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2014

I interviewed Dan Grosz who discussed The Provision of Next Generation Network Services.

 

 

 

 

 

 

It’s good to speak with you today, Dan, and I’m looking forward to hearing your views on the topic of the provision of next-generation network services. Before we start, can you provide a brief background of yourself?

 

Sure. Thank you, Dustin, it’s a pleasure to be with you again. I have over 25 years of corporate IT and management-consulting experience. Currently, I run a private hedge fund that focuses on technology companies, and from time to time, I also take on special corporate IT projects.

 

What is the next generation network?

 

The next generation network is a rapidly emerging network architecture. It really has origins over 20 years, with the development of the Internet. Essentially, this new architecture allows decoupling of physical infrastructure from network services and applications. From a supply chain perspective, the provisioning of network, bandwidth, and services, which used to be a very time-consuming and difficult process, switches from being reactive with very highly time to being proactive and dynamically configurable. With this new-generation architecture, you can deploy services via software rather than having to rely on hardware. This provisioning and network architecture is completely IT-based and it utilizes things like the SIP—session-imitated protocol—standard devices, such as session border controllers, and combines that with rule engines that manage signaling between endpoint devices.

 

What are some key drivers for it?

 

The basic driver is the exponential growth in demand for data, all kinds of data: video streaming, big data, * (2:14—unclear) services. That makes a traditional network architecture very, very unwieldy and difficult to work with. As companies need additional bandwidth, having to manually configure that, putting in the all the hardware is very time-consuming, expensive, and complex. The other driver is the need to fuse disparate data and the provision of network devices, such as the Internet of Things. It includes things like the unification of voice, video, Internet messaging, and business applications into rich, multimedia services. The network has to be able to do all these things which it previously did not have to deal with. Finally, security, the proliferation of security threats, which is a big driver for this new network architecture, which is a lot more secure.

 

Can you talk about the characteristics of the next-generation network?

 

Here are some of the characteristics. It’s virtual, which means that it’s not hardware-limited; you can provision network devices virtually via software rather than having to unbox, configure, and plug in physical devices. By being virtual, the network is very scalable. Another key characteristic is that it’s dynamic and agile; you can change the behavior and configuration of the network on the fly, and that’s based on rules-based policy enforcement and intelligence. Intelligence is built into the network, whereas, previously, you had to configure things manually, and the network remained very static and dumb, in a sense.

 

Another key characteristic is that the new next-generation network is protocol independent. It’s standards-based and vendor-neutral. Finally, the most interesting aspect is that the new network is contextually aware, which means that it kind of knows what’s going on and is able to reconfigure itself based on what’s happening within the network.

 

What are the differences from a traditional network?

 

One of the biggest differences is that the bandwidth of the network can be modulated up or down without having to configure hardware, and this is done via network virtualization. You can apply bandwidth to where it’s needed and essentially eliminate the need to overprovision and have a lot of network sitting idle and only when it’s needed during surge uses of the data. Applications will be able to dynamically reconfigure network resources on demand. The application itself will be able to signal to network what it needs, and then the network will be able to provide that application the services required.

 

Finally, intelligent networks will be able to independently sort out and manage complex scenarios, which is completely impossible to do with traditional networks. When you have a lot of things going on at the same time over a given network, the rules engines and some of the intelligence and self-awareness of this next-generation network, we will be able to understand and handle the priorities and the intent of the network designers on how these things are managed.

 

Can you provide three use-case examples?

 

1. Sure. I thought one interesting use case would be, for a health care provider that needs to provide continuous staff training. These days, with things like Ebola and other threats, you need to provide a lot of training for your health professionals, and a lot of that is video-based; it’s also interactive and typically sourced from a third-party vendor. All of a sudden, your network has to accommodate this tremendous bandwidth of video, which typical traditional networks are not designed to handle. On a traditional network, that typically creates a crisis. When somebody tries to load one of these video-training sessions, the network all of a sudden bogs down and slows down; it interrupts, let’s say, voice services or data services for other applications, and it becomes a big mess.

 

To sort that out, you need to provide a lot more bandwidth, put in a lot more hardware, need to call the service provider, and get more network. You might not need that all the time, so you need to over-provision for a certain situation. In this case, having the next-generation network based on the rules that you put into the network, the system will know that you’re running a training session, that training session is important, and, therefore, it might degrade or limit some other bandwidth temporarily to allow for the training to proceed smoothly and then, when it’s over, reinstate that network and switch allocation of resources on the fly.

 

This would be very, very helpful for that company because you could have training and other services running at the same time. Based on various rules that you put in, you can align those rules to coincide with training schedules, but the system could also be smart enough to know that if this CEO needs to have an important conference call, then it might degrade the training session so that the CEO would have priority over the training.

 

2. Another use case might be a call center that needs to fuse and orchestrate both internal and external data to provide best-in-class customer service. It might need to get into a legacy ERP system, get supply chain information, and then it might need to go outside of that legacy system and go on to a social network to get information about the customer. Finally, it might need to go to some cloud service and get some external data and fuse all those things and provide those in a real-time basis to the customer service rep so they can provide best-in-class customer service.

 

Traditionally doing that with a legacy network could cause a lot of bottlenecks. The legacy ERP system could bog down, the network might not have enough bandwidth to outside and get cloud services, so it could become a very painful experience to be on the phone with a customer waiting for all this data to be orchestrated. The next-generation network will be able to do that within predetermined key-performance indicators so that the customer will see that information provided seamlessly.

 

3. Finally, another interesting use case, which is very important, is that military and government emergency services oftentimes need to rapidly deploy forces to address crisis situations. This could be marshaling in some foreign country, or it could be in some remote area of the country that has a forest fire or an earthquake. All of a sudden, you need all of these units to come together and communicate, and they may not have worked together in that particular context, so by having a configurable network that you could put up on the fly, that is able to work across various protocols and codex, which a hardwired, physical network would find very, very difficult to do, you now have the capability using this next-generation system to provide network services when they’re needed in a crisis.

 

In all these three scenarios, having a virtual dynamically configurable and smart network enables all of these use cases.

 

Thanks, Dan, for sharing today on the topic of provision of next-generation network services.

 

My pleasure, Dustin. Thank you for the opportunity.

 

Thanks.

 

 

 

 

About Dan Grosz

 

 

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Dan Grosz

 

IT Executive and Information Architect.

 

LinkedIn Profile

I interviewed  Dean Dorcas who discussed Understanding Cost to Serve.

 

 

 

 

 

 

It’s great to speak with you today, Dean. I’m looking forward to hearing your views today on the topic of understanding cost to serve. Can you start by providing a brief background of yourself?

 

Sure. I started a company—we’re based out of Seattle, Washington—I started a company about 17 years ago called Integrated Management Systems, and we went into distribution centers and other labor-intensive operations, and we would give them a fixed cost. We would send them—the management, the crew—and we’d run those operations for them. In order to do that, we had to do it less expensively than they were running it themselves, so we really focused on what tools and methodologies we needed to drive up productivity fairly significantly in order to create the value that we could then make that operation profitable.

 

We really focused on different ways of managing the operations, what sort of information our managers needed in order to be effective. The tools we had up until that time we did using spreadsheets—and they were pretty good on the smaller operations—but we started running some distribution centers for some of the larger retailers, and what we found is, the size of the operations and complexity of the work and expectation of the customers were just more than our current tools could provide, so we decided we needed to develop some internal systems that would give us basically three things that we needed internally in order to run those operations.

 

The first one was cost to serve. We had to get real clear understanding of where every dollar was being spent in the operation, whether it was a direct process, an indirect process, and then what our costs were in order to do those different types of jobs. What is my cost when I’m doing a cross dock for this type of category or for this customer? What about when I’m doing picking or replenishment, et cetera? Really understanding what our cost to serve was to make sure that we were pricing it accordingly, or if we’re losing money on a process or a customer within that process, then we had a good understanding of where those costs were. That was cost to serve, and I can go into that in more detail, but that was the first thing we were trying to achieve.

 

The second thing we needed to achieve was really getting good understanding and visibility into the performance of our employees, down to an individual level. In those operations, there was a lot of variation in the type of work being done. As an example, a cross dock might take three hours to unload a trailer coming in and divide it up into the outbound trailers, or it might take 30 or 40 hours if there were a lot more cases, a lot of SKUs, a lot of complexity, maybe it was coming in as a shotgun, the freight was mixed, et cetera. A lot of different things went in to how long it should take.

 

In order to hold people accountable, we had to get down to fair labor standards and really understand how long it should take; then we could see every day how employees were performing. That was critical for us because when we run those big operations, we might have a hundred people on graveyard shift, and we might just know that we didn’t hit our numbers for graveyard shift, but we wouldn’t know why. We’d hear stories about people building false walls in the back of a container at two in the morning and going to sleep, but we didn’t know who was doing it, so we just didn’t have the visibility we needed in order to drive the productivity up. That was the second thing we really needed to develop.

 

The third thing was a pay-for-performance system on an individual level. Up until that point, we were running pay-for-performance on a team basis, but when you start getting up into large crews like that, team-based incentives just aren’t effective, so we need to be able to break that down and reward our associates; if they hit certain stretch goals, we wanted to reward them with a portion of the savings they created. That was our goal. We ended up building that system internally. We rolled it out at one of the big distribution centers for one of the big retailers, and within about six months, we took them from 73 cases an hour up to 157 cases an hour. We wanted to double their productivity and ended up saving that customer about $1.5 million a year in labor and took that operation to number one in their network for three years in a row. Real big success there for us.

 

At that point, as we looked around the market, we realized we created something pretty unique, and we made the decision—this was about 2008—to commercialize that software as a cloud-based system, or software as a service, and work with other companies to use those tools to run their own operations. Eventually, we ended up selling off the outsourcing company and focused completely on the software. That’s kind of a background of where Easy Metrics came from; it’s really a spinoff from an outsourcing operation that had developed those tools for their own use.

 

Can you talk about where these tools are needed and why we need them?

 

If we break it down into three areas, if we look at cost to serve, what we find is, a lot of times, companies have a macro-level view in understanding their costs. I might know that my costs are 32 percent of my revenue, so my labor costs are 32 percent. What I don’t know is that, say, a third of my customers or a third of my operations, I’m losing money and making money on the other ones, and I don’t know where I’m making money or where I’m losing money. Once I get visibility at that granular level—it’s called activity-based cost—what’s my cost when I look at the actual activity that it takes to deliver that service? What most companies find is that on a good portion, historically, it’s about 30 percent of the operations they’re actually not making any money. They’re doing a lot of work, but they’re not nearly as profitable as they could be.

 

Getting to that level of understanding really allows managers to start focusing on those areas where there’s a lot of opportunity to improve their profitability. As an example, one of our customers, it was a third-party logistics company, and they were charging 10 cents a unit for a labeling project, what they were doing for their customer; every time they put that label on, it was costing 10 cents. When they ran the cost to serve, they actually found out it was costing 12 cents per unit to do that job, so they were losing about 20 percent every time they were doing the work. By getting that level of understanding, they were able to adjust their pricing. That’s just one example where that could be helpful.

 

Another one of our customers, it was a manufacturing company. They would bring in kitchen items from Asia, and they would sell it to their customers here. Different customers would ask for different value-add type work to be done to the product that came in. In general, they would charge kind of a fixed-overhead cost for each of those value-added requirements, but when they broke it down using their system, obviously, there were some things that didn’t cost them much to do at all; there were other jobs and requests that cost a lot more. What they found out was, in certain areas they were losing a lot of money trying to give the customer what they needed, and they weren’t pricing appropriately for it. What that customer did was ended up taking that information and tied that back into the sales team’s commission structure. If the sales team was promising certain value-added work to the customer and they weren’t pricing it accordingly, then it would hurt their commissions, or, flipside, if they were pricing accordingly, they would end up making additional commission off that. Giving them a good understanding of what it cost to do that job helped them price it accordingly as well.

 

Other areas, if you look at a multitenant 3PL, they might know that it’s costing a dollar per unit to pick an order, but some customers might be more labor-intensive or they might be much smaller units for the order size, et cetera, so the price mix might be very different between one customer and another customer. If you just go with overall averages, you end up pricing one customer too high and another customer too low relative to what it’s actually costing you to serve that customer. Having that cost-to-serve visibility helps you make the decisions and price accordingly. It also helps you identify where, maybe, you’ve got some opportunities to drive process improvement within an operation. There are certain areas that are costing you a lot more than what you think they should be, and you can focus on those areas.

 

The final thing on cost to serve, I’d say, is really getting understanding of your direct costs versus your indirect costs. What we find a lot of times is companies have really no idea how much money they’re spending in those indirect buckets, whether it’s waiting on work or sweeping floors or meetings or quality control, whatever it is. Getting that real understanding of what those areas are costing you; then you can manage them accordingly. A lot of times, companies can drive 5 or 10 percent out of their cost structure just by really actively managing those indirect cost centers.

 

That was on cost to serve. If you look at it from an accountability side, what we find is within operations, if you look at your top 20 percent of employees and compare them to your bottom 20 percent of employees, when you’re able to hold them accountable against fair standards, you’re going to see a lot of variation between those. Being able to see, on a daily basis, how employees are performing and remove all the uncertainty that is associated around product mix so that you can actually hold employees accountable; then you can help them, one, understand what expectations are and help them understand best practices, et cetera, to try and get them up to that level. By doing that, taking that bottom, say, 50 percent of employees and helping them get up to the acceptable standards can really drive cost out of the system as well.

 

The reason I say it’s so critical from the standards standpoint is, a lot of companies, what they’ll do is look at lines per hour or cases per hour or some type of single-unit metric. What they’ll find there is, if I go and hold you accountable, I say, “Your lines per hour were too low yesterday,” and you say, “Yeah, but I had that customer that had a very big order, so, obviously, I was picking a lot of cases for every line I processed; therefore, it’s not fair to hold me to that standard.” That employee might have a very legitimate excuse there, and then it makes it very hard to hold them accountable.

 

Getting that fair standards that looks at more than just a single-unit metric—it might look at cases and lines and orders and locations and travel, et cetera, but it doesn’t matter what order you’re given or what product mix you’re given; you’ve got a fair amount of time to get that work done, and then I can compare how you’ve performed against how long it should have taken you, and now we can have very constructive and meaningful discussions on how you’re performing. I would say on that type of work, when you’re looking at accountability, any company that feels like there’s opportunity to drive productivity higher, to drive down their unit cost of labor, having those accountability tools is going to be very important.

 

The last section we talked about was the pay-for-performance. What we found is, back during 2008, 2009, a lot of companies were going through the recession; there wasn’t a lot of interest in pay-for-performance. They figured their employees were lucky to have a job, and that wasn’t a concern. Now, six, seven years later, what we started to find was, companies haven’t been able to up the wages of the employees very much recently. There’s a lot more pressure out in the market for employees, so they’re having a harder time recruiting new people in, a harder time holding on to good employees, so they want to be able to reward them with additional pay, but their cost structure within their company doesn’t allow them to just go and increase their cost of labor.

 

A pay-for-performance system allows them to set goals for the employees, the employees achieve those goals, they save the company money, and then both the company and the employees share in the savings that are created, so it really is a win-win scenario where the employees make more money and, oftentimes, it’s 20 to 35 percent more compensation than they were making before and the company’s cost per unit is actually going down even though they’re-paying employees more because the employees are doing more per hour of work being performed. I would say, any company that needs to drive down the cost of labor, wants to be able to incentivize their employees more, and really wants a fair way of rewarding their top performers for achieving those stretch goals, pay-for-performance system is a pretty powerful approach.

 

Do you have any final recommendations on how this can be done effectively?

 

Dean: The biggest thing, when you’re looking at any of these programs, especially when you’re looking at accountability and pay-for-performance, as we talked about, fair-labor standards is really the crux of it. If you don’t have fair-labor standards, as I mentioned in my example, then you end up either having a lottery ticket where I’m going to hit a bonus if I got an easy job to do or there’s no way I’m going to get a bonus if I’ve got a hard job to do. You’ve got to eliminate that uncertainty and that variability. The way to do that is to get to fair-labor standards using multiple metrics.

 

The key there is how you determine in a very cost-effective manner what those labor standards should be set at. This is where you can look at two different approaches. The traditional approach is you bring in industrial engineers, they use stopwatches, they’re going to analyze and watch on the floor, let’s say, eight hours’ work being done. They’re going to have a very small snapshot of work, and then they’re going to engineer in what they think the labor standards should be there. The downside to that approach is, it’s very costly—a typical facility might cost $100,000 to get engineered labor standards in there—and they become obsolete over time, so you need to bring the engineers back and continue to engage that; that has a cost associated with it. The final downside is that they only see a very small snapshot of what’s going on out there.

 

What we’ve seen a lot of times is, the type of product being performed, the mix that’s going on, different things have happened, you might not see that in your one day of watching that process. We’ve taken a slightly different approach. We still work with engineers when our customers want to use that, but we use this big data-correlation model that, as we pull in the data into the system, we might get hundreds of thousands of data points of a process that’s being done.

 

You can model that very inexpensively and come up and see, okay, when this work is being done with these different types of variables, here’s how long it’s taken different people to do that. And the system will tell us how to weight those variables to get the variants as tight as possible, and then you just determine how much of a stretch goal over the current level of productivity you want to set that standard. You can look at a given increase over it and then you’ll share the savings, or you can look at what the top 20 percent of the employees are performing and set the standard based on that.

 

The nice thing about that is it’s, one, inexpensive; two, it gets you very tight labor standards; you’re letting the data drive where those standards should be; on an ongoing basis, it’s very easy, say, every six months to go back and use all the more data that you’ve gotten in, have that reoptimize your processes, continually to tighten up those standards so that they don’t become obsolete, they don’t get to the point where they’re no longer fair, and you’re constantly keeping them nice and tight and with a high correlation. You’ve now done that and eliminated 99 percent of the cost out of trying to set up and maintain labor standards.

 

With so much data that’s now available, it’s a new approach to developing those standards in a way that’s very fast and very cost-effective. The ideal situation is if you still have engineers involved; they can then use that big data approach, identify what areas to really focus on, and then use their expertise on a given process to help maximize and optimize how those processes are being run. Really, the best of both worlds.

 

Thank you, Dean, for sharing today.

 

Thank you very much, Dustin. I appreciate talking with you again.

 

 

 

About Dean Dorcas

 

 

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Dean Dorcas

 

CEO at Easy Metrics Inc.

 

LinkedIn Profile

I interviewed Andrea Melis who discussed What Makes You a Supply Chain Manager?

 

 

 

 

 

 

It’s good to speak with you today, Andrea. I realize you’re in Vietnam, and you have a lot of experience in Asia. I’m looking forward to hearing your views today on what makes anybody a supply chain manager. Can you start by providing a brief background of yourself?

 

Absolutely. Thank you very much, first of all, Dustin, for this invitation that gives me the chance to speak with you and express my knowledge to all the people following your blog. Yes, that’s true; I’m in Vietnam and I spent 15 years in Asia. I started in China 15 years ago as purchasing manager. My background is mostly manufacturing business and starting as purchasing manager and then managing different warehouses and logistics departments. This brought me to full knowledge of the supply chain, generally speaking.

 

Starting with your first question, supply chain is the management of all the processes from the very first step, so, the raw materials—up to the finished goods. This may vary a lot from different kinds of businesses. Of course, you might have manufacturing, you might have service companies in terms of transportation. I feel I’m very lucky because I had the chance always to work in the manufacturing business, which is probably the most complete version of the supply chain.

 

What makes someone a supply chain manager?

 

A supply chain manager is a connecting position. It’s a service office, in my opinion, and it has to provide the best solution to the different departments. The very, very important thing for a purchasing and supply chain director or manager or specialist is to know exactly what each department does and the way they do it. The knowledge has to become a complete, unique body made of different parts that have to work at the best of their ability in order to provide the most effective service for themselves as a department, as well as for the company. Deep knowledge of every single department that services the supply chain itself.

 

How do you become a supply chain manager?

 

With experience, in my opinion. I don’t think you can really decide one day to become a supply chain manager; I think it’s a process, although there are many schools and many universities that provide a degree in such a discipline, if you’d like. On the other hand, the experience, as I said before, it’s absolutely important; it’s the best thing. Every single factory or manufacturing company or productive system has a specific way of work; therefore, it’s absolutely important, first of all, in my opinion, not to remain always in the sales field, because you may apply systems that you have learned in one field and maybe apply them to a different industry. This is the first thing.

 

Secondly, you must spend one, two, three years in purchasing, logistics, which are the two main aspects for supply chain manager knowledge. Of course, you must have a bit of financial background because the implication of the supply chain in a cash flow view are very, very important and more effective as a supply chain, they’re more effective with the ability of the company to improve cost savings.

 

Do you have any recommendations or experiences you’d like to share?

 

As I said, I’ve been very lucky because I had the chance to work in difference industries. I’ve been working in the furniture business, which is the one I’m working now, and I’ve been working in China. I’ve been working in the manufacturing electronic business. I’ve been working in the service companies. My recommendation is: Do experience, challenge, accept challenges, and challenge your colleagues to understand and push them to make you understand what they do and how they think. Find the best way to marry the two departments and make sure they can develop the best attitude, the best job for themselves and for the company. This is the final target; this is the ultimate result that a supply change wants.

 

Thanks for sharing your views today on what makes you a supply chain manager.

 

Dustin, I think you very much. I’ll be very, very glad to talk to you again in the future. I’ll talk to you soon.

 

Thank you.

 

 

About Andrea Melis

 


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Andrea Melis

 

Chief Operating Officer

 

LinkedIn Profile

I interviewed Matthew Weilert who discussed Supply Chain Resilience.

 

 

 

 

 

 

It’s good to speak with you again, Matt. You were telling me about your travels; you recently did a world tour, and today’s topic is regarding resilience. Can you give a little background about this topic of resilience and your recent trip?

 

You bet. I’m excited to talk with you again, Dustin. I had the privilege of touring in Turkey, Greece, Cyprus and Malta. I’m very excited to tell you that in Turkey, we have four new ambassadors who are excited about bringing the system key risk-modeling process and risk-discovery process into Turkish businesses, specifically both finance and operations. We’re targeting midsize businesses in Turkey. In Cyprus we will be looking more specifically at the small-business sector. In Greece we’re targeting the large range of defense contractors. And in Malta it will be more a mix of university and operational; we’re going to blend the two.

 

It was a privilege to tour; the food in all four countries is fantastic. Thumbs up for Turkish Airlines getting me there and back. It was a great trip and a great experience for me to see that the lessons we’ve learned for building resilient supply chains are true especially overseas, at least in the four eastern Mediterranean countries where I was privileged to just recently tour in October.

 

With that, as a way to get started, I’m really excited to talk about the concept of resilience in the supply chain because it comes back to the heart of what you and I talked about in our previous discussion. Really, the simple things, the human relationships, are what build the technology; it isn’t the other way around. Essentially, Dustin, resilience is what you do when things go off plan; it really is not software; not hardware; it really is a people-to-people connection. That’s the essence of everything we do here at the nonprofit Chamber of Commerce for Risk that I chair. It’s helping people understand that the one-to-one business intimacy, the people relationships are what drive today’s supply chain and resilience.

 

You mentioned there are four lessons for supply chain leaders. Can you talk about the first lesson?

 

Essentially, we want to cover four steps. Resilience is driven by what I call granularity; granularity is how closely we observe the natural world around us, how much attention we pay to the world that’s flowing by us. The third point we’ll be covering is: You’ve got to love your people in a practical, day-to-day way. Loving your people means giving them the resources they need to get their jobs done. Don’t make excuses; get things done and help your people get rid of problems so that they can get done the jobs for which you hired them. The fourth really is how you build innovation, and, as we’ll discuss briefly, building innovation comes from these first three steps. The fourth really is implementing the first three.

 

In the first lesson—let me turn back to my notes for a sec—the first lesson is: knowing your business. This may sound overly simplistic because I’m not going to talk about how to drive trucks, how you fly airplanes, how you work very expensive software. I’m going to talk about running the human resources function so that you hire the best people, and the only way you’re going to do that is get an HR leader with decades of experience and actually reading people and understanding cultures. Every culture has a language. I don’t mean the words they speak; I mean the way that they live. Every culture either contributes to or detracts from the ability for a risk-free or risk-resilient culture.

 

When you find talented people, create the opportunity for them to have success in your organization by getting rid of the silly bureaucratic stumbling blocks that far too many of us experience on a regular basis. That’s essentially the essence of building what I call the milk stool. People, process, protocol, make sure that your supply chain is structured for success. If you have to have a government intervention to get two companies to work together, or if you have to have physical assets come together and have backup assets in play, for maybe a seasonal storm. Get these assets in place. That’s not a risk; you already know that seasonal storms happen on a regular basis, so get the assets in play, and don’t accept any excuses.

 

 

That’s why we’re very, very different [Our approach]. The heart of the matter is not the hardware and software; the heart of the matter is the people and allowing the people to follow the process which your experience knows, their experience has told you works. That’s pretty much the first lesson.

 

 

Get these assets in place. That’s not a risk; you already know that seasonal storms happen on a regular basis, so get the assets in play, and don’t accept any excuses. That’s why we’re very, very different. The heart of the matter is not the hardware and software; the heart of the matter is the people and allowing the people to follow the process which your experience knows, their experience has told you works. That’s pretty much the first lesson.

 

Thanks. How about the second lesson?

 

The second lesson comes from what I call the 11th-century Samurai Tea story that authors like Rick Warren have modernized with their concept of a purpose-driven life. The power in powerlessness; that’s a concept that has both Eastern and Western connotations.But the power in powerlessness says that you look around you and you let other people take **the** credit; you let other people lead; you lead invisibly, like the best waiter. The image of a good waiter is someone who’s never there until you need him, and when you do, he has exactly what you need.

 

That’s the essence of having behind-the-scenes geniuses who aren’t looking for fame. They make sure that the right fuel connections are there; they make sure that they right amount of fuel is ready when the vehicle needs it—whether that’s a plane or a truck or anything else—they’re there to make sure the job gets done; they’re not there to make themselves look good. That’s coming from the Samurai Tea ceremony where technical mastery and humility were woven together; that’s the Samurai concept. That’s an easy way to summarize what could be a semester-long course in logistics: technical mastery with humility. It really is that simple.

 

And how about lesson three?

 

I’m going to wrap over here. Lesson three is that the real currencies of business are not money. The real currencies of business are not Turkish Lira or Euros or the U.S. dollar; the real currencies of business are relationships. What do I give to you? What do you give to me? And how do we establish a medium of exchange where we both are well-fed, well taken care of, well-sheltered from storms, and we have the ability to shine in our respective disciplines? Those are the currencies that are most important.

 

When we give the humble people who don’t want credit, when we give them the spotlight, in the appropriate vehicle, subject to their position of expertise, then we are paying it forward, like the saying goes. The essence of everything that we do is taking the human dimension and bringing it forward into areas of extremely high technology, like aviation or like international supply chain logistics. It’s the same message delivered in a thousand unique ways: People precede and people trump technology each and every time. If you want that technology to work right, you’ve got to treat your people right.

 

That is the simple lesson that, again, could be expanded into a semester-long workshop or semester-long collegiate course on supply chain logistics: Work with people, give them the tools they need to succeed, allow them to flourish by doing whatever you’ve got to do on the back end to allow that flourishing to occur, and then work in the currencies that reward people, which is not money. The currencies most important to business are business relationships, people-to-people relationships. That’s really kind of the summary of the first three.

 

Smart people share the care. Smart people let people be actual people, which means they’re not going to follow a script when they’re on a customer service call; they’re just going to get it done. There was a fascinating exchange captured in a YouTube video where a customer service rep acted like a Star Trek character, and the person on the other end of the line picked it up. It was just funny as all get-out, but they actually got the person’s technology problem solved while portraying Star Trek characters.

 

The reason it went viral on video is because people have had the situation where the person on the other end of the phone doesn’t sound like a person; you can’t get them to actually go off script and help you solve the problem. People who understand they’re in the business of getting the job done will go off script or they will put on a persona if that puts someone else at ease. Those are the kinds of people who are worth their weight in gold.

 

And what is the fourth and final lesson?

 

The real lesson that Olympic-level dedication to your craft brings out is that you’ve got to mature beyond mere technical knowledge. The German that I’m going to quote is named Eckhart Reiland. Eckhart Reiland is the regional president for Bosch Gasoline Systems, and there is a story that he tells about having cross-disciplinary insight. It’s a fairly long story, but the message is: How do we get someone to understand a new topic?

 

The way that they understand that new topic is very much aligned with a story my grandfather told me—and I’ll wrap up with a silly story that my great-grandfather told me. There was a ship captain, and he was seeing a light bob up and down on the horizon, so he told his radio man to radio that ship, that they would have to change course. The message came back and the radio man was a little bit scared because this captain was not a pleasant person; this captain violated all the examples we just gave. The radio man says, “Sir, you will have to go three degrees or three degrees right. You cannot remain on your present course.”

 

As the radio man exploded, the captain just said all sorts of vile language and said, “You tell that idiot in that dinghy that I’m an aircraft carrier, and he will change course.” The message comes back and it says, “The idiot in the dinghy respectfully tells you that he is a lighthouse, and if you continue on this course, he will attend your funeral and console your widow.”

 

I was presenting this–as I was relaying this story that I adapted from a very learned gentleman in the gasoline industry, the entire crowd breaks up. [Laughter] Because we’ve all heard people who just blow up for no reason when they’re actually the ones who have to change.

 

That single story kind of wraps up our former point of hiring talented people. You’ve got to have the talent to be an aircraft-carrier captain. Give them the tools they need. He had all the resources at his disposal. Then be humble enough to recognize the surroundings you’re in and make the changes. Change course when you need to; don’t crash into the rocks because you refuse to change course. The lighthouse story is simple, it takes a moment to tell, and it really helps people of all cultures—anyone who has a coastline, anyone who has a maritime, seafaring tradition—to understand these concepts of being humble to develop a resilient supply chain culture.

 

With those four, I think we’re running close to our time, and I’m really excited to have gotten a chance to share with you again. Anything you want to wrap up with, Dustin?

 

Thank you again for sharing your views about resilience and what it is. I look forward to future talks as well.

 

Dustin, thanks again, and I’ll look forward to the edited version. For sure, let me know as soon it’s up; I’ll be excited to view it.

 

Thank you.

 

 

 

About Matthew Weilert

 

 

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Matthew Weilert

 

Board Chair: STETA Group (systemkey.org) | Publisher at STI Press (stipress.com)

 

LinkedIn Profile

I interviewed Daron Whisman who discussed Talent Demand Within Supply Chain.

 

 

 

 

 

 

It’s nice to speak with you today, Daron, and I’m looking forward today to hearing your views on talent demand within supply chain. Can you first provide a brief background of yourself?

 

Yeah. Basically, I within the health care industry, and I’m been within supply chain for 15 to 20 years. Worked for for-profit, not-for-profits on the buy and sell sides.

 

What makes a good supply chain leader?

 

I’m someone who knows what the strategic vision is and understands how the interconnectedness of supply chain can be leverage for strategic advantage for working capital, for customer service excellence, and also quality within an organization, whether it’s inside of health care or outside of health care.

 

Can you talk about some of the good skillsets that are needed for supply chain?

 

Yeah, Dustin, interesting; on the executive level I’ve had arguments in the strategic vision but also the task level, someone who embraces change, is willing to take risks, but at the same time is highly curious, who understands the causes and effects of interdependencies. With health care, what we say is a supply chain cannot be standalone in the process because if you have a standalone or silo mentality, one change in the supply chain will have unintended consequences in the other areas of supply chain. Really, understanding a value-stream mapping approach but also the financial impacts of the velocity and how you can improve processes through partnering with automation and getting more visibility across in the end-to-end supply chain. That means also having a vision to reach outside and work with your suppliers to see where you can take out the nonvalue-added steps.

 

And what is the next evaluation of supply chain talent?

 

That’s a very good question. I’m going to probably say just seeing—I go back to the nonvalue-added steps and having a process-driven approach, and it seems that engineers do really well in supply chain because they have that good discipline and process-management approach. Getting more people who are process-driven but also can articulate the change management and have a little bit of sales mentality within their organization and across their strategic partners, because the next evolution will really be the end supply chain.

 

There was a little bit of a cutoff. What was the next evolution? Can you repeat that?

 

I think someone’s who able to look outside of their four walls but also has a good process-management approach.

 

 

 

About Daron Whisman

 

 

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Daron Whisman

 

Transformational Supply Chain Executive - Working Capital | Transition Management | IT Optimization

 

LinkedIn Profile

I interviewed Neal Click who discussed How Early/Mid-Career Professionals Can Select and Develop Relationships with Search Firms.

 

 

 

 

 

 

It’s nice to speak with you today, Neal. Today I’m looking forward to hearing your views on how early- and mid-career professionals can select and develop relationships with search firms. Can you start by providing a brief background of yourself?

 

Yes, Dustin. I spent many years in the transportation industry, primarily domestic transportation in North America, in the U.S., Canada, and Mexico, and various management executive positions. Then, over a decade ago, I got into the recruiting business, and, ultimately, one of the other recruiters and I bought the firm, so now the two of us own the search firm, and we specialize in recruiting management and executive talent for transportation, logistics, and supply chain organizations throughout the U.S., Canada, and Mexico.

 

My first question is: What is the role of the search firm?

 

Well, one thing the search firm is not is, the search firm is not there to find someone a job. I think that’s the biggest misconception. Especially early- and mid-career professionals often think that the search firm is there to find them a job, and that’s not what we do. Our role is really to find people to fill positions with our client companies. We see our role as one of identifying, evaluating, recruiting, and placing talented people with our client companies. When someone reaches out to me and says, “Gee, I need you to find me a job.” That’s not what I do. They need to understand that our role is really one of finding people for our client companies and, frankly, finding people who the companies would not find on their own, because they pay us a substantial fee for our services.

 

What should early- and mid-career professionals look for?

 

I think there are several things. First of all, I think you really want to look for knowledge, experience, and expertise within the target market you’re looking at within the industry segment. When I talk about market, not necessarily geographic market, but if you’re in transportation logistics, say you’re in freight forwarding, find somebody who has experience and has successfully placed people in freight forwarding. If it’s intermodal, same thing there or if it’s port terminal operations. Make sure that you’re dealing with a search firm or headhunter who has experience in that specific segment where you want to play. Likewise, if you’re in a very specialized, functional area within transportation—let’s say you’re an industrial engineer—then you want to make sure that you’re dealing with someone who has had experience in placing industrial engineers and can appreciate what’s required there.

 

I think the other thing that someone should look at, a candidate should look at in speaking with a search firm, what sort of questions is the search firm asking. Is that headhunter taking the time to get to know you, or are they just digging for key points so they could sell you to their client? Are they interested in your career, or are they just trying to position you so they can make a placement and get a fee? I think it’s very important that you listen to the questions that are being asked, and they should be asking a lot of questions about your career, your career journey, and getting to know you, not just digging for little key bullet points or nuggets they can use to present you for a position.

 

I think the next thing you need to really look at is the information that search firm is providing about the opportunity and that company. Are they being totally transparent? There are no perfect jobs, there are no perfect companies, and that headhunter should be telling you not only the good, but the bad and the ugly about that position, about that company. And if they’re trying too hard to sell you on the opportunity, you need to watch out.

 

This really all comes down to integrity. Are you dealing with a search firm that has integrity, that has that kind of reputation? Are they willing to provide references and talk about the type of jobs they’ve filled and some of the people who can speak to their professionalism? At the end of the day, you want to begin with someone you can trust. You’re providing them with a tremendous amount of information, and you want to make sure it remains confidential and that they will treat this relationship in a very professional and confidential fashion. That’s what you need to be looking for in that evaluation of the headhunter.

 

How do they develop a good relationship with the search firm? Any more you could say about the relationship?

 

Absolutely. I think, first of all, this sounds very basic, but take the headhunter’s call, even when you’re not interested in making a job change. They say the best time to look for a job is when you have one. I can say the same thing is true for developing a relationship with a headhunter; it’s when you don’t need one. Become a resource to that headhunter by referring candidates, and keep the door open for future opportunities. One thing you can count on is that things will change; you need to be prepared. Be open to taking those calls and having positive business conversations with that headhunter. Even if you’re not in the market to make a job change; build that relationship then.

 

Next, I would say, most important, be honest. Be honest about your work experience, your education, your accomplishments. Be honest about your compensation history and what your expectations are about that. Be honest about the positions you’ve held and the positions you’re looking to hold in the future. Be honest about relocation flexibility; most of our positions involve relocation, and it’s okay to say, “Well, I’m really only looking to move to this place or that place.” Don’t tell me that you’re wide open on relocation if you’re not. As we say, be honest about what you really want to be when you grow up. If you are happy being a direct-contributor salesperson, then that’s great. Don’t feel bad about that. Say, “I love being a salesperson, and that’s what I want to do.” If your motivation is to become the president of the BNSF Railroad, that’s okay.

 

Be honest about your motivation for making a job change. A good headhunter’s going to ask you that. “When it comes down to it, why would you consider making a change?” You need to be honest with yourself and with the headhunter. Otherwise, you’re going to end up wasting the headhunter’s time, you’re going to waste your time, and over the long run, you won’t have a very good relationship.

 

Next, be realistic. If you expect to make a giant leap in position, compensation, don’t expect the headhunter to help you; it’s not going to happen. You need to be realistic about what the next step in your career is going to be and what that looks like position-wise and compensation-wise, so be realistic.

 

Last, be patient. It may take months, it could take years before the right thing comes along. Don’t give up on the relationship because the dream job doesn’t happen immediately. Also understand that you may be submitted for an interview for several jobs, several positions before actually getting an offer, and you may get an offer or two that aren’t acceptable. That’s okay; it takes time and patience.

 

I think probably the keys there are: take the calls, communicate, be honest, be realistic, and be patient. Over time, you’ll have a good relationship, and that headhunter’s going to be instrumental in your career advancement.

 

Thank you for sharing today, Neal.

 

Thank you, Dustin, for asking us to speak about this.

 

 

 

 

About Neal Click

 

 

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Neal Click

 

Principal and Managing Director

 

LinkedIn Profile

Website

I interviewed Scott Massie who discussed Foreign Trade Zones in the USA.

 

 

 

 

 

 

It’s good to speak with you today, Scott. I’m looking forward to hearing your views on the topic of foreign-trade zones in the U.S.A. Before we start, can you provide a brief background of yourself?

 

I’m Scott Massie, born and raised in the U.S.A. I’ve been in the field of logistics for over 40 years and worked in just about every aspect of transportation, distribution, project management, and the whole gamut with all the different airlines, trucking companies, steam ships, et cetera. The subject I wanted to talk about is the U.S. foreign-trade zones and the impact on the whole economy and how they’re being perceived and the fact that many, many companies, the majority, aren’t taking advantage of the opportunities available. You want to ask me some questions?

 

What is a foreign-trade zone?

 

A foreign-trade zone is a designated area that’s set aside in the U.S. which that zone itself—it could be a building, it could be a big facility, small facility, as long as it meets the qualifications—is not considered not in the U.S.A. even though, physically, it is in the U.S.A. until the goods that were received leave that facility. When they leave that facility, if they’re shipped within the U.S., at that time you’d pay U.S. customs duty. If they’re shipped outside the country, you would not pay any duty. If you say, “I can’t sell these things, and I’m going to destroy them,” you don’t pay any duty.

 

They don’t enter U.S. commerce until they’re actually shipped to a customer in the U.S.A., as opposed to without a foreign-trade zone, when an ocean container comes from China and lands in Savannah, Georgia, the customs people charge you the duty, whatever it is, immediately, whereas with foreign-trade zone, the container would just get shipped right to your facility, like, in this case, Atlanta, Georgia, where I’m at. You follow the rules and then you get some great benefits out of it. I can elaborate on that.

 

What are the advantages of being associated with an FTZ?

 

There are some really great benefits, and I’ll just kind of give you an overview. There’s duty deferral. For instance, I was importing some women’s lingerie products that had a 32 percent duty coming from Huangdao, China, into the U.S., and they were paying 32 percent as soon as it hit the port in Savannah. You don’t pay the duty until they sell those products, and they may never sell them. There’s a duty deferral—in this case, quite a substantial amount of money. Each country has different duty rates, but it’s typically anywhere from 10 to 20, sometimes 50 percent duty, depending on what it is.

 

Also, when you ship out of the country, you don’t pay duty at all. If it came in to the zone and left and went to Canada, for instance, you never pay duty, whereas you would’ve already paid the duty coming in, and you’d be paying it again going out. They have what’s called a duty drawback, but it’s almost impossible to collect because you have to prove pretty much the same item went out a year ago, was received a year ago, shipped out, and trying to match it, but most people don’t even bother to do it. With the foreign-trade zone, you don’t worry about that.

 

If you have scrap or something you want to get rid of, you get permission from the U.S. Customs to destroy it. They may want to come watch you do it, or they may just take your word you’re going to do it, and there’s no duty. You don’t pay any duty if you’re shipping anything to the military; that’s duty-free. There’s an advantage also called the inverted tariff relief rate; that has to do with foreigners who are shipping to the U.S. Say they’re shipping cups and saucers and calling it a serving set, and they pay 10 percent duty, but the U.S. company paying those saucers and cups from different places are paying a higher duty possibly, because each one’s on its own rate. Once you’re in a foreign-trade zone, you can put them together as a cup and saucer and then ship them; you’d have the same advantages as the foreign companies. A lot of people think they’re getting advantages unfairly against the domestic ones, but that’s because the domestic ones aren’t involved with a foreign-trade zone; it’s designed to give them a lot of benefits.

 

Another benefit is that there’s no timeline. They can sit in storage for five years, it doesn’t matter—ten years—and you don’t pay any duty until it moves out. Faster service is as soon as that container hits the port, it gets shipped right to your facility. Sometimes containers can sit at a U.S. port for two or three weeks before they can move.

 

There’s another big advantage called duty entries. Typically, companies will pay brokers as much as $50 to $100 for entry, and you might have 20 to 30 entries in a week, $2000 to $3000. Well, you can permission to have one entry per week and just pay $100; huge savings. There are also benefits for tax exemptions, insurance savings, plus you can actually create jobs for people in the United States.

 

Can you talk about how difficult it is to get involved in FTZ?

 

That’s a very good question. There’s a perception out there that, first of all, it’s very complex, it’s very expensive, and you’ve got to be leery of the U.S. Customs people, because they’re out to get you. None of that is true. There is a start-up cost to get in, and part of why it’s relatively high right now—there are still benefits to doing it that way—is because there are only a few people involved. There are some consultants in two or three companies who have software and they have consultants and they make a killing on the companies that want to go into one. Now, if you’re a Wal-Mart or a Home Depot or somebody, money’s no big deal and you’ll pay the fees, but a smaller company may balk at the idea they have to pay maybe $300,000 to set one up even though the payback may be within a year. The truth of the matter is, the costs are so high because there are so few people. It’s almost like a monopoly—well, it is—in setting these up.

 

The bottom line is, the government is not out to get you. Yes, you’ve got to follow some rules, but the rules they have you follow are really no different than if you owned a company, you’d want to follow in making sure stuff is put in the right place at the right time, kept track of, that whoever comes in your facility has permission to be there, you complying with all the safety and fire hazards and things like this. They’re not asking you to do anything you should not automatically want to do yourself. There are a lot of myths that have prevented a lot of companies from not participating either in a multipurpose one, where you’re sharing with other companies that are in there or your own, you set up your own warehouse.

 

What does it cost to set up an FTZ?

 

Again, it can cost you a lot depending on how you go about it. It could cost very little if you have some understanding of how to do it, and it’s really just following any other government regulation. I’m actually working on a training program I’ve created to kind of help this process. Another company came out recently that has more affordable software. The government itself, the U.S. Customs Department is under the Department of Commerce, headed by the Secretary of Commerce, and they’ve been going around to the different foreign-trade zone groups and trying to encourage people to join. It’s not a political issue; both the Democrats, Republicans, and the Independents, everybody wants more business in the U.S., and if they don’t participate in a foreign-trade zone, it makes it difficult to do much more.

 

To give you an example, out of 300,000 companies that do import and export in the U.S. as of 2013, only about 4 percent of those were involved with foreign-trade zone. It seems kind of ridiculous. And the foreign-trade zones have been around technically since 1789 but more heavily since 1934; some of the auto companies were the first ones to get involved with that. It’s really not that difficult, and it could be a lot easier than people think. There’s a myth that’s put out there for reasons to keep it limited to a monopoly that wants to keep control over the money they’re making with the few companies that want to go into it.

 

What are the issues with the U.S. Customs organization?

 

Scott: The issues really are that you become a deputy, basically. When they say, “Okay, you want to set up this warehouse and make it a foreign-trade zone? Okay, we’re going to use some rules,” but you’ve got to keep the place secure, you’ve got signs there saying you’re going to go to jail for 20 years if you break in and steal something or conduct illegal activity like importing drugs or something like that. People come in, they have to sign a log book, you’ve got to keep track of that, there’s some administrative stuff. Technically, at the most, you might have to hire one person, but all in all, what they expect you to do, because they consider, until you pay the duty, they consider the goods belong to them; you owe them money. There’s really nothing wrong with that.

 

If you make mistakes, they’re not going to throw you in jail, especially if you bring it to their attention. And if you made a mistake and they caught it, they go, “Oh, you missed one of these items; you’ve got to pay duty on that one.” As long as there’s nothing that’s considered to be flagrant or somebody’s trying to take advantage of the system. They make human errors and mistakes and those get adjusted. If you’re doing well, you may see them once a year, have a visit, then everything’s fine. They really want to be your friend and not your enemy, but a lot of people always think the government is always the opposite and it’s not true.

 

Where do you learn how to set up an FTZ?

 

Again, there are limited resources right now. You can get the regulations, you can get those free if you download them online, and you can just read about it, or you can contact the various consultants. There’s what they call a grantee, which is sort of like the group that sets up the foreign-trade zone network in major cities. You can visit with them, and they’ll give you some pretty good information as well. You have to do a little digging—not too much—if you’re really interested, and you have to be in a place that’s considered a port. It doesn’t have to be an ocean port; land is 100 to 200 miles away from a port, but, well, Atlanta Airport is considered a port authority, so as long as you’re within 90 miles of the Atlanta Airport, you’re in an eligible area. There are some places that are probably out in the middle of nowhere that wouldn’t be. For the most part, where most industrial business takes place, almost anybody can join a foreign-trade zone, join somebody else’s or create your own. Creating your own is a little more involved, but it can be very beneficial to your organization.

 

Thanks, Scott, for sharing your views today on foreign-trade zones in the U.S.A.

 

Okay, you’re quite welcome.

 

 

 

About Scott Massie

 


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Scott Massie

 

Senior Program & Project Manager

 

LinkedIn Profile

I interviewed Hakan Andersson who discussed Logistics as the New Storefront. Logistics is the new storefront, and this makes the logistics so much more important and so much more fun!

 

 

 

 

 

Hello, Dustin. Thank you very much for inviting me to talk a bit about logistics as your new storefront. What I mean with logistics as your new storefront, it’s easiest to explain if I give you some examples. The first and obvious thing here is the online economy and the growth of the same, the Amazons of the world.


As a matter of fact, if you think about it, a lot of people have their main contact as consumers with their suppliers or vendors through what is sent to them in the mail. That means that, for many companies, the actual delivery of a product is the only physical contact that there is between the company and the customer. This is perhaps more clear if you look into the business-to-business market, where more and more companies are buying a solution rather than a physical product per se.


A very typical example here is that we are working with a manufacturer of fighter jets, and a manufacturer of fighter jets typically wants to sell a hundred fighter jets or so to a government in some country. What’s happening is that the governments are buying airborne hours instead of airplanes or spare parts or something like that, and then it’s a very different ballgame, and it’s a ballgame where logistics has the skills that make all the difference.


Another typical example is, we work with a company that supplies machinery and supplies for dialysis. What we found was that there were a lot of complaints around their deliveries. The reason why that happened was that the customers didn’t do their part of it and order when they should’ve ordered and respected the quantities and the delivery times. The reason for this is that the persons who were doing this, they were physicians or nurses and those categories, they’re busy saving lives; they don’t want to spend time managing inventories of the dialysis water. You could see that as a problem, or you can use that as your storefront and sell the solution of having all the supplies there all the time and you can charge for it.


Another example is the aftermarket, where you used to sell spare parts, and what you do now is keep whatever car or machine, whatever it is, to keep it running. Then you’re selling the availability and service. That, my friend, is raw and beautiful logistics.


What to do in this new, exciting world of logistics as the game changer?


Well, the first thing is to take control. Here, I’m talking about you have the question that many of our clients are asking, which is: Should we outsource our logistics to 3PL or do it in-house? In this case, the answer is obviously a combination of them both.


For instance, there is a huge difference between transportation and delivery. Transportation is much better done by the carriers of the world, whereas you might want to ask yourself the delivery, the actual vendor-managed inventory or white-glove services. That might be something you want to do yourself, whereas the transportation between point A and point B, that could very well be outsourced.


Another thing is material handling. The forklift truck that is putting the pallet on the racking and taking it down and that kind of stuff. Possibly done, in many cases, better by 3PL but when it comes to value-added services, then you want to be in charge of the quality, you want to be the one who is talking to the customer, because that makes a difference. You want to be in charge of the inventory management because the availability is the key in the new world here.


One aspect of this is the rise of white-glove services. What I’m thinking about here is that you make the delivery to logistics a service. This could be that you’re delivering the product and you’re installing. It could be that you did a Vendor Managed Inventory, which is a service; it may be—and it so happens to be in most cases—that you benefit from delivery of services and you get efficient with managed inventory, but it is a service. And while you’re doing a delivery of some supplies to a machine, perform service to the machine to up the availability.


And a huge thing here is to realize that all of those things are part of your product or they might be products in themselves. Instead of seeing this and handling this as an increase in cost, you should embrace the productification and charge for it. You package the services and you charge for it. If you charge for it, then you have a customer who is paying his part because he puts a value on it, and you get the resources you need to make a good job because the company’s making money out of it.


The last thing here, what to do in a storefront, what you can charge for, and those are achievements within the logistics that are very important. This could be within the sustainability area, the environmental area, where, if you’re good at your logistics, your achievements of reducing carbon dioxide emissions would far exceed, in most companies, what you could achieve with other measures. This is something that you should market; this is something you should talk about.


To summarize it, the logistics is the new storefront, and this makes the logistics so much more important and so much more fun. Enjoy yourself out there. Thank you, bye-bye.





About Hakan Andersson


 

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Hakan Andersson

 

CEO Establish Inc

 

LinkedIn Profile

I interviewed Chris Powell who discussed Supply Chain Geographic Alignment.

 

 

 

 

 

 

It’s great to speak with you today, Chris, and I’m looking forward to hearing your views on the topic of supply chain geographic alignment. Before we start, can you provide a brief background of yourself?

 

Absolutely. Thank you, Dustin, for having me. My name is Chris Powell; I’m a founder of a company called Industrial Interface. I have a mechanical engineering degree, and I worked as a technical supplier to the automotive, electronic, aerospace industries here in San Diego, as well as northern Mexico prior to starting Industrial Interface, to solve many of the problems I saw as a technical supplier.

 

My background has evolved from sales to, now, programming and also business development. Industrial Interface has the most detailed capabilities database of U.S. manufacturers. We keep a close monitoring of over 750,000 U.S. manufacturers, distributors, and representatives and document their capabilities from products services, certification, and much, much more information about what those manufacturers actually do so that any sort of person looking to work with manufacturers can query our system by more than a mix code.

 

What problems do you solve with supply chain geographic alignment?

 

Our business breaks down into a couple different use cases, and one of them is for anyone involved in supply chain. Supply chain geographic alignment is the idea of having local suppliers to your manufacturing plant. The reasons that manufacturers would want to have that are: to solve problems like decreasing the amount of time it takes to have a product reworked; to decrease the shipping cost and time for materials and products and services to get to the manufacturer; to set up just-in-time delivery; to have a closer relationship with their suppliers; decreased time in auditing; decreased cost in auditing; and the ability for both parties to easily get to one another’s facilities and what not.

 

Can you talk about how you do it?

 

We built a database of U.S. manufacturers. What we do—I’ll use reshoring as an example—we take the products and services from building materials that a company would like to potentially evaluate local suppliers and align their supply chain locally. We take technical characteristics of those parts, plug them into a query in our database, and then show which suppliers within a hundred-mile radius of their manufacturing facility have capabilities to provide those products and services.

 

It allows companies to look at the total cost of ownership as opposed to just the actual price that they’re paying, factoring in the shipping cost and the likelihood of failure, of noncompliance parts, and then the cost of having a line down due to those noncompliant parts is usually much greater than the company would like to risk. They’ve moved toward aligning their supply chain locally. Another thing we do is, we can go through and actually flag manufacturers outside of a specific radius of your manufacturing plant, and then once we’ve flagged those, then we can identify alternatives that you can provide RFQs for the parts that you’re buying from currently nongeographically aligned suppliers.

 

Do you have any success you can share?

 

Sure. A company in central California was manufacturing specifically some big agricultural automation equipment. They were buying certain components from overseas—I can’t really disclose what they were but those overseas components were used in automation equipment. They had timed the delivery of those and the use of those into their automation equipment, and then a supplier delivered their parts according to schedule from, actually, China, and those Chinese parts failed to have the specifications that they said they would. It was actually a motor that didn’t have the required torque and it fried.

 

They were challenged with identifying a local supplier of a motor that specifically had those capabilities or reworking the ones that they had purchased. In this case, we were able to find a contract manufacturer of motors to take what they had purchased and rework them to meet the increased demand of their automation equipment and locally source in a matter of a week and a half as opposed to two months, which it was going to take to get that motor back from China.

 

Thanks, Chris, for sharing your views today on supply chain geographic alignment.

 

Absolutely, Dustin, I appreciate the opportunity. I look forward to speaking with you again in the future.

 

Thank you.

 

 

 

 

About Chris Powell

 

 

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Chris Powell

 

Founder overseeing Business Development

 

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I interviewed Manfred Bornemann who discussed Value Chains in Education.

 

 

 

 

 

 

It’s great to speak with you again, Manfred. I look forward today to hearing your new topic that you want to discuss, which is value chains in education. Can you first provide a brief background of yourself?

 

Hi, Dustin, it’s my pleasure to be with you again. Thank you very much for this talk. My background is as a researcher in intellectual capital now for almost 18 years. I started with some ideas on measurement of intellectual capital, and I did some projects in the German industry and German-speaking countries. We focused on small- and medium-size enterprises in industry and worked on some projects that focus on applying the concept of intellectual capital to networks and clusters as well in the automotive industry. Recently, I turned to education and, based on some project of some students of mine, I happened to learn about that industry quite a lot and was lucky enough to do some background research. I’m working as a consultant and working as a teacher and part-time lecturer. I try to bridge those domains of knowledge.

 

Thanks. Can you first discuss what intellectual capital is?

 

The concept of intellectual capital I think was introduced in the mid-’90s and focused on the intangible part of our economy. We have lots of tangible assets like, for example, factories and infrastructure in our businesses, but there is another side as well. This is the intangible part; we call it the intellectual part. Of course, there are humans. There’s human capital; we need people to work. We need structures, processes, for example, organizational structures that remain in an organization when people leave the organization. And there’s a third dimension, which is relational capital; this is the outside perspective. For example, if I’m providing a service, I need a customer, and I need to transfer that service. The customer needs to understand what I do, and I need to understand him. Together, we are creating some value. The idea of intellectual capital was implemented in production processes. We can infuse knowledge, we can infuse intellectual capital in our value-creating processes and at substantial higher value. There is an interesting difference to, for example, steel. If you pour steel and add it, for example, to a car, then you can use it only once, but if you use intellectual capital, you can use it twice or three times, as many times. And the more frequently you use it, the more valuable it becomes, because others can relate to it.

 

Thanks. My next question is regarding governance. Can you talk about governance or integrated management within educational institutions in Austria?

 

Yes. As I’m living in an automotive city, in Graz in Austria, the concept of value chains and supply chains is omnipresent; you can see it everywhere. The idea of integrating resources along value chain is quite established in the city and in industry. I was thinking about applying that concept to education as well.

 

What I figured was a bold comparison of setting a student similar to a car in automotive industry. A car is, of course, produced by many different suppliers and then assembled in a large factory and then it’s trimmed to customer demand and customer specifications. If we apply the same idea to education processes, the student should be ready for the challenges of the knowledge economy and future employers, right? My thinking goes that we could probably optimize the education processes to create best students available or the best future workers for industry in the future. I tried to test that idea. I’m aware that this is probably a concept that could be misunderstood, but the integration idea is just such a good one because it saved time and resources. I think that might be applicable to government processes as well.

 

The idea’s quite simple: If you can integrate different levels of education starting from kindergarten and preschool to high school and probably, later on, university levels, we could maybe reap some of the cost savings and efficiency gains we’ve seen in automotive industry as well. This essentially is the idea of applying an integration concept of a value chain or supply chain concept to education as well. I tested that and asked teachers and directors and 16 different institutions in Austria about the idea. We asked about their ideas on intellectual capital and particularly focused on that relational part; their relational part.

 

The relational capital part of intellectual capital covers, for example, drivers like collaboration with other institutions. In that case, collaborating schools or probably competing schools in the same district. And on the next level, for example, from kindergarten, you go to school and then the next levels of schooling. We asked directors, for example, their relations to the next level of education. Particularly on the teachers’ level, we found that there is almost no contact to the next level of organization or to the level previous that they’re on. That was interesting because it’s exactly the opposite of an integration idea. They were focusing on the pupils, of course. They were teaching them and investing lots of energy and knowledge to improve skills and knowledge of the pupils and students, but they did not really reflect on improving the relations to their surrounding institutions. That could be interesting.

 

Of course, they do share some infrastructure, like gyms, for example, or labs, so there is some contact, but regarding the level of knowledge, of competence of students, integration did not yet happen. I did a little experiment and asked teachers, as well as directors a simple question. I asked them: Who is your customer? I expected answers ranging from “My student” or “My pupil is my customer” or “The parents of my student is the customer of my training efforts,” or a third alternative could be, “I’m training the students to be future knowledge workers for industry or whatever research, whatever they want to do. There is a long and wide range of who the customer of a training process, of schooling, could be. In that case the relational capital part in the value chain of education was not yet defined, and I think that’s a huge potential to integrate the training and teaching processes along the value chain.

 

If we are aware that our pupils should be citizens and the future workforce, I think some of the training processes could be focused a little bit more. The general idea is to integrate education processes over time and support students in their development early on and help them avoid some frustrations, as well as develop some of their special talents and gifts, much more focused than they do it right now. In Europe we have a political program; it’s called PISA Project that compares teaching performance all over Europe. The general problem is that not all of our students are achieving their potential. We have to adapt our infrastructure, we have to adapt our institutions and think about new concepts of education, essentially.

 

Can you talk about what the focus should be on for the future?

 

Well, I think the environment of education changed a lot. We have not only complete new developments in technology, like a DIGITAL DIVIDE; a concept related to the idea of some people being part of the knowledge age while others (the majority?) might drop out and lose connection to technology, knowledge or business opportunities.

 

We have completely new technologies in sharing and doing online training, but we have new forms of interactions as well. I think the central approach of schools focusing on the students is absolutely essential, but I think we could open it up a little bit. So far, schools are closed entities, I think. They’re working in their curriculum; they start in autumn, most of them, and finish four years later probably, and then they see the students off to the next level.

 

I think we could maybe learn from industrial concepts like this value chain and focus on the customer idea. I think could probably learn the customer needs and apply this new integration of ideas on the training process as well. Probably that is demanding, particularly because, in some countries, there different stakeholders paying for the educational process. Sometimes it’s the program, sometimes it’s the state, and then there are, of course, some private institutions as well. Maybe we can benefit from the idea, from the market idea, or we learn from industry, whereas OEMs, some car manufacturers focus on their product and streamline the whole value chain in front of them. Probably we could benefit and integrate, for example, universities in the high school and college level to attract more students to higher education and give them the right education we need for the knowledge economy.

 

Thanks, Manfred, for sharing your views today on this topic of intellectual value chains in education.

 

My pleasure. I was happy to publish some of these ideas in an article. I’m going to send you the URL to this journal. It’s great to get some feedback probably, and I’m happy to have another chat with you.

 

The link to the article quoted is:

http://ia-consulting.at/wordpress/wp-content/uploads/2012/04/Intellectual-Capital-in-Education-a-Value-Chain-Perspective.pdf

 

 

Thank you.

 

 

 

About Manfred Bornemann

 


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Manfred Bornemann

 

Founder and CEO of Intangible Assets Consulting; Co-developer of InCaS - Intellectual Capitals Statements made in Europe

 

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