I had the opportunity today to attend a webinar hosted by Eye For Transport on the subject of “Attracting and Developing Top Talent in the Supply Chain and Logistics Industry”. The panel consisted of four executives from a variety of industries speaking about what qualities they look for in candidates for their companies. Of particular interest (at least to me) was the Q and A result when the question was put to the attendees as to what quality they felt was important to present when seeking a position. 49% of the respondents indicated they thought that Strategic Thinking was an important quality to have. This surprised the panelists who more or less collectively felt that Operational Experience was important. Only 5% of the attendees agreed with this position.
Does this indicate a disconnect between what job seekers believe to be a valued quality and what the market may be looking for? I found it interesting that one panelist stated they look for APICS certification in the candidates they are considering hiring. This dovetails with a recent article I found on CNBC this week that told the story of manufacturers paying a bounty to hire qualified workers. There is clearly a lack of available talent in the manufacturing industry in the U.S. What is key however is the talent that is currently being sought and the ‘stage’ that the U.S manufacturing industry is in at this time. The companies profiled were in the business of producing machinery used in manufacturing.
This indicates to me that there will be a three stage process in the resurgence of manufacturing jobs in the U.S. First, we need the talent to build the machinery used in manufacturing. This includes welders, machinists, etc. Second, we are going to need the talent to operate the machinery currently being produced. This will be the workforce with the operational training to produce goods. And finally, we will need the talent to oversee the operational processes and ensure that companies remain profitable. This will be the degreed and/or certified workforce that supports the operational decision making.
How soon each of these talent pools will come into demand remains to be seen. The question a candidate should be asking at this point is, “What type of position do I want to fill and what training and education do I need to get to that point?”

A colleague recently forwarded an article to me authored by Don Peck that was published in ‘The Atlantic’ back in March (see link at the end of this post). While I confess that at this point I have not read the entire article, I did read enough to get the gist of what Mr. Peck may have been getting at. This country is in a dire economic condition and it may take years to get out of the mire, if we do at all. But what I found interesting is that the normalcy Mr. Peck was hoping to return to was what we had prior to the economic bust. Sorry Mr. Peck, but I don’t think we’ll ever get back to the way things were, and more importantly we shouldn’t want to.

It seems to me that we are spending a lot of time wringing our hands over the loss of the status quo, we should be glad to be rid of some of it. Yes job loss is hard, I know, I’m going through it with 10 million of my close friends right now. But we need to refocus our efforts on how to pick up the scraps of the old economy and build a new one. I am stealing a paragraph from the article to include here because I think it is important:

“Ultimately, innovation is what allows an economy to grow quickly and create new jobs as old ones obsolesce and disappear. Typically, one salutary side effect of recessions is that they eventually spur booms in innovation. Some laid-off employees become entrepreneurs, working on ideas that have been ignored by corporate bureaucracies, while sclerotic firms in declining industries fail, making way for nimbler enterprises. But according to the economist Edmund Phelps, the innovative potential of the U.S. economy looks limited today. In a recent Harvard Business Review article, he and his co-author, Leo Tilman, argue that dynamism in the U.S. has actually been in decline for a decade; with the housing bubble fueling easy (but unsustainable) growth for much of that time, we just didn’t notice. Phelps and Tilman finger several culprits: a patent system that’s become stifling; an increasingly myopic focus among public companies on quarterly results, rather than long-term value creation; and, not least, a financial industry that for a generation has focused its talent and resources not on funding business innovation, but on proprietary trading, regulatory arbitrage, and arcane financial engineering. None of these problems is likely to disappear quickly.”

Innovation may be what eventually saves us as a leading global economy, but we need to be smart enough to get out of our own way. The old way of doing things is gone, let’s embrace and support the new efforts that will bring us back.

This holds true in whatever business you are in. The partners in your supply chain, your vendors, customers and everyone in between is having to approach their business with a new perspective.  Are you adapting your business model to work with them, or are you trying to force your old model to do things it may no longer be capable of?

http://www.theatlantic.com/magazine/archive/2010/03/how-a-new-jobless-era-will-transform-america/7919/

A recent article in the Chicago Tribune got me to thinking about the current state of strategy being executed by business in general. The article told the story of MIT professor Yet-Ming Chiang who invented a lithium-ion battery that could eventually be used to power hybrid cars. The battery he created is more powerful, longer lasting and more compact, all key elements the industry is looking for. He started a company called A123 Systems to manufacture the battery; the problem is when he tried to raise capital to build a factory no one wanted to fund him. At least not for a factory built in the U.S. A123 was forced to build their factories in China, where they now have five facilities. Anyone who does business in China understands that it is difficult to protect intellectual property there. I’m not taking a shot at the Chinese, it is how business is done there and if that’s where you want to be don’t whine about it. A123 Systems had to teach the workforce how to create the batteries, and now some of them have started companies, utilizing the A123 technology, and are directly competing with A123.

I can understand the short term reasoning of the venture capitalists in this scenario, it is cheaper and quicker to build a factory overseas and the labor is a lot less expensive also. And we have been promoting ourselves as the country that will develop the technology and outsource it to the rest of the world to produce. Maybe this logic has now become ‘old school’. Is it time for the definition of profit to shift from “How quickly can I make back my investment, plus a profit, and get out” to one of “What is the overall long term benefit of creating a domestic business around this idea”? I may come off sounding a bit protectionist, but I don’t mean to.

We are not competing globally on just low cost production anymore. Global technology is moving at a dizzying pace, and the U.S. is not always at the forefront. I believe the long term benefit of being able to manage the technology offsets the additional cost of building a factory and producing a product domestically. We also have to view this in the spotlight of the current economy. What is the long term benefit to a particular locale of having a new factory come into the local economy?

The good news is that A123 Systems is building a factory in Livonia, Michigan (right near the auto makers that will save tremendously on shipping costs) and hopes to have a second facility in place by the end of next year. Employment projections are 400 workers with the hope of going to 2000. General Motors, however, is buying their batteries for the Volt from LG Chem; a Korean maker that is building a plant in Michigan, but for now will ship from Korea. A123 admits that LG Chem was further along in manufacturing readiness, but could A123 have been the dominant player had they built their production facilities here five years ago?

My point is this, in a global economy that will continue to redefine itself almost daily, your strategy has to be one that considers the long term ancillary effects of your decisions. Yes it was less expensive to build factories in China, but you sacrifice the exclusivity of your technology. Anyone who deals with auto makers (who will make sustainable use of this particular product) knows that the most cost effective scenario is to be very close to where the need is. And everyone knows Michigan would welcome the jobs. Your supply chain becomes more manageable which also helps to reduce the costs. The return on the initial investment may take longer to recoup, but the longer term benefits of protecting the technology and bringing employment to a local economy should outweigh the extended ROI. Is it wrong to think that a successful business investment strategy shouldn’t be solely about short term profits anymore?

So I’m putting the challenge out there, can we develop a supply chain that is so finely tuned and maintained that the additional investments and longer ROI can be offset by world class functionality? Maybe this is how we regain our position as a global leader in production. I welcome your thoughts and ideas on how this can be achieved.

The SEC’s filing of a civil complaint against Goldman Sachs shows what can happen when you don’t monitor your supply chain. In brief, the SEC complaint states that Goldman allegedly allowed an organization that stood to profit from the decline in value of mortgage backed securities to have input into how the pool of securities were developed. The SEC alleges that Goldman told investors that the mortgage pools were developed by a disinterested third party. Now institutions that suffered losses are crying foul.

This example highlights one of the caveats of supply chain management. Do your due diligence and don’t rely solely on what you are told. The financial markets, like any other market, goes through stages of evolution and especially in a turbulent economy. New products and services are created in order to maintain or capture market share. In order for any business to survive you have to create profits, and in this economy we are sometimes living very close to the edge of the envelope.

I’m not saying that we have in general declined to a state where we can’t trust our business partners. But as it becomes more difficult for businesses to survive you have to be fully aware of what is occurring in your supply chain. What is going on with your suppliers, and their suppliers, can have a significant impact on your business. How is the overall business health of your suppliers? Are there new players supporting the product pipeline? Do you still know who is servicing your supply chain? This holds true on the customer side also. What is the health of your customers business? And what is the health of their customers?

This due diligence should be exercised at all stages of your supply chain, not just the supplier and customer interactions. If you’re an importer, do you know what is going on with your customs broker? What is occurring in the transportation arena that you need to be aware of? From the financial side, how is your own bank doing? Can you count on them to be a continuing source of funds as needed to support your operations?

Monitoring a supply chain can be a very time consuming task and, let’s face it, the costs of doing so are hard to justify. But like eating any elephant, it can be done in small, regular bites. Look around your organization, chances are you may have the necessary subject matter experts already on staff. If not, you probably have people willing to become the experts you need. The potential job security should be enough of a carrot to develop your group. Set them to work doing the required research and bring them together on a regular basis to report and develop a strategy for addressing any issues. Avoiding even one potential catastrophe is enough justification for any added expense. Or you can wait for the catastrophe and just cry foul.

I have had the opportunity recently to engage in several conversations with business acquaintances regarding supply chain. As I talk with them about my experiences, I find that the most immediate response I get is that I am involved in logistics. While logistics is certainly a vital part of supply chain, it is only one of several segments of supply chain. This can best be described as a purely unscientific survey; however, it does lead one to conclude that many in business do not fully understand the integrated supply chain.

Every business, no matter how large or small, has a supply chain. And your supply chain has a multitude of touch points across your business. There are your relationships with customers and vendors, Sales and Operations planning, demand planning and procurement, inbound and outbound logistics, finance and accounting, human resources, production, warehousing, inventory management, etc. Each of these functions and operations is a part of your company’s supply chain. More importantly, each of them is inter-related to all the others. Understanding those relationships and the effects that one area of your business has on the others is vital to keeping your business running smoothly and profitably.

This leads me to my next point, which is strategy. When was the last time your company revisited its strategic plan? Does everyone in your organization know and understand your strategy? More importantly, does each of them know the role they play in executing that strategy? Clearly defined goals and processes for reaching them cannot be emphasized enough. And the effective execution of your supply chain is the methodology for achieving your strategic goals.

As the temperature outside begins to climb, maybe it’s also time to heat up attention to your strategy.

I recently witnessed the death sentence being given to creative innovation. The sentence is unjust and the death will, I fear, be slow and painful. I had occasion to be meeting with some colleagues at an afterhours networking event and talk ultimately got around to what they were doing in their businesses. One company in particular had expanded their marketing department and was working on enhancing their website to improve customer interaction. I was talking with the project manager and this individual was expressing concern about the scope creep that was coming from the C level executives. When I offered that the executives should be advised that any changes to the original charter should be addressed in future phases, the response was that the project manager couldn’t tell the CEO that they couldn’t make changes. I resisted the urge to grasp this poor individual and shake them violently, all the while screaming that the CEO is exactly the person who should be told that they can’t be messing with the original charter. Gently asking why the original charter wasn’t off limits I came to discover, to my great dismay, that they actually did not have a written charter and this work was being done ad hoc.
Not to disparage this individual, because they are intelligent and good at what they do, but this situation points up a disturbing trend in business. As we shake of the recession and start to get down to the work of improving our business, we are attempting to resolve complex issues with a sometimes less than optimal talent pool. This is the result of having let go some of our top talent in order to cut costs, which at the time seemed to be the wisest choice. But is it still wise to try and address issues that will take your business forward without having the proper talent in place to lead the charge? What this company is attempting to do is laudable, but I fear for their success due to the approach they are taking.
I find that this is the fate that many improvement projects suffer, the result being that the methodology used becomes the scapegoat for project failure. Now more than ever companies need to be sure that they have the proper level of talent in place to lead the improvement projects that they have planned for. Individuals with an understanding of how to optimize methodologies such as Lean or Six Sigma will deliver a far better result, with less cost and frustration, than if you try and wing it with the talent you have. The unfortunate result is that the projects may eventually fail, and executives become gun shy from attempting any other projects using what are truly sound methods.
So this is a call out to you C level execs who are facing the need to initiate those improvement projects. Take the time to hire and develop the proper level of talent before you embark on those projects. And empower those who you task with executing those projects to be able to manage them the way they ought to. You’ll get a better result, and let’s face it, you’ll sleep better too. Pleasant dreams.

The implications of the recall for Toyota go beyond the obvious issue of public safety. This is a company that has built its reputation for quality on the production process that it has developed over the years. The ability for anyone in production to stop the line when they see an issue, and not start again until the issue is resolved, is part of the DNA of the organization. And this extends to all aspects of the company, not just production. So what went wrong?
It is going to be interesting to see how this plays out. If the issue is across multiple production lines, do we look at a possible engineering flaw? If it is not in engineering then is it a quality issue with the parts? And if it is the parts, was there a breakdown in managing the quality of the suppliers?
With the exception of the Avalon model, the vehicles in question are all from model years of 2007 to 2010. About the time that economic pressure increases on manufacturers we are seeing quality issues with the finished goods. As manufacturers squeeze their suppliers to reduce costs, those suppliers have to find a way to reduce costs also. You can give up so much margin before you have to start looking at alternative ways of doing business. I’m not saying that Toyota suppliers intentionally delivered sub- standard parts, but how close to the control limits can you get and still have a viable product? Toyota’s own website indicates that the problem may occur when the accelerator mechanism becomes worn. Why is it now that this is becoming an issue?
So the lesson for supply chain is this, understand that when you put pressure on your suppliers to reduce costs, you need to step up your vigilance on quality. Is your supplier going to start to outsource some of your production to reduce their costs? At this point you lose control over the management of specifications and rely on your suppliers for oversight. And you generally don’t know that it is happening. You may also find more products reaching the extremes on your control limits, is this acceptable to your customer base?
The decision for management is do we put quality at risk in order to contain costs. And if we are going to put cost pressure on our suppliers, we need to be prepared to increase our cost on ensuring quality. Part of this cost may be an increase in safety stock to avoid interruptions in supply flow for potentially rejected product.

As we come out of the current recession, business needs to be acutely aware of what their customers and suppliers are saying about transacting with them. We conduct polls and do surveys to learn what the current mindset of our business partners may be, but let’s face it, how many responses do you really get from surveys and polls? And more importantly, how candid do you think the responses are that you are getting? And know that your business partners talk, oh yes they do! They just may not be talking to you the way you really need them to.
Social media sites such as Facebook and Twitter have become a significant force in tracking what the masses are saying about a company or a product, and you should be paying attention. I will go so far as to say that if you’re going to compete in the new economy, your company needs a presence in these spaces. Users of social media are not only talking about products, they are talking about the quality of the companies they work for. Junior Achievement Worldwide and Deloitte Touche Tohmatsu recently completed their seventh annual Teen Ethics survey and found that more than half of the respondents stated that their access to social media in the workplace would influence their decision in accepting a job offer. There is a question raised regarding the appropriateness of postings to social media sites, but most of the survey respondents say they don’t behave unethically on the sites. In addition, the spokeswoman for Junior Achievement indicated the need for more education for the young people in terms of appropriate behavior on social media. I venture to say that most of the emails circling the globe at any given time would make her blush.
Sadly, I think that the JA people have missed the point. This is how the coming generations are communicating, and business needs to get its head around that fact. Some retailers used social media sites over the past holiday shopping season to broadcast sales, etc. and users were letting each other know about deals they found while shopping. Shoppers can also talk about the experience they had in your store, good or bad. You can’t put a price on that kind of advertising. But if you’re tracking it, you can react to it.
Your supply chain needs to be paying particular attention to how the public is responding to your company. Are there issues with delivery of product availability? Is there a quality issue that needs attention? What is the benefit to your bottom line of being proactive in resolving issues before they become issues? This is especially true if you are in a mature industry where there may not be any product innovation you can capitalize on to drive new business. In this type of business your best asset is information. How quickly you can gather information and develop a response may be the only thing that separates you from your competition. And in this economy more than ever, you need that distinction.

The latest jobs data is out, and not surprisingly we see another increase in the unemployment numbers with the economy shedding another 85,000 jobs in December. This should have been anticipated, my guess is that some of that number accounts for the seasonal workers hired by retailers for the holiday season. As one of the estimated 10% of the population that is currently looking for work, the news, while discouraging, is not shocking.

An article in the Wall Street Journal on Tuesday reported that factory activity has rebounded, but what are they producing? Best Buy’s latest data shows a marked increase in the sale of appliances, which leads me to believe that buyers may have taken advantage of sales to move merchandise. So if the rebound in factory production is to replace these durable goods, are we banking on an increase in sales of durable goods? We may be mistaking a dead cat bounce for recovery. If however, factories are producing goods that main street will consume in the short term, and the need to replenish will continue, then we may actually be turning a corner. We also need to be prepared for what’s around the corner.

In the same edition of the Wall Street Journal, just a page away from the previous article, is another reporting that personal bankruptcy filings soared in 2009 with 1.41 million filings, up 32% from 2008. And more of these are Chapter 7 filings, which tell me that Main Street is more often throwing in the towel rather than trying to keep up the fight. The buying public may still be lacking the confidence to spend, and that confidence is needed to drive business to produce.

So what does this mean for the supply chain? Your historical data may not be very useful in creating a demand plan in this environment. This a time when you need a good S&OP process in place and to have key players involved in your plan. Know where your suppliers are in terms of raw material availability and their capacity utilization levels. Can they ramp up production quickly if you need them to? Also, get close to your customers, what are they seeing in their markets and what are their plans in the short term.

None of us can predict the future, but we have the ability to create our future. Knowing what is going on in your supply chain gives you the ability to remain agile and respond appropriately as conditions change, and change they will.

The survey of job satisfaction, conducted for the Conference Board by TNS, reports that 55% of employed Americans are dissatisfied with their jobs. The report, which I accessed through the CNBC website, http://www.cnbc.com/id/34704775/site/14081545 , states rather surprisingly that the most dissatisfied are those age 25 and younger. In about eight years the boomer generation will compose only 25% of the workforce. Business needs to be concerned about the cross generational knowledge transfer that will be required for continued operations. The boomer generation satisfaction rating has been on a slide for the twenty years, with roughly only 46% currently expressing satisfaction in their jobs.
Much of this may have to do with concerns about job security and ‘survivors guilt’ of having come through the purge that has left one in ten Americans unemployed. Also, those still in the workforce are now doing the additional duty of those who were let go. The added workload, most likely with no added reward, weighs on morale after a while. But management must also look at the level of engagement that employees have. The quality of the work that an individual is engaged in may be the result of diminished activity, but now is when management must be most keenly engaged.
Keep in mind that people want to be led; they don’t necessarily want to be managed. Now is the time to revisit the vision of your organization and see if it’s not time to redefine it based upon the condition of the current global marketplace. And now, more than ever, that vision needs to be heard by the rank and file. Your employees need to know that their contribution matters.
And if your workforce is now composed of multi-generational factions, you need to understand how each of the generations relates to the workplace and how they relate to each other. There is great opportunity to land some good talent for your organization as the recession evaporates, but are you prepared to not only relate to them on their level, but meld them together into a cohesive workforce?
In closing I offer this bit of wisdom I found from Gil Schwartz, Executive VP at CBS: “This is how I view the big bang of 2008. Once upon a time, dinosaurs ruled the earth. They had enormous, scary teeth and always got a very big bonus come dinnertime. Then the world changed. A comet hit the planet just south of Schenectady, New York, or something like that, and all of the sudden the world was no longer a congenial place for big, scaly lizards that ate up everything in their paths. The good news for mammals is this: After all the T. rexes were dead and gone, the planet was suddenly more habitable for smaller, softer life-forms, like us. The key for people who walk upright and have opposable thumbs is to make the most of the vacancies left in your power structure by the departure of the roaring carnivores, as well as the smaller creatures who attended them. In spite of the fact that many are gone, the need for work in all areas has not diminished. Aggressive, opportunistic, ambitious people like you can cast a wide net and scoop up all kinds of responsibilities. And with responsibilities comes new titles, new client relationships, and even, in the end, new money. Remember this: The one predator that has survived from the days when the dinosaurs ruled the earth is the shark. That’s because no matter what, it always, always keeps moving forward, eating as it goes. You do the same: Always keep moving, sharpening your skills, seizing new opportunities, and you’ll do all right.”