Monday, November 28, 2005

The Mountaineers are BCS Bound!

The 12th-ranked West Virginia Mountaineers(9-1, 6-0) defeated Pittsburgh, 45-13 on Thursday night to clinch at least a share of the Big East title. On Saturday, the Mountaineers claimed it outright after Connecticut upset South Florida, 15-10 at Rentschler Field in East Hartford, Conn.

The most likely bowl destination for West Virginia will either be the Sugar Bowl to be played in Atlanta this year or the Orange Bowl in Miami. Official BCS bowl-game bids will be extended on Sunday, Dec. 4. Most of the sports pundits pick WVU to play LSU in the Sugar Bowl.

It should be noted that West Virginia has either won or shared each of the last three Big East championships.

Lets Go Mountaineers!

Tuesday, November 15, 2005

Every Day Low Prices - No Matter Where You Shop!

Wal-Mart Stores's supply-chain management innovations have driven an overall productivity increase in the U.S. economy, according to a new study by the Global Insight research company.

The findings of Global Insight's "The Economic Impact of Wal-Mart" were revealed last week. Among them: that Wal-Mart's direct and indirect effects on the rest of the retail industry led to a 3.1-percent decline in overall consumer prices between 1985 and 2004.

In 2004, consumers spent $263 billion less than they would have if Wal-Mart were not around, the study said. That translates to $895 per person, or $2,329 per household (that means there are 2.6 people in your house).

Global Insight said there were several aspects of Wal-Mart's business that contributed to the decline in consumer prices, but the largest single one was its efficient use of capital and labor in its distribution and inventory system.

The study also noted that Wal-Mart is more capital-intensive than other retailers. Wal-Mart's size also allows it to leverage its costs for foreign imports. Global Insight also found that Wal-Mart does not appear to pay below-market wages to employees.

"Accounting for the above three forces does not allow us to fully explain the cost savings we have observed," the report says. "Therefore, the only way that these cost savings could have been generated is through a Wal-Mart induced increase in the economy's total factor productivity (TFP) of about 0.75 percent." TFP is an economic measure that combines the use of capital and labor.

Well, that explains it then...

Hmmmmmm...I'm not so sure these savings trickled-down to our house hold. The last time I checked, Jimmy Choo, Coach, Chanel, Polo RLX, etc are still pricing in a "Wal-Martless void." So much for those per household the way, I think our house has 5.4 people (if you account for our three kids, a dog and a cat).

Was this post reminiscent of Andy Rooney? God, please say no!

Thursday, November 10, 2005

Secure Freight, Michael Jackson, and Puke?

Believe it or not, the below press release is from real sources, not The Onion....

The United States is boosting the concept of a neutral global shipping database that international trading partners could draw on to improve supply-chain security.

Michael Jackson, deputy secretary of homeland security, today laid out the broad terms of a so-called "secure freight" initiative at Customs and Border Protection's Sixth Trade Symposium.

The initiative would charge a private-sector entity with gathering shipping data covering the supply chain from purchase order and fulfillment to delivery. International trading partners could then draw on the common operating platform "data fusion center" for their own risk-management needs.

The database would build on existing programs such as Customs' Automated Commercial Environment, Jackson said.

He said a for-profit, or non-profit private entity is preferred, because the U.S. government "is no good at developing new, nimble technology."

Jackson proposed an initial pilot program to be set up between two or more counties, and said he has talked to other governments about the project. He would not identify the countries.
"This is a fundamental philosophical jump from where we are today," Jackson said. "But we can't do it as a bunch of government pukes on our own nickel."

I'm not really sure what concerns me more...that one, for profit entity out there could be the gate keeper for every last bit of supply chain meta-data? Or the fact that a senior US government official actually used the term "puke" in an official press statement!

Tuesday, November 08, 2005

Manage your life as you would manage your business...

I was going through an old presentation that I made to a group of students and found this thread...

The greatest risk is never taking one.

As early as possible, everyone has to take control of his or her career and personal life. Manage your life as you would manage your own business: Pro-actively, diligently, intensely. Never assume someone will look out for you, or manage your have to take the initiative and constantly facilitate your own personal and professional life. Take risks, expand your life experiences, and don't settle for gauging your success or failure on someone else's metrics. Set your own goals, be your own judge, and don't let someone else's career, or what you read, or what you see on television be the benchmark.

In life, and business, superior performance is always the key to independence of action. If you want to manage people, assets, and organizations, you first have to be able to manage yourself. By doing this, you lead by example, which your subordinates and your superiors will recognize immediately.

Treat everyone the same, with respect and loyalty. As your career develops, you will have a chance to make a positive impression on these people. If your career spans many years in the same company, remember that the way you treat people on the way up the corporate ladder, will be kind...on your way down that same ladder.

Sage advice? Or, just wishful thinking on my part? It is my hope that there are few people out there that live by this creed as well...

Friday, November 04, 2005

To Outsource, or Not To Outsource...That is the Question!

In warehousing and transportation operations, anyone can buy trucks, rent a warehouse, fill it with racking, forklifts and even the latest logistics systems…and still end up with a dysfunctional and failed operation.

How can your organization dodge this classic ending to a very old story? Here are a few suggestions:

Foresight: Taking into account all available knowledge and data, develop a vision and understanding of the task or operation to be planned. Then, stick to the vision and communicate it in a collaborative manner throughout the organization.

Qualify: Gather all available data to define requirements. They may include volumes, dimensions, weight, item counts and other related details. Adding up these factors leads to a cost/result, both quantitative and qualitative. Don’t get caught up in the current flurry of metrics, measurements, etc…just keep it simple. This will help the communication, and buy-in of the vision.

Planning: The keystone of successful logistics and supply chain operation planning is based on a close approximation of the end requirement and ensures an optimal cost/result. For example, warehouse space and trucking requirements are directly proportional to the types/volumes of product, required storage/handling and processing (cross-dock, storage/picking, and so on). Again, common sense and logic will prevail, as they should.

Change Management: Changes affect the cost/result. If a warehouse is leased to support a flow-thru/cross-dock operation and all products suddenly require storage, a larger warehouse is needed, impacting staffing, materials handling equipment (MHE), fixtures, systems, and supplies. Hence, create an atmosphere of collaboration and embrace the chaos.

Free Agents: Most companies don't understand the costs and relationships of all factors relating to outsourcing. However, they can define their needs to an expert, stick with the plan and create profitability. Careful selection is important, based on previous personal experience or positive recommendations and references from other trusted sources. So, logistics professionals need not understand all the details involved in executing supply chain operations to be successful. Using solid, experienced third party firms to execute a logistics operation based on a well-defined and accurate requirement is crucial.

Use common sense, let logic be your guiding light, and use an open, honest platform of communication to create a collaborative success!

Tuesday, November 01, 2005

The European Union - A Distribution Primer

So, its time for a little look at European expansion...your company is global, and because it is no longer cost-effective to reach international customers from your U.S. operation, you need to open a European distribution center. Finding the best place to locate that hub is key.

The European Union is made up of 25 countries, all with their own laws and regulations, some of which are imposed on a European level. You also need to consider language barriers; unique employment, transportation, and warehouse rules; and directives from the European Economic Community.

Before making any decisions, you must carefully weigh a variety of factors, that will ultimately focus your decision. Here are some issues to contemplate:

1. Analyze your company's needs. The first step in the process is understanding your requirements. Be sure you can answer these questions: How much product is flowing and where is it flowing to? Where is the majority of your European customer base? What are your shipping needs? What products are you shipping -- medical, pharmaceutical, food, hazardous materials, garments, or fragile items?

2. Become familiar with the European Union's demographics and currencies. The original 15 EU countries have more mature economies than the 10 that joined in May of 2004. Bulgaria and Romania are in discussions to join the EU in 2007. Many of the original EU members use the euro, but not all. The United Kingdom and Sweden, for example, use their own currencies.

3. Check out national employment laws. Employment laws differ from country to country, which makes it challenging to manage your labor pool. This is especially so under the difficult trading conditions that exist in some countries, such as the employment protection and redundancy costs in France and Germany. Countries such as the UK, with more flexible laws, attract a greater number of companies. The cost of employing the staff also varies among countries, given different pension costs and vacation time, which makes a difference to your total labor amount. This employment information may be difficult to obtain.

4. Make sure you understand the country's planning laws. Building regulations change from country to country. In some nations, such as France, a different permit is required for storing chemicals, and new consent is required for storing metals or paper. In most other countries, general storage consent applies. In addition, modern DCs need 24- hour operation, but in some countries, facilities located near a residential area will have restrictions. The inability to operate 24 hours a day can substantially inhibit your business.

5. Learn the EU transport initiatives. The EU is working to get freight off roads and onto rail and water systems. It has a number of initiatives, such as Marco Polo, TEN-T and Motorways of the Sea, to encourage this idea. There is also a discussion about charging tolls (mainly in Germany, Belgium, and Holland). It is important to understand these initiatives and how they impact your business. Your decision should favor a location that offers different transportation modes and has access to ports.

6. Examine transport connectivity and infrastructure. Infrastructure is not consistent across Europe. Using rail transport, businesses face track gauge changes entering Spain and Russia as one challenge, but most national railroads still are comfortable in working their neighbors.. Consider how well your distribution center will link into the transportation system, specifically rail and water.

7. Know your potential exit strategies. You must understand the properties sale and leaseback value, and whether or not you will be able to exit the property if your circumstances change. Is the site attractive to another potential buyer? Issues such as remoteness, labor availability, specialization, and connectivity must all be examined. These factors affect the future sale or lease of the DC if you choose to move or leave the country.

8. Ask about available grant incentives. In certain economically disadvantaged regions, the government may encourage economic activity through grants, which boost financial investment in the country and its economy. These grants are definitely worth considering, but should not solely drive your location decision.

9. Understand the European drive time directives. Similar to the United States, the EU is reducing the number of hours truck drivers can work before taking a break, and putting limits on the number of hours a driver can work in one week. This substantially limits labor in the market and affects the number, size, and location of the distribution centers companies establish.

10. Check out property pricing and local taxes. Rents and investment yields differ across Europe to reflect market maturity. These dynamics change all the time. Countries have different ways of taxing property, which can impact your operations costs.

This is pretty strait forward advice. So, use it as a guide. Right now, the push to source and distribute product from some of the new EU countries is all the rage. The Czech Republic provides one of the best locations (in the heart of all European countries), matched with excellent labor talent and costs. Add the Czech Republic's robust transport infrastructure and you have well situated alternative to distribute your product into all of Europe. The Slovak Republic also presents an interesting alternative.

The bottom line is do your homework up front, and find people who know the market and understand the complexities to manage your foray into the EU market.