In this Value Unchained Live video I provide some insight on the returns management process and how companies are finding a balance between cost-effective repair and providing a fast turnaround for no fault found product.
How does your company manage the returns process? Share your insight in the comment section below.
Video running time: 01:29
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Download the Aftermarket Service Profitability white paper to learn how to transform the reverse supply chain into a source of value recovery and revenue.
I recently spent some time in Asia and a significant portion of that time I was traveling through China. I have been to China many times, but this trip was eye opening. I was shocked at the level of advancement China has made. The rising middle class was apparent. The country’s infrastructure is improving at a rate I have never witnessed. In fact, in Chongqing I lost count of the number of cranes. One of my Irish colleagues joked that it looked like Dublin in the 90s. With all this progress, it brought me back to a controversial rant from Ed Rendell, the Governor of Pennsylvania, who said, ”I think we've become wussies. ... We've become a nation of wussies. The Chinese are kicking our butt in everything. If this was in China do you think the Chinese would have called off the [football] game? People would have been marching down to the stadium, they would have walked and they would have been doing calculus on the way down.” I’m an American who travels the world, and sadly, I have to agree with him.
So what does all this mean to our macroeconomic world or the future of supply chains? To me, it means the Chinese are resilient. They are a hungry nation willing to work and work hard. Case in point: I present the below picture.
That said, I still believe there will be a gradual transformation that will occur over the next decade. My prediction is that China will gradually become a more expensive place to manufacture goods. This will spark a chain reaction which will cause North America and Europe to wake up and get hungry again to compete. I think a big part of this is that energy is going to become exceedingly more expensive because developing nations like China and India will exponentially increase demand for natural resources. Africa and South America will become new hot spots for manufacturing. Supply chains will evolve and soon the whole idea of “make it in China and send it to the U.S. and Western Europe” will change to “make it locally or find a new emerging market or both.” This doesn’t mean that I think China will completely go away. After all, it is an enormous, growing market with a thirst for consumption. I believe that when you raise the level of competition as China has done, the same competition will raise the game with other already developed nations.
So in the future I believe local or near-shore manufacturing will become the new theme, which will mean supply chains will have to evolve to support this change. To me, it is an exciting time and I look forward to the sleepy bears waking up and beginning to stand high again. Only time will tell.
What observations have you made in your travels that either support or disprove my conclusions?
Recently we announced that nine out of the top ten high-tech supply chains listed by Gartner Inc., are clients of ModusLink. While we stop short of laying a claim to a direct cause and effect relationship, we like to think that it is more than coincidence that we play a part in the supply chains of these award recipients.
There is well-documented debate about the criteria for the Top 25, but in essence these companies have gained the respect that comes from delivering the numbers in terms of metrics performance, from peer votes and from analyst votes. I am not here to reopen that debate, but I believe that there some common characteristics that we observe as a partner to many of these companies.
This may not turn out to be the secret recipe for Top 25 award recognition, but I believe that these ingredients can only help improve supply chain performance.
- Clarity in short- and long-term goals across the supply chain organization: The existence of clear direction on what is required today, and in the longer term sets the tone and the direction of the organization, especially in turbulent market conditions. The direction can change, but this clarity presents a consistent message to partners whether engaged on a regional or a global basis.
- Balance between revenue and cost focus: This comes from a strong alignment with the sales and marketing functions and a team-based approach to profitable revenue growth. The leading companies have moved past the defensive positions around forecasts and are engaged in conversations around channel growth, enabling additional product variations, competitive supply chain costs and new market coverage.
- Effective partnership between procurement and business teams: These companies have not achieved success by over paying for services. While they can be some of the most aggressive (in a good way) in terms of value expectations they have generally done their home work in ensuring that the scope of services is reflective of the real business needs.
- Manage the metrics and more: Metrics are almost always viewed in terms of total supply chain rather than individual process performance. Service execution to commitment is a given in these supply chains. You know that it is not a good sign if this is where most of your partner dialogue is focused. The more meaningful engagement is around the opportunities for step function improvements to the effectiveness of the supply chain. These companies push themselves and their partner capabilities and I believe that we are all stronger as a result.
- Choose good partners, expect high standards and hold them accountable: These companies have moved beyond micromanaging partner performance and spoon feeding them planning and process inputs. They expect partners to take responsibility for processes and manage them better than they can themselves. The value is not in outsourcing labor, but in accessing a more efficient business process.
While we are frequently in a behind-the-scenes role with our clients’ supply chains, we are immensely proud of their achievements and our part in their success. Our teams see themselves as an extension of our clients’ organizations and are committed to contributing to their success. We look forward to continued success in 2011 and thank our clients for the opportunity to work with them in that process.
I recently attended an Institute of Packaging Professionals (IOPP) event in Durham, North Carolina. During the event we toured Burt’s Bees manufacturing facility and I was very impressed by the company’s sustainability initiatives. As Global Packaging Engineer for ModusLink, I am always looking for ways to reduce green house gases (GHGs) from the supply chain and from our clients’ product packaging. It really is amazing how much impact a company can make not only through packaging refinements, but with efficiencies across the company’s entire footprint.
For starters, Burt’s Bees’ goal is to be off the grid by 2020, and currently offsets 100% of its power by funding carbon reduction projects. It has built its brand reputation on striving to ensure its products are 100% natural. This includes product packaging. The highest approved levels of post consumer recycled (PCR) and recyclable material are used whenever possible, as well as 100% recycled corrugate, while PVC is eliminated.
What is Burt’s Bees doing in the manufacturing and office areas as far as sustainability?
- LEED certified
- Follows 6S (the sixth S being sustainability – to learn more about 5S click here)
- Facility improvements like waterless toilets for men, no trash cans at desks (only recycling), and common sorting areas for compost, trash, recycling, and reusable items
- Eliminated paper and plastic in the kitchen. Employees bring their own dishes/glasses or use the supplied dishes/glasses and dishwasher in break rooms.
- Reduced operational energy and water usage while sales and square footage continue to grow.
How can you get your company’s employees on board with sustainability? Burt’s Bees provides a variety of incentives, such as:
- Bicycling to work incentives
- Premium parking for cars that are hybrid or get more than 36 miles per gallon, and employees that carpool
- Setting corporate goals for water, energy use, and waste reduction every year and measuring consumption.
Sustainability training is required for all new employees, and sustainability is part of their yearly performance review—which affects their bonus. This year, Burt’s Bees became the first company in North Carolina to achieve zero waste to landfill. During the tour, the Manager of Environmental Sustainability spoke about the journey to get there.
Once a month, the waste bins are audited and recorded. Burt’s Bees held a “Dumpster Day” to turn “waste into wisdom,” by saving all trash for two weeks, unloading it in the parking lot and asking employees to sort by hand everything they could have/should have re-used, recycled, or composted. This significantly reduced the company’s landfill waste and helped it achieve its goal of being a zero waste company. You can watch the inspirational video at: http://www.youtube.com/watch?v=MtdTSb4aV-M
Isn’t this amazing? This IOPP event and tour of Burt’s Bees certainly made me more conscious about my personal day to day activity and what I can do to have less impact on the environment. I will continue to share sustainability best practices (not just in regard to packaging) with friends, clients, and colleagues. Every little bit makes a big difference for our future! What is your company doing to be more sustainable? Let’s share best practices in the comment box below!
Want to learn more?
Download the Sustainable Supply Chain Solutions white paper that examines three major areas of supply chain sustainability – sustainable packaging, network configuration, and greenhouse gas optimization.
In this installment of Value Unchained Live, I share my insight on the benefits of using a postponement strategy in the value chain.
How have you successfully used postponement in your value chain? Share your stories in the comments section below.
Video running time: 01:38
I read an excellent blog post on hbr.org this weekend about the relatively small number of organizations that effectively use process owners to drive cross-functional improvement. While many organizations succeed at improving processes within functions, far fewer are effective at doing so for processes that involve multiple functional areas. This represents a substantial challenge since customers of any organization tend to buy primarily processes that cross functional lines. The customers of a product manufacturer aren’t specifically buying sales operations or logistics or demand planning services, but these functions (and many others) come together to support customer requirements. Similarly, clients of a service company like ours aren’t individually buying material planning, inventory management, or EDI messaging services; they’re outsourcing a business process that combines those (and many other) activities. The author makes the point that organizations must appoint process owners to monitor and improve these critical cross-functional processes. Pointing to several process gurus, he outlines three main responsibilities for process owners: acting as the voice of the customer, monitoring KPIs, and ensuring that the key processes are delivering a competitive advantage.
In my experience, organizations that embrace this concept are more effective at meeting or exceeding their customers’ expectations than those that operate fully within functions. That being said, I see several requirements for the process owner role to be effective in improving customer-critical, cross-functional processes:
- The process owner must be empowered within the organization to drive change. He or she must have frequent, effective communication with top executives and functional leaders.
- The functional leaders need to understand and support the role of the process owner. A pocket-veto from a functional leader can easily prevent the process owner from being effective.
- The customers have to view the process owner as an effective advocate for their business.
- The process owner must have a thorough understanding of all aspects of the process – as well as the inputs and outputs of the process – in order to earn the respect of the functional leaders.
How does your organization monitor and improve cross-functional processes? How well does it work for your customers? I would love to hear your feedback – particularly examples of where you see this working effectively.
The Consumer Electronics Association (CEA) came out with the initial estimates today for the show which, in the words of CEA “wows the world with innovation and optimism.” With attendance at CES 2011 back up to pre-recession levels at more than 140,000, it certainly felt busier in everything from the taxi lines, to registration queues to hotel availability. The length of a taxi line at CES may not be a recognized economic indicator but it felt good to see the buzz back in Las Vegas for this important trade event.
The exhibition halls presented us with demonstrations of what we can expect from 2,900 exhibitors during the next 12 months and the key note sessions delivered the views of 22 of the consumer electronics industry’s most influential CEOs. Whether you would call 80 different tablet computers or 20 variations of 3D TV truly innovative is a matter of perspective, but everyone will take away their own favourites to watch for in the coming months.
The real business at CES is frequently not on the show floor, but occurs in a series of meetings between OEMs and buyers in private meeting rooms and hotel suites across the city. At these meetings the first product, marketing and support plans for the 2011 season are discussed and these will ultimately be refined into product forecasts and orders as the year progresses. There is no taxi line indicator here, but the mood as the conference progressed was generally positive.
Despite this optimism it is unlikely that we will see 80 different tablet products launch and be successful in the market. Like netbooks, navigation devices and many other products before them, the range will narrow quickly and ultimately a small number of players will dominate the market.
Getting a functioning product available for a show like CES is only the beginning. You can safely bet on a number of the key consumer electronics brands succeeding, not necessarily because they have the best products, but because they have mature and robust distribution channels and value chain infrastructure.
Early engagement between sales and marketing and the customer value chain organization is key to plan not only the launch, but the mix between sales channels, replenishment cycles, aftermarket requirements and likely product lifecycle.
As for my own technology take away from the show: As much as I look forward to being able to switch channels by waving ‘Kinect’ style at the TV, I worry about the potential of an explosion of ‘reality TV’ type content by providing people with wearable cameras.
Please share with us your personal CES experiences and observations in the comment section below.
Last month, I found myself in Bentonville, Arkansas at our semi-annual packaging strategy meeting with Walmart. It’s been a little more than four years since Walmart launched its sustainable packaging scorecard to its supply base, and the initiative is still thriving. Just last year Walmart announced its incredible goal of eliminating 100% of its packaging waste by reducing, recycling or reusing everything that comes into its 4,100 U.S. stores by 2025.
In our meetings, we discussed a wide array of initiatives, assessed the tracking of goals, the setting of new ones and held information sessions on everything from Bisphenol-A (BPA) linings in cans, the state of the recycling infrastructure for paper liquid containers and low-toxicity label adhesives.
The dialogue continues to be fresh and high spirited as Walmart and its hand-selected strategic partners continue along the journey towards zero waste and sustainable solutions for packaging across all sectors of business.
For me, the most impressive highlights are a commitment to pursue perpetual enhancements to the scorecard program (although it’s already the undisputed leading retail tool in the market) and the international expansion of the program beyond what Walmart has been able to accomplish already.
One of the most profound elements of the Walmart sustainability strategy is the colossal savings it has realized throughout this journey. From day one, Walmart has made it very clear that while the environment benefits from the company’s commitment to sustainability, a conscious eye is also focused on the bottom line and the efficiencies gained.
I haven’t seen a figure disclosed publicly, but would wager that Walmart has saved millions … maybe tens of millions of dollars over the past few years across all its sustainability programs. I continue to be amazed by its leadership in the field and while some retailers are certainly further along than others, I wonder when the rest of the U.S. retail community is going to commit to sustainability strategically, build a network of experts and begin the journey to efficiency. Why wouldn’t they?
What sustainable initiatives are you working on for your company? Share your experiences in the comments section below.
Since the launch of Value Unchained last April our authors from around the globe have shared their insight on value chain trends in over 100 blog posts. In this first post of the New Year, we would like to share with you our top five most popular posts from 2010.
- Smart Phones Need Smart Aftermarket Value Chains
Author: Eoghan Dillon
Originally Posted: June 30, 2010
- Taiwan Supply Chain Perspectives – The Next Leap After the Global Downturn
Author: Lorcan Sheehan
Originally Posted: August 19, 2010
- Lean and Green Supply Chain Initiatives Can Be Complimentary
Author: Bob Ferrari (guest post)
Originally Posted: September 20, 2010
- Postponement Strategies – Why Should You Care?
Author: Lorcan Sheehan
Originally Posted: August 19, 2010
- Customer Experience Management
Author: Patrick Tang
Originally Posted: July 21, 2010
What topics / trends do you want to hear more about in 2011? Let us know in the comments section below.