July 2010
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on Tuesday, July 27, 2010 3
Over the past few months I have been fairly critical of the path President Obama has taken in dealing with some of our most pressing problems - the oil spill, the financial crisis and overall government accountability to name a few. As a Democrat I was excited to see a person who appeared to have some interest in helping normal people and making the government work come into office. Obama seemed very capable and showed a coolness even in times of crisis that appeared reassuring. Unfortunately that coolness has also made his first few years in office fairly ineffectual and may cost him the next election.

That’s not to say there haven’t been major accomplishments. The Administration passed some of the biggest legislative changes in the last 40 years in the health care bill and the financial reform bill. He’s also invested more in clean energy than all of his predecessors combined. If there is anything in these bills and initiatives that will actually help normal people or make our country better off is still yet to be seen, and probably won’t have an impact for at least the next few years.

But here in lies the problem - even when the Administration accomplishes something big the results can’t be immediately tracked or determined in a meaningful way. And the demonstrated coolness from the Administration gives the appearance that nothing substantial has been accomplished, even to people like me who want to find examples of his success.

Coming in, Obama promised accountability, promised to make sure working middle class people didn’t get screwed, and that change was coming. He then proceeded to let Congress control the agenda, and ended up with watered down proposals and lacking legislative changes that progressives and conservatives alike could take issue with.

This is the polar opposite of what’s happening in New Jersey right now. Chris Christie, the new governor, has only been in office for 6 months, but no one would question his accomplishments to date. Even his opponents would say he is an effective leader that is inspiring change. I won’t go into all the examples of the legislative initiatives Governor Christie has made since he came into office, they have been well documented in this blog and other news outlets. I do believe that his leadership style encompasses four policies that you normally never see in politics. Those include:

1. Holding people accountable
2. Firing those who are not
3. Naming Names
4. Not expecting others to support you

One of the most important things I realized early on in my career is that you can’t expect the facts to speak for themselves. Even when I have presented the most motivating business case to a customer, I know there will be a chance they will not make the right decision, because non-business factors existed. The same holds true in politics. Where President Obama has expected common sense and cooperation to prevail, Governor Christie has assumed it will not. Out of the two, Christie’s approach makes a lot more sense.

I don’t agree with all the changes Governor Christie is making in New Jersey. He often comes off as a blowhard that uses a sledge hammer to bang in a nail, and tends to picks fights that aren’t worth the battle (Google Christie AND Snooki). However, I would never question his effectiveness or his intent to do right by the people of New Jersey. Pending some ridiculous scandal, I would also never question his ability to get re-elected, even in the blue state of New Jersey. The President could learn from his example.
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on Friday, July 23, 2010 1
apple supply chain
As a quick follow up to my article a couple of weeks ago, it appears that Apple's supply chain is also starting to hit some stumbling blocks in manufacturing. Coincidentally, the stumbling block is almost identical to the one that we mentioned HTC was having, the primary supplier is not able to produce enough displays. In Apple's case, LG apparently is not able to meet the demand for the iPad and will not be able to completely hit targets until Q2 of 2011.

Although Apple supposedly has other minor suppliers that they can turn to, they also face a new major challenger in Microsoft. Last night, as expected, Microsoft beat the Street's earnings estimates and is on a roll with a new series of products in the pipeline. Microsoft is set to release their new series of Windows Phone 7, for the holiday season of 2010, while simultaneously launching their own series of tablet devices (called slates), to compete directly with the iPad. These slate computers are promised from a large variety of major technology manufacturers including; Asus, Dell, Samsung, Sony, Toshiba, MSI and HP.

It will be interesting to watch just how prepared Apple is with their supply chain sources over the next few months, as those are some serious competitors they are up against.
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on Tuesday, July 20, 2010 0

I came upon this article on philly.com about a young student in a Philadelphia Catholic school who has experienced a lot of bullying in her short school career. She decided that she wanted to make a change and began by addressing the issue to President Obama. Quite bold for an 11 year old girl if I do say so. As touching as that is, the President actually wrote back and commented on the issue. Now I don’t believe that the President will be coming to Philadelphia to scold these students anytime soon, but I do think this relates to the supplier relationship in business.

An important element to consider is to not let the supplier run the show or “bully” you. Maintaining your relationships with suppliers means collaborating on efforts that will benefit the client as well as having mutual respect for each other. This idea can be applied in all sorts of settings. For example, have you ever been to a store in which the salespeople work on commission? This can easily turn into a hairy situation for a timid consumer. I once bought a pair of $80 jeans because the saleswoman told me they looked great in them! Ok, so that was definitely poor decision making on my part, but you get the idea.

As a consumer or business consultant you need to ensure that you keep the upper hand or leverage in the situation. Do not allow the supplier to take control and drive the results. If anything it should be a collaborative effort in which both parties work alongside one another to meet the goals of the project. If suppliers get too overbearing, customers may cease to use their services in the future. If customers are too timid, there is no way they will achieve their goals, it takes a certain degree of moxie to maximize savings opportunities.

Well, needless-to-say, this 11 year old student certainly has moxie. She has taken up a crusade to end bullying by encouraging other students to join her in a movement against bullying. She plans to go to different schools and speak out against this type of behavior. I think we can all benefit and learn from this student’s ambitious behavior and nature in general.

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on Tuesday, July 13, 2010 3
Nothing beats your local corn-on-the-cob as we continue through the summer grilling season (heat wave or no heat wave!). I’ve heard corn is good for you being that it’s a vegetable but also that it has no nutritional value and the human body cannot digest it like other vegetables.

Just as with corn-on-the-cob’s healthy vs. unhealthy views; ethanol is under the microscope for being a fit fuel replacement or not. Ethanol is a form of alcohol distilled from the sugars found in a wide variety of plants as cited in the July/August 2010 issue of AAA World. Using ethanol as an automotive fuel has been around since Henry Ford’s Model T in 1908 which was designed to run on ethanol, gas or a mixture of two for example. Now we have flexible-fuel vehicles which can run on a more concentrated blend of ethanol and gas (85% ethanol, aka E85) than 10% or less ethanol blend before. But is it worth having a car or truck that takes E85 when less than two percent of gas stations nationwide sell it?

According to the editor of the Edmunds.com Green Car Advisor blog, “After 9-11, everyone began worrying about energy security. So the big agribusiness companies began selling the idea of producing ethanol from corn as a way to reduce America’s dependence on foreign oil.” Enter ethanol greenwashing. Auto manufacturers started producing millions of cars that take E85, mainly to help meet federal government Corporate Average Fuel Economy requirements. I’m sure many people felt they were doing their part to help the Earth and reduce emissions with their flex-fuel vehicle purchase. But how many of these vehicle owners have ever filled up with E85?As in the sourcing world, one needs to be cognizant of total cost of ownership. Jan Kreider, a chemical engineer and professor emeritus at the University of Colorado noted as an example, “our recent life-cycle analysis of a number of alternative fuels showed that using corn-based ethanol actually increases CO2 emissions and uses about 30 percent more imported oil when you factor in the diesel fuel consumed by the farm machinery used to grow the corn and the trucks and trans that transport the finished product.” Not to mention the massive amounts of land, water and fertilizers needed to produce the raw materials.

When Jan puts it like this, it's hard to disagree that the corn-based ethanol being produced may be worse for the environment than the gasoline it's meant to replace.
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on Monday, July 12, 2010 0
strategic sourcing cell phones
With the release of the 4th generation iPhone dominating the news, the smart phone industry has been buzzing lately. Apple successfully shipped 1.7 million devices in the first couple weeks of release. However, it wasn't completely smooth sailing for Apple. During the first days of preordering, Apple had their share of problems. It was widely reported that the ordering systems were faulty, either outright not allowing people to place orders, or worse, having corrupt systems which displayed other customers' confidential data to the wrong people, including credit card and address information. That being said, it wasn't entirely Apple's fault. In reality, it was AT&T's ordering systems that could not handle the load, and crashed, which put some more egg on the face of Apple (as it is already criticized for being on a failing AT&T network).
I will not get into the rest of the problems with the iPhone (you are holding it wrong) in this post.

Those problems shadow in comparison to the problems that HTC has been facing. HTC has set a lofty, yet realistic (based on past performance), goal of achieving 40% of the smart phone market by 2011. However, their supply chain problems are interfering with their goals.

HTC dropped the 'HTC Incredible' Android phone on Verizon all the way back in April. The Incredible was a highly anticipated device being one of the first Android phones on Verizon's network sporting a 1ghz processor and a 8 megapixel camera, capable of recording in 720p HD. This phone is one of the few contenders in Verizon's arsenal that could compete with the overwhelming success of the iPhone on AT&T. However, the phone has yet to gain a dominating presence in the marketplace because Verizon does not have the ability to ship them, due to having no inventory. Verizon has no inventory because HTC has no inventory of the OLED display that is used in the phone. The OLED display is in shortage because Samsung (the sole manufacturer) has not been producing the quantities necessary, and has been redirecting some of their own manufacturing capacity into developing OLED displays for their own Andoid Phones (Galaxy S), which should be hitting the market soon.

It doesn’t stop there. HTC then dropped the Evo on Sprint back in the beginning of June. The Evo was one of the industry’s most anticipated devices, as it was the first U.S. domestic phone to operate on Sprint’s 4G WiMax network. However, the Evo suffers from the same OLED shortages, and HTC cannot meet Sprint’s demand either.

So in each of the cases above, each provider suffered failures with their supply chain. In Apple’s case, they had mud on their face for a couple days, but fortunately for them, the loyal consumers of Apple products have an uncanny ability to forgive and forget any negative news on their beloved company. In HTC’s case, they not only lose confidence in their customers (who are Sprint and Verizon), but they let their direct competitors come to market with devices that directly compete with their own. Motorola is set to release the Droid X and Droid 2 on Verizon in the next month, and presumably will not experience the same problems HTC faced in shipping products out the door. Verizon and Sprint suffered directly in many cases as educated buyers, who had expired contracts, were not able to purchase the phone they needed from the carrier they wanted and switched to the iPhone and AT&T due to its immediate availability.

The moral of the story: when you are analyzing your sources of supply, remember to take that extra step and analyze your supplier’s supply chain as well.
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on Monday, July 12, 2010 0
Why bother booking your airline travel in advance if you can't get your seat assignment until 20 minutes before your flight anyway.

My business trip was booked weeks in advance with United Airlines. I can say that the flight down was not too shabby although I had to shove my suit in a small carry-on so I did not incur a costly fee to put a larger bag under the plane. My co-workers and I sat together which was beneficial when discussing the purpose of our trip.

But I was not so lucky on the ride home. First, 3 out of 4 of us had no seat assignment. The rep at the gate said they had to make sure they allowed enough time for their "preferred" travelers to choose their seating. The preferred travelers could pay to get the seat they wanted. About 20 minutes before boarding they released the remaining seats and gave each person a number to be called to get their actual assignment. Well even though my co-workers and I were 1, 2, 3, we were separated out all over the plane. No time for debriefing.

The best part is that my seat was in the second to last row, I was called to board last, and by the time I got to the door there was no room left for my small carry-on bag. I had to check the bag under the plane.

Here is what this experience has taught me:
  1. Airlines want to make things as inconvenient as possible to ensure they will accrue the most revenue.
  2. You do not need to arrive at the airport 2 hours before a domestic flight because you won't get your seat anyway.
  3. Although there is no cost to bring a carry-on bag, there is no guarantee it will not need to be checked anyway.
  4. Airlines DO NOT do everything in their power to make sure the customer is satisfied.

In the world of strategic sourcing when choosing a "preferred" supplier, it is always best to have several references and not only to rely on the "Customer Satisfaction Guaranteed" tag line!

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on Monday, July 12, 2010 0
We often mention in our articles, best practices, blog and marketing materials that purchasing professionals should be casting the widest net possible in their initial RFI stage of their strategic sourcing process. Rather than looking to disqualify potential suppliers, you should be looking to qualify as many as possible in your initial sourcing initiative. An easy way to accomplish this is to ask your existing and potential suppliers for help in identifying new sources of supply, regardless of if you are buying a product or a service.

So how do you do this? It is simple actually. When you reach out to potential suppliers, and they indicate that you are not capable of handling your business, simply ask them if they have any partners or know of any companies that could help you. You will be surprised at how often a supplier will turn you on to another vendor that you never heard of, and in some cases, will even direct you to one of their competitors that can handle your requirements.

Don't stop there however. When you are conducting your initial steps of the sourcing process, look to identify suppliers in "adjacent technologies" and ask them for help. For instance, if you are looking for Sarbanes Oxley auditing services, and have worked with a telecom or electricity bill auditor in the past, ask them if they could recommend someone… or if you are purchasing a highly engineered piece of machinery, find suppliers that are in similar industries if they are aware of anyone that can help.

As a procurement professional, you are often required to learn everything there is to learn about a product or service that your organization is buying, in a very short period of time. Asking professionals in that industry for help can often be the best way to identify new technologies, suppliers and industry developments that you simply could not find on your own in a short period of time.
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on Friday, July 09, 2010 2
DO: Follow up a phone conversation with an email restating action items agreed to on the call.

DON’T: Follow up the email with another email asking for a status update on the first email.

Email makes our lives much more efficient. In the business world, it’s probably also the Number 1 reason why things don’t get done. I try to only use email if I am sending an attachment, following up a phone call, or trying to get someone’s attention anyway I can. I might also send an email if the message I am sending is not critical or if my intent is to stall. In any other case I am going to pick up the phone. Here is why:

1. Email is avoidable - Sure, phone calls are as well, but less so. For some reason, people have a greater tendency to pick up a ringing phone, even if it means interrupting the work they are doing at the time.

2. Email piles up and can easily get overlooked or lost - I hate to admit it but sometimes I will check email on my smart phone when traveling or having lunch and will forget to follow up on information I received. It’s also easy to mistakenly delete an email or just pass it by. I’ve seen people with hundreds of unread messages in their email - those people will probably spend less than a minute on each. In most cases I want their attention for a longer amount of time.

3. Phone calls are much more efficient - Phone calls can replace 8 to 10 email exchanges over the course of several days with a 5 minute conversation.

4. Emails are informal - Email does not convey intent or importance the way a phone call does. Overall I find that email sets the tone not just in communications but in the overall project as well. If I am working with a supplier or business partner that prefers to communicate via email it tells me they are taking a passive approach to the project we are working on together. I’m going to find a way to use that situation to my advantage, or better yet, find a supplier that is proactive.

Conversely I find that if I use the phone for most day to day communications with the people I work with, they take me and the project I am working on much more seriously. Not to mention you also get much less scripted information out of the person you are talking to, which can often lead to opportunities.

Email does have a role in project management - the primary purpose is to document a conversation or provide supporting materials (reports, spreadsheets, etc). And no, recent college grads - texting is not the same thing as a phone call. Even if you put an OMG at the end.
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on Friday, July 09, 2010 3
We hear all the time about offshore outsourcing to India, China, and many other countries in various industries such as IT, manufacturing, and customer service. But recently with the changes in the economy and overseas costs beginning to rise to help combat poor economic conditions worldwide and address poor labor conditions, we are seeing a bigger trend in intranational outsourcing. With the national unemployment rate remaining steady at 10%, corporations are starting to look into lower cost, skilled labor right here in the United States. If you ask me it’s about time!

According to an article on CNN.com, a new form of outsourcing called “ruralsourcing” or “onshoring” is based on the idea that small rural communities in need of jobs can provide inexpensive, quality labor. “One rural outsourcer, Onshore Technology Services, recruits workers from minimum-wage jobs and gives them intensive training in IT specialties. Sixty-five people work in IT centers in the rural Missouri towns of Macon, Lebanon, and Joplin”. This “ruralsourcing” is providing opportunities for people who might not have access to the education they need to acquire higher paying, more fulfilling jobs. At the same time corporations are able to accomplish their goals with a smaller budget. By opening these centers in rural communities with lower costs of living, corporations don’t have to match the salaries of expensive metro type cities and the people are happy to not have to move to over populated metros to get the good jobs.

This onshore outsourcing decreases some potential risks as well. Companies have turned to offshore outsourcing solely for cost based reasoning, however, according to ComputerWorld UK, "[C]ompanies expressed frustration with the quality of work being provided, according to a survey, but most businesses still said they chose the cheapest outsourcing option instead of the best quality. Nearly all businesses - ninety-four percent - admitted that the focus on cost was increasing the likelihood of their projects failing". Another important aspect to consider when thinking about IT related outsourcing is intellectual property rights and how much of that is lost when sending confidential information overseas.

Outsourcing, insourcing, onshore, or offshore, it is all about saving on tactical costs so that organizations can fund the more strategic areas of business. This is certainly not a new idea, but it is nice to see a new twist on an old concept.
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