could enable live loading of the drop trailers—again, one touch—and we would also reduce the need for staging space, which is very space-consuming in normal warehouse design and a very critical part of it too.

And we then set up routines to direct the trailers to the doors that were nearest to where the majority of the products were stored. This made a huge difference when it came to the staffing requirements.


Use floor stacking when volumes are high enough


The fourth major takeaway here is regarding storage equipment. In this case, as always I would say, the 80/20 rule is very applicable, which meant that we had a lot of products with less than five pallets an average storage volume. For them, we set up pallet racking, but that would leave us, then, with very few SKUs.

 

We started out with, say, 150 to say that we had 25 to 30 SKUs that were produced in very high volumes.

 

For those, it made a lot of sense to floor stack them; we would floor stack them two high and nine deep. No investment at all and racking for them, very space-efficient; just so deep, you could stack them too high that without the aisles that you would have with a racking solution, it’s actually surprisingly space-efficient, and it’s a very flexible solution.

It also means that you have a built-in ability to expand in increments by putting in four deep, four high driving racks.

 

Summary

 

The main takeaways here that are making it very efficient and low investment for high-volume goods with few SKUs:

  1. Separate flows, inbound flows from outbound flows.
  2. Automate where the flows are big enough.
  3. Abundance of dock doors to enable live loading into drop trailers.
  4. When you have high enough volumes, don’t be shy from using the floor stacking.

 

 

 

About Hakan Andersson


 

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Hakan Andersson

 

CEO Establish Inc

 

LinkedIn Profile

I interviewed John Leishman who discussed Bookkeeping Business Experiment. His software would take PDFs, run them through some servers in the cloud, we’d extract the data, put it in an XML or DSB format, and then push it into your ERP or accounting system.

 

 

 

 

 

 

It’s nice to speak with you again, John. We’ve done an interview in the past. It’s been several years I think. Today I’m looking forward to hearing a new thing you’re working on, which is a bookkeeping business experiment. Before we start to get into the details, can you provide a brief background of yourself?

 

A brief background of myself, sure. Basically, I’m a technology entrepreneur. I’m really interested in leveraging technology and innovative and creative ways that most people haven’t thought about. In this particular instance, about a year and a half ago, I talked to some accountants and bookkeepers, and they told me that, basically, the industry hasn’t changed in 20 or 30 years. People get their paper receipts and manually enter them into whatever ERP or accounting solution. I thought it might be an interesting challenge to take upon to see how I can introduce technology to eliminate some of the manual data-entry work.

 

And can you talk more about what the product or the experiment you’re working on is?

 

What we’re creating is, we’ve created a Web site called [BookkeepingBusinessExperiment.com], and what we’re doing is blogging about everything we’re doing to run basically a high-tech bookkeeping business because no one’s open the kimono, so what we’re doing is talking about how our pricing strategy works, how many clients we have. We talk about our expenses; we show what our profit and loss is in a conventional firm versus in our firm. We’ve only been doing it for 90 days. We’re just getting up and running. Then what we’re going to do is, we’re introducing technology to automate a lot of the work that’s currently being done. I think a lot of bookkeepers—and, actually a lot of midsize companies—they get a lot of paper coming into their office, whether it’s actual paper you can see in front of you, or else they get PDFs from vendors. That is a manual process to get the data out of the paper or PDFs and get it into the accounting or ERP system so that you have access to that information.

 

We looked into the marketplace, and there are a couple companies that do data extraction out of PDFs and JPEGs. We called and talked to a couple, and we’ve created a relationship with one in particular. What will happen if I was to walk you through the process here quickly is, let’s just say that you’re at a manufacturing company and you get a stream of paper and electronic PDFs from suppliers for whatever it might be. In this particular instance, what you’d do is scan the paper into PDFs, put them in a folder, say, called your in folder, on your server. Our software would take those PDFs, run them through some servers in the cloud that we have, we’d extract the data, put it in an XML or DSB format, and then we’d manipulate the data in such a way that we can then push it into your ERP or accounting system. This involves a little bit of bidirectional data flow.

 

We’re working with Quickbooks right now, so what we’ve done is tapped into their SDK, which is their software developers’ kit, and we’ll extract all the vendors, all the GL codes, and some other information that’s required in Quickbooks, like class and project job, and we’ll make those GL codes available through our cloud user interface. What will happen is, we’re extracting the vendor name, the address, the tax, the individual line items. All the data-entry person needs to do is simply assign the GL code, or if you know that a particular vendor is always assigned a GL code, you can force our software to remember that, hey, if it’s Office Depot or Staples, it’s always an office expense, and the GL code is 1120. What we’re trying to do is minimize the amount of data entry so that people can simply focus on just allocating to the right expense or the right class or project.

 

Every ERP and accounting solution has different ways of tracking items and products beyond the GL codes. That’s what we’re trying to do, just speed up the whole process. We figured about half of all transactions can be automated because they’re not inventory-related, like office expenses, and then half will still require some manual entry, but at least we’ve minimized the number of steps that someone would need to take. Does that make sense?

 

Yes, and do you have maybe an example of a success story or some results?

 

We don’t because we’re actually working on the software right now. We actually have a number of companies that have signed up for beta testing. We’re planning to launch in the first week of September. It’s a bit complex to put this all together. It’s not something we can code in a couple weeks or a month; it takes a little bit longer than that. I do have an office in India, and they’re working on it full-time. We have these beta testers, and once we get the beta testers hopping in the month of September, then we’ll start rolling it out to the general public, whoever might be interested.

 

If someone’s interested, what do you suggest they do to learn more?

 

They can just call and talk to me at john.leishman@tursagroup.com, or you can go to BookkeepingBusinessExperiment.com. You can register on the Web site to get updates whenever we post new information up there and follow along what we’re doing. And if people have specific requests, maybe they might have a problem like they’re working with a particular ERP, whether it’s SAP, it might be an older one like Bond or JD Edwards or some other cloud-based ERP. If they have a request to facilitate data being pushed into their ERP, we’d love to hear from them and talk about maybe potentially making our software work with their particular ERP solution or accounting solution.

 

Thanks for sharing today, John.

 

You’re very welcome, Dustin.

 

 

 

About John Leishman


 

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John Leishman

 

CEO at Tursa Group

 

LinkedIn Profile

I interviewed  Cheryl Paradowski who discussed Employer Market Survey Shows Support for Supply Chain Profession But No Investment To Develop Professionals.

 

 

 

 

 

 

It’s good to have another interview with you. Today I’m looking forward to hearing your views on the topic of the survey that you’ve done. This is an employer market survey that shows support for the supply chain profession but no investment to develop the professionals. Can you start by providing a brief background of yourself and also a background of the survey?

 

Yes, absolutely. I’m speaking as the national president and CEO of the Supply Chain Management Association. We are the premier supply chain association in Canada, and our focus really is on to build leadership in the supply chain profession in Canada. The way we do that is through a focus on professional development and on providing the supply chain management professional, or SCMP, designation, which is really the premier credential in supply chain in Canada. We’ve got about 7500 members across the country here, and we work through a network of 10 provincial and territorial institutes to deliver services and education to our members.

 

Through the national office, a big part of what our responsibility is is not only the development of standards around our education program, but also information that will help us  promote the profession and have it recognized as a profession. Supply chain management is actually really pretty young. The term supply chain management itself has only been around for about 25 years, so we’ve got a lot of catching up to do in terms of having supply chain management recognized as a profession.

 

When SCMA established our last strategic plan, we really decided that our focus, our vision was going to be to ensure that employers understand and value the contribution that supply chain professionals can make to the success of their organizations. We thought it was really important for us to start with understanding what employers thought about our profession, about our association, about our designation. We contracted a survey company that was able to interview for us 531 employers across the country, and they basically created a mix for us that was reflective of our membership both in terms of small, medium, and large employers, in terms of the industry sectors that we represent, and in terms of our various geographies.

 

The one real advantage for us with this survey this time around was that we didn’t ended up talking to our own members; we didn’t want a survey, for example, that was asking whether people knew about the Supply Chain Management Association when it would just be our members who were answering the questions. It’s kind of like preaching to the choir. We were able to work with a survey company that was able to conduct telephone interviews with some folks that they identified from an independent database and got us those results.

 

It was a large group, a defensible result, and we felt that we really got some good data and some good intelligence on what the employer community was thinking. We really ended up dividing the results, I guess, into what we thought was good news, what we thought was interesting news and gave us more intelligence into what employers were thinking, and then some of the bad news in terms of where we really needed to focus our marketing and communication messages.

 

And can you talk about the results?

 

I’ll maybe use those three categories. From the good-news perspective, we were really pleased to see that 80 percent of the employers that we talked to did think that their company should be recognizing better supply chain management as a function and as a profession that would be able to contribute to the success of their organizations. We felt that was a really positive result.

 

We also, obviously from our perspective, when we were looking at our designation, we were pleased to identify that 88 percent of the employers that we talked to, when we told them what our designation covered, basically, they were not able to identify any gaps in the information that we were delivering. That told us that our designation, in terms of its content right now, by and large, is meeting employer needs. That was positive as well. And we also determined that there was at least a third of the respondents who would give preference in hiring and in promotion to individuals who held their designation versus those who didn’t. We got some very positive results on that side.

 

With respect to the interesting results for us, the first area was where we asked the employers which skills and knowledge and competencies they valued most in their supply chain management practitioners. It was interesting to note that the first four areas had nothing to do with the functional competencies of supply chain. They were things like communications and relationship-building, they were negotiation skills, they were leadership skills, they were ethics skills. That told us and it reinforced for us some changes we made about five years ago in our designation program to not only cover functional skills but also cover management and leadership skills in a supply chain context. I think if we’re really looking at having supply chain move to being a profession that is strategic as opposed to operational and tactical, those are obviously the skills that employers are looking for.

 

The other interesting piece of intelligence for us was seeing when we asked the employers where they thought that their supply chain management professionals were having the greatest impact. It was still what I would call the pretty traditional supply chain function; for example, the reduction of cost, which was their immediate answer. That told us, at least for us here in Canada, that we needed to do a better job of getting the message out that supply chain management can have impacts on a far broader range of functions within a company than simply the reduction of costs. I know that one area in particular, which is risk management, rated quite low with the employers, and yet I feel that’s an area that our supply chain management professionals could really be making a significant contribution to companies.

 

I think the whole purpose of my wanting to chat with you were the results that I would classify on the not-so-good side, and the biggest piece of that was the very obvious disconnect between employers recognizing that they needed more professionals in this sector and that those professionals could be making a contribution to their organization and yet there’s nothing there within the organization to back it up. We only had 54 percent—only just a little bit more than half of the employers responded that they would actually encourage their staff to take training to develop their skills. And 75 percent of them had less than $100,000 available in terms of a training budget for all of their supply chain management staff combined; that was right up to companies that had more than 300 staff in those departments.

 

There’s another survey that was conducted in Canada in 2012 by the Canadian Supply Chain Sector Council. They had done some work in identifying what I don’t think is unique to Canada but is the upcoming labor shortage. We are going to have a lot of Baby Boomers who will be retiring in Canada, and that’s going to create a lot of attrition in roles of every sector, but supply chain management is certainly going to be included among that. One of the biggest problems is, when you lose that level of individual, you’re going to be losing a lot of corporate intelligence.

The Supply Chain Sector Council, when they presented the statistics to employers about how many vacancies that were going to be coming up over the next five years, they asked employers how they were planning to address that challenge. Over a third of the employers basically responded that they were going to steal the talent from other organizations. For us within SCMA, that just makes us shake our heads because all that’s really going to do is drive up wages, but it’s not going to create a larger pool of employees. Eventually, when the musical chairs gets to the end and the music stops, there are still going to be empty seats.

 

It’s very evident to us as an association that we really need to focus on getting the message out to the employer community that if you need these professionals being able to contribute at this level within your organization, you are going to need to invest in their professional development, and that can happen through professional associations, it can happen through continuous professional development, it can happen through credentialing, and more and more, at least in Canada, it is a discipline that’s starting to have greater presence within the postsecondary community as well. We can start to be encouraging students to pursue the profession right from the outset and providing them with opportunities to get introduced to it because, otherwise, we remain a pretty behind-the-scenes profession that is unusual for individuals to start out their career saying they want to be in supply chain management; certainly, most of our members right now, if they were asked the question, would say they fell into it, fell in love with it, and that’s how it’s become their profession and their career.

 

Those, for us, were the major findings that came out of our discussions with the employer community.

 

Thanks, Cheryl. Did we cover all the points you wanted to make?

 

Yes, I think so. I hope that’s of interest.

 

Yes, this is great.

 

The kind of information you hoped it might cover.

 

Yep, and thanks for sharing today.

 

It’s my pleasure.

 

 

 

 

About Cheryl Paradowski

 

 

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Cheryl Paradowski

 

President and Chief Executive Officer at Supply Chain Management Association

 

LinkedIn Profile

Interviewing LUXeXceL CEO Richard van de Vrie who discussed 21st Century Manufacturing  - Printing the Future of Optics

 

 

 

 

 

 

It’s nice to speak with you today, Richard. I’m looking forward to hearing about your company and the new developments. Before we start, can you provide a brief background of yourself?

 

Yes, my name is Richard van de Vrie; I’m the president and founder of the LUXeXcel Group. I founded the company five years ago with the intention to improve the optics and lighting industry. There is a lot of light pollution in lighting, and that’s all caused by the fact that people can’t use a customized optics data to every project or application, and that’s why we said, “Let’s design a new process to manufacture optics on the mounds.” We investigated a lot and, finally, we have invented a new base technology in 3D printing called print-optical technology, where we don’t put layer on layer that needs a lot of post processing. With our technology, it’s actually the jetting of droplets on the mounds. We decide per droplet whether we use it as a Lego block or whether we let it flow perfectly and create a smooth surface. This is a new technology to print optics on the mounds.

 

Can you talk more about what your company is all about?

 

Yes, we are trying to digitize the optics manufacturing. We have invented a completely new manufacturing process where people can upload the catch file, and we can go from a catch file directly to an optic in the printing process. People like this or you can make some alterations. With one mouse click, we can move the prototype face to the manufacturing, and we can manufacture production from just one piece to up to a few thousand pieces, all within days. This will give new possibilities to the many different optical and photonics markets.

 

How is your company different?

 

There’s no company in the world that’s able to edit manufacture optics. There is no company in the world that’s able to manufacture optics in this way. This is completely different, and we can now start from actually an online platform where we can combine the world where we could, for example, bring the optic designer together with someone in Canada who needs an optic design but we just print it. It can all be made in a digital way; your inventory can become actually your computer file. This will change the world of optics. When optics can be made in an additive way, we can decide per droplet what to do so we can create complete, new optical functions and new optical products can be designed with this process. It’s the kind if iTunes of optics.

 

About your process, can you talk more about what it’s about and the results that your customers will get?

 

LUXeXcel is, at this moment, primarily focused on the nonimaging optics, primarily on lighting. For the lighting industry, this means that we can customize all of your lighting optics, and people can work with interchangeable fixtures where we can easily change the optic in last moments to have final custom light distribution. This is new and this is giving lots of new possibilities to the lighting industry.

 

Thanks, Richard, for sharing. Did we cover all the points you wanted to make?

 

Thanks, and have a look at LUXeXcel’s Web site, LuxExcel.com, and if you have interest to incorporate, always contact us; do not hesitate.

 

Thank you.

 

Thank you. Bye, Dustin.

 


 

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And here are a few links of interest:

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LUXeXceL Group BV - Inventor of Printoptical Technology®

Amundsenweg 25 ▪ 4462 GP ▪ Goes ▪ The Netherlands

T. +31 (0)113 22 44 00

F. +31 (0)113 22 44 44

E. info@luxexcel.com

W .www.luxexcel.com

 

 

About Richard van Vrie and Professor Jyrki Saarinen


 

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Richard van Vrie

 

President & Founder at LUXeXceL Group B.V. - 3D printed Optics

 

LinkedIn Profile

I interviewed  Edith Simchi-Levi who discussed How to Deal with Imperfect Data in Supply Chain Analytics.

 

 

 

 

 

 

Please provide a brief background of yourself?

 

I have a computer science education and software development background which in the last twenty years has been primarily devoted to supply chain management applications. This came about through collaboration with my husband Professor David Simchi-Levi from MIT, who is a well known supply chain expert. Our collaboration has been both on the business side as well as some very well received publications,including the text book “Designing and managing the supply chain”.

 

In our first company, LogicTools, we developed software for network design, inventory optimization and a few other applications. The company was sold to ILOG in 2007 and is now part of IBM Business Analytics Solutions.  Our software has been used by over 350 companies and by over 50% of the AMR/Gartner top 50.

 

I am currently VP Operations of our second venture - OPS Rules,a consulting company focused on analytics and optimization. Our goal is to help companies identify and capture hidden opportunities in their supply chains and operating models by becoming more data-driven.

 

Many of the ideas are based on David’s recent book “Operations Rules” which highlights the scientific rules of how the supply chains work as well as a new approach to crucial operations topics such as complexity, risk and flexibility.

 

What are some of the main causes of imperfect data in supply chain analytics?

 

In the operations area, many strides have been made to consolidate master data through Enterprise Resource Planning systems, allowing for a single source of truth and providing more real-time updates. But companies still struggle with serious data quality issues. This is one of the most common things we see and this is true across many industries.

 

The three major symptoms:

 

First, Inconsistency -  different results depending on who you ask about the source of the data, the time you’re pulling the data, and the source of the data extract. That is why the mantra of  “single source of the truth” is so critical .

 

Second, Inaccessibility - While it may be easy to identify the source of your data, can you actually use the data and sample it whenever you need it? It is of no benefit to your business to have good clean data if it is locked up in a vault with no means of access or if you have to jump through hoops to access it. To become data-driven, Master and transactional data should be easily accessible to a wide base of users who can gain value out of the information.

 

Third, Incompleteness - Imagine you have found the right source of data and you have access to it. There is often a moment of truth when you start analyzing and reviewing the data and you find that what’s supposed to be there isn’t there.  Master and transactional data sets with large chunks missing are almost as worthless as no data at all.

 

What do you do when faced with imperfect data?

 

Our approach is that you are already making important operations decisions and they will definitely improve if they are more data-driven. Therefore, alongside projects to improve data quality you should use what you have and at the same time gain better understanding of the gaps.

 

We will provide some examples from the area we are most familiar with – end to end optimization. In order to do this kind of analysis – network design, supplier risk or inventory optimization – you need data on all your network as well as external information on customers and suppliers.

 

The internal data includes information on products, plants, warehouses and stores including various costs, capacities, bills of material, inventory levels, service times and transportation. No company has all this data in one place and there will be inevitable inconsistencies between different parts of the company, different facilities etc.

 

Based on our quite extensive experience with this type of modeling, we make 7 observations:

 

1)    The process of collecting data will provide quite a lot of insight into how the company works and where there are performance issues. Several years ago we worked with a paint company that was about to close one of its plant because it was old and inefficient. After collecting data about its production line cost and performance, which did not existbefore, setting up the model and running optimization scenarios they, surprisingly,decided to expand this plant for certain paints where it was more efficient than others.

 

2)    Missing or inaccurate data can be an issue but some of it can be estimated based on similar data and some of it ignored as too small to be meaningful. An example of missing data could be weight of a product which is required for transportation calculations. In many cases, the missing information is related to low volume products which can be ignored or estimated without affecting results. For the few important parts it is important to find the right information.

 

3)    An important part of the process is building the baseline and validating it relative to the company’s overall financial data. This process providesinsight into where there are discrepancies in company data and how large they are, in effect providing a measure of the data problems. This is invaluable information as companies may not be aware of this and it can provide the additional benefit of a way to prioritize where to tackle data issues.

 

4)    End to end optimization helps companies understand the drivers of cost. Even if the data is not perfect, it can help them see the direction of where they should be focusing their investment efforts. They can also run different scenarios based on different assumptions to analyze the impact of changes or even data quality. Can you trust these results? As long as they are consistent with intuition and experience or if not, the difference is understood, it is very likely much better than having no way to evaluate decisions.

 

5)    Consider that most planning analysis is for the future supply chain. The demand forecast data is not all that accurate, many costs could change over time and other factors may not be considered. Therefore, the rest of the data does not need to be perfect just close enough to help make meaningful decisions.

 

6)    An end to end model enables analysis of various risks in the supply chain. You can systematically explore what happens if a facility is down and how much time you have to recover it before you lose money. The data you need for this does not need to be completely accurate but enough to provide the ability to spot trouble areas in the supply chain.

 

7)    Not all data is all that critical to the decision. There is a phenomenon in optimization the result is flat around the optimum. This means that there are a range of options with similar cost results not just one “perfect” optimized solution. Therefore the model is not necessarily sensitive to all the data. Sensitivity analysis through different scenarios will help the modeler decide how much data is enough data.

 

When is it ok to work with imperfect data?

 

It is interesting to take a step back from supply chain analytics and see what is going in with big data analytics which is gaining a lot of traction and attention. In this space, data-driven decision making is all the rage with the wide-range availability of big data from the internet and analytics methods to glean better associations, predictions and recommendations.

 

But one of the challenges is still matching the data available to the one needed for analytics. A recent NYT article titled “For big data scientist hurdle to insights is janitor work” noted that  “Data scientists, according to interviews and expert estimates, spend from 50 percent to 80 percent of their time mired in the mundane labor of collecting and preparing unruly digital data, before it can be explored for useful nuggets.”

 

Our approach is that you are already making important operations decisions and they will definitely improve if they are more data-driven. Therefore, alongside projects to improve data quality you should use what you have and at the same time gain better understanding of the gaps. The NYT article also mentioned that “Data scientists emphasize that there will always be some hands-on work in data preparation, and there should be. Data science, they say, is a step-by-step process of experimentation.” This type of work is called “data wrangling”.

 

In real life you are going to work with bad quality data. The data is not only imperfect but you also need to understand how to use the usage and the analytics so don’t wait for perfect data but start experimenting with supply chain analytics as soon as you can.

 

 

To quote Professor Jeffrey Heer“It’s an absolute myth that you can send an algorithm over raw data and have insights pop up.”

 

 

About Edith Simchi-Levi

 

 

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Edith Simchi-Levi

 

VP Operations at OPS Rules

 

LinkedIn Profile

I interviewed Jim Tompkins who discussed Alibaba Effect. This development will have a huge impact because consumer-products companies and retail companies have to decide how they’re going to take advantage of Alibaba and of the benefits that this is now putting in front of them. This is highly relevant to retailers, consumer-products companies, wholesalers, distributors, and third party logistics providers. 

 

 

 

 

 

 

Will Alibaba ever sell product in the United States? Well, that is a particularly naïve question because the first Web site Alibaba had in 1999, called Alibaba.com, was an English Web site for selling Chinese business-to-business to America. Alibaba has been in America since the day they existed. In addition to that, they’ve made a large number of acquisitions in the United States over the past year, over a billion dollars they’ve spent on acquisitions. They are very intimate with some very important e-commerce players to include folks like Fanatics, one of the biggest sports players out there; including 1stDibs, which is a very large company that is doing some very cool things with unique product. They have done some very interesting acquisitions in the technology space with QuickC, they bought Tango; they spent $200 million on 39 percent of ShopRunner; they spent $250 million on Life, which is a competitor of Uber.

 

They are all over America, and on June 11 they came out with the first real American Web site called 11 Main. 11 Main is just an amazing story unto itself. I have senior writers from nationwide American newspapers, I have executive vice presidents of strategy for $40-billion retailers saying to me, “Alibaba? I thought that was the name of a book I read to my son when he was growing up.” This is the executive vice president of strategy for a $40-billion company literally doesn’t know Alibaba is a company. It’s the largest Internet player in the largest Internet nation in the world. They are the fastest-growing Internet player in the fastest-growing Internet market in the world, and people don’t know who they are. You kind of go, “Oh wow!”

 

The video (see Youtube video here which currently has over 70,000 views) was done to answer: What should I know about Alibaba just so that I have the capability to understand how I should respond? I think the video is critical to watch. For example, the video was published on June 22, it was taped on June 3, and June 11, 11 Main was first introduced to America. You’ve got to think about it. If you are a Chinese e-commerce player who’s very successful and you’re now going to open your first real American-only site—it’s not buying something that already exists; you’re going to open a new site, and you’re going to go in competition with the Wal-Marts and the major online players in the world, how in the heck can you do that?

 

How do you, a country boy show up to America and going to take some market share. Well, what Jack Ma, who is the founder and chairman of Alibaba, does is what he always does, and it’s based on his thinking of kung fu. Kung fu says, “Okay, Dustin is younger than I am, he’s in better shape than I am, and he’s a better fighter than I am, but if I can figure out how to take Dustin’s strength and turn it into my asset, I can win this war.”

 

What would you do if you wanted to do a kung-fu thought process against Wal-Mart and all the other big titans in the American market? Well, what I would want to do is the opposite of mass merchandising. Mass merchandising is going to some huge Web site or it’s going to pack your kids in a car and go to Wal-Mart and walk around this huge, big box. What I want to do is the opposite of that. What I do is learn from my investment in 1stDibs, where 1stDibs says you’re buying unique things and “I want first dibs on this item.” It’s a unique, kind of eclectic thing, so it’s opposite of mass merchandising. Then you want to call it something unique so it has a different feel to it. Why not call it 11 Main?

 

Main is in Main Street. The thought process, instead of you packing the kids and the wife in the SUV and going to a mass-merchandising store, what you’re going to do is grab your wife’s hand and walk down Main Street, USA on a Saturday morning with a cup of coffee and kind of enjoy the experience of shopping.

 

And then, why call it 11? The 11 number, it’s not like 8 or 9 that has some good-luck aspects or some long-lasting faction. Eleven doesn’t mean anything except 11/11, where 11/11 is, as you know, Singles Day, which used to be like the Valentine’s Day in China; now it’s the world’s largest shopping day. On 11/11/13, Jack sold $5.7 billion of product in 24 hours; not a bad haul for 24 hours. The 11 number indicates a singles, it’s a relationship between a man and woman. What 11 Main means is: I want you to walk down Main Street and establish a personal relationship between a merchant and customer, but I’m still going to do this online.

 

It’s a marketplace where I want a relationship based on the uniqueness of the product. Further to emphasize the reality that this is just the start and also to indicate the uniqueness, you can’t go to 11Main.com and get online. If you go to 11Main.com, it will ask if you’d like to be invited into the shop. You have to fill out a form to get invited, and then two to three days later, you’ll get an invitation. It’s the exact opposite of anybody who can walk in to a mass merchant. You need to be invited. And then when they invite you, obviously, what they’re going to do is, they’re going to be watching where you go and what products you’re interested in so that when they get really serious about B to C in the United States in 2015, they have a wealth of information as to what items you’re shopping for, so they’ll have a head start on that outreach.

 

It’s just so very, very important that people understand what this is about. The folks that, I got a call the other day that said, “Well, I think eBay and Amazon and Alibaba, they’re all really the same, aren’t they?” You say, “No! No, no, no.” Jack began back in 1999; there were four important things he said. Number one, he said, “I will be global. My goal is not China; my goal is the world, and that means we must do well in America, because America is where business thrives.”

 

The second thing Jack said is, “I will never be a retailer because I am a marketplace. My goal is not to sell things; my goal is to connect buyers and sellers. If I ever become a retailer, I will be going in competition with my merchants, and I never want to compete with my merchants because they’re very important to me.”

 

The third thing Jack said is, “I will never become a bank,” and that lasted for only four years. The reason he had to change his view on that is, his original site in China was Taobao, and Taobao, which means “looking for great treasure,” is a site that has, today, eight million merchants on it, selling over a billion different items. It’s a very, very, very large site, and it’s consumer-to-consumer. In that way you can kind of think of it like an eBay.

 

The problem is that people in China do not trust giving their credit card to other people, so Jack had to become a bank to allow the business to grow. He created Alipay. Alipay is a unique payment system because it holds in escrow. Let’s say I decide to buy something from you on Alibaba. What happens is, you will give our credit card information to Alipay. Alipay will give me nothing. I then send you the product. Once you receive the product, I tell Alipay that you’ve got the product. Alipay then asks you, “Are you happy with it?” If you’re happy with it, then Alipay will give me the credit card information. It’s an escrow system. that was required, so Jack had to go back on what he said.

 

The fourth thing Jack said is, “I will never get involved with the logistics of the product,” and he never had until 2012, when he realized that in Chan, the logistics—the delivery of the merchandise—was becoming a constraint to the growth of his business. He started to get involved in logistics. He is now building the largest logistics network in the world. He’s going to be investing $24 billion over the next eight years in developing this network.

 

Last year in China, Alibaba was responsible for the delivery of five billion parcels. If you look at the U.S., Federal Express does about one billion a year; UPS does about four billion a year. Alibaba caused the same volume of parcels to be delivered in China as UPS and Federal Express combined do in the United States. By the year 2024, Alibaba will be delivering two hundred million parcels a day; that’s just mind-boggling the scale in which they are moving.

 

This is a phenomena. It’s the new way. It’s a new day and there are all sorts of retailers and all sorts of consumer-products companies that are waking up this morning, not realizing that the world is changing as we sit here. That’s a huge, that’s the biggest story of all time.

 

When there was a big discussion would Alibaba go public in China, in Hong Kong, in London, in the U.S., or if it was in the U.S., would it be on NASDAQ or would it be on the New York Stock Exchange. Excuse me, you weren’t listening to what Jack said in 1999. He said, “We will be global and the United States is where we want to be.” There was no question in my mind. NASDAQ does not stand for the U.S.; New York Stock Exchange does stand for the U.S. Guess what? He is on New York Stock Exchange, and that’s where it’s going to be tomorrow and he’s going to go, the handle for Alibaba is BABA.

 

As you know, the word ba also stands for the number eight, and the number eight means “good luck.” It’s going to be “good luck, good luck,” and as you also know, in China, things that come in pairs have higher emphasis. If I say, “Good morning, Dustin,” that’s a nice greeting, but if I say to you, “Good good morning, Dustin,” that’s more than double the good morning. That’s why it’s baba and that’s why his trading signal is BABA.

 

I’m going all over the place here, but it’s just so phenomenal to see what is going on; it’s just very, very cool.

 

You were mentioning in the beginning about the IPO and some of the details and numbers about that. Can you mention that again?

 

Sure. The experts, whoever they are, were saying the stock valuation would be someplace between $60 and $66. I have been saying, “No, it’s going to be closer to seventy.” The experts changed their minds yesterday and said it’s now going to be between $66 and $68. I think it’s going to be higher than $68; I think it’s going to be around $69. The overall size of the IPO is actually defined by the dollars raised. The largest IPO of all time was the Agricultural Bank of China in 2010, and that was $22.1 billion. The largest in the U.S. ever was Visa back in 2008, at $19.96 billion. Of course, Facebook, which got a lot of press, was only a $16-billion IPO in 2012.

 

I think we’re going to see somewhere between $24 and $25 billion as an amount of money raised, and that’s going to beget a valuation of something north of $160 billion. I’ve been saying those types of numbers since last October. It’s interesting now that’s where we’re going to wind up. Very, very, very cool. Largest IPO ever, larger valuation than Amazon on its first day out. The stock is a very good value, and it will go up, in my opinion. Goldman-Sachs’ responsibility, they will make sure that it goes up.

 

The title of this interview is “Alibaba Effect.” What would you say is the effect of Alibaba on the world?

 

That is an excellent question; much better than the question I get sometimes: What’s the effect on the U.S.? That’s an interesting question. But what this is really about is the global competition is now really in the game.

 

Look what’s going on in Brazil, where there was an article earlier this week in the Wall Street Journal that was well done, and it was talking about a Vans sweatshirt that, I don’t know, in Brazil was $500 or something, and you could buy it through Alibaba for $50.

 

What we’re finding is, competition will be global. Just like if you’re in Chicago, you go online at Groupon to buy something, and you see it costs $100. Well, you then travel to California, and you’re going to find it still travels for $100 because California and Chicago are both in the U.S. What’s really interesting is what Alibaba’s going to do is level the prices around the globe. If I’m in Brazil, where there are all sorts of crazy import duties and taxes and so forth, what you’re going to find is the globalization of competition, so the impact is going to be absolutely huge.

 

Similar in Russia. It’s not surprising that Alibaba has huge outreach in Russian and in Portuguese, to go into those countries. They are moving very rapidly in bringing goods to China with something they now call TMall. TMall used to be called Taobao—which is the first Web site they had in China—but it’s very difficult to say Taobao Mall, so they just call it TMall. TMall is where folks are bringing international goods—French, English, Italian, American goods—to China to be sold to the middle-class. That’s the basis of the IPO, the going middle-class.

 

Reality is, what is happening is you see Alibaba bought 10 percent of the Singapore Post. Why the Singapore Post? The Singapore Post covers all of Southeast Asia, and it delivers to Southeast Asia. A company bought 10 percent of Singapore Post. They bought 10 percent of the Australian Post. They bought 10 percent of the Brazilian Post Office; they handle the delivery of goods.

 

This is a scale beyond anything that’s ever been done before, and it’s global. It will impact the United States in a huge way in 2015. It’ll have an impact on Europe in a huge way in 2016. This is a global phenomenon that companies need to figure out how they’re going to engage.

 

Thanks for sharing today. Did we cover all the important points you wanted to make today?

 

Well, I don’t know. I didn’t have any points I wanted to make; I’m just talking. Yeah, it’s a story that people need to get engaged with, and then they really need to understand it so they can figure out what they’re going to do to benefit from this opportunity.

 

I guess one other point. A lot of folks think this is a retail play. Well, it is but you’ve got to look at the new definition of retail. What we find is lots of retailers are very active in private label. Wal-Mart, for example, has 36 different private labels. Trader Joe’s, 50 percent of the items they sell are private-label. For breakfast this morning, I had the granola from Trader Joe’s because it’s the best granola made; it’s really great granola.

 

As retailers become more and more and more focused on private label, the brands are suffering. If you look at Kroger, they have a 20-foot section of diapers, and that used to be 20 feet of Pampers, made by Procter & Gamble. Today you look, they still have 20 feet for diapers, but half of that, 10 feet, is for Procter & Gamble Pampers; the other 10 feet is for Krogers’ own brand. The customers have found that own brands have good quality, the same type of benefits and sometimes even better, and they’re cheaper, so people are buying those.

 

Pampers, what are they going to do? Are they going to stop selling to Kroger? Well, no, you can’t stop selling to Kroger; they’re huge. What Pampers has done is said, “Well, I guess I need to now become a retailer. Consumer products companies are becoming retailers. In 2012, only 21 percent of American consumer-products companies sold directly to the customer. In 2014, that’s 52 percent; 52 percent of all companies that we call consumer products are now selling products directly to customers, which means they’re retailers.

 

This is growing, so this has a huge impact because consumer-products companies and retail companies have to decide how they’re going to take advantage of Alibaba and of the benefits that this is now putting in front of them. I think that’s a huge point as well, who should be interested in this. It’s retailers, it’s consumer-products companies, it’s wholesalers, it’s distributors, it’s third-party logistics providers. This is a big deal.

 

Thanks again for sharing.

 

Great, Dustin, good to talk with you. Let me know if I can help.

 

 

 

About Jim Tompkins


 

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Jim Tompkins

 

Tompkins International Supply Chain Consulting CEO

 

LinkedIn Profile

I interviewed  Mona Pearl who discussed New Emerging Markets and Risks.

 

 

Where are the new emerging markets? BRICs was the big thing. Brazil, Russia, India, China, these were the defining countries for future work. Here, these emerging countries have emerged, and there are new candidates, new, upcoming potential stars. If a company wasn’t in the BRICs, it seemed they weren’t global. Most companies changed their strategy to be in the BRICs.

 

Looking into 2015 and beyond, I see South Africa as an emerging market, as well as Turkey. The region of central Europe, as well as Central America and north Asia, and the one we may not really see as an emerging market per se—and it may be a stretch to call it so—Japan. Japan is definitely a country to watch very closely, as growth is definitely on the horizon.

 

Some emerging markets are strong and others aren’t. It’s all about picking the right ones and the right ones for the company and its product, the right ones for you. There has to be a match between the target market and the company’s capabilities, vision, and strategy. This is no news for any company. Basically, it’s not about generalizing and saying we’re going to find emerging markets.

 

When going to emerging markets, we, of course, face risk. I define a risk basically starting with what is based in the dictionary: a situation involving exposure to danger. But when we talk about international markets, what comes to mind are the words uncertainty, unpredictability, instability, insecurity. I’m sure you can think of a few more. However, parts of risk can be eliminated with preparation and the company’s doing its homework in terms of defining their target market within the market itself, their target audience, segmenting the market, understanding how to do business in the target market in terms of culture and operation. Sounds easy? Not really.

 

This is where most companies fail miserably. Uncertainty can be associated with political, financial, and, in some regions, geographical predictable events that we know, from past experience can take place and have taken place in the past, which means it’s almost certain that it’s going to happen, but we don’t know when. It may take one year, it may take five years, it may take fifteen years. For example, the turmoil in the Middle East is in different variations; it repeats every so often and depends on the country. This is a predictable risk when going to the Middle East, but there is no way to tell when exactly and what shape or form it may take. And we see it right now as events emerge.

 

When we think about it, what are the risks in these emerging markets? What comes to mind are several risks to anticipate when trying to do business, expanding, and growing into emerging markets. Of course, we have political risk. That may involve the results of an election that may affect the business climate, as well as the appetite for inbound FDI, foreign direct investment. This can financial stability in the country, prices, and, therefore, the ability to be profitable and sustainable for the long run.

 

For example, Indonesian presidential elections that took place on July 9, 2014, just recently, where [Joko Widodo] won. However, had he lost, defeat for [Joko Widodo] would have prompted big investors to sell. It really depends who is going to be elected and how it is going to work afterward. Another example, very recent in Turkey, the Prime Minister Erdogan won the presidential election on August 10. His confrontations with antigovernment protestors have spooked markets before, and he’s known for trying to influence central ban decisions. For some companies, it may pose a huge risk.

 

If we look at another region, Brazil’s presidential elections in October are also putting investors on edge. Dilma is expected to win a second term, but economists have warned that her fate may hinge on Brazil winning the World Cup. If Brazil loses, it could spark renewed anger over the huge cost of hosting the tournament. We’re done with the World Cup, but these hesitations and the risk that’s perceived is not going away.

 

Certainly, economics is another risk factor in emerging markets. Deep-seated economic challenges such as slowing growth, high inflation, and dependence on foreign capital could return to haunt some emerging markets in the coming months. When we look at Brazil, India, Indonesia, Turkey, South Africa, which were dubbed the Fragile Five last year by Morgan Stanley because they have these risks in common. Little appears to have changed since then. We look at it and we try to figure out a strategy and it’s not easy.

 

Another risk is the rising oil prices. Investors seem to be relaxed about the continuing crisis in Iraq. All prices spiked briefly in June as the Islamic militants advanced to cross over into Iraq but have since fallen back partly bemuse of reports that Libya could resume exports. The story is that, basically what it means in terms of risk, that any significant destruction to oil exports from Iraq, OPEC’s second biggest producer, would send world prices back up and could dent global growth, which means what for emerging markets, which is our topic? Emerging markets that depend heavily on all imports, such as Turkey and India, would suffer the most, which, again, raises the risk to companies that are doing business in these countries.

 

Then we have political violence, corruption that make it very difficult to do business in these countries. Unless a company has savvy people who know how handle and maneuver the challenges successfully, most likely, they’re going to find themselves pretty broke. When we look at all of these risks, it’s a matter of assessing and understanding what we face and how to overcome it.

 

We shouldn’t forget supply chain risks and challenges as well. In the emerging markets, there may not be the infrastructure necessary for smooth delivery, assembly, after-market service, inventory, and such. The risk is a gap in delivery that may cause the company the business and leave them standing helpless while losing business to their competitors. All of these risks and more are dominant in emerging markets.

 

When we look at the risks and all the implications, it can be addressed and should be addressed with basically gathering the right information in the applicable context and analyzing it as it may pertain to the company—its vision, goals, objectives, specific strategy. It’s not a one-size-fits-all. There is no one size that fits all, nor is there an application you can download that can give you the right answers and this information with a guarantee; that simply doesn’t exist.

 

For example, when I was working with a company to open the Indian market, we were faced with geographical, cultural, and financial issues in the risk for the project, and it was almost the decision to stop. The way I approached this was to look at each component separately, tie it into the company’s mission, vision, and strategic goals while changing course as we moved ahead. That requires the flexibility, the know-how, the knowledge. This project was successful and proved itself immediately as the experience, knowledge, and the know-how were crucial to make decisions on the go.

 

What was also important was the ability to read and interpret a situation real-time and shift plans based on a modular strategic approach. The risk was addressed. First of all, everybody needs to be aware of the potential for risk and not when it’s too late. When you already face these events, it may be way too late to fix. Keep your eye on the ball or on the pulse and know how to read and interpret reality and context, reality in different countries, reality in different cultures, and different realities. This requires seasoned people with global-growth experience who have been there, done that, and have the ability, the knowledge—again, the know-how—to look at the situation analytically.

 

As I always tell my clients, we have to create the dots here and not connect them. Strategy is something that you’ll do in the future; it doesn’t exist. It hasn’t been done by you yet. Something you have never done, and there are no instructions anywhere that can char the road with guarantee. When planning for success, it is crucial to understand that what makes a local company successful may be the same that will bring it to a crash when going global. The one thing I avoid when addressing global risk is the exhaustive risk-management processes. This may not be the best way to deal with the risk in markets where global organizations must move fast and in real-time to lock in opportunities and overcome challenges.

 

  Understanding these risks is just a starting point. Capturing the benefits and mitigating the challenges associated with each will require global companies to explore new ways of organizing and operating. This is where my group comes in and helps companies flourish and address their risks in a rewarding manner. A rewarding manner for the business world is becoming profitable, sustainable, and successful in the long run.

 

 

 

About Mona Pearl

 

 

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Mona Pearl

 

Strategic Planning for Fast Pace Growth, Interim COO/CMO, International New Business Development

 

LinkedIn Profile

I interviewed  Jeffrey M. Crowley who discussed The Keys to Being a Successful Entrepreneur.

 

 

 

 

 

 

It’s good to speak with you today, Jeff. I’m looking forward to hearing your views today and experience on the keys to being a successful entrepreneur. Before we start, can you provide a brief background of yourself?

 

 

Sure, not a problem, Dustin. I appreciate the opportunity. I have been in executive search now for a little over a decade. I’ve had my own firm for about six and a half years. I specialize in working at the retain * (00:34—unclear) with manufacturing companies primarily in the U.S.-North America, though a number of my clients tend to be global organizations. I’m a father, husband, and enjoy college football, American football, here in the U.S.

 

Thank you. What are the keys to being a successful entrepreneur?

 

I think the first one is kind of simple and yet complex in knowing who you are as an individual. Being an entrepreneur, I’ve learned there are a lot of things I needed to improve in my own skillset in terms of follow-up, in terms of sales calls, in terms of motivation. I think one of the hardest things I found when I left my firm I was with prior to open my own firm is that there’s really no one above you pushing you to get stuff done. You’ve got to be really self-motivated, really focused on making calls or making contacts or whatever it might be within your business—sales calls, getting out the word, whether it’s social media, cold calls, networking calls. You’ve got to be very self-driven there.

 

Early on it was, I’ll admit it was a struggle for me because I’d always had that peer or mentor to kind of push me and tell me when I need to do these things a little bit better. I think knowing yourself, knowing your strengths and weaknesses are important. I would say a second one is even though you’re opening your own business, having some type of mentor has been key to me. I’ve got two or three gentlemen I can rely on both in search and outside of search who are just successful businessmen that I turn to for ideas, brainstorming, looking at them for guidance when it comes to how to set up my business, how to handle my sales calls, how to handle my recruiting calls, how to work with professionals at the midlevel, as well as the executive level, just to have an individual or two to bounce ideas off.

 

At times early on, I found it was very lonely, if you will, in running your own business. You’re expected to have all the answers, you’re expected to know everything. Quite honestly, I don’t know that I do know everything, to be frank with you, Dustin, and I assure you I’m not an expert at everything, so having a peer group or mentors that you can go to is critical there. Some people set up a board of directors even though they might not have a financial investment in the business but perhaps have a friendship or professional-friendship interest in the individual; I think that’s very appropriate. Whatever you want to look at it that way I think is important.

 

I would say the third one is to really understand your finances; whether you’re going to self-finance the business, whether you’re going to take out some type of business loan, but to really know what your month-to-month bills look like. I know that’s small beans perhaps, but when you’re starting up a small- to midsize business, so much of it is cash flow and “Can I pay my bills this month?” and things along those lines. Really sitting down with a good, strong accountant, taking sure your budget is in place, make sure you’ve got, in my opinion, a good three to six months of cash on-site or on hand so you can get started and not have to have revenue the first two or three months, to be able to get things up and going.

 

And, finally, I would say, at least in my business, I needed to have some key contacts that I was pretty confident that would become clients fairly quickly. Obviously, these are folks I had worked with over the years in my industry, in search, having either done search work for them through my prior forum or simply having connected with them as potentially a candidate or resource for candidates. There were two to three key individuals when I was debating going out on my own that I reached out to and said, “If I did this, what is the likelihood you and your business would use me for search and things along those lines?” almost that I had not a guarantee because nothing’s guaranteed, but that I had fairly confident assurances that within the first six months, two to three of my key contacts would have some search activity for me, which would obviously provide income, provide opportunities to prove myself and kind of get the ball rolling along those lines.

 

Why did you become an entrepreneur?

 

Most entrepreneurs will say they do it to make more money, and there’s nothing wrong with that. I became an entrepreneur so that I could, to an extent, control my schedule better. My goal in my life, to be completely honest, is to be a father first and a husband first, so I did it to be able to go to PTA meetings for my kids’ schools, to volunteer in their classes, to go on their field trips with them. I can’t go to everything and I can’t do every volunteer activity, but, ultimately, my goal was to be able to have a successful business while I raise my children.

 

Do you have any recommendations for people who want to become entrepreneurs? Any final recommendations on how to do it?

 

I would say you need to be prepared, ultimately, for the ups and downs. We talk about the stock market, we talk about business revenue, we talk about growing revenue, and I think a lot of people, including myself, when I first started, thought once I got the ball rolling, it would always go up, the revenue stream would go up and those types of things.

 

The reality is, especially being a small entrepreneur business—I don’t have a lot of employees; I’ve only got one full-time employee; the rest of my team are contract employees I use when I need to, so a fairly small business—there are going to be ups and downs. There is going to be the positive year, and there is going to be the next year, where it’s going to be like, “Where did everybody go?” I think understanding that that’s a) not based just on you as a person is really hard—at least it was for me and understanding that they’re not rejecting me, they just don’t have search for me right now; staying active and, as I talked about earlier, staying focused on making those calls day in and day out even though you’re not getting the results you want right away but staying in the networking and staying in the business of talking to decision-makers and those types of things.

 

Understanding that there’ll be months you’ll be really high and there’ll be months you’ll be kind of low. That’s just part of the flow, I think, being a small business and entrepreneur. It’s not always just going to go up; it will go down from time to time. Being able to balance that, being able to save appropriately when the times are good, and being able to be frugal where needed when times are a little thin. I’m a big believer in keeping my overhead down; I work out of my house primarily; I lease a lot of my equipment; I lease office space when I need it for professional interviews, so, certainly, spending money where appropriate, but I don’t have a lot of overhead other than my technology background, my database, my CRM, whatever you want to call it, computer, phone, those type things are all top-quality, but I don’t rent office space that I might need four or five times a year; I would rather rent that. Things along those lines. Just understand that it doesn’t always go up; there will be ups and downs in being an entrepreneur in terms of revenue, in terms of your feeling about it, and those types of things.

 

Thanks for sharing today, Jeff.

 

You’re very welcome, Dustin, thanks for the opportunity. I hope it’s insightful and enjoyable for your audience.

 

Thank you.

 

 

 

 

 

About Jeffrey M. Crowley


 

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Jeffrey M. Crowley


 

Founder & CEO of JMC Search, LLC - Executive Search with Integrity


 

LinkedIn Profile

I interviewed Tina Groves who discussed Variety in Big Data, Specifically Around Text Analytics.

 

 

 

 

 

 

It’s great to speak with you again, Tina. It’s been about a year since we’ve talked. Today I’m looking forward to hearing your views on the topic of variety in big data, specifically around text analytics. Before we start, can you provide a brief background of yourself?

 

Yes, thank you, Dustin, it’s a pleasure to speak with you again. I’m Tina Groves; I’m a senior product manager with IBM. I work in product strategy in the Big data and analytics area; I’ve been working in this area for a little over two years at this point. Last spring I shifted my focus specifically to look at text analytics.

 

Thank you. My first question regarding this topic: What’s the latest buzz in big data?

 

The term has been used so often now, but many people just say the world arise, but it does become a little hard to keep up with everyone claiming they’re doing something in big data. The three trends I’ve seen that are about solving the problems with addressing not just very large volumes of data, but how to achieve the analytics experience that we’ve enjoyed for several decades now with relational databases and also how to tackle the types of data that can be stored in Hadoop and the old SQL databases. What we’re seeing is a great deal of innovation around dynamic SQL or interactive SQL so that one can put the traditional and analytical tools on top of these new forms of data storage.

 

You can see there are a lot of concerns around security and privacy for companies that have gone past the pilot stage, and they’re looking at, they want to share data as a data aggregator or data collector. Lastly, you see a lot of innovation around tools that are around data wrangling. We’ve moved past the data scientist who’s analyzing the data and looking at how we can take all this messy data, data that’s normally not joined together and how we can bring it together in a way that creates that experience that we’re used to seeing on the relational database side. In data wrangling, a term that was coined largely by Stanford University, and you can see it in products like Trifacta and Paxata claiming to address this space. One of the areas that’s very common is how to transform text in typical rows and columns that you see in a traditional environment so that you can use it in an analytical model.

 

In supply chain there’s all kinds of paper and e-mail and PDF attachments. How can this be turned into data?

 

That’s a great question, Dustin. In any kind of environment, especially one where you’re taking data from, let’s say, in the middle of a logistics chain. How do you manage all this data? In some cases over the past decade, I’ve seen many clients barcoding the information; they just basically use a barcode. That helps with a lot of the structured data—if you’ve scanned a piece of paper and it’s been transformed into its piece parts; sometimes there’s digital interchange.

 

The tough part is when somebody’s typed in a note or there are special instructions or there’s something in the e-mail that’s related to that PDF attachment, and that’s where the text analytics really comes into play. Nowadays, what you’ll see is more embedded technology to help transform those special instructions into instructions that can then be tracked, for example, in a supply chain context. How does this turn into data? Well, I think that’s going to require some more questions because it’s a very complex area.

 

Why is analyzing text so hard?

 

Well, I’ve been learning from the scientists I work with at IBM, who specialize in natural language processing, and I have a greater appreciation today than what I had five, six months back. Analyzing text where you can just do straight word matching, that’s really text parsing, and that’s not that hard. If I see the word Tina in a piece of text and Tina represents a person, then we can have a person field with my name, Tina, in it. Or detecting, for example, the names of cities and locations or countries can be easily done.

 

What becomes more difficult is, let’s say you’re analyzing customer-support records, which could happen in a supply chain; calls that are coming in about people complaining. How can you infer, for example, the sentiment that that customer has? Are they a little angry, somewhat angry, somewhat complacent? How would you then use that mood or that person’s sentiment as an input into your decision-making? And then combine that, for example, with is this the first time this person’s called in, the second time, the third time? And what’s on the line? Is there a parcel that’s worth a few bucks, or is this a parcel that represents a birthday present for someone very close to the sender?

 

In those cases you want to be able to combine both qualitative and quantitative information, and that’s where we get into that moving from just text parsing and detecting specific words into understanding the perception of the person. What is their awareness? What is their opinion? I’ve already mentioned sentiment. That really requires more skill and linguistics and language use than normal text detection or text recognition.

 

What technologies can supply chain consider to address this challenge?

 

That’s another great question. In the big data space, this area’s evolving very quickly, so three months from now, the answer may change a little bit. If you’re using Hadoop, any of the technologies today tend to be very developer-oriented. You’ll see Python scripts being developed, leveraging the natural language processing toolkits, which is a very costly, very time-consuming way to address text analytics, but it is an area that’s evolving very quickly.

 

If you’re dealing with a lot of documents—we were talking earlier about e-mail and e-mail with PDF attachments—there is an area around content management called content analytics, which can facilitate pulling out the information more quickly, and many of those technologies will have additional toolkits or what they might call annotators or extractors to infer opinion, sentiment, or awareness factors. A third type of technology is around natural language-processing toolkits, like you see from basis technology or an open-source one called Gate.

 

IBM also has, of course, these technologies but because of difficulty in using them and the developer focus, we tend to bundle them in our products so that it’s hidden and, basically, it’s one of the engines that we use to drive people’s requests, their interaction with the information. That’s three. Just to recap, the developer-oriented technologies like our Python toolkits; there’s the application that you’d view with content analytics; and the third one is kind of this middle ground in the data-wrangling space where the natural language-processing engines are embedded as part of user interface.

 

What do you see in the future?

 

This is another good question. In the future, this area is just so hard to do. Once you get past the basics and the amount of skill that’s needed both in, some cases, statistical backgrounds if you’re going to clustering on words, if you’re going to understand, for example, how this turns into fraud. I have one customer who is looking at automating their accounts payable and this was Memorial Hospital.

 

After they finished basically automating this process, they found all kinds of unusual behavior. The behavior was suspicious enough some contracts being handled that they engaged the FBI to investigate. At the end of their investigation, the FBI successfully prosecuted several employees for bribery and some vendors that the hospital was dealing with for bid rigging. The outcome of that investigation was that because this area is hard, Memorial Hospital actually created an application that they now resell to other hospital systems that are tackling a similar problem.

 

I see that the trend will be to encapsulate the algorithms needed to analyze text, so it wouldn’t be just generics in that sentiment; it’ll be sentiment for supply chain vendors or, even more specifically, sentiment for vendors that are in logistics planning, and sentiment in the terms for people who are in the manufacturing area. People who do warranty analysis, for example, are looking for the shortest time to resolve so they can obtain. In the future, I see that the developer tools will eventually become less important, and this type of technology will be baked into the applications.

 

Thanks, Tina, for sharing today.

 

Thank you, Dustin, for the opportunity to speak with you and your audience again.

 

 

Another link which explains the technology a little more: Why is analyzing text so hard? | The Big Data Hub

 

 

About Tina Groves


 

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Tina Groves

 

Big Data and Analytics Product Strategy at IBM

 

LinkedIn Profile

I interviewed  Carol Ptak who discussed Update on DDMRP Acceptance in Africa.

 

 

 

 

 

 

It’s great to speak with you today, Carol. I’m looking forward to hearing your views today on the topic, which is actually an update on DDMRP acceptance in Africa. Before we start, can you provide a brief background of yourself?

 

Absolutely. Thank you, Dustin. I’m really happy to speak with you today too. My background is that I’m currently a partner with the Demand-Driven Institute. The Demand-Driven Institute is responsible for the development and maintenance of the demand-driven MRP methodology. Before that I worked for PeopleSoft. I was vice president and global industry executive there, where we came up with a concept and the name of demand-driven in 2003. Prior to that, I was with IBM. All that followed a career where I started on the shop floor at minimum wage in manufacturing and worked my way up to being a supervisor and manager, production-control manager, and running several companies around the country. I come up off the shop floor and worked my way up into some executive roles.

 

Thank you. My first question is: What is DDMRP?

 

DDMRP is what we call demand-driven material requirements planning. The name was picked when we were invited by McGraw-Hill to update, really, the bible of manufacturing, which was an MRP book that was written first in 1975 and then updated in 1992. DDMRP came about as a way to codify what was going on, as a way for a company to become demand-driven. How a company senses a gap to the changing marketplace around it but does it in such a way that we challenged a number of what we call great truths.

 

Great truths are things that absolutely everybody believes and they’re absolutely and unequivocally false. The great truths today include things like: To have better customer service, I have to have higher inventory. This is the basis of all the inventory models, inventory optimization models, and that is absolutely false. What DDMRP does is a way to be able to reduce lead time, absorb incredible amounts of supply chain variability and volatility, and improve return on capital employed all at the same time and all without compromise.

 

What is your involvement with DDMRP in Africa?

 

This is really exciting. I had the opportunity to be invited down there. I actually went down in June for the first time to first take the message of DDMRP to Africa. The acceptance was so overwhelming. We had scheduled a seminar down there, and we figured we’d book a room about double what we thought we would need, and we ended up, that room was absolutely full, with a waiting list. They invited me back down in August, and I’ve just returned from Africa.

 

The acceptance down there is absolutely incredible. What people don’t realize is that African economy is the fastest-growing economy on the face of the planet. Everybody’s focused on China and India, and the reality is: Africa is the place to be. It has got the youngest on average population, it is the fastest-growing economy, and, what’s news to me, 60 percent of the arable land in the world is in Africa.

 

Here’s this powerhouse that’s coming up online, and they were very receptive to this message and saying, “How do I sense and adapt? How can I see what my customer really wants? How do I adapt to my supply chain so that I can service that need in a profitable manner, in a way that’s sustainably profitable, not just looking at short-term profits where I sacrifice something in the future, but something where I’ve got improved return on capital employed ongoing?” I had the opportunity to visit with companies that made everything from consumer goods—they made wine and liquor and that kind of thing—to companies that were making canned goods and things directly from the farm to the consumer. I met with people who were everywhere in between that, from construction, I got an opportunity to meet with the folks who do the trains in Africa.

 

South Africa actually does a lot of the trains, the remanufacturing of trains for all of southern Africa. From this idea of maintenance, repair, overhaul, new construction, the receipt of the message was the same. They were like, “We get this; we understand this. This is something that we absolutely need to do here in Africa so that it will really help our economy grow with the potential that it has.” It’s already growing. They’re seeing a lot of extra demand down there that they’ve never seen before. How do they manage that? Especially given that a lot of the raw materials currently come in from South America, Europe, and the United States. They’ve got long lead times coming in, but the customers are expecting very, very short lead times as they deliver product. The receipt of the message was absolutely overwhelming. It has been the country that has accepted the message the most quickly. I was very surprised the first time I was down there, and it just reaffirmed it the last trip I was there.

 

How is DDMRP developing in Africa?

 

DDMRP is really developing in Africa with several pilot projects that are going on down there, from companies that are steel manufacturing, to other companies that manufacture construction chemicals. They’re doing several pilots down there; there are several software companies that are actually down there working on the DDMRP software solutions, to become DDMRP-compliant. We have a number of them in the workshops.

 

A lot of activity going on down there to get the pilots going, to prove that it works for them down there, and to have the necessary infrastructure that they have down there for education and training, as well as the technology and the implementation teams to support this as it’s rolling out. Like I said, for a country, South Africa has really jumped on this bandwagon and is aggressively moving forward. Our affiliate down there, which is SAPICS, is covering all over sub-Saharan Africa, and they’ve got alliances with instructors who are French-speaking, to be able to get in to the western African countries, as well as taking the message up to Mozambique and up into Africa.

 

They’ve got a very aggressive schedule moving forward. I think they’ve schedule already six sessions coming up in just the next few months of being able to get that education out there.

 

Thank you, Carol, for sharing your update on DDMRP acceptance in Africa.

 

Thank you very much. It was very exciting to me. I was really surprised. I really did not expect that when I went down there, and I really didn’t expect what I learned about the African economy. There’s just so much in the news and media today about Ebola and all this, and they treat Africa like it’s a third-world country, continent, and it’s really not. You get into areas like South Africa, and you get up into some of the other countries that are down there; very safe, very growing, a lot of very healthy economics.

 

The dollar to South African rand is very, very favorable right now. Yeah, I was very excited that you wanted to talk about that today, because I was surprised, and I thought maybe some of your readers might be as surprised at how healthy that economy is down there. People shouldn’t miss it. Africa’s really the place to invest right now. I know we’re definitely positioning some more investments down there.

 

Well, I look forward to future updates regarding Africa as well, so feel free if you have more things to share.

 

Absolutely. Love it.

 

Thanks.

 

 

About Carol Ptak

 

 

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Carol Ptak

 

Partner at Demand Driven Institute LLC

 

LinkedIn Profile