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2016

I interviewed Dhananjay Joshi who discussed SCM Business Models for Wind Industry.

 

 

 

 

 

 

Dhananjay Joshi, who is the Senior VP and Head of a Wind Business. And we're going to discuss some SCM Business Models for the Wind Industry. So, Joshi, can you first provide a brief background of yourself?

 

Hi, Dustin, myself Dhananjay Joshi. I am basically a postgraduate mechanical engineer and a management graduate, and I have about more than a decade experience in the field of wind, out of which most of it is in the supply chain management and the business strategy.

 

I have been working with companies like Vestas Wind Technology, Asia Pacific, which is the largest company in the world providing wind solutions, ReNew Power Ventures, which is a part of Goldman and Sachs, and [inaudible 00:01:10], which is an Indian company. And I now head the wind division of SL Group, one of the largest media houses and infrastructure companies in India. So, that's my brief introduction.

 

Well, my first question is what are some of the SCM business models for the wind industry?

 

So, to answer to your question... Globally, if you talk about let's talk about the stakeholders in the wind business. The first stakeholder is the supplier of the equipment that is the wind turbine. Second stakeholder is the developer. Developer has the role of development of the land, the wind site, and the balance of [inaudible 00:02:15]. The third stakeholder is an investor. And the fourth stakeholder is actually the buyer of the power, which is normally a utility or a private segment customer.

 

And if you see the internal relationship, you would normally, the investor would send money with a contract either to the manufacturer of the turbine. And the developer who keeps the site ready develops the site, installs the turbine, and then of course, after that, runs the turbine. Operation and maintenance also can be done by either developer or the turbine equipment manufacturer.

 

So, the first business model, which has been there for quite some time is the investor has a contract with the turbine manufacturer, and it's the turbine manufacturer who gets everything done —contracting with the developer, contract with the selling of power to the utilities through the power purchase agreement.And its entire responsibility of the [inaudible 00:03:53] manufacturer, that is the turbine manufacturer. And this is called [inaudible 00:03:57] business model. Excuse me.

 

So, in that case, the buying of equipment, land, balance of [inaudible 00:04:10] and everything lays within the scope of the manufacturer. But it's a very straight business model.

 

The second model, which got [inaudible 00:04:25] in the history of wind industry is actually, this is called a self-development model, which means the developer develops the land and the other infrastructure buys the turbines, installs and actually commissions the wind farm and sells to the investor or the customer and also runs the wind farm.

 

So, here, the responsibility of manufacturer of turbines is limited to only supply and at the most is required commissioning.So, here, the supply chain of scope of only manufacturing of turbine. Turbine has basic anatomy of four measured parts. One is nacelle, which is under top of the wind turbine. Second is rotor blade, which are the fans assembly. The third one is a [inaudible 00:05:38] tower over which the entire assembly gets fitted. And the fourth one is control system, which is inside which controls the wind turbine.

 

So, in this anatomy, all these things are being supplied by the turbine manufacturer and the developer does the rest of it — that is, the power transmission and evacuation [inaudible 00:06:03].

 

And the seller buys it. The investor buys it. Here, the supply chain is divided in two, between two groups. One is the developer group and second is turbine manufacturer group.

 

The third business model which also got evolved especially in the countries like China and some parts of Southern America, that the turbine manufacturer, actually, their skill is mainly into the manufacturing of turbine and technology development. So, they are focusing right now on the basic turbine and the rotor blades. Now, the customer is actually, which has been traditionally investor. In China, government is the only customer, that is, the utilities. And they even take the control of the tower. Tower reach is a very hairy component, and that is all they...that has become a commercial trend in China, to control the purchase of the towers.

 

So, this is a third business model, which got evolved. The only thing is, while the got evolved, the best part of optimization... These are basically three business models which I have explained.

 

So, any questions on this, Dustin?

 

And what are some of the challenges with these business models?

 

The challenges are the following. The more the supply chain, which is kept in the first model if you [inaudible 00:08:17] turnkey. It is impacting the cash flow of our turbine companies, because, you know, the cost of turbine is quite high. Between various countries, various levels, it could be about roughly $1 dollars a megawatt. The cash flow impacts because the cycle time to complete the project is sometimes quite high. And that is why it is a challenge of cash flow.

 

Now, [inaudible 00:08:58] investor has the money. The project completion could be a challenge. Now, second challenge is if in the second model, which is the technology. You know, once you try to develop a price to manufacture the tower and also the other electrical parts, the technology and the supplier quality becomes a big challenge. The cash flow issue is resolved, but then the technology of manufacturing, process technology could be a challenge. Right now, the globally this challenge is being fixed.

 

And obviously, most of the companies, in order to reduce their cash flow issues, they try to divide the [inaudible 00:09:59] and so their challenges can be reduced. So, these are, basically, I would say, our challenges which are faced currently.

 

My last question is what innovations can be done in the current business models?

 

Right now, what can be done is the best innovation could be the turbine manufacturer could offer the technology to the developer. And with their supervision, you know, they could buy the raw material and under their supervision, with the cash flow of investors, they can handle the production so that the productivity, quality, and execution can be on time.

 

So, if it is worked out jointly, like the turbine manufacturers who's strength of the skill is a great technology and process technology, they know who the best supplies are. The investors have money, and the cash flow can come, and the developer can work on actually the [inaudible 00:11:23] of the project.

 

This is actually the best innovative model, which could really work all over the globe, which would be acceptable by most of the companies, which would be a win-win-win situation.

 

Thanks, Joshi, for sharing today.

 

I think this is good for the 10-minute interview. We could always do a follow up discussions in the future.

 

Okay.

 

 

About Dhananjay Joshi

 

 

 

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Dhananjay Joshi

 

SVP & Head of Wind Business

 

LinkedIn Profile

I interviewed Steve Gruler who discussed Crisis Management Planning.

 

 

 

 

Can you first provide a brief background of yourself?

 

Dustin, I'd be more than happy to do that. Thank you for the opportunity to discuss crisis management preparedness today. I don't know how brief that can be. I've had a pretty long career. I have enjoyed over 30+ years within consumer products companiesin manufacturing and senior management. .

 

I came out of college with degrees in analytical chemistry, went to work with Quaker Oats as a , quality assurance supervisor. I finished my career with Quaker as the QA manager of the world’s largest oat and cereal mill.

 

I learned a lot about operations by being on the shop floor and managing quality assurance operations. My eight years with Quaker was a great learning experience and set a solid foundation for me on regulatory compliance and what it takes to ensure deliverance of high quality product.

 

From there I went to the Clorox Company in California, I was with them for about 10 years. The majority of that time, I was the global head of quality. At that time Clorox was a $ 5.3 billion international consumer products company, with a wide variety of products. You could go in any aisle in a grocery store, and you would find a Clorox product that was either number one in its category or number two or both. Product ranged from Clorox bleach to Liquid Plumber to auto armor tire care and cleaning materials to combat insecticides to Hidden Valley Ranch Dressing to KC Masterpiece barbeque sauce, Glad bags, etc., etc., etc.

 

My years at Clorox were the most formative of my career and where I formulated my strong beliefs on the need of a risk based predictive quality management system. It became obvious that the widely accepted approach of compliance to global standards and certifications are lacking in true brand protection. With the support of a very enlightened senior management team we transformed the company’s culture to a pragmatic risk based predictive and preventative system. This transformation delivered outstanding results such as significant reductions in brand risk, manufacturing waste and cost of goods. Clorox is where I realized the critical natural and key  role of the Quality organization is to implement a proactively brand risk based quality system managed with clear predictive data. Additionally, developing and ensuring the company is well prepared to protect it’s brand with a well-designed crisis management plan.

 

From there, I had a couple other stints with some other companies. One company was a bottling molding company providing plastic bottles for many branded companies.I was the corporate head of quality responsible for 51 manufacturing facilities

 

I finished my corporate career with Gerber as global head of quality, Gerber product lines included baby food, medical devices and clothing. I gained a lot of experience around the globe, a lot in Asia and Europe with Gerber, and in South America with Clorox.

 

I founded Global Quality Consulting (GQC) in 2004. We (GQC)isa full-service crisis management, product safety, and regulatory compliance consultancy company. We help companies of all industries and size to pragmatically identify, manage, and mitigate critical risk to their brand and reputation. We gained exceptional experience as the retained crisis management consultants to a Lloyds of London insurance syndicate. We have had the honor of working with outstanding companies of all sizes and all categories and sectors in proactive risk mitigation globally

 

Our primarily role is to provide an outside in look and peel the risk onion for the c-suite. We  perform comprehensives risk assessments, planning, helping companies build crisis management plans. We help them focus on how to identify manage and mitigate risk to their brand.

 

Our business model is to provide a network of senior-level consultants, which have held senior management positions of accountability and authority within the public and/or the private sector to our clients. They range from regulatory, microbiologists, toxicologists, crisis communications firms, both internal to the U.S. and global, and customer service representatives, call center expansion support during a crisis. We have an extremely strong and experienced multi-functional team. It's a unique business model, having such high level senior professionals positioned to pick up the phone at a moment’s notice and help you thru a crisis.

 

That's fundamentally the background about my company and me.

 

From your experience, do most companies you talk to, are they well prepared to handle a crisis environment?

 

The direct answer is the majority of them are not. They arenot well prepared to effectively respond to a brand-crippling crisis.One thing that has changed over the years is social media capabilities, which has really increased the critical need for a solid crisis management plan.The warp speed of social media puts the unprepared back on their heels on how to handle the crisis in today's social media and multi-media. Prepared companies are poised to get out in front and lead messaging instead of responding, defending and fighting the negative messaging.

 

It's interesting. If you look at crisis management planning, there's two key phases that you undertake when responding to the crisis. One is immediate response. In other words, you've got to stop the bleeding and get operations under control. Those with a well defined and practiced plan handles this portion far better than those that don't. The 2nd phase is recovery, where you bring the business back to its norm as quickly as you can. Crisis management plans should integrate these together.

 

 

What are some of the top one or two things that need to be in place to be effective? What should companies be doing with their plans?

 

The most important key to successful managing a crisis is being prepared, which means having a well-developed plan that is practiced periodically.

 

Crisis Management Planning should take holistic approach and cover all potential perils to a company. The best plans I have seen, include multi level cross functions teams providing great alignment of strategic thinkers, tactical planners, and operational doers with clear roles and responsibilities. The top elements of a plan includes:

 

1. Control of Information flow into and within the company (How does critical information get to the right person quickly?)

2. Rapid Determination of Scope and Severity of an Issue (Do I have a problem? If so, how big is it and how much damage can it cause?)

3. What immediate steps must be taken to control or mitigate the damage (How do I get out in front of this thing?)

4. Decision Making Process (Who has the absolute authority to make the key critical decisions?) Is this clear to the organization?

5. Execution of the plan (Who does what, when and where?)

6. The process to keep the system current (How do you keep the company trained and skilled at what they need to do?)Practice !!!

 

 

We have found the most effective plans are well aligned with the company’s culture and organizational capabilities. Mostorganizations do not have the totality of capably in house and should include professional external services into their plan.

 

Internally the core plan typically have three different levels that. Smaller companies typically have two layers, because there's not a sharp line in responsibility between executive team and the middle management team.

 

The three levels are the executive team, issues management team or the middle management team, and the business recovery team, the boots on the ground in many of these facilities, the doers.

 

Each team has clear interdependent and overlapping roles and responsibilities.

 

Do you have any final recommendations for companies that want to build a solid crisis management plan?

 

Yes I do.  When building their plan, reachto experts in the field, people that do this daily, people that have long experience, people that have been there done that.

  

Secondly, periodically pressure tests your plan. I’m talking about a simulation that involves all elements of the plan, not just the annual mock recall.

 

I do want to share the results of a study done in Oxford in the UK probably 10 to 15 years ago,for it outlines with data the key element to successfully recovering your brand from crisis. This study looked at the impact of a crisis on a company's value, in other words, their stock price. They looked at many different incidents, including things like plane crashes, severe food poisoning, recalls, etc., etc., etc.

 

They plotted the stock price over time. All companies stock price droppedimmediately when the crisis hit, they fell anywhere between 15 to 30%. Over time, a period of 3 to 6 months what they saw was quite fascinating. There were two clear and distinct lines formed.

 

One line came back up to the initial price point before the incident and kept growing like a normal healthy business. The other line stayed below that 15 to 30% and never recovered.

 

They came to the conclusion that it wasn't the issue or the crisis that happened, but it was how the company responded. How did they respond? How prepared were they? And you can see that in evidence since then that supports that. If you look at Tylenol issue in the U.S. Has been one that's been renowned as the best way to do. It's taught in all the business schools. It's a case study. They did it right. They responded right, and they recovered well. There are quite a few other examples around the globe. Maple Leaf Foods in Canada was one that was managed extremely well.  So the conclusion is to be prepared with a solid, proactive, pragmatic crisis management program.

 

Thanks, Steve, for sharing today.

 

My pleasure. Wish you the best, and hope to talk to you again soon.

 

 

About Steve Gruler

 

 

 

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Steve Gruler

 

President and CEO of Global Quality Consulting, Inc.

 

LinkedIn Profile

I interviewed Leona Charles who discussed Diversifying the Supply Chain in Sustainable Ways.

 

 

 

 

 

 

Today we're speaking with Leona Charles who is the owner of SPC Business Consulting, LLC, and the topic for today's discussion is diversifying the supply chain in sustainable ways. So, Leona, can you first provide a brief background of yourself?

 

Sure. Hi, Dustin.Good morning and thank you for having me.So, a brief background on my company. We focus in program management, and we operate in a lot of government areas. We do do some non-profit, and we do some commercial. But I think our bread and butter is government. But we do all areas of program management from [inaudible 00:00:43] solicitations and developing processes for that, all the way to post award where we're managing compliance and things of that nature. So, process improvement and continuous improvement is kind of our bread and butter. And we work really hard with our clients to develop strategies that help them run their business more efficiently without them having to be there, which is the ultimate goal.

 

Well, what are some of the inefficiencies that are involved with government contracts and supply chains?

 

I think the biggest inefficiency in government contracting is the regulatory environment. It's very intensive. It's very staff intensive. It's labor intensive. And it's also time intensive, because there's just so many of them, and they're constantly changing, and once you're working with the government, you have an intense amount of liability as a contractor, to comply with all of these regulations that are out there. So, it's a perfect breeding ground for inefficiency, because the liability for small businesses... One bad decision can effectively shut your doors.

 

Well, how do you develop processes to address these mandates?

 

One of the biggest mandates that's coming out recently, and something that a lot of companies are struggling with is the mandate to diversify your supply chain. And diversification for many governments means small, minority, veteran-owned, woman-owned businesses. And depending on what your industry is, sometimes this is easier said than done. But the mandate is generally a percentage. I know I work a lot in the D.C. Metro area, which encompasses Virginia, Washington, D.C., and Maryland. And I know in Maryland, if you're doing any state contracts, there's a mandate that 29% of that contract over a certain value has to go to a diverse company. So, you have contractors scrambling to figure out, how can I meet this goal. And not meeting it is, a lot of times, not optional. If it's above a certain dollar threshold, it's usually above $150,000, they have to meet these mandates.

 

They're going around and picking up people just wherever. And the thing about it is that these people may or may not be qualified. So, diversifying your supply chain is a way to insulate yourself against poor performance, and it's a way to make sure that you're complying with the mandates that are coming out.

 

Can you share with us where you've seen some success?

 

Sure. Industries that are really successful at meeting this are manufacturers are really successful in meeting this and construction industries are really successful in meeting these. And part of that is because the award amounts in those industries are typically larger. So, it's a bit easier to get smaller companies on board, because there's a lot of money to be made.

 

Also, now that I think about, some utilities are doing really well. I know in this area, Washington Gas is one and Pepco is one. They are constantly exceeding their goal. And a lot of that has to do with the way that they've diversified the supply chain and the way that they've reached out to the small business community and the diverse business community, the way that they've set up programs with clear, concise processes and clear directional challenge address. That's not the word. But they address challenges in a clear and direct manner for all of their vendors that come through. If there is an issue, it's addressed very quickly. And it's that particular issue that's addressed. So, it doesn't turn into any type of [inaudible 00:05:00] about things that aren't relevant. It's addressing that issue, addressing [inaudible 00:05:05] successful and what they need to be successful on that particular contract. And it's setting them up for future work.

 

And I think building a diverse supply has to evolve around sustainability, and that's outside of diverse business. It's outside of small business. It's just about your supply chain. Nobody wants to have a vendor that's going to fold in six months. And to do that, you have to think long term. When you're looking at partnerships, when you're looking at joint ventures, you have to think long term. Is this somebody that I really want to bring into my company, show the ropes, show them how to do this and work with them and grow with them?And that needs to be the priority.

 

When you're building a diverse supply chain, those things have to be at the forefront. Yes, you want to meet these goals, and you want to be compliant, and you have to be compliant a lot of times. But that compliance should not supersede your strategic development, which is long-term relationships, which will make your supply chain much more successful because your quality will go up. Your added value to your clients will increase. Everything positive will come from building that supply chain in a meaningful way.

 

And do you have any final recommendations regarding using process improvement to create sustainable supplier diversity programs?

 

The first thing you have to do is you have to understand whatever your state's guidelines are. You have to understand what they are. You have to have clear lanes to the point of contact for whoever it is that's going to oversee this program, whoever is going to be managing compliance. You have to have a clear path of communication to this person, both internally and externally. And you have to have a clear path for the suppliers to get to this person. They need to understand your program, understand what you're requirements are, and understand who is the person to ask question to. And this person needs to be accessible. They shouldn't be someone that you send an email to, and it goes into a black hole and you never hear from them again. This needs to be someone that you send an email, and they'll pick up the phone and talk with the supply, get them in, meet with them. You have to meet with suppliers. I know this is the age of technology, and I know that we're doing this interview using technology, and it's great. But at the same time, you have to have some human touch in this process. That's what makes it successful. And if you're clear about what you need, clear about what your expectations are, and clear about how you're suppliers can get to you, and what you expect from them once they're there, then you will have a really good program.

 

Again, we've built these kinds of programs for utilities and for private businesses and government entities before, so if you have questions, please let me know. Dustin, I know that you're very good about giving information. Shoot me an email. If it's something right off the top of my head, I'll be sure to help you with it.

 

These programs have to be set up in a way that they are going to work. And to that is to make sure that your processes are clear, concise, and your avenues to questions are out there, and they are actually being utilized. If they're not being utilized, then your processes have a problem.

 

Thanks, Leona, for sharing today.

 

You're welcome. Thank you for having me. I appreciate it.

 

 

About Leona Charles

 

 

 

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Leona Charles

 

Owner, SPC Business Consulting LLC

 

LinkedIn Profile

I interviewed Paulo Moretti who discussed Chemicals Price Forecast.

 

 

 

 

 

 

Please provide a brief background of yourself

 

I have worked 35 years at Dow Chemical where I developed experience in diverse areas as: Manufacturing, R&D, Sales, Marketing, Business, Finance, Economic Evaluation, Strategic Planning, e-Business and Purchasing.

 

Tell us about your more recent article published at MyPurchasingCenter.

 

I would like to talk about Crude oil price and some derivatives: Ethylene and Propylene,

Since 2012, the peak year for oil prices, Crude Oil prices have fallen, and all chemicals users have enjoyed lower prices for Crude Oil derivatives. However, I believe this scenario will change in 2016 and 2017.

 

Why do you think the scenario will change?

 

There are competing theories about the reasons for the Crude Oil price decline. Some conspiracy theorists believe the Organization of Petroleum Exporting Countries (OPEC) wants to financially restrict Iran and ISIS, which are both financed by oil exports. Others believe that OPEC wants to decrease the global oil inventory so the price will increase easily. My own view is that global oil prices declined in order to delay Shale Gas (mainly in the U.S.) investments and further production.

 

Note: Shale Gas is Natural Gas in a different formation, which is cheaper than Crude.

 

My view is that the Crude Oil price will reach an average of US$50/BBL in 2016 and US$60/BBL in 2017.

 

As we all know, supply-demand balance defines the price, and in May, Bloomberg reported that OPEC ministers were “happy with the direction of the oil market” to “eradicate surplus production.” A second indication is the tremendous financial impact on the oil exporters. A recent Deloitte article provides a clear view of the impact on the budgets of oil exporters, showing they need a certain level of oil price in order to balance their internal budgets. Russia, for example, is heavily dependent on its oil revenues, with Oil and Gas accounting for 70 per cent of total export revenues. The country loses about $2 billion in revenue for every dollar fall in the oil price. The only oil exporter with high levels of monetary reserve to support this pricing environment is Saudi Arabia, and all others are struggling.

 

Based on this scenario, which prices will you predict?

 

For Crude Oil I believe the avarege price will be US$50/BBL in 2016 and US$60/BBL in 2017, and based on Crude Oil I predict that Ethylene may reach 30 cents/lb in 2016 and $35 cents in 2017, and Propylene around 35 cts/lb in 2016 and 40 cts/lb in 2017.

 

For now, I propose you check these prices at the end of 2017 to see if I was right. If not, sorry; I just gave my view.

 

 

About Paulo Moretti

 

 

 

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Paulo Moretti

 

Principal - PM2Consult

 

LinkedIn Profile

I interviewed Glenn Rosenholmer who discussed Logistics End to End - Efficiency, Coordination and Leadtime.

 

 

 

 

 

 

Hello there, Dustin. Nice to be on, and I'm looking forward to giving some insights about, as I call it, the black holes in the complex supply chains.

 

Can you first provide a brief background of yourself?

 

I've been working with several complex and challenging networks, or as I like to call it, value chains. I have always been targeting to make it more stable, make it to be more endurance, to predictability from both stakeholders but also, of course, the people working the flow. So, firm infrastructure and getting conditions for that has been the purpose in all the assignments.

 

What are the black holes that companies are not able to control or coordinate regarding the flow in logistics in supply chain?

 

Well, normally, everybody gives an idea about the flow as, normally at least, inbound.You have the operations and you have your outbound services in the end. Or, if you like to call it the demand chain. When you work with it, I have very often came into discussion about where to start and where to end when you want to change your supply chain or make adjustments. First of all, I like to mention the problem of variety of lead times.

 

Depending on the different procurements that you feed into your supply chain, both from first tier and second tier, those are in variations so much. So, giving a set of conditions for each supplier becomes a big, big problem.

 

And the preconditions, not being able to control or coordinate it, is what I call the black holes, major dilemmas.

 

So, first of all, I think you can work with before going ahead, making sure where you want to stop and end your end-to-end study, and what to do in the flow. The first thing I want to mention is really understanding the customer's customer. Even if you, on a daily base, want to please your customer, not having anyone in your organization working on the issue of customer's customer, that becomes a black hole in what is really expected.

 

The other one is also going upstream. This was downstream. Both areas need to have an understanding. So, that means going to supplier's supplier, or if you like to call it, second tier, is also underestimated when you look at your flow.

 

And the [inaudible 00:03:41] of this is, as I see it, is it's not any time or effort set to get the broader view when you do your analysis of your flow. So, those things are to make you sure that those black holes, as much as you can, to understand both downstreams as well as upstreams, what's going on and the strategists do that.

 

Can you talk about how do you address these challenges?

 

I have a very good background in looking at it to work with the challenges to the setups with a sort of a new value chain thinking. And doing that is to have a starting point that keeps the network a freshness and sense of urgency. And what I mean by that is if we have a view from the start to learn from other branches or industries, that will help a proper starting point. And typically, you pick out two or three [inaudible 00:04:59] conditions from selected industries, and you use them as a case and not as a typical benchmark. But you try to pick out the main essential way of changing. And also, what I have done to get more predictable flow, so you can sort of have a cherry picking from that.

 

Then, that prioritized program and step-by-step plan in the same sort of approach end-to-end is making sure that broad perspective is held, which I mentioned earlier. The supplier’s supplier as well as the customer's customer.

 

Where have you seen some success or results?

 

The key findings, so to say, has been when I worked with a company who actually took this approach. I cannot mention the company's name, but they were very successful. And using a team to review their [inaudible 00:06:11] as mentioned before from two — how do you call it? — branches, other branches, industries, and sitting down and doing a four-quarter plan. The plans in action was then taken to be followed up on a quarterly basis. There also have been both structure as well as operational perspective in that plan, how we cannot improve our [inaudible 00:06:47].

 

And the key conclusions I find from these success results, it's the key approach being plan into work practice, working prerequisites, clear define measuring when we are looking at the benchmark. And number three, and not last, where we want to be. Description is shown as a business plan and broken down, meaning that it will touch the work practice. And after that, each quarter, it's been reviewed with those three key approaches as I mentioned — working practice, prerequisites, where we want to be description, and the fine measuring.

 

Thanks, Glenn, for sharing today.

 

Thank you. And looking forward to giving more insights, and also the feedback from these findings I've seen. Thank you.

 

 

 

About Glenn Rosenholmer

 

 

 

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Glenn Rosenholmer

 

Management Consultant and CEO

 

LinkedIn Profile

 

 

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I interviewed Ranjan Sinha who discussed Necessity of having a Flexible Supply Chain.

 

 

 

 

 

 

Hi Dustin, My name is Ranjan Sinha. I have 24 years of Experience in Logistics, Supply Chain management, Transportation Management &  Project Management in many countries which includes India, Ukraine, France, Luxembourg and Middle East. My assignments includes CEO-Logistics/Supply Chain & Port Operations with the  biggest steel conglomerate in the world. Currently associated as  project director with a green field project for development for a Integrated Logistics city based in Middle East.

 

I will be speaking today about ‘Why do you need to have a Flexible Supply Chain System”

 

 

Why You Need to Have a Flexible Supply Chain System ?

 

Supply chain flexibility is becoming increasingly important, helping companies to most effectively manage their costs and resources, as well as most effectively meet consumer demand. A flexible supply chain is both agile and adaptable. It is demand driven (and can therefore respond to short-term changes in demand) and it can evolve and improve over time to meet ever-changing conditions.

 

There are two forms of supply chain flexibility: micro flexibility and macro flexibility. Micro flexibility essentially refers to how quickly a supply chain can detect and respond to any kind of short-term issues. A company with a supply chain that exhibits a high degree of micro flexibility can manage spontaneous or sudden problems or opportunities quickly and effectively, such as the late arrival of a delivery truck a customer request for special packaging or handling: how quickly and effectively can you manage these changes and needs?

By contrast, macro flexibility refers to broader, over-arching company strategies, programs, and policies. A company that has a macro flexible supply chain system can easily change existing supply chains or develop new supply chains to accommodate changing consumer demand.

In other words, agility and adaptability are important.

 

The bottom line is that both macro and micro forms of flexibility are absolutely essential.

 

Let’s take a look at the inherent benefits of a flexible supply chain system.

 

a) Combat increased market volatility

 

Historically supply chain factors such as production levels, raw-material purchases, transport capacity, etc, were determined through a careful examination of historical patterns of demand. Now, however, this simply isn’t feasible. Today’s markets are increasingly volatile and a flexible supply chain can help a company to pull through potentially damaging market changes, such surges in prices or drops in demand.

Ultimately, businesses that are flexible are able to protect themselves. Interestingly, many analysts have praised Honda’s remarkable flexible supply chains, arguing that it was this flexibility that helped the company to make it through the 2008 recession and surge in gas prices relatively unscathed.

 

b) Adjust to complex patterns of consumer demand.

 

Determining consumer demand isn’t as simple as it once was before  because markets are more volatile it isn’t just as simple as looking at the historical patterns of consumer demand. In most emerging economies economic expansion is occurring at double-digit rates, prompting huge shifts in global demand patterns. Because of the scale of these shifts, it’s hard to predict what consumer demand will look like five or ten years down the line.

 

c) Boost company value.

 

In an economic recession or any kind of situation that causes a drop in demand a company may be tempted to scale back on everything. This can be quite a mistake, however, as if and when demand resurges it will difficult to accommodate it. Flexible supply chains means that a company can easily adjust production levels, raw-material purchases, and transport capacity in order to maximize profits.

When demand is high the company boost production, when it is low it can scale back. In a flexible supply chain making changes to the overall system are simply not as costly..

 

So how can managers achieve better supply chain flexibility?

 

Be Proactive, Not Reactive

 

Normally, companies tend to react to the uncertainty of the supply chain in four  ways:

 

  • Keeping safety stock to reduce the probability of inventory shortage.
  • Setting capacity higher than average demand to avoid substantial shortages during peak periods.
  • Maintaining multiple suppliers, which increases costs.
  • Adding safety lead times to the actual cycle time .

 

But using these strategies may be counterproductive in the long term.

 

Instead, they will find greater flexibility in proactively redesigning products, processes, and their supply chain network and negotiating more effective relationships with trading partners.

 

For example:

 

  • Using common components
  • Redesigning both shop floor and administrative processes
  • Reducing facilities or centralizing stocks to fewer facilities to reduce risks
  • Partnering with other firms to achieve consortium purchasing
  • Negotiating or renegotiation supply contracts to alleviate minimum order quantities or to obtain a commitment from suppliers to supply materials or services in the case of a significant increase in demand
  • Reducing lead time by redesigning procurement processes, changing supplier selection criteria from cost focus to speed focus, or developing suppliers for better lead time management.
  • Identifying alternative routing or shipment modes
  • Fostering better collaboration with supply chain partners

 

My Experience with Flexible Supply Chain

 

Established supply chain “war rooms” to make fast decisions across functions. Populated by leaders from production, procurement, logistics, and sales—and furnished with the latest data on purchasing, production, orders, and deliveries—these teams meet weekly or even daily to devise near-term operational plans.

 

The team managed to  cut inventory levels by 20 percent in just ten weeks, while maintaining high levels of customer service. What’s more, by speeding up decisions, the company increased the frequency but reduced the size of its orders from key suppliers. Greater cross-functional cooperation helped it not only to identify new opportunities for using out-of-spec materials (and thus inventory on hand) but also to make better-informed decisions about where and when to discount overstocked products.

 

A flexible supply chain organization requires not only a strategic leader, but also input from managers who represent the traditional supply chain functions of planning, sourcing, manufacturing, logistics, and also sales and marketing, among others.

 

That's it.

 

Thank you Ranjan for sharing today.

 

 

 

About Ranjan Sinha

 

 

 

 

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Ranjan Sinha

 

CEO with 23 years experience in

Supply Chain|Logistics|Shipping|

3PL|Transportation|Export|Steel

|Freight|Maritime|Port

 

LinkedIn Profile

I interviewed Subhash Chowdary who discussed Internet of Things in Logistics.

 

 

 

 

 

 

Can you first provide a brief background of yourself?

 

 

Well, the last job I held was the chief architect of Apple Computer. So, one of the things I had worked on at Apple was the architecture for now what is known as the Smartphone, which involved the entire ecosystem for supporting such a thing as a personal digital assistant. So, data warehousing, web services, portals, metadata, all of that, the whole architecture for that. And we published it, so it's in print, available, and it was adopted by large corporations at that time, and then it kind of paved the way for the success of the personal digital assistant and the success of the iPhones.

 

 

After that, I actually started a couple of software companies. I went into becoming an entrepreneur and founded a few companies building out those technologies that Apple did not want to build, like data warehousing, web services and all those things. So, I built that out while the hardware was being developed at Apple. So I did that, and now I'm working on supply chains using what I think is the next generation of stuff that, beyond the human interface, devices to...without human interfaces, which is what I call the internet of things.

 

 

What is the internet of things in logistics?

 

 

I specifically wanted to differentiate internet of things in logistics from just the internet of things, because the internet of things is a very broad topic. It covers everything and anything. And so, just to bring whom scope and context, I wanted to talk about IOT being applied to logistics which has been, I think, one of the oldest or the longest implementations of anything to do with technology has always gone into the logistics of moving physical stuff from somewhere to somewhere. So, IOT has been, in practice, and I think, in logistics, as long as M2M has also been there for machine-to-machine communications.

 

 

Specifically talk about logistics to put some scope around the context of IOT.

 

 

Why is the internet of things in logistics important?

 

 

Well, as long as we want to have a good life in the world, you have to rely on logistics to get you the stuff from wherever they are manufactured to the point of consumption, and then also now it was logistics of taking it and destroying it in such a way so that they're recycled and not thrown into dumps.

 

 

Logistics will always be there. And it's very fundamental to the existence of human beings as long as we're on this planet or even planning to go to other planets. So, that's why I think logistics and IOT go together, and it's one of those fundamental things that could be there forever.

 

 

How is the internet of things in logistics done effectively and where have you seen success?

 

 

So, in IOT, logistics has been there in pretty much every aspect. Everybody want's to know when they ordered something, when they will receive it. They want to know the supply chain. Everybody talks about visibility. We talk about security. We talk about digitization of the supply chain. So, all of these things, really today the underlying driver of that is the internet for communications — the status as communicated, people place orders, e-commerce works that way, the Ubers of the world, self-driving cars, trucks, all of them use some form of the internet of things. So, there are devices; there are senses; all of these being used at multiple levels. Even to the moon shots of trying to launch a cargo route to Mars, for example, the space shuttle going back and forth.

 

 

All this involves some sort of IOT and the logistics of all the components that go together to make that happen.

 

 

And then, on the other side, the other 99% of the world, actually is going to see a revolution, just how we saw the internet affecting people all over the world. I think the internet of things is going to affect the lives of the other 99% in more ways than we ever imagined the interest or the smart phone to have done.

 

 

So, that's where I think there's a huge potential for breaking that viscous cycle of poverty, the climate change issues, all those things,and now are directly addressed using IOT. This applies to agriculture. It applies to how we know where the banana republics are being created, the pollution of the water is taking place, the Bangladesh factory. You cannot deny that there was a factory with a thousand people killed that nobody knew existed, that they were sourcing from. You cannot see the profound impact that it can have on the entire concept of visibility in logistics, supply chains, and things like that.

 

 

Thanks for sharing today. Did we cover all the points you wanted to make about the internet of things in logistics?

 

 

Well, I think this is a very early stage of the cycle of IOT in logistics, I think, in terms of the new technologies coming in. There's a tremendous amount of progress, innovation taking place. I think we're completely going to change a lot of things. We can't cover all of that in such a short time, but I think we are at a very exciting point in time where everything that we know of as today is likely to change in the area of logistics. So, the entire 3PL industry that we are all familiar with is now going to be replaced with what I call a digitized version of 3PLs, which is third-party information logistics.

 

 

So, there's a whole bunch of industries that are difficult to cover in such a short period of time. I'm excited about it.

 

 

Thank you. And I'd love to have further interviews with you in the future to share with our community, if you'd like.

 

Sure. I'd be happy to.

 

Thankyou.

 

Thank you, Dustin.

 

 

About Subhash Chowdary

 

 

 

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Subhash Chowdary

 

CEO at Aankhen Inc.

 

 

LinkedIn Profile

I interviewed Rob Martinez who discussed Small Parcel Market and Some of the Challenges and other Trends.

 

 

 

 

 

 

Rob, can you first provide a brief background of yourself?

 

Yeah, I'm happy to. My name is Rob Martinez. I'm the president and CEO of a San Diego-based consulting and technology company called Shipware, and I have spent about 27 years in the parcel market. I spent about a decade on the carrier where I ran a large division of a company called Airborne Express that competed with the two parcel giants today, FedEx and UPS. And for the last 15 years of so, I have been representing volume parcel shippers in their best interest in things like contract negotiations and making sure they get the best terms, rates, and conditions in their contracts with FedEx and UPS,modal optimization, making sure that shippers are taking advantage of all of the players in the marketplace, not just the giant two, but companies like regional parcel carriers, companies like OnTrac and LSO and Eastern Connection and kinds of companies.Package consolidators, parcel market work-share partners and the United States Postal Service.

 

We also provide freight auditing services, so those FedEx and UPS invoices every week have a tendency to have errors, so my company's software finds those errors and then we work directly with those customers to credit those accounts when errors occur. And there are a handful of other things that our company does, but those are the main points. So, yeah, I've negotiated literally thousands of contracts on both sides of the negotiating table, Dustin.

 

Can you talk about some of the current players and major industry trends in the small parcel market?

 

Sure. I'll break those down into two separate questions. Let's start with some of the major players. So, when I started in the parcel business back in the '80s, we had dozens of competitors delivering packages in North America, believe in or not. Companies I mentioned, my company, Airborne Express, but certainly FedEx and UPS were big players back time.

 

But we also had company like Every and Bax Global, Flying Tigers, Purolator was even delivering packages in North America, south of the border back then. Burlington and other companies were competing in this space. What's happened over the years is that all of those competitors have left the North American marketplace with the exception of FedEx and UPS. So, that trend has not been a good one as it relates to shippers trying to get the most economic value that they can from these two very large players in the industry.

 

There are alternatives, however, to FedEx and UPS, and the United States Postal Service is making a very large play in parcel. And the fastest growing segment of their business has been their packaged services business that incorporates things like Parcel Select and Priority Mail. So, the declines that we've seen in the marketplace for the Postal Service and all of the negative things that we read about the Postal Service have a lot more to do with the decline of First Class mail volumes, although we did see a stabilization of that in 2015 and into 2016.

 

But really, the shining star in the United States Postal Service portfolio of products has been shipping. So, that certainly has been a trend.

 

Moving into trends, we'll talk a little bit about things like the growth of eCommerce and what that has done, Dustin, for the shipping industry. But, FedEx and UPS have done a very good job, I think, of keeping up with the growth of e-commerce and creating new services to cover that residential market. So, both FedEx and UPS are work-share partners with the Postal Service on a product that the Postal Service calls Parcel Select. And that's where a work-share partner like a FedEx or a UPS would pick up a package, handle the entire sortation and inter-lying part of the transportation and induct that package as deep within the postal delivery network as possible.

 

There are other parcel consolidators or aggregators that uses Parcel Select product. So, companies like Newgistics and OSM and other companies do this as well. But FedEx and UPS are two of the largest. The FedEx product is called SmartPost and the UPS product is called SurePost. And both of those products are the fastest growing within those companies' portfolio lines.

 

These offer a deferred delivery method to the residents for lightweight, low-cost, non-time-sensitive materials, which is perfect for e-commerce.

 

And on the other side of the e-commerce equation, the online shopper, they're expecting free delivery. That's what most important — not how quickly it gets delivered, but if it's a free or very, very low flat-rate shipping cost, they're more likely to complete a transaction and go ahead and purchase something online. So, you couple the Parcel Select low-cost product with the United States Postal Service making the final-mile delivery in most cases — I can talk about that more, if you like — with the fact that that's what online consumers are looking for. And you can understand what that has been the fastest growing product.

 

What are some of the critical changes that are happening in the market?

 

Well, certainly that trend to residential, packages moving from predominantly commercial routes into more residential routes is a very big one and an important cost driver for the carriers. So, UPS, for example, 10 years ago, for every 10 packages they moved about eight of those were going to commercial addresses.

 

By the end of 2019, UPS expects residential packages to actually outweigh the commercial packages. And it's very close, right around 50/50 right now. And within the next couple or three years, they expect the residential products, they'll have more deliveries to the residential markets. So, that's a very, very important one, because UPS bases their cost on density — pick up density and delivery density. Businesses tend to have multiple deliveries going to a single location every day, versus the e-commerce market, you have much fewer packages going to individual residences all across the country, in fact, across the globe.

 

It costs UPS a lot more to deliver packages to the residents than it does to a commercial address. So, they've had to really create what they call synthetic densities, trying to maximize how many packages are going to that same residential door so they can make as many deliveries alongside of that one package as possible. So, they've invested in a lot of technologies to either speed up a delivery if they know something is going to be delivered to that same residential address or slow it down if they have a non-guaranteed product like this UPS SurePost, this Parcel Select product that I'm talking about. It's non-guaranteed. So, if UPS knows that tomorrow they have a ground package or an air package that's being delivered to that same residence, the technology allows them now to hold that package and delivery it alongside of the other package that was destined for that same location, thus reducing the cost significantly with multiple package deliveries or greater density. That's certainly been one of the trends.

 

Other trends in the marketplace we've seen over the years, shippers have moved from air to ground to take advantage of the lower cost ground products. And ground, by the way, has done its job of really keeping up from a time perspective. Both FedEx and UPS guarantee their ground products. And for the most part, they're one-to-five-day deliveries. The majority of ground products with the UPS and FedEx network are delivered within three days, because most shippers have shorter haul packages. They're not going from coast to coast necessarily all the time. But the majority of their packages are traveling within the first few zones, as FedEx and UPS calls it, which has a faster delivery transit time.

 

Certainly that is a trend. We're seeing now ground to this deferred ground product, which means the growth of Parcel Select that we've talked about as a major trend. And as e-commerce and global trade continues to grow, we are seeing and the carriers are seeing significant growth in their international divisions, especially to emerging markets.

 

UPS has called the opportunity to deliver international packages, these emerging markets, as their number one growth objective. There is that significant promise in those particular geographies based on populations. So, we can certainly get more into trends, or if you want to move on to another question, just let me know.

 

Are there alternatives to the big two — FedEx and UPS?

 

Yeah. The Postal Service is now a major player. They are delivering roughly 10% of small packages, and that's based on considerable growth. And it's also based, in part, on the packages that FedEx and UPS tender back to the Postal Service for final-mile delivery through the work-share product we talked about. But still, the majority of these small parcel packages are being delivered by those two competitors, FedEx and UPS, to the degree that some have called it a duopoly. There are a whole other group of smaller parcel carriers — private, independent companies for the most part — that handle packages on a regional basis.

 

For example, a company, OnTrac, delivers packages to every zip code in California and to major metropolitan areas in the eight western United States. That's their geographic niche and their footprint. And they do a very good job of it. They offer some services very similar to FedEx and UPS, door to door delivery, trackability, some automation solutions, and they offer multiple services too, from an overnight service to a ground product.

 

Companies like OnTrac or LSO or Eastern Connection or LaserShip or other regional carriers allow large volume shippers to contract with multiple carriers for this best in breed approach, where they are utilizing multiple carriers based upon their unique delivery footprints and their specialization into certain markets to not only reduce costs, as these regional carriers tend to provide lower pricing than FedEx and UPS, and certainly easier to negotiate some of the major terms with them.But also, they can offer some superior service.

 

For example, I'm in San Diego, and let's say that I'm shipping a package from San Diego up into the Pacific Northwest, say, to Seattle. That's approximately a zone six delivery with UPS and FedEx. So, if I ship that package ground via FedEx or UPS, that is a three-to-four-day transit. If I ship it with OnTrac, it is a one-to-two-day transit. So, I can reduce my transit time, delight my client, and reduce my cost, very likely, if I've negotiated a good contract with these regional players.

 

I would also tell you that the 10% that United States Postal Service has of the marketplace is growing. And they offer a lot of packaged solutions that I think a lot of shippers just don't know about or miss, or maybe there's a lack of trust with the Postal Service. But it's a very viable alternative. So, for example, Priority Mail is a product that offer several different price points, and that's a one-to-three day product. Now, it's not a guaranteed product, but the transit times are very, very consistently into the 90s, and they do offer insurance, and you can track the package very similar to the kind of tracking to FedEx and UPS provide.

 

For certain shippers, especially those that ship lighter weight packages to the inner zones. In other words, they don't ship too far from point of origin to point of destination, can really take advantage of some of the pricing differences that the Postal Service offers on this product versus a FedEx or UPS. Especially if you compare it to a UPS Ground or a FedEx Ground, a one-to-five-day transit. You have a one-to-three-day Priority Mail transit at a significantly lower cost.

 

One of the biggest cost drivers for shippers these days is what FedEx and UPS would call surcharges or accessorial charges. So, Dustin, these are things like residential surcharges, fuel surcharges, deliver area, or out-of-area surcharges, those kinds of things that can contribute somewhere between [inaudible 00:15:15] and 10 and as much as 30% of shipper's overall cost.

 

Well, the Postal Service does not levy any of those accessorial charges. The only time you get ancillary charges with the Postal Service is when you ask for something different than a normal delivery — if you want a special signature or something and you ask them to do that, then they'll levy these additional charges. They are not automatic, like you see with FedEx and UPS.

 

Some other benefits to the Postal Service over FedEx and UPS also include the way that they price dimensionally is different than the way FedEx and UPS price. So, the way the big two do it is they take a package, they take its length, they multiply it by its width and its height, and then they divide that total cubic-inch factor by a dimensional divisor, which in 2016 is 166. So, length times width times height divided by 166. They round up that number, and whatever is greater, the actual weight or the dimensional weight, is what they charge you.

 

The Postal Service only applies dimensional pricing to the outer zones, zones five through eight — not the inner zones — and when they do apply the dimensional factors, it's a better factor for its shippers. It's a more improved factor of 194. So, the dimensions don't play as great a role in pricing with the Postal Service as it does with FedEx and UPS. And there are some other benefits of using the Postal Service as well. So that is certainly an alternative in addition to those regional carriers that I mentioned before.

 

 

Thanks, Rob, for sharing today.

 

Sure. My pleasure.

 

 

About Rob Martinez

 

 

 

Rob Martinez.jpg

 

Rob Martinez

 

Co-Founder, President & CEO at Shipware LLC.

 

LinkedIn Profile

I interviewed James Ransdall who discussed Asset-Based Consulting.

 

 

 

 

 

 

James, and looking forward today to hearing your views on asset based consulting.  Before we start, can you provide a brief background of yourself?

 

Sure.I've been, in my career, moved back and forth between sales leadership and consulting.Consulting focus has been around innovation services, innovation solutions, helping companies figure out how to organize the innovation efforts,how to deal with cultural challenges, organizational challenges around that.And in the course of that work, one of the things that's come up often is this notion that a consulting firm should build “assets” which essentially capture their intellectual property, as software, preferably.

 

So the frameworks, the practices they use, the standardized approaches that they develop over the course decades of engagement have tremendous value, if they can be crystallized literally into code.And most recently, as a senior managing consultant at IBM, my charter was to pull together a whole set of assets that would support this innovation as a service model that IBM wanted to market.And in the course of working on that, a lot of things became evident, or a lot of challenges became evident,as a consulting firm attempts to move into this new realm having these assets, which support long term client engagement.

 

And what is asset based consulting?

 

It really is this notion of taking what can be decades of intellectual property, which exists in consultants' minds, which exists as frameworks, which might reside in PowerPoint presentations, might reside in Word documents.But which rarely has been captured as actually software, where we can standardize our approach, and then bring the combination of that software, and our professional services to engage with a client around solution delivery.

 

The first really well pointed out example of that was from 2007 when McKinsey launched McKinsey solutions.You can think of sort of a first generation of ABC, which is what the acronym for Asset Based Consulting is.What we've seen since then is a lot of companies — a lot of consulting firms, all of the large ones that you would expect, KPMG, Deloitte, PWC, IBM, etcetera — all put their toe in the water, and begin to think about what assets they might bring to bear.

The business challenge for them has been that it's a disruptive business model, in that it favors the delivery of a priced solution, usually in smaller consumable chunks, and it's fundamentally not built around the billable hour, which is what consulting firms sell.They give you their expertise at an hourly rate, and this favors sort of the shared risk, shared return solution model, where the solution delivers an economic benefit, and both the client and the consulting firm participate in whatever the cost saving stream is, the revenue increase stream might be. So that's why it's disruptive.That's why it’s been difficult to often go beyond the dipping of the toe stage.

 

And where does it come from?

 

Well, it's been around for a while, in the sense that do consulting firms try to figure out how to standardize solution design, solution problem solving,how to standardize discovery processes, to understand problems.They're very effective at building out engagement frameworks of all types across multiple vertical markets, across multiple domains.So, if they're involved in an engagement say, around customer relationship management, customer care, customer sensitivity, they will build out a lot of best practices and frameworks for delivering solutions.They will often verticalize those, so that solution delivered into pharmaceutical is different than that solution delivered into the energy sector or the financial sector.

 

So they've got all of that intellectual property, and the question is can they define it well enough, and they define the processes around it well enough, that it can be distilled into what would be a set of business and technical requirements that you could hand to a development team and say, "Hey, go build this thing, and let's really try to capture our intellectual property that way."Not surprisingly, that’sthe point of origin for an awful lot of software companies.And remember, a lot of software companies start life when a consultant sees a problem, thinks it can be addressed by software, probably knocks on the boss's door, and says, "Hey, I think I've got something we could build as software," discovers after asking many times, that the consulting firm is not really tuned to become a software company, goes out on his or her own, starts a software company and presto!Three years later,you've got somebody who is taking something public.

 

The effort by the consulting firms is to capture that, and to begin to build solutions around their intellectual assets, which are considerable.One of the things that should be noted is that there's a new generation of development tools.So-called low code development tools, that might be the major tipping point for this asset based consulting approach, in that using these tools, it's possible to assign business analysts, solution architects to define a problem in terms of process flows,in terms of relationships and data elements that need to be connected and rules for connecting those data elements to support a flow or a process.And the low code platform will actually write the code for you, so you don't have to actually go to development.

 

You don't have to actually hand things off to a whole team of developers and work that cycle that's been the typical cycle for software development for so long.Those tools particularly should be particularly attractive to large consulting companies who have solution architects and business analysts and such.They employ those people by the tens of thousands, so they have a huge skill repository that might be harnessable, given the power of these new low code development platforms.

 

And can you talk more about how it’s done effectively?

 

Well, I think the challenges that are first, you have to have fairly... You have to have sea level sponsorship within the consulting firm to drive this forward, because it a disruptive business model.Right now consulting firms are rewarded and individual consultants are rewarded an incented by maintaining their billable commitments.So the utilization ratio is the single largest measurement used for incentives, promotions, career advancement, etcetera. Doing something that is disruptive can't come from midlevel people.It'll never gain the sort of support that it's needed to succeed.There need to be proper metrics in regular reporting, and so the billable hour is not end all be all, when you're measuring the success of this asset based consulting approach.You have to have a different set of performance metrics in place.They need to really embrace the disruption.You know, they can't pay lip service to it.This will change what they sell, it will change how they sell, it will change their pricing model quite dramatically.

 

The organization has to embrace that.They have to embrace the notion that they're actually becoming a software company of sorts, and that they're going to have to have accountability around that and the proper roles in place.You have to have people that have responsibility for the product.Product management has to become a role that gets fulfilled in that organization.They have to think about how they brand, and how they market and how they sell these services.If you do it well, and your client embraces this software platform that you bring to say, deal with financial reporting.Let's say financial reporting is one thing that the consulting firm has expertise in, and they build some set of tools that reflects their expertise and they bring this to client as a solution that combines this platform they've built, plus the services they wrap around it, the client is now using that and will continue to use it for potentially years, if not decades.

And that's the attraction to the consulting firm.This promotes long-term sticky engagement, but this also becomes a product now, that the consulting firm has to support just as software company would.They have to have bug fixes, they have to release new versions, they have to add new features and functionality to these platforms, so they are becoming a software company.More of a product company, which again is one of the payoffs.Consulting firms, if you look at them, have balance sheets that will show a lot of cash, but not a lot of assets.So these platforms start to show up as business assets, real assets on the balance sheet, which is something that is an advantage with it.

 

They also have to play straight with their own partners.So, if I'm a consulting firm, and I'm starting to build a solution around financial services reporting, I might already have a software partner.Maybe SAP or Oracle,who have been partners of mine for a long time, also have financial reporting software, and there's a potential there, obviously, for channel conflict, that needs to managed and mitigated.The consulting company, at least what I advise, is that they play straight with their partners on this, they be transparent about what they're doing and why, and work through the relationship as opposed to try to pretend they're not really doing what they are.

 

There's an inventory to be built, and there's an inventory to be surveyed, so there's an effort around going through all of your various practice domains, whether those are vertical or horizontal, and figuring out which of the many, many frameworks and business process models that exist today are most amenable, most suitable to becoming an asset, and build out that asset.

 

There can be literally hundreds if not thousands of candidates for this type of software build out.Figuring out what you have, and then prioritizing those to select the best is a fairly big undertaking, and it's one that most consulting firms have not engaged in.If you go to a consulting firm and say, "Show me your master repository of all consulting assets," they don't have one.Those exist in highly fragmented forms all across the organization.Sort of woven into the organization, but with no central visibility into what those things are.One of the first efforts is to bring together, pull together that defined inventory.So a catalogue, if you will, so you know what you have, and then to figure out which of those are the ones that you're more likely to take to market.

 

I think there also needs to be sort of a horizons model applied to this to be successful.The three horizons model, the typical one would be a technology company, and the third horizon is the stuff that's in R&D.The second horizon is the stuff that's not in R&D, but has not become a mainstream product yet.And horizon one are those things which are mainstream products in the market, generating the lion share of cash, the lion share of revenue, the lion share of product profits.

 

The tricky thing is that second horizon, and how do manage that?The consulting firms that I've spoken with will readily acknowledge that's been there biggest challenge.They can come up with the ideas about which assets to develop.They can do a good job of thinking through that and getting them defined once they've kind of gone through this inventory creation exercise. They've got them.But taking them into the market, and managing them through that second horizon, where they're kind of out liers to the business norm, and they probably need to be managed differently, measured differently, incented differently.It's a bit of a hot house environment, where those things need to be nurtured and developed, before they are turned over to the larger sales and delivery organizations.

 

Often companies will try rush that.They're in a hurry to get the thing to market, so they kind of ignore the second horizon.Then this little tiny new entity needs to compete with all of the multimillion, multibillion dollar initiatives already at play,the horizon one stuff.And they need to compete for sales time.They need to compete for executive attention.They need to compete for resources, and somebody looks at that, and says, "That's a pipsqueak little thing, I'm going to go take care of the thing that earns the company a billion, or three or four or five billion dollars a year. I don't care about this little thing that's going to make maybe $300,000 or $2 million."

 

So that second horizon is tricky, and requires kind of specialized management to get through it.And then lastly, I think it's the notion of figuring out what the best development platforms are, and I've become an advocate for this new generation of technology products that enable the consulting firm to leverage its huge store of skill and solution architecture and business analysis, and empower them or enable them to develop assets quickly, flexibly, and without any of the huge overhead, typical overhead that's involved in software development.Those are the keys to success, at least as I see them.

 

And did we cover all of the points you wanted to make?

 

Yeah, I think so.I think so.

 

And thanks for sharing...

 

You're more than welcome.

 

 

 

About James Ransdall

 

 

 

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James Ransdall

 

Chief Revenue Officer at i-nexus

 

LinkedIn Profile

I interviewed Thomas Tanel who discussed Adapt, Overcome, and Improvise: Words to Live by for the Supply Chain.

 

 

 

 

 

 

Can you share with us your perspective on what Clint Eastwood,in the movie Heartbreak Ridge, as Gunny Sergeant Thomas Highway when he says, “You're Marines now.  You adapt.  You overcome.  You improvise.” What did Gunny Highway mean and how does it apply to today’s supply chain?

 

Dustin, thanks for having me back.Hi I’m Tom Tanel President and CEO of CATTAN Services Group Logistics and Supply Chain Management advisory, counseling, and training firmwith more than 40 plus years of seasoned and practical supply chain experience.

 

As I understand, your military perspective was gained from 11 years of active duty during the Vietnam era and the Cold War era where you served in infantry, transportation, and logistics US Army officer slots at various posts in the US and overseas.  Let’s start with Adapt.  They say in the Army that no battle plan survives the first five minutes of combat. Can you address that statement and apply adapt to the supply chain?

 

During my military tenure, I served with 101st Airborne Division and its Division Support Command, the 19th Support Command in Korea, and the Military Traffic Management Command-Eastern Area.

 

As Helmuth von Moltke, the German military strategist, identified in a famous military dictum, “No battle plan survives contact with the enemy.”  One thing I learned in the military is to adjust to whatever situation being faced.  And that adapting requires an agile mindset.  So when things are not going as planned, you need to adapt to the situation at hand and make the necessary adjustments.  Sometimes you just have to understand the situation has changed and look at it from a different perspective.From a pragmatic view, ask yourself what would you do if your company is faced with a major supply chain disruption?

 

In the military, you learn to create contingency plans.  A contingency is a provision for an unforeseen event or circumstance.  And having options will help you remain optimistic and provide alternative routes to success.  Effective contingency planning can compress response timelines and improve the likelihood that you have the agility necessary to adapt and overcome adversity.  It requires having multiple backup plans so you can remain focused in any emergency situations.  Remember the advice given by Patrick Swayze as Dalton in the movie Road House “Expect the unexpected.”

 

Only the strong survive?  You say it doesn’t mean “only the most physically strong or mentally strong thrive”.  Would you please explain your claim and how does it affectadaptability in the supply chain?

 

Contrary to what you may have heard, Darwin didn’t define the fittest as those that survive.  His “fittest” were those endowed with the best equipment to survive, and that makes all the difference.  The fittest are defined as those that survive, so the catchphrase amounts to “those that survive, survive.”

 

According to Darwin, “In the struggle for survival, the fittest win out at the expense of their rivals because they succeed in adapting themselves best to their environment.”  Survival of the fittest isn’t about the most physically or mentally able.  It’s about who can best adapt to the situation to survive.  In the supply chain, it’s about how well you can adapt to each situation and make the most out of it.  In reality, this is what the supply chain comes down to…constantly adapting to VUCA(an acronym used to describe conditions of volatility, uncertainty, complexity and ambiguity) situations many times throughout a day, week or month.

 

Adaptability can quickly be summed up as your ability to move in a given direction at any time.  As Hannibal, the famous Carthagian General wisely stated “We will either find a way or make one.”  Therefore when problems arise, tackle them head on—or go around it, over it, under it, or through it.One of the Airborne Cadence running chants in the 101stwent like this: “Up in the morning while the moon is bright! Gonna run all day! Gonna run all night! Up the hill! Down the hill! Through the hill!”

 

Rarely is there anything you don’t know, it’s only things you haven’t figured out yet.  So if you don’t know, then simply learn or figure out how.  Adapt!

 

In the military, you need leaders who can adapt rapidly to unforeseen circumstances just as in the supply chain.  Hence, being inquisitive about new opportunities is crucial to successful change as well as adaptation.  By way of example, changing technology in the supply chain and the resistance to it is part of this “adapt and overcome” that Gunnery Sergeant Highway put forth for his Recon Marines.  What really matters in technological innovation is how well new and improved enabling technologies are incorporated into effective and intelligent concepts within the supply chain framework and with the least resistance—adaption.

 

Do you remember General Gus Pagonis, the Director of Logistics during the Gulf War,who retired as President of Sears Logistics Services and serves currently as Chairman of GENCO?  He was billed in the news media as the logistics genius, who, as head of the Army's 22d Support Command, fed, housed and equipped more than half a million American troops on short notice. He describes overcome best in his book Moving Mountains: Lessons in Leadership and Logistics from the Gulf War: “Logisticians deal with unknowns.  They attempt to eliminate unknowns, one by one, until they are confident that they have done away with the possibility of paralyzing surprises.  This is what we did in the First Gulf War in 1991.”Can you elaborate on how the word overcome applies to the supply chain such as the military faced in the incredibly difficult Gulf War conditions?

 

In the military, you are constantly presented with classroom situations, field exercises, and computer simulations that test your ability to prevail in adverse situations.  Within each setting, you come out more knowledgeable and in a better position to handle future adversity.  As Horace, the Greek philosopher understood "Adversity has the effect of eliciting talents, which, in prosperous circumstances, would have lain dormant."

 

In a wartime environment and fluid battlefield, the military have to be able to handle the pressure.  For that reason, you want proof that you are someone that’s going to overcome whatever is thrown at you.  What better way to prove it then if you’ve had the opportunity to observe some realism as well as learned how to adapt yourself to your supply chain environment.

 

This what General Pagonis had to work with in theatre—the logistical moves that would have to take place in an orderly fashion and required to support the operation plan—matching combat service support unit requirements to those for combat and combat support types known as a TPDFL (tip-fiddle).

 

Tom, could you expand on what is described as the TPDFL (tip-fiddle)?

 

OK, the TPFDL—Time-Phased Forces-Deployment List—which is known to military planning officers as the (tip-fid, for short) is the Pentagon’s most sophisticated war-planning document.  It is how you put together a plan for moving military units into the combat theatre of operations.  “It’s the complete applecart, with many pieces,” according to Roger J. Spiller, the George C. Marshall Professor of Military History emeritus at the U.S. Army Command and General Staff College.  He further said.  “Everybody trains and plans on it.  It’s constantly in motion and always adjusted at the last minute. It’s an embedded piece of the bureaucratic and operational culture.”A TPFDL is a voluminous document describing the inventory of forces that are to be sent into battle, the sequence of their deployment, and the deployment of logistical support.

 

It has come to me that you are fond of saying “if you don’t believe in yourself and you are not willing to persevere, then adversity will always get the better of you!” Would you provide us with more perspective on this statement?

 

In the military, I became accustomed not only to assessing situations and quickly formulating actionable plans with an Operations Order (OPORD), but also to performing After Action Reports, which require all members of a team to identify areas that should be improved for the next time out.  The ability to define clear goals, then work with a high degree of discipline, and focus to accomplish them is of paramountimportance for someone learninghow to handle and overcome adversity.

 

Resilience is the word I would use when describing the degree of fortitude people are able to show in the face of adversity.  Ask yourself, how much resilience do you have?  It comes from having experienced situations in which there is no clear precedent or path forward.  Thus resilience,in having experienced those type of situations,builds your confidence to overcome obstacles. It’s the redundancy that saves lives in wartime!

 

In fact, it was said that Napoleon won most of his battles in his tent.  He would look at the plan of battle and his maps and consider all the different things that could go wrong and think through what he would do in response to each of those things.  In the heat of the battle, when things went against him, he had already thought out completely what to do and was able to give both answers and orders instantly.

 

Throughout our supply chain career,problems, large and small, will present themselves to us.  While some may experience more than others, everyone will suffer some setbacks and periods of difficulty.  But once you have had to perform, under stress, in resource scarce environments like the military, I believe you can learn to be comfortable in overcoming adversity.

 

For most of you listening to this interview, this isn't your first supply chain rodeo—which is convincing evidence that you've been capable of overcoming adversity.  As John Wayne put it, “Courage is being scared to death but saddling up anyway."

 

We now live in an unscripted supply chain world. There's no getting around it.  You believe improvisation isn’t about being original, clever, witty or spontaneous.  How so?

 

It’s probably best to start with that on a regular basis—working in logistics—equates to operating under extreme pressure.  That is why despite the rigidity of military regulations and the certainty provided by standard operating procedures, officers and enlisted personnel alike are accustomed to making significant decisions in stressful conditions, under the threat of physical harm and in a myriad of uncertain situations.  The ability to creatively solve problems, using the “field expedient method” in the face of unprecedented situations, is a quality which I believe is of immense value to being successful in the supply chain.  It’s bringing into the moment all of your previous training and experience that has been shaped over a period of time to improvise.

 

The “field expedient method” is akin to the term “jury rigging” which refers to makeshift repairs or temporary contrivances, made with only the tools and materials that happen to be on hand.  Some may have also used the term “jerry rigging” which is creating contraptions out of whatever materials you have on hand.  For example, MacGyver, the TV Series genius, who never carries a gun and always thwarts the enemy with vast scientific knowledge—sometimes with little more than a paper clip and the duct tape in his pocket—was very good at “jerry rigging”.

 

When you improvise it’s because things didn’t go as planned.  As I have said previously, the best laid plans can go awry as well as your contingencies.  You improvise in the sense that adaptation must allow for flexibility—being agile.  As a result, it forces you to leverage your supply chain knowledge and available logistical resources by being creative to solve the situation you are going through.  As Henry Ford, founder of Ford Motor Company put it, “Whether you think you can or whether you think you can’t, you’re right.”

 

So improvisation isn’t about “making it up”?

 

To improvise is devising an answer to a given situation by making-do, despite the absence of resources that might be expected to produce a solution such as the use of a butter knife in place of a screwdriver to turn a screw.  In the movie The Martianwhich tells the story of an astronaut played by Matt Damon, who finds himself stranded on the surface of Mars after his team assumes him dead, we find an excellent example of improvising.  With only meager supplies, he is forced to use his intelligence and ingenuity to survive and also to find a way to signal back to Earth that he is alive for a rescue mission.

 

During the height of the space race in the 1960s, legend has it, NASA scientists realized that pens could not function in space.  They needed to figure out another way for the astronauts to write things down.  So they spent years and millions of taxpayer dollars to develop a pen that could put ink to paper without gravity.  But their crafty Soviet counterparts, so the story goes, simply handed their cosmonauts pencils.

 

If you have learned to adapt and overcome, then you have had to improvise on occasion.  Consequently, action is required…if skill at improvising is going to be attained.  Repetition of actions to adapt and overcome is what leads to true improvisational capability.  The Greek philosopher, Aristotle said that, “We are what we repeatedly do.  Excellence then is not an act but a habit.” The more you’ve successfully used field expedient options in the supply chain, the more leeway you will be given by senior executives to improvise on the fly!

 

Do you have any concluding thoughts?

 

Yes, we like to think successful people were just lucky, but the key is they were ready when the opportunity presented itself.  So the next time the supply chain throws you a curve ball or drops a tree in your path and the opportunity presents itself, will you adapt, overcome and improvise?  Remember that it’s not what you say, it’s what you do that matters.

 

 

 

 

 

About Thomas Tanel

 

 

 

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Thomas Tanel

 

CEO of CATTAN Services Group

Logistics and Supply Chain Management

 

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