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Archive for the ‘Bidness, and Other Current Economic Realities’ Category

We noticed a great closing article in this quarter’s issue of APICS Magazine, by Randall Schaefer, a CPIM and retired consultant, on how he once described his daily routine to his boss, and how it became an inspiration to others.  We’ll reprise his story here, from the Jan-Mar 2018 issue.

Schaefer’s career covered 50 years in supply chain beginning in the 1960s.  He recalls a time of no computers and resistance to procedures and discipline.  Then came computers, at least for accounting.  By the 80s he found managers finally embracing technology.  Then at a new organization, Schaefer endured his first performance review and found himself “on the wrong side of the company’s expectations.”

Apparently, he notes, the general consensus was that he didn’t do anything.  Subordinates and superiors all agreed, he notes.  Now in truth, Schaefer points out that he “trained my subordinates well and… brought our department’s metrics to all-time highs.”  But people noticed that he was not stressed out or always resolving some minor disaster.  They decided he wasn’t busy enough.

When his boss asked Schaefer to describe his daily routine, he told him he had none.  His style was to ensure that subordinates were following the disciplines and processes he’d put in place.  His only routine was to continually assess whether those processes and procedures were still valid.

His manager thought a manager ought to personally handle more tasks, rather than delegating.  But as he notes, his results were undeniable.  Thus, notes Schaefer, “he could only advise me to change my ways” and “I disregarded his advice.”

A year later, his metrics were even better.  His boss hated it.  He was changing the expectations.

Years later he applied for a job in the automotive industry.  In an interview with the president, Schaefer was asked to describe his management style.  He decided to play it straight he says, even if it might kill his chances.  “I don’t do anything,” he told him.  Then he says he smiled and added, “At least, that’s how it appears to others.  I learn every process, procedure and discipline in my areas of responsibility.  I teach each one to my subordinates and expect them to be followed routinely.”  They knew to come to him if something wasn’t right so he could fix those things.  In short, he noted “I have been very successful and would like to continue this success at your company.”

The president smiled and nodded, saying “I agree with you.  The busiest-looking managers rarely get the best results.”  And then he offered Schaefer the job.

On his first day, the president asked Schaefer to write down the description of his management style as he had shared it in his interview.  The president wanted, he said, to memorize it because an old boss of his had also once accused him of not doing anything.

And that may be the best definition of what a manager “does” that we have ever heard.

 

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As a recipient of multiple regional Company of the Year awards over the years from APICS (the American Production and Inventory Control Society, frequently known as the association for supply chain management) we are long-time boosters of their educational programs, in particular the series of five lengthy classes that leads to the CPIM (Certified in Production & Inventory Management) designation.  Over the years, many of our employees have taken their classes and earned the CPIM designation.

In the most recent of APICS Magazine, Mallinckrodt Pharmaceuticals is cited for its award-winning responsiveness enabled by improvements it made to its global supply chain.  And in several of the examples given, employees and managers there give proper credit to the CPIM training they utilized to accomplish their goals.

Mallinckrodt, a global specialty pharmaceuticals company that manufactures both generic and specialty drugs across a number of product lines, recently logged tremendous improvements in supply chain transformation through initiatives that were executed by staff with a deep understanding of what it takes to make a supply chain work – knowledge in large part gained through involvement with APICS and completion of their CPIM designation.

In Mallinckrodt’s case (since the full story is too lengthy for this brief post), those changes had a major effect on profitability and customer service.  Inventory turns rose by 52%.  Unit fill rate improved by 14%.  That led to a 92% reduction in backorders, and a 97% reduction in maximum single-day backorders, according to a review of their efforts published in the Jan-Mar 2018 issue of APICS Magazine.

Staff at Mallinckrodt repeatedly credited the training they got in the process of earning their CPIM, and the way it helped them understand the elements of supply chain, and then change the culture, gradually, within their own firm.  As one manager said, “This was an important step in my career because it gave me a foundational knowledge to build from.  The common language facilitated communication.”  This person was a recent college grad, didn’t know yet what he wanted to do, but then set his sights on leading the supply chain at his facility.

At Mallinckrodt, even IT staff have earned CPIM, which the parties say, enabled them to more easily translate IT requirements into a language the supply chain team could use.  “When communication improved, so did our results,” noted the Demand Manager.  “The answers to common questions became more powerful,” he adds.

In the end, the team not only “noticed the improvement in our internal metrics, but also received numerous accolades from customers through both supplier scorecards and formal awards received from our consistent delivery experience.”

And it was all because of CPIM and the desire to learn and grow into their supply chain responsibilities.  What better reason not to look into the APCIS CPIM designation at one’s own firm today?

 

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Manufacturers are increasingly pursuing direct online sales to end users these days, and with that comes the challenge of more, but smaller, shipments.  When you’re built for pallets and cases and you’re shipping onesies, you face new challenges.  The rise of e-commerce has made the integration of logistics and distribution a integral part of operational competency.

Moving from a manufacturing and wholesale environment to a direct sales model for e-commerce may require more employees, fixtures or space.  Instead of loading pallets into trucks, you may be staging small shipments in boxes.  Documentation and labels multiply, and new types of equipment may be needed along with everything from tape and packing materials to racks and printers.

Is it worth it?  Dave Turbide, a New Hampshire based consultant and APICS certified CPIM makes the point in a recent article in APICS Magazine that, in fact, you may not have much of a choice.  E-commerce is growing so quickly that some manufacturers have found they have no choice but to direct-ship to customers.  The question becomes one of whether to do it yourself, or engage a third party.

Turbide suggests a few questions, taken from APICS’s CPIM body of knowledge, to ask if you’re facing that question yourself:

  • Is the activity strategically important?
  • Does the company have specialized knowledge?
  • Is the company’s operations performance superior?
  • Is significant operations performance likely?

If you answer yes to one or more of these questions, Turbide suggests careful exploration and to consider the cost-service trade-offs involved either way.  If you can answer no to most or all, then outsourcing may be the way to go.  Just remember that e-commerce is not going away, and only likely to grow.  It can become a vital link in your customer relationship experiences.  You may want to “cultivate positive workings relationships with package delivery services” like UPS, FedEx and others.

It’s worth noting the following survey statistics recently produced by PwC.  When asked “Which of the following channels are companies using to generate sales,” respondents indicated:

  • 79% – Store
  • 73% – Website
  • 25% – Mobile app
  • 24% – Catalogue
  • 21% – Third party provider

As to the reasons people say they shop online:

  • 38% – Convenience
  • 25% – Bargains
  • 18%- Speed

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If you follow the finance and the realm of money at all these days, then the notion of someone trying to reinvent finance may pique your interest.  That’s exactly the goal of a cryptocurrency exchange called Coinbase.  It’s a 225-person startup located in San Francisco whose vision of the (not-too-distant) future for loans, fund transfers, venture capital and the trading of stocks will be done with electronic currency – instead of banks.

As a recent article in Bloomberg BusinessWeek points out, Coinbase is already popular with individual traders, and is now actively seeking “the legitimacy that comes from persuading big companies to use its platform,” while reassuring regulators that bitcoin isn’t simply “a market for hackers and money launderers.”

They’re off to a good start.  From an apartment-based startup three years ago, today it operates as an exchange for individual investors as well as a more sophisticated platform for traders called the Global Digit Asset Exchange (GDAX).  Today trading volume is driven mostly by hedge funds, but they’re working on luring players like Goldman Sachs to the platform.

Developing ties with banks is a priority for Coinbase, so owners who want to cash out for dollars have an exchange to do so.  It apparently has several banks already in partnership with them, as well as a partnership with Fidelity Investments.  Coinbase thus far has raised over $200 million from investors, and after recently doubling headcount is on track to double it again in advance of going public in 2018.  The company currently holds over $10 billion in assets.

Of greater interest to investors and regulators is the fact that Coinbase – unlike others operating in the bitcoin realm – has never been hacked.  As Ari Paul, chief investment officer of a hedge fund called BlockTower Capital Advisors has said, “They’ve been the largest hacking target in the world for a long time, and they’ve proven they can handle it.”  At the same time, they’ve been building strong relationships with regulators.

GDAX CEO Adam White notes that “This isn’t a couple dozen kids in a garage kind of hacking away.  We recognize we’re protecting people’s money.”  Coinbase stores USB drives and paper backups of 98% of customers’ digital currencies in safe deposit boxes.  Only 2 percent is kept online, covered by insurance against security beaches.

Notes one Coinbase executive, “We’re going to be successful not because the price [of bitcoin] goes from $10,000 to $100,000, [but] because we have millions of customers who trust us.”

As Coinbase CEO Brian Armstrong notes, as more institutional money flows into the cryptocurrency space, it will help grow the entire industry.  Notes one hedge fund manager, “Institutions are just chomping at the bit waiting to come in.”

And if Coinbase and their fellow financiers have their way, the future of money will never be the same.

 

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According to Elliott Kass of Information Management, U.S. business is expected to spend big on technology in 2018.  Corporate and government tech budgets are set for around $1.5 trillion in the year ahead.  That’s a whopping 9% increase over 2017.

According to the Forrester Research team behind those projections, cloud-based software-as-a-service leads the way, especially for applications that attract and retain new customers, like CRM, e-commerce, mobile apps and services, which together will account for over $500 billion.

Core financial, HR, hardware, telecom and other services will make up the other $1 trillion, logging about 3% annual growth.

Forrester estimates that spending on new projects next year will grow by 7% and CIOs will take advantage of favorable economic conditions to “expand their application portfolio.”  For the past couple of years they note, IT spending has been outstripping nominal GDP growth, with cloud services viewed as new technology that can spur tech buying to exceed those economic growth rates.

CIOs are slated to bring to fruition many of their wish list items in the year ahead, focusing on projects that improve customer satisfaction and the overall customer experience.

With security always a concern, the Forrester Research lead, Andrew Bartels, took the chance recently to emphasize the importance of security and backups, noting that with cloud applications come growing concerns about safety and security.  Bartels recommends balancing cloud adoption with “alternatives” since the cloud offerings can be compromised.  As Bartels notes: “Businesses should back up their data, whether it resides on its own systems or the systems of a cloud service provider, and maintain ‘a reserve of on-premised systems’ that would allow it to continue to operate, if its cloud service provider becomes inaccessible.”

Says Bartels: “Any firm that puts all its tech eggs in one cloud vendor’s basket is asking for trouble.”

The full text of the Information Management article can be found here.

 

 

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Did you know that all six of the first programmers of America’s first computer, ENIAC, were women?

Did you know that the proportion of women earning degrees in computer science peaked in 1984 at 37%, and has since declined to half that percentage?

Or this (according to an article by Christopher Mims in the Dec. 11th edition of The Wall Street Journal): “Memos from UK government archives reveal that in 1959, an unnamed British female computer programmer was given an assignment to train two men.  The memos said the woman had ‘a good brain and a special flair’ for working with computers.  Nevertheless, a year later the men became her managers.  Since she was a different class of government worker, she had no chance of ever rising to their pay grade.”

These facts from Mims’ article would probably come as little surprise to many women today.  The sad truth is, with such a low rate of female computing grads, it’s no surprise that at companies as large as Google and Facebook, only about one engineer in five is female.  (Over our own thirty year history as an ERP services firm, our level of female tech support specialists has hovered around 50%, varying from year to year, but lower on the pure ‘programmer’ side.)

But according the Journal, a growing number of women and other minorities are working on the issue.  U.K. history shows that simply educating more women and other minorities to be engineers won’t solve the problem.  At its genesis, computer programming was initially thought of as menial labor and it “was feminized, a kind of ‘women’s work’ that wasn’t considered crucial.”  The U.K. government considered these workers to be of the low-paid “Machine Operator Class.”  Later, women were pushed out of the field during the postwar era by the then-common belief that women should be denied entry into higher-paid professions because they would leave once married.  Instead, the government set out to develop a class of “career-minded and management-bound young men.”

Turns out, the males were often less qualified, and left the field, viewing it as ‘unmanly.’

In fact, a shortage of programmers actually forced the U.K. government “to consolidate its computers in a handful of centers with the remaining coders.  It also meant the government demanded gigantic mainframes and ignored more distributed systems of midsize and mini computers which would give rise to the personal computer, according to Univ. of Wisconsin Professor Marie Hicks, in her book “Programmed Inequality.”

As a result, the U.K. computing industry imploded down to a single firm by 1968 – and the dream of personal computers was probably delayed by a couple of decades.

One of the women pushed out, Dame Stephanie Shirley, built a tech firm in the 1960s made up almost entirely of women with family-friendly benefits like working from home.  (It was eventually sold to a rival in 2007 for $1 billion.)  Shirley said when she founded the firm, she was seeking not wealth but “a workplace where I was not hemmed in by prejudice or by… preconceptions about what I could or could not do.”

As to progress today: Stephenie Palmeri, a  partner at Venture Capital firm Uncork Capital says raising the ratio of women in tech requires having more women in positions of power, both as investors and as executives.

Adds Dr. Hicks, “Without external influence, you can’t expect a system that prizes ‘culture fit’ to change.”  You can’t expect to rise in a meritocracy that does not reward everyone equally.

Today the challenge is all the greater: companies are racing to build artificial intelligence systems to propel smarter hiring, and the need to eliminate bias has never been greater.  AI learns from pre-existing notions of what constitutes a ‘good employee’ much like the personality tests given by many firms in the past.  We can scarcely afford to build in biases that inherently limit the opportunity for a level playing field at all.

 

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Despite the fact that we implement some very cool technology solutions – or perhaps because we do – we are ever-sensitive to the impact that technology has on people.  When our company began 30 years ago, we knew we could make companies much more efficient – the same principle that drives us today.  And a more efficient company has a much greater likelihood of staying that way, and staying in existence.

Still, as we flash forward thirty years hence, it’s important to pay attention to some of the job implications of technology.  Automation is a huge boon to the world’s workers, but only if companies and governments can manage the disruption that is often created.

According to a McKinsey Global Institute estimate, as reported recently in The Wall Street Journal, 375 million workers worldwide will “need to find new occupations or lose their livelihood to automation by 2030.”

That astounding figure represents roughly one in every seven workers on the planet, and the time line is only about a dozen years if the McKinsey folks are right.  One of its principals, Susan Lund, remarked that “The question is, what are we going to do to manage the transition for the people who do lose their jobs?”

While those of us in the tech sector bear responsibility to varying degrees for that displacement, it comes down to the choices made by policy makers and business owners about how to support those displaced workers.  This can take many forms, including investments in continuing education, training, new job-creation and the infrastructure-type projects that can support them.

Adopting automation tools, adjusting wages and reconciling regulatory issues all have an effect.  Ultimately, those higher wages create even greater incentives for companies to automate and innovate.  The transitioning of the affected workers creates a lot of potential for unrest – and remember, this isn’t just a national issue, but a global one.

In a sign of looking at the future in a whole new way, some countries are already experimenting with universal basic incomes – cash grants that provide a fiscal foundation in workers’ lives.  The idea is to see if, given a subsistence income, the basic support infrastructure can be put in place to free up workers to aspire to newer, higher or more entrepreneurial heights.  Or whether they’ll simply lose work incentive and just drop out altogether.

Support for displaced workers, Ms. Lund points out, can include guidance, career and skills coaching, and providing things like transportation and child care.

McKinsey estimates that about 15% of all hours worked globally could be automated by 2030 by using technology that is currently available.  “60% of all occupations could be at least partially automated with current tools,” though only 5% are at risk of total automation, they add.

Machine learning… artificial intelligence… and other advanced forms of automation are real, and arriving now.  Like past waves of technological evolution, they have the power to create more jobs than they replace.  As we noted in a recent post, it’s already happening as we transition from fewer retail workers to even more warehouse and logistic jobs.  This, as we noted, is already delivering higher paying jobs than the ones replaced, and more of them, which benefits all classes and sectors as the indirect result of technology’s contribution to higher productivity.

That increased productivity is what job growth, job creation and the benefits of automation are all about.  It’s why thirty years ago we made “Productivity” the first word in our company name.  And why the message is as important now as it was then.

 

 

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