Newsletter August 2000A

SUPPLY CHAIN EVOLUTION: Learning from Everest

Summit, pinnacle, top--reaching the highest level. Throughout history, standing atop the highest peaks in the world symbolizes man's ability to overcome and conquer even the most demanding feats of human adventure. The structure for achievement in many business models uses the same triangle (as the mountain) in the form of a diagram to help employees reach superior achievement.

As in business, the supply chain of mountain climbing has undergone radical change. Using Mount Everest as our example, we see that the change came about from three improvements: (1) the introduction of the direct alpine approach of Italian climber Reinhold Messner, (2) the technological advances in equipment, gear, and clothing and (3) the replacement of Sherpas (local inhabitants) with helicopters to transport necessities. In 1963, a successful climb of Mount Everest required the aid of over 900 Sherpas hauling 300 tons of equipment. Due to the second and third improvements above, the same expedition in 2000 is shortened by a month, and the amount of equipment needed has drastically decreased. There are, however, elements such as weather and human error, that offset even the best improvements. The highly publicized expedition of 1996, resulting in the deaths of 12 explorers (which was the highest single year loss in history), could not be saved in spite of these advances.

Back in the business arena, we witness a change in supply chain relationships from a "we-you"/"vendor-customer" philosophy to an "us" philosophy. Soon gone may be the days of separateness between a company and its chief supply chain arm(s). We benefit from opening our doors and allowing our supplier more responsibility for, involvement with and input on aspects of our business. The cooperative relationship, however, is based on the human elements of trust and respect. In spite of the evolution and advancements, we still, as our friends on Mount Everest have shown us, need to attend to the human side of the supply chain.

Here are a few suggestions to consider when looking at your supply chain:

* Streamline your vendor selection. Even the smallest of companies can have a tremendous amount of suppliers. Set up authorized sources, establish online catalogs, and allow for the approval to purchase supplies and miscellaneous items by use of simple systems.

* Work with the best firms. The "best" does not always mean the cheapest. As in any relationship, it's not always important who the vendor is when things are going smooth. However, the "best" does mean that your vendor steps up to the plate when things go wrong and takes proper measures. Select a vendor who considers you important and who will do the extras.

* Computerize and track all purchases. (Suppliers can do this for you, also). Too many managers mistakenly assume that they're in tune with their supply chain, and it never hurts to reinforce the correct figures.

* Invite suppliers in to visit your plant. The more they understand your business, the more they can help. Toyota will send their own engineers into a supplier's shop to assist in productivity gains. Their gains are Toyota's gains.

* Address problems early. Forming new alliances and partnerships in the marketplace requires sharp communication and relationship skills. If you've got a hunch that you're company isn't getting what it needs, check the numbers, the other options available, and your staff (including management and front line.) If the relationship or the service is shaky when the going is smooth, what happens when there's a turn in the marketplace. Remember that in spite of well laid plans and advances in technology and the supply chain, the '96 Everest climb was disastrous because a storm arose and people found themselves as the unprepared victims of unsound judgment.

* Don't just pick up the next buzz technique, such as JIT or TQM, for supply chain thinking. Realize that just as your systems and corporate culture took years to develop, your supply chain will evolve and develop over time, as well. The creators of many of the supply chains have been developing these concepts for years. Supply chain changes won't happen overnight, but focusing attention in this area will pay off in time.

Hill

Krakauer, Into Thin Air

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CUSTOMER SERVICE: Don't Let it All Show

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Today's cutting edge companies can take stock in the "vanishing" of technology: vanishing in the sense that technology may not be visible to the eye, but that it still exists and functions to the benefit of the customer. Disney has been doing this for years and others are catching on. Visit the wonderland of Disney. It's pure entertainment, it's tangible fantasy, it's magical. You won't see trash being hauled away. You won't see supplies being delivered to its many eateries. Thank Disney's complex underground network, where the reality of operations lies hidden beneath the walkways of Main Street USA. Just as Disney has cloaked its operations from customer view, companies today are melding technology into decor and presentations. Once a fashionable statement to show high tech, we are seeing the opposite occur in certain sectors of consumer marketing.

For example, The Chatham Bars Inn, a five star hotel located in (Cape Cod) Massachusetts has taken a lead in concealing technology visually. Wires, cables, computers and telecommunications are woven into the resort's authentic preservation of early 1900 decor after undergoing an $8 million renovation. The beachside resort's labyrinth of information tools is barely visible to its many visitors. Laptops now sit unobtrusively behind the concierge's desk, replacing large monitors of only a few years ago. A comprehensive registration and travel software system took the place of outdated technology. ( http://www.micros.com ) Service desks now feature monitors that are hidden below the counters so as not to distract from the aesthetic appeal of yesteryear. Conference facilities are wired with state of the art features, yet to the unknowing eye, the T1 connections and AV tools are hidden below the surface. Technology should enhance service to customers, though not necessarily be seen. We can learn from leaders in the hospitality industry, since these companies survive on the intangible product of customers' experiences. How are you using technology to enhance the experiences of your customers?

Look at customers of cable television. They want the variety of many channels. If given the choice between a single wire tapped into the home versus the big white satellite dish in the yard, how many would choose the dish? Appliance industry: many homes enjoy the convenience of a dishwasher. However, few families want to struggle to hear their favorite TV shows over the sound of one. Those in the appliance industry who have made the dishwasher less intrusive by creating quieter machines are enhancing the customer's experience and winning sales.

As much as technology proliferates every corner of our lives, we must realize that the next big change is in how technology becomes less noticeable and more integrated into the natural surrounding in which we live. Ray Kurzweil, in his book, The Age of Spiritual Machines, describes the creation of nanotechnology and how computers in the year 2010 should be able to process information at the speed of human brain functions...all for $1000. In the future, this technology will make everyday items into microscopic luxuries. Imagine a shirt that's a radio with embedded chips, an alarm clock that only wakes the person it's set to wake, and rooms that feel a person's body temperature and adjust accordingly. Technology no longer has to be put in the customer's line of vision in order to be appreciated. Customers are looking to see how a company uses technology to make lives easier and more enjoyable. Customers want their experiences with companies to be less "techno" and more human. Are you working in this direction in your firm?

ADVICE CORNER: Be Prepared for Change

In almost every release of a newsletter there are 20-40 returns. In most cases, the person has left his or her job to hopefully move on to greener pastures. A serious recommendation: register your own URL. In the case of David Goldsmith, we secured the domain name davidgoldsmith.com. The value is that instead of an address that has the AOL or some other .net or .com, this name remains yours forever (or at least as long as you renew). You still maintain your ISP (internet service provider) such as dgoldsmith@XXXXX.net , yet your friends, associates, business partners, etc., do not lose track of you when you move. The email address dgoldsmith@davidgoldsmith.com is actually forwarded to the ISP of our choice. If another service provider gives a better deal, faster service or any other reason prompting a switch, no one has to be notified. The process only requires the changing of the forwarding of your emails.

Most web designers can do this for you inexpensively. Expect to pay a maximum of $72 for 2 years as a registration fees. Some monthly fees would apply, but the value in keeping your own name may be your next big success story, since people could keep track of you.

As we move closer to each person having their own identity when it comes to communications, this is one of those areas that will be dominated by the people who move the fastest.

If you have any questions on how to establish your own domain, please call or email. Again, as always, thank you for reading.