Thought this was a good article from my LinkedIn feed: 10 Tips to be an Effective Innovator by . Innovation is one of those buzzwords that people think is for entrepreneur or companies with disruptive technology. However, it’s really applicable everywhere.
From a supply chain transformation perspective, outsourcing logistics (for example) can be innovative. The tasks to accomplish this feat are tough, and you will find yourself on one side of the table challenged by internal team members. You may be in the position where you need to be the one to connect all the dots (key stakeholders) and really drive change.
In startups, innovation is the name of the game really. Point 4 about Discovering Needs is so critical. Being innovative means nothing if you don’t know the pain points of your target market. Further, you can quickly realize potentially an innovative way to approach a problem by brainstorming with prospective customers. It’s likely that founders of startups have been in a particular industry for a while so much of their experience can be parlayed into building a startup. That should also mean that founders have good connections to potential buyers and have heard the pain points and the needs of target customers.
Yes, this article can even be useful thinking about yourself and what you (or others do) in a social setting. Just think about how some of these tips by van Wulfen could be leveraged in your group of friends. I know personally when I try to get friends to get together, it’s much like herding cats. Taking some of these tips such as Tip 3 Facilitating or even Do Things Fast (Tip 9) can be critical so that decisions are made and the group moves forward.
Anyways, you should give van Wulfen’s article a read. What are your thoughts about the being effective in innovation? Or how have you been an effective INNOVATOR?
- Change is hard. When you go to a gym for a few years consistently weekly, you see those who come and go, and those who stay true. It’s clear those who are “newbs”. They come in, sometimes work half-heartedly, and then either stick around and wonder they’re not seeing the gains they want or they just disappear as quickly as they arrived. In consulting, similarly, companies who are looking to change make a difficult decision to embark on change. However, it’s so easy for companies to lose sight of the goal and milestones to bring about sustainable change.
- Even if you’re seasoned in the gym, you need to change to keep improving. Companies who don’t embrace the necessity to change as the world evolves are likely to see growth become stagnant, and is most often the case, fade away. It’s so easy for companies to keep going about their business managing the day-to-day without thinking larger and more strategically. However, without change, it’s even easier to then let competition come in and take everything away (think Blackberry, Kodak, etc.). In the gym, if you’re doing the same routine over and over again, your body adjusts and you no longer see gains in your strength. It only takes six weeks before your body adapts.
- Bringing an outside perspective can help. As a consultant, this is almost the very reason we exist. Similar to the point above, it’s so easy for companies to be complacent and continue to operate just as they have over the last 40 years. However, bringing in fresh eyes from consultants, an outside hire, or otherwise, can easily give perspective from potentially competition, other industries, etc. In the gym, bringing a friend who is knowledgeable about working out can easily bring new routines, or even help spot when you’ve actually got poor form.
- Establishing goals helps you achieve greater. One of the first things you do as a trainer with a client is to run an assessment. This includes understanding a baseline or where a client is, and where the client wants to go (i.e. lose weight, add 25 lbs to her squat, drop your 40 time by a half-second). Without knowing where you want to go, it’s hard to really push yourself and make it timely. In the consulting world, if you don’t establish a baseline of “current state” and plan for a “future state” (Shangri-la), how do you know what to do, who to employ, how your customers will react (if any)?
- Post-workout is just as important as in-workout. In working out, it’s important to take care of your body after a workout. That may include a post-workout protein shake to ensure you have the nutrients for recovery, or just daily nutrition in meals. If you aren’t eating right and stretching and the like, it’s hard to sustain any gains you may have from a workout. In consulting, implementing post-transformation catches is key to sustaining the change. Tracking efforts via metrics is one way of ensuring change has sustainability; while establishing a culture embracing change is another sure-fire way of keeping the momentum going.
Ninjas in Supply Chain (like yours truly), front-line customer service, Accounting, anywhere and everywhere are motivated by a number of factors. It’s not necessarily fruit, either. (From the popular mobile and Microsoft Kinect game Fruit Ninja.) For some, motivation comes from factors such as a good work environment (next to a beach?), money, or other external factors called extrinsic motivators. For most, motivation comes from sources of intrinsic motivators such as vertical job ascension (read: promotions), recognition of work, and other internal, personal factors.
I recently stumbled upon a TED talk of Dan Pink back in July 2009: The puzzle of motivation. What a great talk. You can watch the video here. 
Dan discusses the people aspect of motivation and their true motivators — the battle of intrinsic and extrinsic motivators. In business school, half the students would argue money is a massive motivator. However, money is also one of those factors which only causes workers to not only want more but people then tend to EXPECT compensation (salary bumps, bonuses, etc.) as normal procedure. Dan adds that compensation actually motivates those with finite, discrete processes, but compensation does NOT motivate those with more challenging, innovative tasks. In fact, “these contingent motivators — if you do this, then you get that — work in some circumstances but for a lot of tasks, they actually either don’t work or often, do harm.” 
Dan cites several social experiments including the Candle Problem from 1945 by an American Psychologist named Karl Duncker . Groups were tasked to attach a candle to a wall so that the wax does not drop onto the table. An illustration of the materials is shown in the figure below .
Sam Glucksberg, a Psychology Professor at Princeton University, pivoted on the Candle Problem by gathering participants and challenged them to solve the problem based on: 1) solve to help establish norms vs. 2) incentivize monetary incentives (top 25% of fastest times earn $5; fastest time earns $20). The incentivized group solved the problem faster than the group who were tasked to help establish norms. NOT! The incentivized group actually solved the problem 3.5 minutes SLOWER than the group without the incentives! (I tricked you, didn’t I?)
Another iteration was performed on the Candle Problem… I won’t describe it now, but I’ll let you watch Dan’s video for more information. What Glucksberg found was that incentives only motivate people when the path to solve are explicit and known — a concept Dan Pink touches on called Functional Fixedness. Incentives actually do NOT foster innovation and creativity! Who would have thought?! This tells us that today’s motivation and incentives programs are actually hampering people from using their creativity to solve problems!
This TED talk was one of the best I’ve heard (and there are many on TED). There has been so much attention recently regarding intrinsic vs. extrinsic motivators. This TED Talk further supports intrinsic motivation as THE way to foster creativity and innovation and to ultimately higher performing and happier employees. The incentives today of if-then only dulls creativity, and will continually hamper people from thinking creatively to solve today’s problems. So as leaders in our respective domains, remember to motivate fellow Ninjas with intrinsic motivators and as Dan Pink says, “we can strengthen our businesses, we can solve a lot of those candle problems, and maybe, maybe, maybe, we can change the world.” 
 Wikipedia contributors. “Candle problem.” Wikipedia, The Free Encyclopedia. Wikipedia, The Free Encyclopedia, 7 Sep. 2012. Web. 19 Sep. 2012.
 Dewey, Russ (2007). From Puzzles. Intro Psych. [Website]. Retrieved September 19, 2012, from http://www.intropsych.com/ch07_cognition/puzzles.html
Today, I am excited to introduce to you Max Moriarity as a guest writer for today’s post. Max provides an interesting perspective on Reverse Logistics (RL). All too often, I hear of RL as a pure service-related play. However, Max shares good insight on how manufacturing companies can leverage the RL supply chain as a competitive advantage.
This is a snapshot of manufacturing as a grand industry(-ish), but as I pointed out in the RL blog post earlier this month, some companies do redeploy returned assets into other programs. And in some instances, companies are able to harvest parts (a.k.a. parts reclamation) from returned product to be used to refurbish other products (i.e. refurbished phones from the earlier article). This is a huge cost mitigation strategy and an area flourishing in the high-tech industries especially. Before I get too excited, here’s Max:
Irv Grossman, VP of Supply Chain Operations in Chainalytics, wrote a very interesting article regarding the similarities between fishing and Reverse Logistics. If you haven’t had a chance to read it, go ahead and take the time to read it first (here) and then come back.
What I’ve seen, as has much of the industry, is a growing focus on the Reverse Logistics side of the supply chain. Reverse Logistics (RL) is the inverse of Forward Logistics (FL) where RL encompasses products from the consumer back upstream. In contrast to FL, RL can embody much more complexity as it’s dependent on potential failures (think: general buyer’s remorse, warranty, insurance, etc.) in addition to the lead time associated after new product launches. (FYI, there’s more reason it’s very complex — I’m being kind and simplifying to a couple main points.)
As Mr. Grossman points out, cycle times from receipt to disposition of assets once the assets have re-entered the supply chain are extremely critical. In fishing, the longer you hold onto fish, the less valuable and stronger the scent. Similarly, especially in high tech industries, product sitting in inventories start to lose value — and fast. (In all my experience, I haven’t noticed these products starting to smell, yet.)
Consider this: in the fast-paced world of cell phones, devices can lose at least 1% per week. Let’s do some back-of-the-napkin math and extrapolate what this may mean… You accept 20,000 devices per week through your returns process. The blended cost of a phone is roughly $350 (Nielsen estimates 2/3 of sales are smartphones with average smartphone COGS of $550, feature phones representing 1/3 of sales at $250 COGS) (see source 2). Extrapolating, you can be losing $70K per week! Aghast! What can you do?!
Fear not! There are ways to maximize value and create a leaner RL supply chain!
One of the most crucial areas companies are targeting is “simply” stopping returns from even occurring. In the consumer electronics world, the key area of opportunity is tackling No Trouble Found (NTF), No Fault Found (NFF) or Cannot-Duplicate (CND) devices (NTF, NFF, and CND are by and large synonymous). Accenture estimates 68% of returns are NTF (see source 3). Indeed in my own experience, I’ve seen NTF rates reach as high as 60-65% including 30-35% purely software-related. Addressing NTF devices not only reduces costs from the point-of-return and further up the supply chain, but it also increases customer satisfaction as he/ she is able to keep the device. Happy customers make loyal customers, right? Just watch the Genius Bar at any Apple store…
Once the product has entered the supply chain, however, companies are tackling the dispositioning problem. That is, how can we, the company, now maximize value recovery? I know several companies (carrier, OEMs, retailers) are choosing one or a combination of the below solutions:
- Speed up cycle times from receipt to disposition. Depending on how many touchpoints of companies’ RL supply chain, companies can significantly inventory and maximize recovery by consolidating touch-points.
- Maximize value recovery through optimal liquidation channels. That sounds good, right? What does that mean? Optimal channel management is being able to select the RIGHT secondary channels to disposition through bulk sales, auctions, or otherwise. Maximization of value includes the balance of capturing the most value per device while also clearing inventory of more obsolete products. This may include the use of auctions and bulk sales.
- Maximize value recovery through redeployment through channel/ program management. Different from the preceding bullet as I wanted to highlight the liquidation aspect of cell phones above. This solution is more related to redeploying returned assets into the company’s other programs (i.e. insurance, warranty, loaner phone, etc. programs). If you’ve ever returned your computer for a warranty claim with an OEM, for example, you most likely received a refurbished unit back. The key for the OEMs and companies performing the returns is, again, maximization of value. Companies must understand the back-end value and determine necessary refurbishment costs to bring a returned asset to a quality level acceptable for redeployment.
3. King, Joe. Carving Out a Path to Aftermarket Service Profitability Starts with the Basics. [PDF] Retrieved from http://www.cscmpsfrt.org/resources/Documents/Value%20Recovery.pdf
Jon Stegner’s famous article “Gloves on the Boardroom Table” is a classic example of not just leaders in denial (for my business school friends) but also the opportunity in procurement – specifically, strategic sourcing. The article can be found here. I’ll downplay the leaders in denial aspect in favor of the Supply Chain benefits in the article – Jon describes the opportunity in cost savings opportunities within his organization. Convinced of significant savings opportunities, Jon tasked his summer intern to gather various gloves (yes, something so simple) across the factories in his organization, and what he found was staggering… FOUR HUNDRED TWENTY-FOUR different gloves were being used across the factories. Many of the gloves were similar but their costs could vary greatly. In one case, two gloves which were nearly identical were marked one for $3.22 and the other $10.55. Jon Stegner proceeded to lay out all 424 gloves on the boardroom table for his peers to witness the opportunity at hand. Jon didn’t share the cost savings his company was able to reap, instead citing a general “a great deal” but as you can imagine, strategic sourcing in this example can yield significant results.
And so this brings to light the very simple, yet impactful opportunity in strategic sourcing to your bottom line. Synchronizing procurement efforts across an organization can have immediate effects to costs. This should come as no surprise as you think about companies who do this extremely well including Wal-Mart (the epitome of operational excellence), UPS, The Home Depot, etc. Strategic sourcing empowers your procurement organization reap the benefits of supplier competition. And today, there are many ways to empower your company’s procurement strategy…
- As a Consultant, I was part of a small team leading the transformation of the Procurement organization of a major IT outsourcing company with spend across global business units. Over the next several years, the organization looked to reign overall Procurement spend with immediate savings through an e-Sourcing solution.
- The implementation of an e-Sourcing system enabled the company to leverage RFx templates and run auction events to drive down costs and enable supplier competition for its more than 1,000 vendors and more than a 100 internal procurement categories.
- I spent a few years as a Procurement Analyst within a major third-party logistics company’s Procurement group within its Transportation organization. Third-party logistics companies are the very shining examples of strategic sourcing. I supported the management of largely truckload and less-than-truckload carriers on behalf of our customers analyzing transportation costs, rate changes, and provided lane-carrier recommendations. At the end of the day, upper-tier carriers are very similar. Yet, when you review RFP bids, some carriers bid with 30% premiums over their competitors.
- Further benefits of strategic sourcing (and 3PLs) include “soft” benefits which at first are hard to quantify until service failures arise (in this example). Aside from numbers, Procurement empowerment meant also assessing suppliers’ qualitative bid as well. For example, being a low cost provider counts for naught should a carrier’s on-time performance be well below top-tier standards (99.8% oftentimes).
- Other activities included the analysis of rate increase requests. Our strategic goal here was mitigate costs as much as possible reducing rate increases, fuel surcharge increases, accessorials, etc.
It’s a no wonder during the Great Recession, opportunities in Procurement were (and are still) the fad. Not many strategies can be implemented so quickly with such significant impact straight to your bottom dollar. Strategic sourcing, e-Sourcing solutions, and intelligent deployment of 3PLs can be a powerful advantage against your competitors. So the question is: how many gloves are on your table?
I wanted to continue my first post on being an effective consultant with this — the sequel. What I mentioned before greatly hinges on the ability to quickly learn but adaptation and becoming a SC Ninja is more than learning. Another attribute and key ingredient to being an effective consultant is blending in, too. I mentioned “blending in” earlier but want to touch on this a bit more.
To be an effective consultant, supply chain or otherwise, you have to be able to adapt. As a Supply Chain Ninja, I have to be a chameleon… to be able to blend into my surroundings and new engagements. Otherwise, you end up sticking out like a sore thumb and you don’t pick up new projects quickly. You must be able to adapt and to learn on-the-fly. This… this is the key to being an effective Supply Chain Ninja.
One example of this:
I had one project with a Major Steel Tube Producer and Manufacturer. The client was looking for operational and systemic improvements in the warehouse co-located within its steel mill. However, I had limited experience in the steel industry. As a project team, we were completely transparent with the Client’s Executive Team in our relative limited experience in the steel industry; however, we had a plethora of experience and qualifications in warehouse operations.
To be effective and deliver exceptional results, we utilized our past experiences to relay warehousing’s core concepts. Nuances always exist that differentiate client to client and project to project. In the end, in warehouses and other business processes, core concepts are the same and “portable”… a pick’s a pick, a bin’s a bin, and picking strategies are crucial to the operations.
As effective Supply Chain Ninjas, each team member was able to pick up the critical elements of the steel company and industry while marrying key warehouse concepts to identify the areas of opportunities in a relatively short time frame. In the end, we partnered with the key stakeholders to deliver recommendations for bundling (picking and loading) strategies and integration points for a warehouse management system implementation.