Countdown to Beijing 2008- and Chinese suppliers

Today is 08-07-08 and just after 8 pm. Guess what ? the Beijing 2008 Olympics are scheduled to start in less than one year at 8.08 pm on 8th August, 2008. The number 8 signifies "prosperity" to the Chinese and the Olympic start date and time is no coincidence.

Beijing08
China has pulled out all the stops for the games which are billed to be the "grandest" of all games with everything becoming ready ahead of schedule. Indeed, with all the controversy surrounding Chinese quality problems with toys,toothpaste etc. China is going all out to create a positive impression with Beijing 2008 and I am sure they’ll do really well. In fact, I know that China is really doing well when you see Indian markets with  idols of Hindu Gods like the elephant headed Ganesha  and  Taj Mahal replicas  manufactured in China!

In America, Sara Bongiorni, author of "A Year without ‘Made in China’: One Family’s True Life Adventure in the Global Economy," declared in a recent interview that it was really hard to find goods for the family that could at least compare in cost to Chinese goods. Nevertheless, angst in America continues as folks grumble but buy Chinese nevertheless, as there is really no choice. More on the upstream side of the Supply Chain it came as no surprise that Chinese suppliers are easy to deal with compared to other global suppliers as this story from Thomas Net suggests. But what was really surprising is that European companies consider European suppliers really hard to deal with.

Perhaps all global suppliers will look to 8-8-8 for better luck- they will sure need it !

Minnesota Bridge Collapse and Infrastructure capabilities

The Minnesota Bridge Collapse is a most tragic event. CBS news  made the comment that there are over 80,000 bridges in the US that need repair. The aging steam pipe burst in New York caused a panic just two weeks ago.

Infrastructure is a strange thing. Countries that have less of it are typically "developing" countries like most of Asia,Africa and Latin America. In fact, the defining difference between the developing and developed world is the lack of reliable infrastructure like roads,bridges,power and water. Maintenance, as one of my maintenance manager friends used to tell me, is an unglamorous, unexciting affair. Maintenance is not seen as providing "news" value. Just consider, does it sound more exciting to add a sun-room or simply replace the roof and furnace? Clearly a new sun-room is as exciting as adding anew stadium than simply repairing an old  bridge or pipes.

Apart from the simply good human thing to do,  maintenance of infrastructure helps build the maintenance capabilities of US companies. Better capabilities developed in maintaining infrastructure can only help gaining infrastructure market entry world-wide for US companies.

Herb Kelleher and aligning supply chains with business strategy

"We are THE-low fare airline" said Herb Kelleher to succinctly capture the strategy of South West Airlines. The Heath Brothers call this "Commander’s Intent" in their new book "Made to stick." Once you have the commander’s intent simply defined , everyone else in the organization and stake holders expect and do things that match up with the strategic intent. Herb_on_plane_tail_3
The Heath brothers go on to explain (pg 29, quoting from Carville and Begala) that suppose a market research executive came in with customer feedback and suggestion that chicken Caesar salad would really make the
Houston-Vegas passengers happy. Herb Kelleher would simply measure whether this helped or did not help the strategic mission of "We are THE-low fare airline." Obviously the streamlined, literally low cost South West peanut supply chain  would win every time over chicken Caesar salad. And whoa! you’d ignore customer feedback….. and stay with peanuts! Customers will keep coming back…..

Having just read the above I had to agree with the Manufacturing Insights-IDC’s recent research that mis-alignment of supply chain with corporative objectives is a big problem in industry. Increased quality and customer satisfaction is the top priority of supply chain executives and not low cost alone. No one wants to recall Colgate. 

The supply chain digest is provoking its readers to respond to the "low cost" priority and it is precisely this low cost orientation that has left executives in the upstream supply chain i.e. the supply managers and the downstream distribution channel i.e. sales managers responsible for distribution out of the center-stage in the company. As soon as these value chain mangers start figuring out that they add value and don’t simply reduce cost these managers  and their companies will do better.

Harry Potter and the Deathly Hallows

Harry_potter_and_the_deathly_hallowThe last Harry Potter book, i.e. as of now, is getting launched in the US at 12.01 am i.e. in less than 9 hours. People are queuing up and you know things are serious and global when average book sellers from New Delhi are giving long TV interviews about the prospects of this and related books. Guess the book is launched in New Delhi and points east. And then there is the whole secrecy thing with JK Rowling, the author imploring people not to reveal the ending and be a"spoiler." An account of the global roll-out is here. Amazon.com is teaming up with UPS to deliver 1.3 million copies as their largest ever print run. Forbes painstakingly reports the fortunes of related organizations like the publisher ‘Scholastic" and the various new plans that folks in the hard book business have to come up, now that Harry has grown up. For example, there will be a 7 pack gift set this holiday season for "muggles" who  will actually  admit to having not read the stuff ! Well there is marketing hope here, as the product will be called a "collectors edition."

On the ground, its interesting to see that the grocer "Stop and Shop" has the book on its weekly flyer and assures patrons that being a 24 hour operation is really going to help-this time. Was at Barnes and Noble a few days ago and they had a rather large tear down calendar with no. of days to go till launch and the University book store sent out a message that the book will be available despite the rather relaxed summer scene. Consider, that we had all thought that books and print will decline with the Internet , online shopping etc. On the contrary the Internet has actually fueled the  print industry with more  "brick" book stores and book sections  at various stores , "spoiler’ videos on the book plot, lots and lots of buzz on community sites ,blogs etc. Best of all, kids worldwide are reading more than ever before.

Dow crosses 14,000 for the first time

Today the Dow crossed 14,000 for the first time . Interestingly, this has happened despite record oil prices and  troubles in the housing market. Inflation fears are low, and global markets for US multinationals have picked up. The global boom and globalization has much to do with the happy news as do the big corporations and manufacturers  that drive the Dow like 3M ,Caterpillar,Alcoa and Exxon Mobil. These big corporations have been working hard to build their global brands on the market side and have been working equally hard to streamline their global supply chains for both goods and services.As the numbers come in and are analyzed an interesting twist to globalization is that Rupert Murdoch the Australian magnate’s News Corp has reached a tentative agreement to buy Dow Jones driving its shares lower.

Boeing 787 Dreamliner launched

On Sunday Boeing 787 – Dreamliner was launched amidst much fanfare by 15,000 primarily Boeing employees. Couple of things make the launch remarkable. First is 677 orders (at $200 million each)before being assembled ,excluding an order of 20 Qantas planes,placed over the weekend, as the Sydney Morning Herald,happily clarifies. Second, according to Reuters, 50% of the primary structure by weight is based on composite carbon material including titanium and aluminum. Instead of panels bolted together, the composite material barrels are fused together saving thousands of sheet metal bolts and fastners. But most importantly, being 20% lighter the fuel efficiency will be higher as will be the lesser pollution. Moreover, the air pressure and moisture will be more comfortable in the cabin leading to lesser aches and pains for long distance air travellers. As a Boeing marketing executive pointed out on TV, their expectation is that consumers will prefer the 787 and will force the airlines to adopt it. However, the delivery period for new orders is 8 years at this time.

Passenger aircraft are infrastructure products like power plants. Getting individual customers  to demand an expensive business infrastructure product is every business marketer’s dream.Boeing has clearly won this round competing against the giant Airbus 380. One Boeing marketing person put it very well on TV saying that both can fly Kansas to Shanghai,non-stop. On the 787 you will be dining with 200 other passengers while on the Airbus 380 you’ll be dining with 600 others. Don’t you get the feeling that the Airbus might just "feel" more crowded?

Happy 4th of July !

 

July4th
The 4th of July holiday this time is mid-week and that complicates
holiday plans for many but lots of folks have taken the whole week off.
The weather in the north east is great and bar-be-cue should be fun
today- rain is fore casted only later tonight in Connecticut.Here is wishing a Happy 4th of July to readers of this blog !


Apple iPhone launches tomorrow and the supply chain is tops

Iphone
The iPhone launches tomorrow (Friday 29th at 6 pm) and there are excited shoppers lining up in front of the Manhattan Apple store today i.e. as of Thursday morning. Amazing!

The phone is not cheap and you need to sign up for a 2 year contract with AT&T which means a commitment of $2000.  The iPhone fans are unfazed and are more than happy to come up with the money so long as they get the phone. Apple plans to sell 10 million phones in the first year and according to this report the supply chain is streamlined this time.

Meanwhile industry at every part of the value chain is scrambling. Consider the telecom service provider industry where AT&T (including the merged Cingular)  has clearly got its biggest marketing coup as  the exclusive telecom provider to the  iPhone .You need to sign up only with AT&T to use the iPhone. I would imagine that subscribers with other great carriers like Verizon are leaving in droves- just for the iPhone. On Demand  CRM provider Etelos is differentiating itself by providing service through the iPhone. Wonder what the now "dull" PDA folks will do- they have got to do something -fast !

Figuring out supplier-customer relationships

I enjoyed the article by Dr. John Gattorna in the Supply Chain Digest based on his book Living Supply Chains. John Gattorna obviously has years of experience and therefore is rightly incredulous as to why organizations both on the selling side and on the buying side, don't take care of their good suppliers and good customers. Dr. Gattorna offers some good actionable recommendations that basically urges both buyers and sellers in B2B to stay true to their best customers and suppliers both in words and in deeds.

The question is – why do organizations on the selling side keep "wasting" resources on difficult customers and vice versa. The relationship marketing literature gives us a clue from the sociology of marriage(I keep writing about this in my own papers  and  Dwyer,Schurr and Oh ,1987 – Journal of Marketing is the neatest summary). Somehow it is always more "exciting" to to get "new" customers or at least waste resources on "difficult" customers like dealing with several difficult mistresses. When it comes to getting your marriage to work, you need to follow simple (but boring ?) things from the Reader's Digest and if you prefer television – you can follow Dr. Phil !

I guess both marketing departments and procurement /supply management departments don't just "get it". Dr. John Gattorna's advise should help.

Colgate recall

I happened to watch Lou Dobbs and I remembered that I had actually opened a new Colgate toothpaste this morning and the carton was in the waste basket. I knew that I was spooked because I actually went back to check the carton to see the country of manufacture. Whew ! it was made in USA, and then I remembered that Connecticut is not one of the "recall" states.  Goes to prove that Lou Dobbs isColgate_toothpaste
extremely compelling and that there is increasing stories about China supply chain problems. There was the petfood problem, then beef recall, the toys problem and now toothpaste.

The toothpaste is not really a formal supply chain problem but a Grey market and counterfeit issue. Apparently the manufacturer is supposed to be Colgate South Africa but Colgate points out that the packaging is clearly counterfeit and the product was sold in dollar stores in the US. The fact is that there is just tons of counterfeit consumer products in Asia and the dollar stores have to get their stuff from somewhere.Poor Colgate and the China Supply Chain get a bad name! The root cause of these things is price pressure, the more pressure there is the more suppliers,particularly in developing countries, tend to cut corners. Perhaps understanding changing costs in different countries is a step in the right direction….