I interviewed Mary Adams who discussed Smarter Supply Chains.
It’s nice to speak with you again, Mary. We’ve done great interviews in the past, and today I’m looking forward to hearing a new topic you have, which is smarter supply chains. Before we start, can you provide a brief background of yourself?
Sure. Hi, Dustin. Really glad to speak with you again; it’s always interesting to hear your perspectives and your experience in this space. My background is, I spent close to 15 years as a high-risk lender, so I was in the financial world; then I had a strategy consulting firm for another 15 years or so.
Two years ago I started Smarter Companies, which is really a knowledge-era story. In the first 30 years of my career, I developed a deep understanding of this new and tangible side of business, which has been growing and growing, and developed some tools and methodologies we were using in our consulting firm. I had a lot of consultants from all over the world approaching me and saying, “We’d love to try and use your tools as well,” so Smarter Companies is a network of consultants who are all using this space of tools we’ve created and hopefully continuing to innovate and build on the experience space, because there’s so much going on with business on the intangible side that I’ll talk about in a second. That’s my mission: to help people see and measure and really bring their organizations to a new level of performance and value and value creation by paying attention to these intangibles.
Can we start by talking about what smarter supply chains are?
It’s interesting. In this new course that we’re launching next week, called Building Smarter Companies, one of the key examples we use throughout is Federal Express. The reason we do that is because it’s a great example that everybody knows—and certainly one relevant to a supply chain audience—of what’s happening in business today. Essentially, about 80 percent of the value and value creation in business today is in tangibles rather than intangibles. At first blush, you say, “Well, how can they be? A company like Federal Express has the largest private air fleet in the world. They have countless trucks and pieces of equipment and scanners and facilities, so it seems like a very tangible business.”
When you think about where the value is and what really makes that company tick and successful, it’s not those things they own, those tangible goods. It’s the systems and processes and the data they’ve accumulated over decades and the training they have in place for their people and the competencies that those people exhibit every day, the partnerships they’ve developed in hundreds of countries around the world and in each local market where they’re serving their customers. It’s their culture, their business model. All of these intangible things are really what makes Federal Express successful, it’s what makes the company unique, and, if you think about really most companies or parts of companies or companies related to the supply chain, the same logic applies. Anybody can buy a truck. If you have enough money, you can buy an airplane, you can buy the equipment, but that doesn’t make you a successful supply chain player. It’s the intangibles that make you successful.
The problem is that we’re all still working with Industrial Era information systems, and when you talk to the people in Accounting, they know how to put planes and ships and equipment on a balance sheet; they don’t know how, and they don’t, put things like processes and data and competencies and partnerships on that balance sheet. Where do you go? How do you talk about this system in an integrated way and with a nice, clear set of data that says, “Okay, this is what we have, this is how well it’s performing, this is how we’re investing in it,” just the way you should and do for your tangible assets?
Who can benefit from your training?
The training is oriented to external consultants or internal, as we call them, catalysts. People who are seeking to drive some change, who are in a position where they can come forward and say, “We have this problem.” I call it the intangible-information gap, the 8/0/20. Most organizations, 80 percent of their information is about 20 percent of their assets, and there’s very little information on a clear, consolidated basis about intangibles.
The people who can benefit are external or internal consultants or catalysts, people who want to provoke the conversation and know that having better information about these things will drive better decisions and will also enable them to tell a more clear story about what a company has and what’s needed for the future. I think a lot of what happens in supply chain is about communicating with the different partners about the viability and strength and risk associated with intangibles. I hope, 20 years from now, everybody in a management program learns about intangibles. For now, we’re starting with the consultants and catalysts.
I know you mentioned a little bit about why. Can you talk a little bit more about why use this training?
When you go into a conference room and sit down and start talking about these things I’ve mentioned—processes and data and capabilities and partnerships—most of the information we use is anecdotal, and it’s based on people’s experience. You may have deep information about little pieces of specific processes or specific things, but no one has an overall, I call it a balance-sheet equivalent, that says “Here’s what we have and here’s how it all works as a system.” What happens if all the information is kind of in people’s heads, if they’re making their own judgments about how well things are working, then you’re never going to be able to make the progress you want to, because you’re going to spend all this time discussing or arguing between yourselves about if it’s working or not, how well it’s working, if you are or aren’t at risk.
All of these things are things that can be quantified and identified and managed; it’s just, most people haven’t been trained to do it. Why should you do it? Two basic reasons. One is: You’re going to make better decisions. And, two: You’re going to be able to tell a better story. We all end up having to tell stories to recruit partners, to win funding for new initiatives.
We just had a situation last week with one of our clients where this information was critical to getting board approval for a big new investment. We all need to learn to tell the story about the way the system works and, obviously, to make better decisions about it.
How do you use this training effectively?
Well, it’s interesting because one of the things we teach is that there’s not one right framework for every organization; every organization’s a little different. If you think about what distinguishes—if we go back to the Federal Express example—what distinguishes FedEx from DHL, from UPS, from the U.S. Postal Service—I’m using U.S. examples, although many of them are international; you would have equivalents in all your different markets, because I know you have an international audience. What differentiates them? Yes, there are some common themes, but in today’s world we’re very much a knowledge economy, so it’s the people and the culture and the way you decide to solve problems that differentiates you.
How do you use it? What we’re really training people to do with the Smarter-Companies process—and I’ll just mention the process quickly, because I think that helps make it clearer—we’re teaching people how to go on a journey to map and measure and drive results with the unique, intangible set a company has. There are four steps in the process and it’s a continuous process and we have a module for each one.
The first one is matter. Why do intangibles matter? How do they relate to your goals? How do they drive financial results? What are your intangibles and how do they work together? Most organizations, if you can see a factory or you can see a distribution center, you know the way it works or it’s a lot easier to, but you can’t see inside computer systems and people’s heads, so you need to create a model of what’s going on.
Once you have a model or inventory, then you can, our third M is measure. People are not nearly as disciplined as they could be about measuring the intangibles. We teach three basic families of solutions. One is financial measurement, another is quantitative, and the other is qualitative. Qualitative is actually a really interesting emerging measurement if you think about Amazon and Expedia and all kinds of online profiles; it’s really qualitative measurement we’re all valuing much more than quantitative.
And the final step is manage. There are a lot of nuances to managing knowledge-based businesses as opposed to hard assets, so we just have an introduction to all those issues. Then, of course, you’ve gone through model, measure, manage, and it leads you right back to matter. How is this connecting with results? How can you communicate those results to others?
That’s what the course entails. What’s interesting for me as an intangible capitalist is that this course is basically taking you something that has been delivered—we’ve been doing this either face-to-face or via WebEx for a couple years now. The methodologies are about ten years old; the course is about two years old. Now we’re putting it online, which enables lots more people to access it. You can do it on your time; it doesn’t cost as much because I don’t have to talk through every single word of the course, but we still have an online community of people within the course communicating with each other. We’re excited. We’re launching it, as I said, next week.
How can people sign up if they’re interested in joining?
Dustin, I’ll give you a link you can put on your blog. I’ve got a little page on my site that says Smarter Supply Chains, and it explains to people if they’re interested in hearing more, I have a series of three articles that talks about how this consulting process works, how you sell this process—whether you’re doing it internally or with an external client—and then how you use this kind of thing to drive results, and how it all connects back to the intangible and the financial results people are accustomed to seeing.
If people are interested—even if they don’t want to take the course, they can read these three posts and learn a little bit about it, and then if they want to, we’d love to have some people from the supply chain world join in the conversation. One of the things that’s really fun about all the trainings we’ve done to date is that we have people from diverse fields who come in, and the participants end up learning a ton from each other because you have an innovation consultant and an evaluation consultant; they each have a deep expertise that they bring to each other. Although, as I said, I think it’d be interesting to have a version of this course just for supply chain people too, so maybe we can talk about that someday.
Yep, I look forward to reading those three articles you mentioned and getting more awareness of your course so we can have more of a learning community regarding smarter supply chains.
That’d be great; I’d love to.
Thanks, I’ll talk to you next time.
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About Mary Adams
ICountant, Author, Speaker and Founder of Smarter-Companies