January 2009
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As of end 2007, the blogosphere featured over 72 million bloggers; as reported by Technorati. That was more than double the almost 35 million bloggers in 2006, and nine times the 8 million tracked in 2005. Technorati reported that as of 2007 120,000 new blogs are being created every day, worldwide. Those are significant numbers. Even though recent trends point to slow or no growth in blogging, it’s reasonable to consider that there’s a great deal of content out there. Ten years in, much of this content is the product or derivative of other content. If you’re reading a lot of blogs these days, you may have to ask yourself, haven’t I heard about this before?

Perhaps the most important question is, how many times have I heard this before? It’s at that instant when one seriously considers closing their browser, or turning to another antiquated medium altogether. Perhaps those magazines they used to print back in the 80’s?

It’s a serious question noodled by serious writers, contemplated very seriously. It’s no secret that the light speed access to websites has geometrically increased reader’s choice. But it’s also no secret that the absence of an internet gatekeeper has led to some qualitative shifts in content that may not be for the better. In this bloggers opinion, quantitative trends equal a tremendous, practically inverse qualitative decline.

I’m not going “Buzz Bissinger” on the masses, though. My focus is on the seemingly repetitive and stagnant nature of subject matter expertise and currents events missives. After all, there’s only so much to sourcin’, right? They sell, we buy. In the end, that’s the headline and the rest is just stuffin’ and gravy.

So where’s the value in “value” anyway? Who cares if you’re upstream or downstream? Supply chain needs smoothing out; so what? Have we gotten so bored with our work that we have to invent new jargon just to say “buyin’ stuff right”? Are we so short of things to say that we just recycle each other’s ideas, and reshape and reform each others’ paragraphs?

It’s both a question and a challenge; the answers to which might change our approach to content, and evoke a qualitative shift all its own. Think about it. Will your next contribution to the blogosphere merely be commodity? Or are you putting something “out there” out there?
It’s getting a little ridiculous. Telecommunication service providers are coining new acronyms so fast, I’m sure they’re already labeling themselves TCSP’s. If not, I’ll be due a royalty.

I first noticed that telecom was becoming the acronym business when “ISDN” started being bantered about. I think it was the mid-nineties. Which sounds like yesterday, and was almost 15 years ago. Back then, my significant other was in the business, and even she joked that “ISDN (Integrated services digital network) stood for “I still don’t know”.

The telecommies had a sense of humor back then. That was back before management concluded that a mish-mash of endless acronyms equalled a layer of mysticism. A mystique that protects profits like the Popemobile helps Catholics sleep at night.

I’ve been following the telecommies for years now, watching them smugly recite acronyms ranging from “POTS” (plain old telephone service) to ATM (asynchronous transfer mode) and every imaginable, and undecipherable acronym in between. Who’ll ever forget “kbps” (kilo bits per second) or PBX (Private branch exchange? What I remember is the mind numbing sensation that occurred when the telecommies started spewing their acronese (I’m sure there’s a royalty coming for that one) until I said, “man, this is way too irritating, give it to another project manager”.

That’s telecom, and that’s the way they like it. Confuse the user, and the profits roll in.

Two very diverse personalities eventually provided me the perspectives that helped crack the telecode for me though. One, a co-worker who thought he was funny always joked about telecom being sold in “units”. Ultimately, offerings like MPLS (a system that manages packets of data) make him accidentally smarter than he actually was. Another, a brilliant woman I once married, explained to me that whenever the answer to a question seems mystical, remember the real world problem that the question answers.

In the final analysis, it’s all just sending and receiving little bits of data. Sure, there are lots of ways to transport ‘em. But there are lots of ways to send bananas, too. You don’t see producer farmers marketing their SBBT (send bananas by truck) service, or the PBAM (Put in Boxes And Mail) product. But they could. Only UPS, FedEx and other parcel carriers have adopted even a fraction of acronese as a method to obfuscate their way to profits. Still, it works.

So the next time you’re dragged into the data dungeon and help hostage by a bunch of rogue letters whose meaning you can’t decipher, remember this. “Bits of data, sent and received.” It’s really just that simple.
When I was a freshman in college, my Girlfriend’s grandfather had a 17 year old-car with less than 35,000 miles on it. We were riding along with him one day when I noticed the mileage and asked; How have you kept the mileage so low for 17 years?”

“By not driving it”: he replied.

Psychologists would have predicted Grandpa’s response using “Occam’s Razor” theory. Without going into a wordy, abstruse explanation; Occam said that in most cases the simplest answer is the best answer.

In a year when all of us will be challenged to maximize and optimize each and every function, procurement will be pressed to squeeze yet more cost out of every buy. So before we rush to enlist all the exquisite, evolved theory and “best practices” that the think tanks have to offer, let’s try to peel the grape using the most basic approach.

A wise man once said that you fight the price battle forever, but never win. Prices eventually rise. But once you’ve pared out cost, cost is gone forever. Using that metaphor and one of the most basic items we can buy, the corrugated box; let’s examine some methods to remove cost, rather than enter negotiations.

Q: When does a blank have a value > 0?
A: When it’s a corrugated “blank”

In the manufacture of boxes, the corrugated “blank” is the sheet that is sliced, folded, printed and sometimes glued and painted to make a finished box. Few corrugated salesman will tell you this, but shaving a mere few inches off the “blank” used to make a box can generate tangible savings. Often times, the change in blank size can be achieved with modest reshaping of the finished box as well.

The short verse is, less board = less cost.

Q: How can we minimize our corrugated expenses?
A: Use fewer boxes

My visit to one clothing distribution center revealed one of the most advanced distribution models I have ever witnessed. This retailer managed to fulfill clothing shipments with almost 98% automation. One piece of the automated system dropped cartons onto stands, automatically folded and closed the bottom of the carton and then filled the cartons with men’s shirts. It was quite an impressive sight. Here’s what wasn’t so impressive, the cartons were 80% full.

After much research, we concluded that the reason the cartons were 80% full was because the filler was set to a default value. A mere adjustment of the fill setting would have reduced carton usage by 20% for shirts.

Sometimes the cost of the boxes has as much to do with how you pack the boxes as it does how many boxes you buy.

Q: But our boxes are “custom” made, they must cost more, right?
A: Let me answer your question with a question . . . .

Why are your boxes “custom”?

I hate to pick on a retailer. But that same company that was packing its boxes 80% full also had a special, 4” extended flap on the top of the package, for which they purchased special tape and special taping accessories, in order to prevent “shrinkage” (the fancy word for “theft”. The special flap worked. Theft was nominal at best.

But here’s what we know about boxes, the less box board you use, the lower the cost. The less the manufacturer touches them, the less they cost. The less expensive machinery you use to cut them, the lower the cost. In short, plain boxes cost less.

So the question that came to my mind was; “how much “shrinkage” would there be if retailer used a standard box?” We’ll never know the answer, at least not for that client.

Here’s why. Someone was deeply invested in the decision to spend a lot of extra money, for a special box. Someone would have been mighty embarrassed to admit that all the extra expense for special boxes and special tape and accessories was wasted money.

So the real answer is; find out if you can use a non-custom box. The industry standard, RSC (regular slotted container) often works just fine. That’s why it’s the industry standard. The mind-set behind using “custom” packaging is often driven by the corrugated sales rep, your marketing team, or sometimes even loss prevention. What matters is that we at least examine the justification for the expense. In some cases, the custom product is an operational must-do. But in some cases, the fluff is unnecessary and the savings can be significant.

Those are just a few examples within an example of simple cost saving strategies that often get buried in the software, the VMI, the best practices and other tactics that also produce positive results when firms properly implement them. Keep them in mind and more importantly, retain that mindset.

Occam, and your management would be proud of you.

While everyone remains excited about WiMax, despite its consistent rollout delays in the US, a new technology may be adopted instead, leaving WiMax behind to be put to sleep. This other 4G technology is called Long-Term Evolution (LTE) - a GSM-based standard that has (and is expected to evolve) a greater bandwidth capacity than the TD-CDMA-based WiMax. Both technologies are based on the same 802.16 standard but LTE boasts speeds in the hundreds of mbps while WiMax only facilitates data transfer in the tens of mbps. Additional advancements to both technologies are expected to yield even greater capacities.

Performance aside; what does competition in the mobile data market mean to the industry? Well, with WiMax ever-so-slowly rolling out and LTE still on the way, WiMax does have the upper hand, albeit in a limited way. To LTE’s advantage, the standard is being adopted by equipment vendors (See: Alcatel-Lucent and Ericsson) and can be easily piggybacked off of the upgrades previously necessitated by WiMax. Also, GSM more widely used than CDMA and Verizon, a CDMA network, is already making changes to accommodate LTE. Odds are being stacked against WiMax. The economy may be the final nail in the coffin for WiMax which is really Sprint’s 4G baby. Sprint’s financial turmoil, despite support from Google, Comcast, and Time Warner et al., could delay rollouts long enough to let LTE gain even more footing. It is undoubtedly possible for these similar technologies to coexist, but if Sprint can’t push hard and fast enough, there would be no cause for surprise when LTE swiftly moves in and dominates the market.

For now it will be interesting to observe business, consumer, equipment manufacturer, and carrier adoption of both technologies. As things progress, we will have consider more carefully what impact widespread high-bandwidth wireless data networks will have on broadband in the US.

The Minneapolis Star Tribune reported last month that the government is looking to seize some expensive property just outside of Chicago (in Deerfield, Ill.). No, this property does not belong to the infamous Rod Blagojevich, it belongs to a pair of newly accused criminals, Abby and Russell Cole.

Abby Cole is the president of "Chip Factory", which is now accused of defrauding Best Buy out of millions of dollars. The former Best Buy vendor-relations manager, Robert Bossany, has also been charged with multiple crimes including money laundering for allegedly taking kickbacks from Chip Factory before being fired.

How was it pulled off? Evidentially, Chip Factory submitted lowest bid prices through online reverse auctions run by a company identified as National Parts, Inc. Once the job was secure, Chip Factory basically charged Best Buy whatever the hell they wanted, or as the court's called it "a price significantly higher than its bid price".

So, it sounds like there is a great opportunity for some improved supply chain systems, services and/or contract managers over at Best Buy. I wonder just how many sales calls their procurement and finance teams have received over the last two weeks?

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Happy New Year from the Strategic Sourceror.

January also marks the anniversary of this blog. So happy 1st birthday to the Strategic Sourceror, and thank you to all of our readers and authors on this site.

In our first year, www.StrategicSourceror.com had a total 172 posts including everything from spend management humor to best practices in strategic sourcing for specific commodities.

Our most read article in 2008, dealt with some warnings about outsourcing web content development and how to defend and react to website plagiarism.

Coming in at a close second was an article synopsyis of the Heineken Fit 2 Fight cost-reduction program.

Also hot last year were a couple of informative articles on Lubricant Price Increases: Lubricant Price Increases Part One, Lubricant Price Increase Part Two

The most popular series last year were Fleet Management Best Practices and Wireless Management Best Practices:

Fleet Management Best Practices:

Wireless Management Best Practices

So, please drop a comment. What are we doing right? What are we doing wrong? Is there anything specific you would like to see more coverage on?

Thanks again for stopping by the Strategic Sourceror! Wish us luck for another great year.