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2015

I interviewed Johan A.H. Dillerop who discussed Why Fusing the Physical and Financial Supply Chain is a Strategic Enabler for Future Growth and Supply Chain Agility.

 

 

 

 

 

 

It’s nice to speak with you today, Johan. I’m looking forward to hearing your views on the topic of why the fusing of the physical and financial supply chains is both a strategic enabler for growth and also for supply chain agility. Can you first provide a brief background of yourself?

 

Yes, I can, Dustin. Thank you for having me on your blog. I am based in the Netherlands, and I work for a company called GT Nexus. I’ve been working in strategic communications for the past 20 years as well as operational excellence in end-to-end supply chains.

 

Can you talk about the reason why the diffusing of physical and financial supply chains is good?

 

In many companies I talk to, there is a disconnect between movement of physical goods and the movement of the funds in their physical supply chain. Like in finance, it’s often seen as a thing to improve working capital or enable payment-term extensions. The bottom line is for not only the buyers but also for the suppliers.

 

Let me give you an example. If finance says, “I want to extend my payment terms from sixty to ninety or even a hundred twenty days,” that definitely will affect the finance KPIs from that supplier. He has to choose if he’ll buy my raw material or will I pay my employees?. The cost of that will be put in supply chain cost somewhere else. It’s not always a good idea to extend your payment terms. By choosing them, linking them to the physical product, you can offer new things. I feel new and improved ways of financing and injecting capital into your supply chain towards your suppliers.

 

Can you talk about how this is done in practice?

 

It requires a mind shift, and it typically requires people from finance, procurement, and supply chain to work together and to align their goals internally and to be sure that everybody’s on the same page and speed.

 

By choosing the supply chain as a strategic *enabler requires value chain and requires fundamental supply chain transformation. In most cases, supply chain finance processes express a single need. In some cases, that’s all it takes and they decide. Automation initiatives and invoice programs that addresses the challenge. That’s short-sighted. What if you provide your capital toward your suppliers and then get stronger and that will furthermore make them stronger instead of drive cost up.

 

What we do is we bring everybody together. People work from their same PO and can acknowledge that PO and can inform his buyer if he has the raw materials on hand or if he has to order them and the work in progress. He can share inventory management, factory management, work-in-progress management. Based on that data, those KPIs, he’s able to share data that is part of the initial PO. Let’s say 30 percent of the PO will be paid up front toward my supplier so he can act accordingly and he doesn’t have to go to his banks or financial institutions in his country; let’s say somewhere in Asia, where they’re farther than in Europe.

 

Do you have any examples of where this has been applied in practice or some success examples?

 

I think one of the most successful examples at this moment and being mentioned, for example, in the finance is the business strategy of an incorporation with part of the World Bank.

 

The * (6:25—unclear) capital toward their suppliers * (6:28—unclear) based on the technology transformation where * (6:39—unclear) toward their suppliers by * (6:43—unclear) their financial KPIs, the performance KPIs. Really good buyers see that, implement them, search and * (6:54—unclear), working hours, environmental issues, et cetera, and * (7:00—unclear) work relations by * (7:03—unclear). That’s one many * (7:10—unclear) industry. You use supply chain * (7:13—unclear).

 

They are self-funded through a supply chain finance program that makes them carry their supplies through approving the invoice. For the buyer, it’s beneficial because they get better interest rates on their money and their supplier gets better interest rates by receiving money up front and doesn’t have to manage for 10, 11, 12 percent , but he can lend at 5 percent . There are many missteps and initiatives within governance. There are ones who have supply chain finance programs. For small and medium enterprises, it’s always I believe that it always should be linked to a physical goods as well.

 

Thanks, Johan, for sharing today.

 

You’re welcome.

 

 

 

 

About Johan A.H. Dillerop


 

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Johan A.H. Dillerop


Challenging the Status Quo by Transforming your Supply Chain Resulting in a Collaborative Value Chain @ GT Nexus

 

LinkedIn Profile

I interviewed Paul Jakubicek who discussed Tech-Based Economic Development.

 

 

 

 

 

 

It’s great to speak with you today, Paul, and I’m looking forward to discussing with you the Big Truck Guide and solving transportation challenges. Before we start, can you provide a brief background of yourself?

 

Sure. Hi, Dustin, it’s great to talk to you. I grew up in Canada, and I worked in transportation for, really, all through my twenties into today. My background was, I started driving a truck right out of high school, and I started driving a truck even as I was going into university. I drove all across North America, really. I drove in a variety of industries, making deliveries to retail locations, in the oil field out west in Alberta, and then the towing and recovery industry, as well as doing some long-haul stints. I have a really good chance to get a good grasp of how transportation works, how trucking works.

 

In my education, I went and looked through challenges that people face in warehousing and logistics. I ended up driving a truck while I was going to school, so it gave me a really complete view of the industry, I think, and gave me a good position to come from when looking at challenges in transportation.

 

Can you talk about some of the major transportation challenges you see?

 

What I see today as some of the major transportation challenges are, in North America there’s big potential coming up, I think, for technology in transportation, and it’s going to happen a lot quicker than it has been in the past. Transport and logistics have been, in some ways it’s really quick to adapt to new technologies, but it still hasn’t really been picked up to the full extent that it can be.

 

Now, with all these Uber-like apps for trucking that seem to be cropping up, I really believe that it’s only a matter of time before one of these applications really takes off and takes a big part of the trucking pie. What that means is that there’s going to be a lot of space for a lot of different service providers providing supplementary services for the transport industry. I think that’s one of the big challenges that trucking companies are going to face, this kind of threat from transportation.

 

Another thing that really is coming up and is a big challenge for transportation is funding and keeping—especially in the U.S.—keeping the road network financed. Where is the new money going to come from in terms of keeping the roadways up to date? Also, what are the new technologies that are going to be invested in for that physical stock? We’re seeing this new growth in natural-gas vehicles. Is that going to continue and to what extent? Siemens is developing trucks that can run off of overhead catenary lines that could be hung on highways. That’s another exciting development.

 

I think on the physical side, maybe in the next ten years, we’re going to start to see real changes in that mix of transportation vehicles. It’s not going to be just diesel-burning trucks that are on the roads.

 

Is there more you can say about how you can solve these challenges?

 

Paul: I think that it’s going to be…there are a few ways. When taking a look at funding challenges and new technologies that are coming up, I think it’s a matter of finding a new business model that companies can follow in order to implement new physical solutions. If you look at things like, there’s talk of freight in tubes that can be moved, similar to Elon Musk’s Hyperloop system. What if you put freight in tubes and shot it around?

 

There’s the challenge of coming up with business models that actually go about solving these challenges. Those business models have to be come up with and verified in order to make these kinds of really unique solutions valid. In terms of solving challenges, in terms of coming up with solutions for the technology side, I think that’s happening now, and that’s really going to take off.

 

With my solution that I have, the Big Truck Guide, which is a Web site that provides information for drivers, carriers, and shippers, this is the kind of solution that has come up. It’s affordable, it’s ready for people to use, and they can use it to supplement services provided by big-truckload carriers in terms of their safety-and-compliance people. You can supplement and help these kinds of people. I think there are services that will come in that will start to solve these problems.

 

Can you tell me your story about the Big Truck Guide?

 

Paul: How it started was, I was working for a large truckload carrier in Ontario, Canada, and what I saw was essentially how complicated trucking regulations are, especially throughout eastern Canada and the eastern U.S. What I mean by that is that you have a lot of different truck types—a lot of different numbers of axles and variable amounts of weights on those axles—so you end up with, we had one possible scenario where somebody could go from, a truck could go from Ontario to Québec, put various axles down in each of those provinces in order to comply, then travel into Michigan back through Ontario with a load, and have to put down different axle combinations in Québec, Ontario, and then all of the axles in Michigan, then lift up a few axles and travel into Ohio to pick up the backhaul to go back into Ontario.

 

You had these trailers that are really contrived and they have all these axles you can move up and down and all the regulations are different everywhere. Really, the problem is that all these transportation regulations are only kept in the minds of the few professionals who work at truckload carriers. I saw this problem over and over again at this carrier and as a driver and, really, a lack of clear information about legal truck weights and sizes in the industry. What bothered me was that people would always tell me that this wasn’t something that could easily be solved. I went and developed this solution that really does do that, and it does it by taking a step further and going and having the * (8:36—unclear) regulations in order to provide semi truck weights that are clear for everybody’s understanding.

 

Thanks, today, for sharing this information about the Big Truck Guide.

 

Thank you very much, Dustin. If I can, one final point I’d like to make in terms of transportation-management systems is that, typically, transportation-management systems are implemented in large companies by coming in and talking with transportation managers in companies and implementing transportation-management solutions in order to come up with all those truck weights. I also hope the Big Truck Guide will be a way for transportation-management solutions to take advantage of this information to have clear information about truck weights and sizes.

 

Where can we go to learn more about the Big Truck Guide?

 

It’s at www.BigTruckGuide.com.

 

Thank you.

 

Thank you very much, Dustin.

 

 

 

 

About Paul Jakubicek


 

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Paul Jakubicek


Founder and Head of Research at Freight Transport Research Institute

 

LinkedIn Profile

I interviewed Matthew Gollop who discussed HK’s Evolving Role as Regional/Global Supply Chain Hub.

 

 

 

 

 

 

It’s good to speak with you today, Mat. Are you in the Shanghai area right now?

 

I’m actually in Singapore at the moment. We have three offices. Hong Kong’s our headquarters, we have a Shanghai office, but today I’m in Singapore.

 

Great. I look forward to hearing your views on trends as far as Hong Kong being in a global hub for global sourcing. Before we start, can you provide a brief background of yourself?

 

Absolutely. Just in summary, ConnectedGroup is a regional executive-recruitment-and-search business. We operate across those three locations that I mentioned, and we run about 70 to 80 staff. I run the group out of the Hong Kong office, but I also oversee our manufacturing-sourcing-supply chain division, which predominantly recruits in Asia, really from manufacturing, all the way through the supply chain, though predominantly between manufacturing and sourcing office. We work on opportunities from upper-mid to senior level. I personally work on the more senior searches. Location-wise, quite a lot out of Hong Kong but also southern China in the east, so Shanghai, and then in some outlying production offices. We recruit into Bangladesh, Cambodia, Vietnam, and then also looking at some emerging markets, like Myanmar as well.

 

Thanks. Can you talk about the trends you see as far as Hong Kong being a global sourcing hub?

 

I think probably the key trend that we’ve seen over, really if you look over the past five to ten years, there’s been a bit of a cycle, so we’ve seen organizations migrate sourcing offices from Hong Kong and move them to either southern China or Shanghai, depending on the nature of the product base and their manufacturing base. Part of the drive for that is obviously cost. I think the salary costs in those locations on average are lower, and that was a major driver. Also, to be closer to manufacturing partners.

 

More recent, really more so in the past two to three years, is a return of some of those offices or individuals back to Hong Kong for a number of reasons. We’ve seen at the senior level particularly, if you’re talking about expatriates, talent, the cost of having those individuals on the ground somewhere like Shanghai is actually more expensive than in Hong Kong. The cost of schooling in China, international schooling, is much higher than Hong Kong. Individuals need car drivers; the expectation for an expatriate package is much higher, so that’s been a major factor.

 

What we also see is that whilst the operational level of staff is technically adept in China and very capable of dealing directly with China-based manufacturers, what they struggle to do is transcend the cultural boundary between the Chinese operation and the overseas operations. If you have a merchandising sourcing manager in Shanghai trying to deal with a supplier in Bangladesh, all of a sudden, the advantages you previously had evaporate very quickly, and it’s very hard to do business, to gain the necessary advantages.

 

What we see is a sort of migration of more of the strategic office back to Hong Kong; what’s coming back is a smaller, leaner operation where you have more regional capability, more strategic capability. Then, left on the ground in China is a lot of the technical capabilities; quality, production management remains on the ground because that’s where the cost savings can be gained. That’s kind of the general trend we see.

 

The market volumes are increasing; i.e., the product-shipment volumes have been going up but slowly to both the U.S. and to Europe more recently. What we then see as a result of that is a continued focus on Asia as a sourcing hub. Organizations, however, are tending to look at how they can achieve more with less and how they can really drive efficiencies through the supply chain because of the increasing cost of salaries, particularly in China. It’s not just a China issue; if you look at even emerging markets like Bangladesh, Vietnam, Philippines, Cambodia, they’re all suffering from the same rapid increase in cost. And China still offers the better quality, greater technical capability, and the capacity that is never going to be matched by other locations.

 

We see this sort of diversification into emerging markets mainly in the soft line sectors, but mainly apparel; that is starting to grow into accessories and leather goods, where people like Coach have set some standards. Fundamentally, organizations realize that the cheaper cost of the locations that we’re talking about is not necessarily going to be the long-term advantage, and as a result, they’re trying to drive much greater efficiencies through the supply chain.

 

What we’re seeing is the shift from China back to Hong Kong or a greater emphasis on Hong Kong as the global, or certainly, regional sourcing hub. And in that location they try to identify the type of talent that can bring value to their manufacturing partners. The type of skill sets we’re looking for, really, are those people who can go out and consult with the manufacturing partners, really focus on the value chain rather than just the supply chain, and increase efficiencies as a way of sharing in cost reductions on the ship moving forward.

 

Regarding from a talent angle, do you have any recommendations for companies regarding the trends that are happening as far as salary and packages? What are some differences between Hong Kong and Shanghai in terms of the talent angle?

 

I think the key…there are a couple of factors there. If you look at the sourcing space, where I probably spend most of my time talking to talent, what I would say is that they’re still very heavily reliant on a candidate universe of overseas talent at a leadership level. We see expatriates running the sourcing operations in that kind of general-management capacity or in seating leadership roles in larger organizations.

 

For those types of individuals, China is probably a less attractive location. Shanghai compared with Hong Kong tends to be a less attractive location just because the ease of living in Hong Kong is greater, and the cost of education, ease of securing education is a challenge for expatriate families. For them, Hong Kong very often seems to be a more attractive place. I very often see expatriates do a two- or three-year stint in Shanghai or in China and then gravitate back to Hong Kong.

 

As I said, cost of package in general, higher taxes. Whilst you can make the savings as you move down the gradings in the organization, certainly at senior level, we’re seeing that differential. I think the relative cost of living in Hong Kong has become more competitive, so I think organizations need to look at how they structure a strategic office out of Hong Kong and whether that would just be purely China-focused in terms of the manufacturing base or particularly when you’re looking at a regional global hub here; certainly, you need that capability with a mind-set to think across various locations.

 

You can definitely make some savings there, at senior level. I think the market has become more and more localized. You’ve got quite a mixture of talent at senior level, some of whom are operating off of more complex expatriate packages, which will include housing and education as a part of the puzzle. And then you have others who have localized and are operating off of purely a cash package. My advice to companies is to take a big view of the market and be prepared; there will be quite a disparity between the low end and the high end when we talk about leadership roles within this space. I think in both locations, there is, of course, a pool of localized talent, and, certainly, there are some great leaders both in the mainland and Hong Kong, but that pool is significantly smaller at senior level than the expatriates that we talk about.

 

I think, also, what I find is that the salaries in China are still rising at a faster pace compared to Hong Kong, and I think that organizations are finding that maybe when you look at the relative * (6:07—unclear) manager-grade individual in China to Hong Kong, salaries are getting closer; plus, the experience level relative to the grade is higher in Hong Kong than it is in China. There seems to be a deeper learning in Hong Kong from individuals that you’d hire. They spend longer in the organizations that they work for, so, therefore, the learning is more ingrained. You can spend a similar amount of money but get a greater return on investment out of an individual.

 

Again, I think that for particularly around supply chain sourcing and merchandising type roles, Hong Kong still has that attraction. But on the technical side, we’re certainly seeing companies either maintaining their own technical teams in China or maintaining a very small management capability there and then outsourcing to external vendors.

 

Thank you, Mat, for sharing today.

 

No problem at all. If there’s anything else I can tell you in the future, please, just let me know.

 

 

 

 

 

 

About Matthew Gollop


 

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Matthew Gollop


Executive recruitment business leader - specialist in regional HR search

 

LinkedIn Profile

I interviewed Dan Berglund who discussed Tech-Based Economic Development.

 

 

 

 

 

 

It’s good to speak with you today, Dan. I’m looking forward to discussing with you tech-based economic development. Before we start, can you provide a brief background of yourself?

 

Sure. My background has been focused on economic development primarily at the state and regional levels in the U.S. I spent seven years with the Ohio Department of Development’s technology division and then working with state and regions on strategies to build technology-based economies. For the past 19 years, I’ve been running SSTI, which stands for the State, Science, and Technology Institute, which is focused on advancing economic growth through science, technology, innovation, and entrepreneurship.

 

Can you talk about what tech-based economic development is and why it’s important?

 

Tech-based economic development is an approach that’s really designed to encourage economic growth through science, technology, innovation, and entrepreneurship. What that means is that researchers have looked over the years at the success of Silicon Valley, Research Triangle, Route 128 to try and identify those things that are required for a prosperous technology-based economy. They really identified four or five things, including a strong research enterprise, meaning good universities, good companies, federal laboratories, all doing strong research.

 

That’s the first thing. The second is commercializing research, getting it out into the marketplace. The third is having a technically skilled workforce. Fourth is capital, to make sure that there’s adequate capital to finance all of this. The fifth is entrepreneurial culture, that you’ve got a thriving base of entrepreneurs who can create new ideas, create new companies, and scale those up.

 

Technology-based economic development is all about trying to address all of those individual elements, bringing it together more as a system. a lot of people refer to it as creating an innovation or cultivating an innovation ecosystem. It’s important because today’s economy really is so focused on technology as a fundamental driver of the economy. The technology jobs tend to be higher-skill, higher-wage jobs, the kind of high-quality jobs that, essentially, all regions are looking for and trying to create.

 

Can you talk more about who can benefit?

 

Really, it’s good for any community. If you take a look at any of the communities that have a strong technology presence, what you’ll see, in general, is a higher-per-capita income for the population. That has proven to be the case even for those who aren’t working directly for technology companies. It’s a strategy that helps lift all boats, not just those that are benefiting directly or involved in the technology industry.

 

My last question is: Do you have any success stories to demonstrate how this is done effectively?

 

Sure. States have been active in this area for, really, more than 30 years. The first big wave of activity started in the mid-1950s with the concept of Research Triangle Park; that’s the first success story you can talk about, RTP in North Carolina. It took a long time for Research Triangle to take off, but it has had significant impact on the economy there.

 

The next big wave of activity was in the mid-1980s, as the manufacturing base in the U.S. started to run into global-competitiveness problems. You saw programs like the Ben Franking Technology Partnership in Pennsylvania created, which was very focused on supporting entrepreneurs investing in companies, investing in research strengths in the commonwealth of Pennsylvania. They’ve had a number of evaluations and economic-impact reports done, demonstrating the impact that the program has. I think if you take a look at the city of Atlanta, it’s not too much of a stretch to say that a lot of the technology focus in Atlanta is an outgrowth of investments that the state and the private sector have made in a public-private partnership program there called the Georgia Research Alliance, which recruits eminent scholars to Georgia’s universities and helps commercialize research out of the universities.

 

There are a number of examples across the country, and it can be rural areas—or smaller-population areas, I should say. For example, the University of North Dakota, the Center for Innovation has helped create hundreds of companies and hundreds of jobs, as well, in areas that most people don’t think of as a technology hotspot.

 

Thank you, Dan, for sharing today on this topic.

 

My pleasure. Good talking with you, Dustin.

 

 

 

 

 

About Dan Berglund


 

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Dan Berglund


President and CEO at SSTI

 

LinkedIn Profile

I interviewed Niel Nickolaisen who discussed Trust-Ownership Model as a Framework for Creating Great Cultures.

 

 

 

 

 

 

It’s nice to speak with you today, Niel, and I’m looking forward to hearing your views on the topic of the trust-ownership model, which is a framework for creating great cultures. Can you first provide a brief background of yourself?

 

Sure. After I graduated from college, I started out life as an engineering manager. I ended up getting involved with process improvement, became something of a lean-manufacturing person, or expert, and I was working for a consumer goods company in operations, supply chain optimization, and inventory management and such. I pretty much complained every day about how bad their IT systems were.

 

One day, just to get me to stop complaining, the CEO made me the CIO. That was about 18 years ago, and I’ve spent the past 18 years in an IT leadership role, helping organizations optimize their IT, whether it’s business systems or software products they’re developing. Along the way, I’ve had the opportunity to experiment with some models, I’ve learned a lot in my leadership roles, and a lot of that went into this recognition of the impact the culture has on teams and organizations and got me thinking about, then, some of the characteristics of cultures that make a place a great place to be.

 

What is the trust-ownership model?

 

Kind of somewhat cynically, I’ll tell you this story. A great consultant once told me that any valid idea must be represented in a four-box model, so a trust-ownership model is my four-box model. On the vertical axis, we have the levels of trust. At the top is a high-trust culture; at the bottom is a high-control culture, because control, to a certain extent—the way I think about it—is the opposite of trust. If I don’t trust somebody or a team, I’m going to control their activities; I’m going to make sure they can’t do too much without my approval or my direction or my telling them what or how to do something.

 

On the horizontal axis on the left side is low ownership, meaning my teams don’t feel ownership for the results we’re trying to generate. At the right end of the spectrum is high ownership. The teams know what matters, they know why it matters, and they feel strong ownership for generating those results. If I look at that in those two dimensions, I get four types of cultures: high control, low ownership. That is what has been the prevalent leadership or management model of command and control, where the leader knows what to do, the leader knows how to do it, the leader knows what decisions to make, what matters, all those things; everything routes through the leader. The extreme case of command and control is micromanagement, down in the lower left corner of that trust-ownership model.

 

At the other end, high trust, high ownership is a culture that’s innovative, people are motivated, and they love being there. The other two corners, if there’s high trust but low ownership, you get an environment where not much gets done. People are just doing whatever they want, they’re not aligned. There’s not a real performance culture because there’s high trust, but nobody feels ownership for delivering anything. At the other end, along the other diagonal, you’ve got teams and individuals who feel high ownership for results, but they’re being tightly controlled by the leaders or managers, and in that case, you end up with conflict.

 

Now, this chaos quadrant and the conflict quadrant, I don’t think either is sustainable. Most of the time we’re dealing with either command and control or, in the extreme, micromanagement of some type, or this highly innovative, highly motivational culture. When I talked about the trust-ownership model with other people, I asked them to describe the environment and situation with the best leadership they’ve ever experienced. Words like trust come out. “I was allowed to do things. I was allowed to pursue. I could take chances.” Also, they knew what the results had to be. When I asked people about one of the worst environments thieve ever worked in, typically, it’s those other characteristics of either command and control or micromanagement.

 

The other thing I would say is that the command-and-control environment has been the operating model for a long time. To a certain extent, it works. It’s never been optimal but it can work. One of the points I make with people when I talk about the trust-ownership model is that even if command and control has worked—not been optimal but been operational—historically, it is not today because of the pace things are moving. The dynamic nature of the marketplace, the dynamic nature of competition, how everything’s changing so rapidly, command and control no longer works because there’s not a manager who knows enough to keep up with all the changes that are taking place. There’s not a command-and-control manager who knows how to deal with the uncertainty and ambiguity that’s in front of us. The only way we can possibly survive in today’s environment is to shift to a culture of trust and ownership.

 

Can you talk about how this model can be used?

 

Sure. I think the most pragmatic way it can be used is for anybody in any type of role, whether they’re leading themselves or others, is to look at their actions, look at the processes, look at the activities, and ask: What we’re doing, does it increase trust? Does it increase ownership? If not, what can I do to increase trust, and what can I do to increase ownership? Because, step by step, piecewise, I can make changes to how I manage and lead. Shift me wherever I am farther up into that upper-right quadrant of high trust and high ownership.

 

This shows up in lots of ways. One of the examples I use is: How do you get status reports on the projects your teams are doing? Do you get detailed status? Do you really deep-dive to really understand what’s going on, or are your status reviews more focused on the results being generated? Is it at a higher level or lower level?

 

The approach I use now—and I’ve evolved to this as I have become less of a command and control and much less of a micromanager—I do status-report meetings on every major project with all of my teams. Those status reports last anywhere from 30 to 90 seconds a month by project. I ask three questions: What have you gotten done in the past month? What will you get done in the next month? Do you have any problems you need me to resolve? If I’m diving deeper than that, I’m starting to take away their ownership and show that I don’t trust them to deliver.

 

If a team is struggling, I’ll do a deeper dive, but I can’t assume that every team needs my intervention on everything. Only those who need it. Then my goal is to quickly return them to their own ownership rather than me becoming a problem solver for them.

 

Do you have any success stories you can share?

 

Several years ago, I was hired to be the CIO of a rapidly growing and highly successful online university. The previous CIO had been quite a bit of a micromanager. “Here’s what we’re going to do, here’s how to do it, and if you don’t do it my way, you’re doing it wrong.” This team wasn’t generating the results they needed, which is one of the reasons they hired me. In fact, the IT team had such low credibility that the university had decided to replace all of its student-facing technology. No one from IT was allowed to participate on these projects; they had seven distinct projects, and no one from IT could play.

 

I inherited this team that was really used to micromanagement and command and control. I knew we had a lot of culture problems, we had a lot of delivery problems, we had a whole host of problems. In fact, when they hired me, the university president kind of implied, he said, “It’s okay with me if you have to fire and replace everybody who reports to you.” Wow, that’s kind of an indication that things aren’t very good.

 

I approached it from a basis of trust and ownership. First thing I did was tell everybody, “I’m going to trust you first. You can prove to me that I’m wrong to trust you, but I’m going to assume you’re a superstar at work, and I’m going to treat you like you’re a superstar. If you’re not, come to me, and I’ll help you become a superstar. As a team, we’re going to agree as to what our priorities are—the things that matter most, why they matter—and then you’re going to own the implementation of whatever those things are.”

 

It took a while. I had to wean people off being told exactly what to do every minute of the day, every day of the week. Within a few weeks, things got better and our performance improved. Within a few months, things got better. Nine months after I’d started, remembering that I had inherited a team that had such low credibility that nobody wanted to use them for anything, the university asked me to slow IT down because we were producing technology and technological services too quickly for the university to absorb the change. When I inherited this team, there was almost as much shadow IT—meaning, IT people being hired in departments outside of the central IT group as there was central IT.

 

Over the months, we created such a great culture based on this concept of trust and ownership that people were begging to join IT. The shadow IT, which is a big concern in IT circles, evaporated because the best place to work in the university was in IT. It wasn’t the best place to work because we had free snacks or catered lunches, because we didn’t; it was a great place to work because we knew what mattered, we knew what we were working on was important, and people did their work.

 

Sometimes they’d get frustrated. The university president would say, “Who’s working on this project?” I’d say, “I don’t know.” “What do you mean you don’t know?” “I don’t know.” “Well, how do you know who’s working on it?” I’d say, “Whoever’s working on it is somebody who wants to work on it.” I told the team things like, “I don’t care when you work, I don’t care where you work. All that matters is all this work we have has to get done.”

 

People rose to the occasion. The same people the university president told me it was okay with him that they didn’t work at the university anymore; within months, they were the most sought-after people in the university. I’m a personal believer that this works because I tried it in something of an experiment at this university, and it’s one of the most dramatic culture changes I’ve experienced in my life.

 

Thanks for sharing these great insights and your experience on the topic of the trust-ownership model as a framework for creating great cultures.

 

You’re welcome.

 

 

 

 

About Niel Nickolaisen


 

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Niel Nickolaisen


Chief Technology Officer at OC Tanner

 

LinkedIn Profile

I interviewed Norman Wolfe who discussed Shifting From the Machine Paradigm to an Organic View of Organization as a Living Organization.

 

 

 

 

 

 

It’s great to speak with you today, Norman. I’m looking forward to this very interesting topic today of shifting from the machine paradigm to an organic view of an organization as a living organization. Can you start by providing a brief background of yourself?

 

I’d be happy to. Thank you for having me, Dustin; it’s a real pleasure to be here. I spent 15 years as an executive with Hewlett-Packard. In 1988 I left and started consulting. I’ve been working with large and small startup organizations, established organizations in a variety of industries all with the focus of attempting to help them position themselves so they increase their and create extraordinary results.

 

What I found during all that time at HP and beyond was, whatever we ended up trying, whatever we did, whatever classes we sent people to or workshops I did, they had a positive impact for the short-term. Then the leaders would go back to their organizations, CEOs would go back to their organizations, employees would go to training and go back to their organizations, and invariably, what we tried to do would stumble or run into roadblocks.

 

I started to get the impression that the challenges, the issues, were beyond what I would call skillsets or knowledge or information or new techniques or new processes; there was something else going on. That led me to the realization that we’re living in a paradigm. I was introduced to paradigms back in the late ’70s, early ’80s, Joel Barker’s work on paradigms. I began to realize that we all live within a defined worldview or a defined framework, and that framework influences and guides and limits how we see the world and what courses of action we can take. I began to realize that organizations in general live by what I call the machine paradigm. That paradigm actually unconsciously prevents us from achieving what we want.

 

Can you explain a little bit more about what this machine paradigm to organization is?

 

The machine paradigm started out of the way scientists view the world, which was summed up by Isaac Newton’s approach to giving a scientific explanation to the universe, which was that it’s a big clock. It’s a big machine and if we take its components apart, we could better understand it and put it together and make the machine do what it wanted to do.

 

And as we began through the Industrial Revolution and then at the turn of the century, with the growth of the industry factories and so forth, work of Frederick Taylor, everything started to be oriented in the framework. A paradigm was created that said an organization is a machine to be optimized, to be made more efficient, to be streamlined. If you could identify the flow of the work through the system in the most efficient way possible, you would have a very effective organization. In fact, that worked great for the first half of the Industrial Revolution, probably through the mid-’70s and early ’80s. That was a really great model, but it requires certain environmental conditions for it to be successful. One of those environmental conditions is that you can’t have a lot of frequent change because machines are programmed to do what you want them to do, and it’s very difficult to change a machine to be innovative, creative, agile, responsive to constant change.

 

If you think about how organizations are operated, a group of people—the executive team—decides how the work should get done. We have lots of different methods these days, like lean manufacturing and Six Sigma, which involves all the people, but it’s still trying to figure out how the machine would work, how to design it to go from point A to point B in a nice, efficient, sequenced path that creates the optimum output.

 

The problem is, every time something hiccups in the environment, we have to change the machine, and machines just can’t respond that fast. I began to look at if the machine paradigm is hindering us—and I can give you lots of examples of how the machine prevents us from getting the very things we need in the 21st century, such as innovation, agility, and engagement. I began to ask the question: If the machine prevents us from getting what we want, what do we replace it with, what else can we use to model the creation of results?

 

I went to nature. Nature is a perfect example of how to deal with environmental changes and how to respond to them in a way that keeps the objective, the strategy, alive. I began to develop what I call the living-organization model, which is a much more organic model based on not only the way nature works, but the understanding we have about how life works. Life is all energy and we’re just always transforming energy from one form to another. That’s the basis of a living-organization model.

 

To give you a little bit more about why they machine paradigm is unconsciously undermining everything we want. If you look at one of the key attributes of the optimization of a machine—take things like lean and Six Sigma—what you’re trying to do in those efforts is to eliminate variability and to create a certain degree of predictability and control. Those are two of the fundamental principles of the machine paradigm. You’ll find it throughout all of management theory and leadership training and what we’re taught on how to effectively run an organization. But the very essence of innovation is chaos.

 

We’re playing around with an unknown domain, and we don’t have an efficient way of understanding it. To be truly innovative, we have to tolerate a certain amount of chaos, diversity, variability. If we’re working with things like Six Sigma to eliminate all variability, unconsciously we’re eliminating the very environment we need for innovation. Same thing with agility. Agility is being prepared for the unexpected, but if you’re always trying to control things and make them predictable and determinable, you’re weeding out the variability to be responsive and agile. Those are just a couple of examples of how the essence of the machine paradigm prevents us from being successful in the 21st century.

 

Can you describe the shifting from the machine paradigm to an organic view as a living organization? Also, why is this important?

 

As I said, the living-organization model is predicated on the scientific principle that everything is energy, and energy cannot be created or destroyed. With that, you look at how we transform, how we get an output, how we get the outcomes we want. It follows a model I outline in my book, The Living Organization, where energy comes from the efforts of the people; they’re the only real source of energy. It flows through energy wave guides; in business, we call them business processes, so that’s still important. Directed energy out through the business processes produces an outcome.

 

At first blush, you’d say that’s no different from what we’re doing today, except we look at it as only a single field of energy today, the activity we do, which is an important field of energy, but it’s only one of three. The other two are the energy of relationship and the energy of context. Any relationship is what happens when people or companies with markets interact with each other. If the energy is coherent and aligned, what we call an engineering in phase, we get an amplification of energy. We get more energy going through the system. If there’s conflict, if there are differences, misalignment, you get energy attenuation—they’re out of phase and you get less energy through the system.

 

That’s sort of the engineering explanation of it; let’s look at it from a more anecdotal point of view. People who are working well together experience a thing called synergy. They feel energized; they feel like they have more to contribute because they’re bouncing things off of somebody else and there’s alignment and we just get real excited and make things happen a lot easier and a lot faster than if we were in conflict or competing or alone by ourselves. In the business world, this is called creating high-performance teams, and there’s a lot of work around that. All the work is focused on the activity, the process of teamwork; there’s no paying attention to this field of energy of relationship. That’s begun to change over the past couple of decades with things like emotional intelligence, but it’s relatively new and, still, people think of it trapped in the machine paradigm, don’t think of it as a dynamic force that they can actually work with as a part of the equation.

 

Another phase where relationship energy is important is in the field of customer relations. Customers pay a lot for experiences, or they run away from things because of experience, and that’s, again, relationship energy comes into play there. We treat customers—there’s a lot of work on customer management, customer-relations management, customer-experience management. If you look at what they’re all doing, they’re really trying to optimize the transaction flow of customers through the system, and, of course, when you start to feel like a transaction, your customers will respond accordingly, and there’s no sense of relationship, no sense of belonging, no sense of community, of being together with another being, so you end up losing energy from the interaction.

 

When there’s a positive experience, you get a real benefit. I’ll give you two examples. Look at the product that Starbucks provides and it’s a coffee. Some people actually dislike it, but that’s neither here or there. A coffee you can get at a lot of places, like service stores. Here in the States, it costs $1.39 at a 7-Eleven convenience store for a large cup of coffee, and you can add steamed milk, because they have these milk-steaming machines and you can add some hot chocolate to it and you can make a mocha and they even have the flavors now you can add to it. For $1.39. I go to Starbucks or any of the other barista coffee places around town, and I’m paying $4.50, $4.75 for the same cup of coffee. For the same product, I’m paying a lot more money. That’s the power of experience.

 

Apple computers is another great example of that. Apple computer has never been technologically the most advanced computer systems out there, but they’ve been single-mindedly focused on creating the best user experience on the technology that they can create. And not just the experience of the product alone, but the whole ecosystem, like iTunes and the iPhone. Everything became an experience and they changed industries. They changed the music industry and they changed the phone industry; just because they looked at the experience the user’s having with the technology and the whole ecosystem of it. They took relationship to heart.

 

The third element I talk about is context, and this is really the most important one because it defines what is and isn’t possible. It’s the domain of what we believe and how we believe it. It’s what gets us excited, passionate, and deeply engaged in what we’re doing. Or the opposite. It demotivates us; it just makes us feel like automatons, robots serving in a heartless machine, just picking up a paycheck. By shifting to an organization as the organic flow of energy, which is what nature really is, and beginning to recognize there’s more to life than just the activity, relationships are really important and context is really important. One, you get a lot more energy flowing through your system, which means you’ll get more output for less effort, and that translates into dollars and cents, profit. Increased contribution to customers, better experiences with customers translates into higher margins. More context, more alignment, more consistency, more engagement produces more engaged employees, more passionate employees, produces greater results.

 

By just focusing on the traditional paradigm, one, we block ourselves from being able to get to what we want, which is innovation, agility, and engagement and * (17:03—unclear). Two, it diminishes our ability to actually increase the revenue and reduce the expenses the way we’d really like to. To make it work, you have to begin to look at the organization differently.

 

I’ll give you one example of that. I’m working with a client now that’s a health care clinic, and we’re going through traditional strategic planning kind of things, except one of the activities I have them do is look at their organization as a living person, as a single, living entity. Is it male or female? What’s its name? What kind of personality does it have? Is it extroverted, introverted? How mature is it? What’s its age? What’s its relationship, external with customers, with suppliers? What’s its relationship internally?

 

They came back with some rather interesting answers to that. They said it was female, but they named it Alex because it was kind of not quite androgynous, but it was a very quite aggressive female, if you will—and I don’t mean that in a negative sense—and an outgoing female, but it had a nurturing aspect to it. They said it was about 26 years old; fairly skilled, but lots of little maturity that it needs to round itself out. And kind of introverted in terms of reaching out to the community. by looking at it from this point of view, we get a whole different framework on how to view the challenges.

 

I could translate that fairly easily into traditional marketing-strategy speak, but it allows the leadership of the organization to look at the organization much more holistically, much more from a developmental point of view. How do you mature the organization? It has all the power and energy of a young 20-something but starts to round it out and mature itself. How does it begin to become more extroverted so it reaches out more to the community? More from a developmental point of view rather than an activity point of view of, “Okay, we’re going to have to this marketing plan, and we’re going to do these internal trainings” and such and such, it just creates a much more robust, holistic point of view.

 

They’re having some really great success with that approach. They’re getting much more energy, much more excitement through the system. I could probably go on a lot longer about some of the successes, but I just wanted to give you a little sample of where it’s done in practice and some of the results we’ve seen and what we think it’s going to lead to. It also changes what we measure.

 

I’m going back out there next week to talk about if this is where they want to go in terms of creating an ideal customer experience and this is who they are now, how we get from A to B and how we measure that. How do we measure things like the context of the organization, the culture, the way of being of the organization? How do we measure that? How do we measure the experience customers are having when they walk out? Surveys are just way too analytical and don’t really give you the quality of the experience, so how are we going to measure quality of experience?

 

These are all parts of the things it takes to transform yourself from a machine paradigm to a much more living, vibrant, engaged way of looking at it. It takes some doing; it takes some courage on the part of leadership because it’s going to be uncomfortable at first. Anytime you learn something that’s different from what you feel you intuitively know, it becomes counter-intuitive and that becomes awkward and somewhat uncomfortable for a period of time. That’s where I helped them through that period and helped them move to a new way of thinking.

 

Thanks, Norman, for sharing your views today on this very interesting topic.

 

You’re very welcome, Dustin. It’s really a pleasure to have that opportunity.

 

Great, thank you.

 

 

 

 

About Norman Wolfe

 

 

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Norman Wolfe


Founder, CEO Quantum Leaders, Inc

 

LinkedIn Profile

www.quantumleaders.com

Mobile : +1 949-689-2158

I interviewed Reza Ziaee who discussed The Functional Tree-Structure Concept and Tools Within the Health Care Industry.

 

 

 

 

 

 

It’s great to speak with you today, Reza. I’m looking forward to hearing your views on the functional tree-structure concept and tools within the health care industry. Can you first provide a brief background of yourself?

 

Sure, sir. My name is Reza Ziaee. I’m a Ph.D. in applied statistics and quality engineering with more than 20 years of experience in health care, operations improvement, quality improvement, and also some clinical background. Having said that, I do have experiences in teaching. I taught classes for M.B.A. students, specifically speaking, health care-focused M.B.A. programs, and I had a lot of fun. I also taught operations management and health care economics.

 

One of the things I’m really aware of is basically lack of complete understanding of operations management, or operations in general, in health care settings. That is the reason, after 20-plus years of experience, I put all thoughts, approaches, and experiences into this book that is called Preparing for Continuous Quality Improvement for Health Care.

 

As far as my education goes, I do have, as I mentioned, a Ph.D. in applied statistics and quality engineering and also an M.A. in economics an A.B.D. in economics. Did I answer your question?

 

Yes. Can you talk more about the problem?

 

As I mentioned, in health care or any organization—I do not know if you have studied some of the publishing that came out in 2010 that about 70 percent of operations-improvement projects, between nine months and three years go to the wastebasket. Everybody came up with some solutions on how to make this operations-improvement approach sustainable but nothing has occurred. If you’ve studied Deming in detail, that’s where Deming advised us that we have to really create stable processes to really gain limitation of variation or limit the variation.

 

When I looked at everybody in the specific health care setting, everybody wants to do something different or do improvement without knowing the domain of the functionality and also understanding in detail the processes. Before they stabilize the structure, they start improvement. My analogy is this: Before knowing if they are living in the Eiffel Tower, they start building some other structure, but, unfortunately, in reality, they are living in the Pisa Tower. As soon as they build extra stuff on it, all of a sudden, the tower really leans more. Because of that, you might say it’s more inclination to get to the ground and just collapse, they go and pick it up and eliminate it.

 

There are a lot of other analogies we can really provide this. Case and point, to have a car and you get a flat tire on the passenger’s side every other day. Finally, you get an expert and say, “I want you to create a tire that never goes flat.” But without the dimensions and specifications for that tire, these experts create a tire that looks like a tractor’s tire. When you put it under your car, it tilts your car. For a few days you’re happy because you’re not going to get a flat tire, but after a week or two, you get tired of it because your car never functions in the appropriate manner. You take it out and bring it back the old way.

 

It happens in operations-improvement concept. People are doing improvement; they just really go and grind one piece of—in health care, for example, they’re just looking to create the triage better to get the patient in. When we create the triage in a very succinct and optimized manner, you really create constraints for every other function. After a while, while triage is functioning well, the other parts are clogged up due to that improvement and focus and then they want to say, “Let’s go back to the old way.” That’s the reason this study has shown—it was published in 2010 that demonstrated 70 percent of the total projects not only in health care, every other organization also, go to the wastebasket between nine months and three years.

 

For completing our book, myself and my counterpart, we did this similar research. We sent a survey through SurveyMonkey to around 2500 people, and we got around 200 responses. We compiled and really analyzed the data received. We came up with the basic result demonstrated as supported the previous studies, which was around 70 percent of the projects these experts have been working on after nine months or three years went to the wastebasket.

 

And can you talk about what the solutions are?

 

The solutions this book really addresses is to make what and how visible. What you want to say is this. At any organization, not of course, piecemeal; it should be a holistic approach to the organization. Case and point: If you are looking at a hospital, you have to look at every subsystem within the hospital to make sure that it works well. When I say “works well,” it means make what and how for any department or division visible based on the function and subfunctions and also processes. Then, when you really make it visible, understand you’re working on two aspects: optimization, standardization, and alignment, which means that process A that feeds process two need to be aligned with each other. Also, within that structure, they do need to be standardized and also optimized.

 

I do not suggest that at this stage of the game, for example, when you complete this you will get the optimum and the best solution. You will get minimally between 15 to 25 percent improvement, which is drastic. I have shown in different projects or not holistic approach but in the division or subsystem that when we employed this, we gained a lot. We redesigned at one location, the ED, and we did go through detail documentation on what and how within that department and we gained around 30–40 percent patient satisfaction, about 30–40 percent quality improvement, and we decreased the turnaround time or patient throughput from three to four hours to two hours and two and a half hours.

 

Thanks, Reza, for sharing this great information about the functional tree-structure concept and tools.

 

You’re quite welcome, sir, thank you. At the same time, another thing I would like to bring to your attention. Case and point:  it took 12 years to get to the best level of watching, I’d say, operations and success. My suggestion is that this process, if you’re going through the same thing, with the full support of the leadership. As Gary Kaplan became the flag holder or the first person to march to our next stage of operations, if that happens, I believe and can show the way to those willing organizations within three to five years to reach the best in class. Best in class means best quality of services and lowest cost of delivery. Of course, timeliness is also observed.

 

Great, thank you.

 

You’re welcome. I would suggest maybe people need to go and read the book and understand what it is. If they do need any clarification, they can contact me to get really to the level of operations or expertise to be able to deplore what I suggest.

 

Okay, where can they get the book?

 

They can go to Amazon, under my name or under the book name, which is Preparing for Continuous Quality Improvement for Health Care Sustainability Through Functional Tree Structures.

 

Great, and I’ll also put your contact information in this blog so the supply chain community can reach out to you.

 

That’s great. I’m looking forward to hearing more. I believe that nobody yet—I’ve never seen anything similar to what I do present. Currently, I’m working with a software engineer group that automates this process, which means that within, hopefully, six months, it will be available as a software. Any organization or department can sit down and really understand what the department does and how they’ve done it.

 

When you create that type of, what you might say, black-and-white or colorful pictorial presentation of what and how, communication becomes very easy, the creation of, for example, alignment of every staff working together, everybody will understand what’s expected of them, why they’re doing their job, and, also, the system can really deploy an [incentive] program that really creates what you may call a quantum leap. At that level, people do not need, even though it’s very important, that really provides you with a structure that people see the results of the activities and contribution. They can delay themselves and connect themselves to the strategic objective of the organization, and sales actualization became obvious and reachable to everybody.

 

At the same notion, everybody within that structure can communicate with each other very, what you might say, socially and succinctly. Every process that ends, a new process starts, which means that the process before the next process designs and works regarding with production or, for that matter, services that can be rendered or documents that can be delivered to the next process based on the customers’ specifications and requirements.

 

In totality, the whole structure will be looking at such that in sustainable operations improvement reached through, first, stabilize the structure; second, improve the processes through the SOAP construct, which is standardize, optimize, align the process. We are really simplifying this process by asking specific questions for each step of the way that has been detailed in the book.

 

The next part: establishment of a very sound and solid measurement system based on the setup smart metrics. This part, this T structure or pillar creates a supporting environment for the work organization because culture is an outcome; culture cannot be defined as an “infrastructure.” It is a superstructure even though later on, it will function as infrastructure. In here, culture as a connective tissue within each organization really becomes the by-product of what and how. These four pillars create a stable structure and also sustains any improvement that organizations embark on.

 

Great. This sounds like a good benefit for the health care community, and I’m looking forward to publishing our interview.

 

Thank you very much. At the same time, I should say it’s not only for the health care. It has been focused on health care, but the concept can be deployed in any operational setting.

 

Thank you for that clarification.

 

You’re quite welcome, sir, and thank you very much for the opportunity. Please keep communicating. If I can be of any help, I will be more than happy to assist and help you.

 

Thank you.

 

 

 

 

About Reza Ziaee

 

Here is the quick introduction to our book "Preparing for Continuous Quality Improvement" which is published by CRC Press. The book explains how to quickly reach best in class status by making visible the “What and How” of your operations as a precursor to improvement projects and includes case studies and tools on how to set a stable platform from which a successful Quality Improvement program can be built. Learn more about the book by going to

http://www.crcpress.com/product/isbn/9781466567702


 


 

Reza Ziaee


Regional Director of Operations Performance at Banner Health System

 

LinkedIn Profile

I interviewed John Schaefer who discussed How Risk Management and Supply Chain Management Intersect.

 

 

 

 

 

 

It’s great to speak with you today, John. I’m looking forward to hearing your views on how risk management and supply chain management intersect. Can you start by providing a brief background of yourself?

 

Sure, thanks. I’ve got a master’s degree in risk management and have been involved with risk management from many angles, including the traditional insurance-risk management and also internal audit and various consulting positions, working at brokers, consultants, and inside companies. I currently work at SanDisk, and I’m responsible for enterprise risk management, business continuity, and our corporate insurance program.

 

Can you talk about how risk management and supply chain management intersect?

 

Sure. Risk management is one of the terms that has changed a lot in the past couple of decades. Today when we talk about risk management, there are many people that talk about enterprise risk management and others who are still talking about traditional insurance-based risk management. The bridge between those to some extent is business continuity, and, fortunately, here at SanDisk I have responsibility for all three of those.

 

With enterprise risk management, the goal is to figure out all of the major things that can go wrong for the company and make sure that you have appropriate controls in place. When a manufacturing company does that, it’s not uncommon for some of those important risks to be specifically related to the continuous production of our product. If you can’t produce product for any number of reasons, you typically would look at your business-continuity plans as one way of bridging a gap or filling holes if there are issues in the supply chain. We’ve looked at potential disruption to our supply chain as one of the enterprise risks, and we’ve tried to create a number of activities to reduce that risk and then, at the end of the day, to finance whatever that residual risk is, which is where the insurance part of the program comes in.

 

Do you have any recommendations for implementing this?

 

I think the key really is communication. I’m fortunate that we have a group within our procurement team that’s very interested in this topic, so we have the ability to talk frequently about how our contingent business-interruption risk—which is the insurance side of things—affects the supply chain continuity, which is what procurement is concerned about.

 

The first step is really just making sure you have a common picture of the supply chain, that you understand here the value is added in that supply chain, and that you look for the key vulnerabilities to the supply chain. That could be your owned locations, it could be contract manufacturers, it could be your logistics firms, or even, in some cases, your data providers.

 

Once you understand where the value is added and what the risks are to them, then you need to jointly determine the benefits of mitigating those through multiple suppliers through increases in inventory, buffer stocks, and then again at the end of the day to figure out how much of that risk is going to be financed through some kind of cargo-insurance or property-insurance program.

 

Where have you seen some success?

 

I think we’ve seen it in all three areas of my responsibilities. From an insurance standpoint, the fact that I understand our supply and can describe our approaches to reducing risk has been helpful in allowing us to achieve better terms and conditions for our property-insurance program.

 

From a business-continuity standpoint, we have regular procedures set up that help not only reduce the risks that we face, but to explain that reduced risk to our customers, which provides us with some competitive advantage.

 

And from a supply chain-risk standpoint, they’re able to allocate their resources more effectively because they know where they need to invest in alternate suppliers and in inventory.

 

Thanks, John, for sharing today. Did we cover all the points you wanted to discuss today?

 

I think so.

 

Great, thank you.

 

All right, thank you.

 

 

 

 

 

About John Schaefer


 

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John Schaefer


Director of Risk Management and Business Continuity at SanDisk

 

LinkedIn Profile

I interviewed Roslyn Parker who discussed Corporate Philanthropy.

 

 

 

 

 

 

Before we start, can you provide a brief background of yourself?

 

Well, I am sitting right now in Houston, so I have been in the Houston market for about two years. I have approximately over 25 years of sales and sales-leadership experience, primarily in the areas of advertising. I have worked for several major companies, including Time Warner, Home Box Office, Verizon, as well as Dex Media. I have a pretty varied background in terms of advertising, in publishing, of course print media, cable television, and digital media.

 

My first question is: What is corporate philanthropy and why is it important?

 

From my perspective, being in the sales arena for over 20 years and having worked for several major companies, corporate philanthropy and corporate responsibility, social responsibility, was something that was very, very important to them. As an individual who believes in giving back and being of service as an employee of those companies, it gave me a sense of loyalty and a sense that these companies are really in alignment with who I am fundamentally. As an employee on the inside of companies that have foundations and who contributed in a big way, this is something that was very, very important to me.

 

As I crafted my own business as a marketer, I thought it just made perfect sense for me to create a business that would help corporations to align themselves in a philanthropic way by participating in marketing and events and activities that benefited humanity or social cause of some kind. From a personal standpoint, it is very, very important to me because I believe in being in service and I’ve served on several boards and I’ve been a volunteer for over 20 years in a variety of capacities.

 

For corporations, I think now more than ever, it is something that is extremely necessary and a very viable part of a corporation’s business. It really allows corporations to show their hearts. Instead of it just being about the bottom line, it shows that they’re interested in the communities that they serve, they’re interested in the communities where they do business, they’re interested in their employees. It kind of closes the gap and personalizes the corporation in some way.

 

Obviously, philanthropy has been going on for a number of years, but I think you just see it, as opposed to a company cutting a check, you see them far more engaged than you ever have before. I think now it has more relevancy and meaning.

 

How is it done effectively?

 

I think the most effective form of corporate philanthropy is one that comes from the bottom up in terms of really engaging the employees and treating them as key stakeholders in the process. When you have employees of an organization who are championing a cause, it just has more validity and more meaning. When companies are able to create systems that allow their employees to get involved, it’s even more meaningful.

 

For example, when I was at Verizon—Verizon had a foundation and several processes and ways employees could get involved. For that company, because I was on the advertising side, I was a part of Verizon information services at the time in the communications side, our primary causes the company would fund were causes that had to do with communication. Literacy was one piece of it, education, and then domestic violence because of its impact in the workplace.

 

As an employee, I saw areas of interest that aligned with what I was doing every day. We were providing information. We were in publishing, so it made sense that we were involved with literacy in some way. There were various campaigns and ways I could get involved as an employee—really, really get involved—at the local level. We could craft what was going on in our local communities as long as it was in alignment with the corporation’s overall objectives with the certain areas that they would fund and participate in.

 

As I became more and more involved with that as a champion, I was able to identify ways for Verizon to form partnerships. That really only can come from the individuals who live in those communities because they know the community, they know what’s going on, they know the pulse of what is needed. Funneling that information up—there were processes that we had that could be done.

 

We were supported from a financial standpoint; projects were supported. Philosophically, we were supported. We didn’t feel like it was just a song and dance that a corporation felt they had to do. It was something that was real and tangible and something that employees were involved in at a variety of levels.

 

The other corporations I’ve worked for, they’ve had some facet of corporate philanthropy, but Verizon by far, in my personal experience, had the most robust corporate-philanthropy programs.

 

Thanks, Roslyn. Did we cover all the points you wanted to discuss?

 

Yeah, we did.

 

Thank you again for sharing.

 

Thank you. I’ll look for your blog.

 

 

 

 

 

About Roslyn Parker


 

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Roslyn Parker


Experienced Marketer and Social Entrepreneur

 

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I interviewed Tom Boersma who discussed "Textile Recycling Industry" The Statistics of Textile Waste in our Country and the Redistribution to Third World Countries.

 

 

 

 

 

 

 

Can you start by providing a brief background of yourself?

 

 

Yes. I grew up in Milwaukee, Wisconsin, completed my education at the University of Wisconsin-Milwaukee, majoring in logistics. My whole career, I’ve worked for family-owned companies, running their warehouse operations and trucking activities.

 

I retired in 2007. I started up a consulting company and here I am today. I’ve accepted a full-time job with Global Clothing Industries in Atlanta. That’s a brief overview.

 

Great. Can you give me an overview of the textile industry and some of the waste involved and how it’s distributed?

 

This is kind of an unheard-of business. Textile waste amounts to 25 billion pounds of textiles per year, and that’s a U.S. government number; that’s about 82 pounds per resident. Of that 25 billion pounds, 15 percent is donated or recycled. Eighty-five percent of the textiles, which is 21 billion pounds a year, go to municipal solid-waste places. To give you an overview of the post-consumer waste, plastics is 12.3 percent; metals and glass are 13.4 percent; food scraps, 14.1 percent; paper, 28.2 percent; and textile is 5.2 percent of that. There’s very little of the textile that gets recycled.

 

In 2012 that number I just gave you—that 25 billion pounds—that’s a 2012 number. By 2019, it’s expected to be about 35.4 billion pounds of textile waste, with only a 2 percent growth of recycling. Seventeen percent of the 35.4 billion pounds are only going to be recycled by 2019. That gives you some idea of the volumes we’re talking about here.

 

Can you talk about what your company does?

 

Yes, we are a family-owned company, started eight years ago. Some folks from Sierra Leone, Africa, started the business—they’re U.S. citizens—and they had no background in recycling textiles. Today we operate two facilities, one of 64,000 square feet and the other of 53,000 square feet. We have approximately 147 employees who are involved in the sorting of textiles.

 

We obtain all our material from companies like the Salvation Army, Goodwill, and other thrift stores; product that can’t be sold or product that’s just too voluminous. Where these companies can’t process, they bale up into thousand-pound bales, and we buy them so much a pound. The market varies between 12, 15, 18 cents a pound. In addition, we also buy accessories like purses, shoes, bags, hard toys, soft toys. We’re not just a textile, buying clothes; we’re buying pretty much what all these types of businesses take in from the consumer.

 

Keep in mind that’s less than 15 percent of the availability of what’s out there. Not too many people know of or understand the textile-recycling business. It takes a lot of work just to obtain how to sell your product. It’s easy to get the raw material here in the United Stets because it’s so plentiful. The biggest and hardest chore is to find a reliable source to sell it to.

 

We sell in West Africa, South America, Central America, and Asia, and we have partners in each one of these locations where we sort through the clothing, and it has to be no stains in it, no rips, no tears, no discolor. It has to be good-quality clothing; otherwise, the people in Africa, they won’t accept it, and you’ll get a bad reputation in the industry. We sort through, approximately we come up with over 300 SKUs. Whether it be men’s clothing, ladies’ clothing, girls’ or young boys’, whether it be a dress or a shirt or a blouse or a pair of shoes, we bale this product up into hundred-pound bales, and we load containers—approximately 485 bales per container—and we export these to the third-world countries.

 

We also have a division called Vintage. Vintage is something that’s old, all the way up to age 100. At age 100, anything over age 100 is considered an antique. There is a big demand for vintage clothing that we sort out of the rest of the textile when we sort our textiles. That department operate about 12,000 square feet.

 

To give you an example of the vintage, a pair of blue jeans came through, and the vintage person on the line recognized it as a vintage item because it had certain stitching in it and it had a certain design. We ended up selling that pair of blue jeans to a buyer in Japan for $400. Then we were told in japan that the person who bought it from us sold that pair of jeans for $6000. There’s a tremendous value in recycling textile, picking out the vintage. We have people coming from japan, China, Britain, domestically from Los Angeles, Chicago, New York. A lot of movie studios come in here, going through our vintage.

 

The rest of the product, as the clothing, we sell so much a pound for shoes, hard toys, soft toys, purses, bags, and clothing, the vintage sells for X amount of dollars per piece, so it’s a little bit more valuable than the regular product that flows through the business.

 

That gives you a pretty good idea of what we do for a living. Eight years ago the company started with a revenue of $60,000 a year. We are now doing well over $17 million in revenue a year. That gives you some idea of our growth over eight years. With the continued growth and expansion of third-world-country sources, we plan to ship in excess of two containers a day five days a week and grow from there.

 

We’re also buying new technology to help us produce greater quantities with less labor. We’ve invested in two new state-of-the-art baling machines that are going to be shipped to us from Italy in late April. Instead of leasing property, we’re buying our facilities. Because the interest rates are so low, we can end up with a mortgage considerably less than a lease rate.

 

Those are the things we’re doing in the company now and expanding it, getting into second shifts. We’re looking at mezzanines within our facilities to add greater production. The world demand is just phenomenal for all this used clothing. That should give you a pretty good overview.

 

It sounds very interesting. I think our supply chain community will find this a very useful topic regarding the textile industry.

 

Yes, I think so. It’s not a very known industry. When I came into the company, I was asked to come in as a consultant and before the day was over, the owner offered me a job I couldn’t refuse, so that’s how I got here. There are maybe a thousand textile recyclers across the United States.

 

We do about 180,000 pounds a day of finished baling. There are companies that will do—in Poland there’s a company I’m familiar with that does pretty close to 750,000 pounds a day of recycling, but they’re highly automated and we’re just getting to the automation stage to better our production.

 

Thanks, Tom, for sharing today.

 

Okay, I appreciate the opportunity.

 

 

 

 

 

About Tom Boersma


 

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Tom Boersma


Director of Operations and Supply Chain Management at Global Clothing Industries, LLC

 

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