@ Supply Chain Management

I want to alert you to a new free webinar on Supply Chain Risk Management: Supply Chain – it’s Risky Business hosted by World Trade Group (WTG) and presented by Douglas Kent. From the brief of the webinar,

This webinar examines the responses from hundreds of global companies to our recent supply chain risk survey, unveiling their most concerning risks and the level of exposure.  In addition, the study uncovers how companies are evaluating their level of vulnerability and, most importantly, reveals the best practices being adopted to effectively mitigate supply chain risk.

 
Key learning’s:

Extend the knowledge coming from our primary risk research
Provide the participant with valuable insight into how others are conquering the common problem of managing and mitigating supply chain risk.

And a little about the presenter Douglas Kent,

Douglas Kent is the European Chair for the Supply Chain Council and President of eKnowtion. With nearly 20 years of supply chain experience, Douglas Kent brings proven expertise in creating, implementing, and operating complex supply chain projects by "unlocking value" within client companies.   Through formalised business process re-engineering techniques, Douglas drives this improvement by utilising the SCOR model as the baseline for all improvement activities ranging from the initial diagnostic, through re-engineering and change management, benchmarking and continuing education.  His approach stems from the unique combination of experiences as a successful practitioner, consultant and educator of SCOR since the model’s inception.

There are a select group of chosen companies that seem to go bankrupt again and again – they seem to have a bankruptcy addiction. They just can’t seem to help themselves – someone would think Airlines in this context. I am beginning to think that GM is going to join that select list if such buffoonery is going to be the norm.

What am I referring to?

GM board orders faster new vehicle rollout. A hundred thousand blistering barnacles – was that all there was to it? The woes of GM would be well past us if newer vehicles were to hit the streets faster.

He said the board’s involvement in product decisions seems to show that the new board intends to be more active than the previous one.

No kidding!!! I do hope that employees of GM have a role in this. Never mind.

Meanwhile, as you may very well observe that GM is preparing to fire off its silver bullet – in this case, the Chevy Volt. Observe,

The Volt, due in showrooms late next year, can go 40 miles on a single charge from a home electrical outlet. It has a small internal combustion engine on board to generate electricity for the car beyond that.

He called the Volt a "leap in technology" that no one else has, and said the country needs to move toward electric vehicles.

"I think it will be very successful," he said.

Can the Volt save the company? Maybe. But while its competitors thrive on Continuous Improvement or Kaizen, GM is betting its future on silver bullets. Wouldn’t you say?

Whitacre said the board was interested in pulling more fuel-efficient products forward.

"We’re certainly going that direction of more efficient models," he said. "We’re looking at reliability. We’re looking at efficiency. We certainly will make a major thrust in that direction, but that’s not the only direction we’re going."

The all important question assuming the spectacular success of the Chevy Volt (and that’s a big assumption), is whether the culture of the firm allows for incremental approach to improving their product or will they go back to looking for silver bullets. I’m thinking silver bullets and therefore I’m thinking yet another bankruptcy in the not so near future.

Or maybe it really is the influence of the board that shortens product development life cycles and not repeated (as in continuous) efforts to solving issues that require a company wide effort. Keep a look out for the kind of signals that emanate from GM about five to six months from now and then I think the dice will have been cast.

When the recession ends, Will your supply chain be ready? is a virtual conference being conducted by Logistics Management and Supply Chain Management Review.

In my natural bearishness, I read the title as If the recession ends, will  your supply chain be ready? Heh!! Critical words – If, when and it should be in that order. As you can readily observer, “When” is a rather optimistic frame of mind in this context and “If” is dramatically pessimistic. I have no doubts that this recession will end but I am of the opinion that it is very well possible that when it ends, we’ll begin another one which we might or will recognize in hindsight.

But in the meantime, let’s get positive.

Acceleration of Eco-Operation is a new report published (free report : the kind I like) by the Business Performance Management Forum.  I think it would be well worth your time to register and download the report if you want to keep up with the trendiness of green washing everything. I will read and review the report a little later but in reading the executive summary, two comments caught my eye:

"Building better links in high-tech supply chains.the sprawl and complexity of such networks have made it harder to manage end-to-end operations smoothly. Many technology companies are grappling with volatility and disruptions across their supply networks and eliminating waste from duplicative efforts is an ongoing challenge. As product
life cycles shrink, we see inventory build-ups in the supply chains of some companies, while others cope with rising distribution costs, ontime delivery problems, or delays in getting new products to market."
The McKinsey Quarterly

Becoming green is no longer an end in and of itself, but the byproduct of optimizing a supply chain. At the same time, transitioning to a Green Supply Chain while also maximizing efficiency is not a clear-cut process."
Industry Week – Diamond Management & Technology Consultants

There is so much confusion in the above two posts that I can’t help but roll my eyes.

In the first snippet, there is a lot of talk about eliminating waste. If you collapse the global supply chain into a simple manufacturing floor and pretend for a moment that various work centers were indeed different countries and ports, then you would see that all the effort of bygone years that went into batch size reductions, reducing setup times and inefficient steps and processes, reducing physical movement times by workers (all lean related activities) on the manufacturing floor have been turned to naught. We’re back again to big batches, carrying work items from one end of the floor to the other end and then sending it back half way across the floor because we’ve decided to outsource and increase lead times. If anything that is the one root cause of everything that is outlined in the snippet from The McKinsey Quarterly. In short, you cannot eliminate waste on the one hand by creating mounds of it with the other hand. All these management consultants have been doing this for a decade now – I hope that one of the upcoming articles in the quarterly will be titled – "We were wrong to recommend outsourcing," but I’m not holding my breath here.

In the second snippet, ask yourself this question – Would you subject one of the most critical aspect of your operations to some befuddling calculation of carbon emissions sustained in your activity, calculations that no one can even agree on whether they’re the right ones? And it’s not just calculations, but using these calculations to dictate what you would do? This is precisely the back assed way of doing things. Give me a way/technology that surmounts your latest world is ending dogma and I’ll move to it; just don’t ask me to end the world on account of your dogmatism. Archimedes once said, ‘If you give me a lever and a place to stand, I can move the world.’ Today, we’re told, "If you cut your emissions, you can save the world." But cutting emissions means that the industrial activity of the world would decline (and rapidly) across the world returning many parts of the world to the poverty they were just leaving behind barring some new technology that effectively and efficiently replaces the carbon based energy source. And to those who would say that this technology (batteries, wind, solar, geothermal etc) would do it – all I would say is that on your next transatlantic conference or vacation either use one of your "this technologies" in making the trip or use a carbon neutral sail boat or raft. I really don’t believe in nor have the time for first class or corporate jet traveling world messiahs who want me to cut down on my carbon emissions. Neither should you!

And that’s before reading this report. Those are my initial conditions. Now, let me read the report and be enlightened.

No, make that yesterday. By “you”, I mean any of us who are in the business of working to sell things – selling something either here or there. It’s an amazing circular world we live in where I’m working hard to sell you something which you either need or don’t need but which  you can only buy by working hard to return the favor.

Some of you have something to do with the supply chain and some of you don’t. So as someone close to the supply chain space, here is the absolute one thing that you should have done yesterday:

Is it better demand forecasting?

Is it investments in a better supply chain for the eventual uptick?

Is it becoming leaner and meaner?

Is it cutting your losses in earlier bright ideas?

Or something else on your long list that you had hidden away in the deep freeze.

In my opinion, the most important thing that you should be doing right now is getting to know your customer again. Again, as in Refresh.

Your customers are probably in a world of hurt right now and taking the effort to understand them and the value of plain ol’ vanilla, tried and true, is a very good idea. Now is the time to reevaluate the concept of value you provide because it is probably the only thing that you can take to the bank for whatever that’s worth.

Sometimes, I wonder if I am not a victim of my own “permabearishness” and that I’m mistaking the signs of improvement for the calm before the next storm. Perhaps it is the numbness to good news because we’ve been here before now haven’t we?

But I took notice of something: they don’t make good news like they used to. Now, that’s the poverty of it all.

This is a story coming out of India – out of US Sec of State Hillary Clinton’s visit to India : India to Resist U.S. Pressure on Carbon Emission Caps.

India will resist pressure from the Obama administration to accept legally binding caps on its carbon emissions, the South Asian nation’s environment minister told visiting Secretary of State Hillary Clinton.

“There is simply no case for the pressure that we, who have been among the lowest emissions per capita, face to actually reduce emissions,” Jairam Ramesh said at a meeting today with Clinton in Gurgaon near New Delhi, according to a statement he issued to reporters. “And as if this pressure was not enough, we also face the threat of carbon tariffs on our exports to countries such as yours.”

Clinton is on a state visit to India meant to showcase trade and security ties and seek common ground on climate change and arms control. India has said it will reject any new treaty to limit global warming that makes it reduce emissions because that will undermine the country’s energy consumption, transportation and food security.

The climate-change bill that passed the U.S. House on June 26 calls for carbon-based tariffs if countries like China and India don’t adopt their own greenhouse gas controls by 2020. The U.S. said its push for higher environmental standards is not aimed at limiting the economic progress of nations, including India.

And,

“Legally binding” emissions targets won’t be acceptable for India, Ramesh said. “It’s going to be impossible to sell in our democratic system.”

Clinton said she is confident that the U.S. and India can devise a plan that changes the way energy is produced, consumed and conserved, helping to create additional investments and jobs. The two countries must also expand the use of renewable energy in India, especially for rural electrification.

Well, that’s one down. And the remaining player for large scale emissions out of a developing country is China – one country that has significant leverage over the US by way of financing its debt. I’d think that the only thing that one would hear out of the US Sec of State along this line in China is a short peep.

Now, harken back to the expectation set by the retail consultant in the earlier post:

"Suppliers are going to have to absorb the cost increases," retail industry consultant Burt P Flickinger III said Wednesday.

Just what is this expectation based on?

Mentioned in the above news item is a provision in the climate-change bill that calls for carbon-based tariffs on countries like China and India that don’t adopt greenhouse gas controls by 2020. Well, we’ve got till about 2020 to return to growth over here or junk the over-the-top sanctimoniousness of the climate-change bill because the last time that tariffs were raised during a sustained contraction, the resultant was not a pretty sight.

Besides, destroying the planet is an equal opportunity thing – destroying one’s economy is a national choice.

Just who is buying this bullshit is another story. I am not one to use profanity lightly but the profane doesn’t do this latest piece of ludicrousness any justice. What drove me batty is this news item from Walmart: Wal-Mart exec foresees eco-ratings for all.

Among the many firms of this world, Walmart is perhaps one of the few who can really drive such a program and we all know that.

"We see this as a universal-this is not a U.S. standard," Wal-Mart Stores Inc. President and CEO Mike Duke told a gathering of more than 1,500 suppliers, nonprofit groups and company staffers at the giant retailer’s headquarters .

"Across the world, this standard would work across all retailers, all suppliers."

Some time ago, I had blogged on this very topic in Wal-Mart Boss says he will press suppliers in race to go green.

Fortunately for us, some research from AMR places an upper bound on the marginal cost we’re willing to pay for an eco-friendly product vs. a non eco-friendly product.

C. Britt Beemer, chairman of America’s Research Group, which surveys shoppers across the country, said shoppers won’t be willing to pay any more than 10 percent more for something that is eco-friendly.

One eye-brow raised so far. That was so last year dude. Here I’m paring my grocery bill down to the last penny. 10% – fat chance?

"Suppliers are going to have to absorb the cost increases," retail industry consultant Burt P Flickinger III said Wednesday.

Two eye-brow raised now. But not batty yet.

What drove me positively batty was this piece at the very end which was supposed to be an illustration of how a focus on the development of a sustainability program would ultimately result in greater production efficiency, actually lowering costs.

However, Wal-Mart focused Thursday on the possibility that development of the sustainability program would ultimately result in greater production efficiency, actually lowering costs.

One example provided was a private-label sour cream sold only at Wal-Mart. A video told of how electricity generated by burning methane from the manure of cows at a dairy farm in upstate New York was being used to reduce energy costs at the farm.

What an excellent idea – I mean who can find fault with reusing manure. Well, anyone thinking green might for one. For example,

Rearing cattle produces more greenhouse gases than driving cars, UN report warns

Some highlights from the report,

Cattle-rearing generates more global warming greenhouse gases, as measured in CO2 equivalent, than transportation

“The environmental costs per unit of livestock production must be cut by one half, just to avoid the level of damage worsening beyond its present level,” it warns.

When emissions from land use and land use change are included, the livestock sector accounts for 9 per cent of CO2 deriving from human-related activities, but produces a much larger share of even more harmful greenhouse gases. It generates 65 per cent of human-related nitrous oxide, which has 296 times the Global Warming Potential (GWP) of CO2. Most of this comes from manure.

Apparently, among the many ways a cow contributes to global warming – belching and not flatulence is the more important one.

Now, please calculate the marginal increase/decrease in cost of the end product (sour cream) given:

1. The number of cows on the dairy farm and carbon costs of the feed

2. Belching and flatulence (in litres) per cow per day converted into greenhouse gases emissions

3. Manure recycling that reduces electricity consumption

Is the savings from (3)*number of cows/day +(1)*consumption/per cow even remotely close to that from (2) recovered per cow? Does this even compute? This kind of hand waving is precisely what gets me batty. If you’re serious about solving a problem – full credit to you. It’s the “I’m also solving the problem in however miniscule a way” that gets my goat.

And to pick an example where in, the principal player i.e. a cow innocently belches to the low stratosphere greenhouse gases, the amount of which is comparable to our own transportation emissions and publicize the miniscule change denoted by a gain in self sufficiency at the production farm as proof of some concerted shift to sustainability is just downright goofy.

I suspect the green supply chain has entered the faltering stage. And I think that I know just know the stab in the back that will consign it into its casket – that’s yet another green thing – the greenback. As long as the dollar remained the undisputed reserve currency, Walmart (and likewise many firms here) possessed the leverage to force this on offshore suppliers. The dollar is in the process of being killed by the US government itself and with it will go much of the implicit leverage.

I find it all very ironic that on the one hand the government kills the greenback (this has been quite a consistent policy over the past few administrations) and on the other hand thinks that it can legislate sustainability dogma into practice.