@ Supply Chain Management

Supply Chain Excellence – A Handbook for Dramatic Improvement Using the SCOR Model is a worthy effort by Peter Bolstorff and Robert Rosenbaum published by American Management Association (AMACOM).

At the end of this book review, I want to drive towards clear answers for the following questions and/or headings. As I review more books, hopefully, I will expand the following questions into some sort of template against which future books would be reviewed.

1. What this book is about – what are its aims?

If I were to ably classify this book, I would slot it in the category of a Map. I have classified it as a map because it is written to help you navigate the challenge of structuring supply chain management inside and outside your firm. The two authors, Mr. Bolstorff who is a SCM consultant and Mr. Rosenbaum who is a journalist, have laid out a path using the SCOR (Supply Chain Operations Reference) Model as the framework within which your supply chain can be evaluated, planned and executed. It would be a truism to say that various firms are situated somewhere along that path to excellence, the achievement and realization of the said state is unknowable, ephemeral if achieved and the mine upon which careers are built or wasted – such is the life of business.

Rather than deal with such matters of philosophy or digging deeper into what excellence really means or the like, the task at hand is to begin that project – to make a stab at Supply Chain Excellence. And the authors have a 17 week plan to get you started. While I have my sweet suspicions of the 10 step program or for that matter the 17 week project (that’s still over 4 months of work), the plan is a tight one with meetings, homework, templates, samples of charts, tables and tasks and more. In order to give users of this book/guide a context for the required changes and a backdrop for the challenge itself, an imaginary Fowler’s Inc. has been conceived and employed which is a useful device as well.

So the aims as spelt out by the authors themselves:

a. The book is meant to be a manual for anybody (specifically for someone who wants to make sure supply chain improvement is done right) who seeks a rigorous and proven methodology for systematic supply chain improvements.

b. As a working guide for using SCOR as a tool to help senior managers at every step of undertaking supply chain initiatives.

2. Who this book is for?

My take on this topic is – If you’re not in the Steering Team (which not only comprises the power players but also members of the design and project team), chances are that this book will only be good review of how the SCOR model meets the road of implementation and execution. Which is a shame, all said and done from multiple points of view. A steering team typically consists of the few – no doubts about this. Say you are a marketer – would you prefer to market a commodity such as a book to the few or the many? Sure, it is the few (in the steering team and above) who have to take decisions at the end of the day and that is what a lot of this book is about i.e. how to create that sort of a methodology based (SCOR) supply chain improvement plan and execute it. The authors have done an excellent job of writing effectively to and for this group. But what about the many – those who will actually participate and implement this new plan, who will form the links for feedback on how well the plan is working – why and why not?

3. Does the book succeed in its aims?

I believe that in one of its principal aims – that of being a working guide for using SCOR by senior managers, this book succeeds a great deal. Laying out a four month plan is a very short time to get down the path of supply chain improvement and I do wonder if this is a realistic goal as well. However, what I would think about doing is to take a look at the cycle of activities that forms the normal quarter to quarter cycle within a firm and adjust the timelines accordingly. So, while they hit one of their aims above (b) nice and square, they do miss out on a good chunk of (a) and thus also a significant market for this book. Can anyone say companion book to this one?

4. A summary of my thoughts about the book

There is a host of valuable insights about how to make this sort of change happen within an organization and the fact that one of the authors is a consultant who has considerable related experience under his belt contributes to this mine of insights. But as I have said above, this is a map and there are several maps out there not only in the area of supply chain excellence but also in the area of change management and the like. The benefit that is readily observable to me is that over the project period, a structure and ordering of activities is presented which should be mined for insights. Moreover, a set of templates associated with the structure and activities is also available for modification and adaptation.

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It’s Thanksgiving today – I wish a happy day to one and all!

I happened to come across the first Thanksgiving proclamation of the Continental congress:

November 1, 1777
FORASMUCH as it is the indispensable Duty of all Men to adore the superintending Providence of Almighty God; to acknowledge with Gratitude their Obligation to him for Benefits received, and to implore such farther Blessings as they stand in Need of: And it having pleased him in his abundant Mercy, not only to continue to us the innumerable Bounties of his common Providence; but also to smile upon us in the Prosecution of a just and necessary War, for the Defense and Establishment of our unalienable Rights and Liberties; particularly in that he hath been pleased, in so great a Measure, to prosper the Means used for the Support of our Troops, and to crown our Arms with most signal success:
It is therefore recommended to the legislative or executive Powers of these UNITED STATES to set apart THURSDAY, the eighteenth Day of December next, for SOLEMN THANKSGIVING and PRAISE: That at one Time and with one Voice, the good People may express the grateful Feelings of their Hearts, and consecrate themselves to the Service of their Divine Benefactor; and that, together with their sincere Acknowledgments and Offerings, they may join the penitent Confession of their manifold Sins, whereby they had forfeited every Favor; and their humble and earnest Supplication that it may please GOD through the Merits of JESUS CHRIST, mercifully to forgive and blot them out of Remembrance; That it may please him graciously to afford his Blessing on the Governments of these States respectively, and prosper the public Council of the whole: To inspire our Commanders, both by Land and Sea, and all under them, with that Wisdom and Fortitude which may render them fit Instruments, under the Providence of Almighty GOD, to secure for these United States, the greatest of all human Blessings, INDEPENDENCE and PEACE: That it may please him, to prosper the Trade and Manufactures of the People, and the Labor of the Husbandman, that our Land may yield its Increase: To take Schools and Seminaries of Education, so necessary for cultivating the Principles of true Liberty, Virtue and Piety, under his nurturing Hand; and to prosper the Means of Religion, for the promotion and enlargement of that Kingdom, which consisteth “in Righteousness, Peace and Joy in the Holy Ghost.”
And it is further recommended, That servile Labor, and such Recreation, as, though at other Times innocent, may be unbecoming the Purpose of this Appointment, be omitted on so solemn an Occasion.

Tags: Happy Thanksgiving, 1777 Thanksgiving Proclamation

Continuing from the previous post – When the long tail becomes exposed… – Part 1, I wanted to dig a little deeper into the exposed nature of the Long tail. These thoughts were inspired from reading this article by Robert Cringely – The Next Microsoft: Google is learning too well from the master, in which Robert Cringely criticizes Google

The following image tells a story.

When I look at the clutter and clunkiness of my site – I’m spurred to act. I only wonder if I will get there.

HT: Prof John Maeda.

Tags: Contrast Yahoo and Google in years, Yahoo homepage, Google homepage, , Simplicity by Prof. John Maeda

Got Long Tail? In this article by Robert Cringely – The Next Microsoft: Google is learning too well from the master, Robert Cringely criticizes Google’s missteps when it comes to its recent moves some of which he outlines in his article. Some of the recent steps that Google has taken to protect its business model are here – Google slapping PageRank Penalties, Official: Selling Paid Links Can Hurt Your PageRank Or Rankings On Google, Is There A PageRank Penalty In Your Future? …

I’m pretty sure that you’re aware of the Long Tail effect and the dramatic success that firms such as Google have had incorporating this into their strategy and execution.

In gobbledygook speak:

In these distributions a high-frequency or high-amplitude population is followed by a low-frequency or low-amplitude population which gradually "tails off." In many cases the infrequent or low-amplitude events-the long tail, represented here by the yellow portion of the graph-can make up the majority of the graph.

Or in plain ol’ English:

If you added together the total volume of all the very popular items that a firm can sell and compare that to the total volume of all the rest of the stuff that the same firm can sell, you would find that the former is less than the latter.

Of course, it is not always the case that one finds this long tail effect but where one does find it, one needs a technology/strategy/plan that addresses both the high frequency and low frequency population and in the mold of the inimitable Porter competitive strategy model – the Long tail of your suppliers and the Long tail of your customers. Google’s deployment of Adsense (Google advertising network) in precisely this manner is acknowledged as one of the major sources of its remarkable success, even by its CEO, Eric Schmidt:

What Google has done is to find and monetize the Long Tails of both advertisers and publishers. These include millions of small companies and individuals who may never have advertised before, at least not nationally. They were considered sub-scale — too small to be worth a call or visit from an ad salesperson, possible too small to even think of themselves as an advertiser at all. But Google ads are self-service, cheap, and performance based (pay-per-click), which all combine to dramatically lower the barrier to entry.

Matching these advertisers are hundreds of thousands of previously sub-scale "publishers", from blogs to niche commercial sites. Most are too small to have their own ad sales business, but they can now run relevant Google ads by just adding a few lines of HTML to their site. About half of Google’s business now comes from such "partners", rather than from ads sold against search results themselves.

Eric Schmidt, Google’s CEO, explained how these millions of small-to-midsized customers represent a huge new Long Tail ad market. "The surprising thing about The Long Tail is just how long the tail is, and how many businesses haven’t been served by traditional advertising sales," he said. Google now has revenues of more than $1 billion a quarter, a least half of which is made up of Long Tail advertisers by this definition. This is, needless to say, just a glimpse of what’s still to come.

So far so good! Google has addressed the Long tail of the customers (which are the millions of small-to-midsized customers who would like to purchase advertisement through Google’s network) and the Long tail of the publishers (which are the millions of blogs and web-based publishers) in a way that neither has any real bargaining power over Google which sits in the middle. In another sense because Google actually pays the publishers if the ads are deployed on the publisher’s site and clicked, the publishers have an incentive to push Google’s ads as much as possible as well and so in a sense, the publishers are also customers when it comes to Google’s ads.

Well, what Google can do, so can any yahoo – well, one Yahoo (YPN) actually does try to do exactly that but its own success has been, how to put it kindly, so so.

Until now, Google had the supplier and customer sewn up, so to speak – a collection of small to mid-size customer and small to mid-size publishers cannot effectively take on Google, their bargaining power is simply non-existent. But for Google’s advertising customer, their small size (and even smaller budgets) can be a liability because they can go out of business quickly, from prevailing macroeconomic conditions if not from Google’s own missteps. In other words, Google is exposed to considerable risks from its customer base, the advertisers who use Google’s advertising network, even though the risk is distributed over millions of Adwords budgets – small as they are. While Google may use the Long tail effect to its own advantage, the long tail, I argue, is in fact an exposed long tail. But before I get into why it is an exposed Long tail, I need to explore one more salient fact – what contributes to the success of aiming at the Long tail:

The potential for a Long Tail market (or attention) distribution exists when the fixed costs of production, distribution, and buying are reduced by technology or other means. Then you don’t need as many units of whatever to amortize the fixed costs to a competitive point, and niche products are supported with a decent ROI.

And the reason why Google has had remarkable success against Yahoo’s own YPN is probably because of first mover advantages more than anything else. That sort of covers the Industry competitors – Rivalry among existing firms of the Porter’s competitive model.

In the next post, I will explore why I think this Long tail is an exposed long tail.

Tags: Long tail, Google’s Long tail, Why does the Long tail work?, Long tail exposed