by Elizabeth Hines | Jul 15, 2015 | Blog, Leadership, Strategy, Supply Chain
The sharing of tangible and intangible assets will increasingly become a fundamental feature of successful businesses.
Few developments of late are as intriguing as the rise and disruptive impact of the collaborative economy. In a very short time, services that we may have thought of as permanent fixtures of our business and personal lives have been rendered obsolete by the sudden sharing of tangible and intangible assets in the peer-to-peer, business to consumer (B2C), and business to business (B2B) spheres.
B&B and hostels, car rental, and DVD rental are giving way to peer-to-peer accommodations, car sharing, and music and video streaming. The Marriott Hotel chain used the online platform LiquidSpace to convert empty conference rooms into rentable work spaces for guests as well as outside visitors. Walgreens teamed up with TaskRabbit, an online marketplace for outsourcing errands, to deliver products during flu season. The list is endless.
Rachel Botsman, an innovation strategist who has spent the past four years studying 500 collaborative economy startups worldwide, concludes in Harvard Business Review:
The real power of the collaborative economy is that it can serve as a zoom lens, offering a transformative perspective on the social, environmental, and economic value that can be created from any of a number of assets in ways and on a scale that did not exist before. In that transformation lie threats—and great opportunities.
While consumer sharing may have received the most media attention, Robert Vaughan, an economist at PwC Strategy & Inc., argues the open sharing of resources among businesses may present an even larger opportunity. Although, on the surface, it seems like an unlikely marriage – businesses do compete, after all – a growing number of successful collaborations prove Vaughan is right.
He writes:
In just a few years of activity, it has become clear that the unfettered exchange of otherwise unused major assets, including physical space and industrial equipment, allows a sharing company to operate more efficiently than its non-sharing rivals. Companies that go further still, wholeheartedly embracing the sharing of less tangible assets, may benefit from a different sort of change, one involving their culture, that builds new types of connections with, and sensitivity to, the world outside.
One example of an interesting collaboration involves General Electric and Quirky, an online inventor community. GE and other market giants such as IBM and Samsung file thousands of patents every year, most of which never move beyond the drawing board. The collaboration gives Quirky open access to GE’s patents, allowing for products that normally would not have been put to productive use – such as a smartphone controlled window air conditioner – to be brought to market.
Sometimes a direct collaboration may not even be necessary. A company may choose to place an undeveloped product on an online technology exchange, thereby opening itself to the possibility of building a connection to another company with complimentary expertise.
In many respects, enterprise sharing is still in its infancy and is likely to evolve just like Airbnb, whose concept seemed “fringe” when it launched in 2008 (it was initially marketed as a service for people to stay the night on their air beds in strangers’ homes). Now the company has amassed more than 650,000 rooms in 192 countries and threatens to disrupt not only the hotel industry but the entire hospitality sector.
Fronetics Strategic Advisors is a leading management consulting firm. Our firm works with companies to identify and execute strategies for growth and value creation.
Whether it is a wholesale food distributor seeking guidance on how to define and execute corporate strategy; a telematics firm needing high quality content on a consistent basis; a real estate firm looking for a marketing partner; or a supply chain firm in need of interim management, our clients rely on Fronetics to help them navigate through critical junctures, meet their toughest challenges, and take advantage of opportunities. We deliver high-impact results.
We advise and work with companies on their most critical issues and opportunities: strategy, marketing, organization, talent acquisition, performance management, and M&A support.
We have deep expertise and a proven track record in a broad range of industries including: supply chain, real estate, software, and logistics.
by Fronetics | Jul 14, 2015 | Blog, Logistics, Manufacturing & Distribution, Strategy, Supply Chain
To see lean perfected – study the NASCAR pit. In a matter of seconds, the pit crew has changed tires, wiped down the windshield, filled up fuel, and given the driver a drink of water. Everything is in the right place at the right time. If only every distribution center would run that smoothly. What’s clear is that mastering inventory levels is central to the equation of eliminating waste, but inventory management is becoming a vexing problem for some organizations – compounded by multi-channel distribution, inadequate demand forecasting, and a lack of communication among appropriate parties.
Taking a closer look at the experiences of forerunner companies in their quests to master lean inventory management might just help your company avoid these top three snags.
Failure to Adapt Business Processes
In an effort to reduce merchandise sitting around on warehouse racks, some organizations take lean too far. The problem, in this case, is one of business process rather than software. While management sees the financial impact of cutting inventory, they tend to pay less attention to how it will affect operations. The heads of distribution quite frequently are not even invited to take part in the decision and find out only when fewer cases and pallets show up at receiving. Adapting business processes to involve the managers of procurement, finance, operations, and sales and marketing, is key to maximizing efficiency. In other words, open up the silo by building it in to your formal and informal processes.
Failure to Collaborate
Even with sophisticated demand forecasting models on hand, input from all parties is needed for an accurate assessment of inventory levels. And although demand forecasting can help an organization plan around high-level “what if” scenarios, it may not always be able to break it down on a granular level or take into account the increasing number of variables associated with multi-channel distribution. Collaboration is crucial.
Failure to Align Objectives
Sometimes the answer to the issue of inventory levels is counterintuitive. Even with lean as the driving force, the notion of optimization cannot be left out. In some instances, it makes sense to increase rather than minimize inventory if it will contribute to lowering your overall supply chain costs. Your business and inventory strategies need to align.
Despite the fact that in recent years the lean revolution has hit manufacturing, many organizations, especially retailers and wholesalers, have yet to apply lean principals. And among those who do dabble in lean, the focus tends to be on suppliers upstream rather than adding value to the end customer. As more and more businesses seek to tighten the management of their inventory in order to increase efficiencies, opportunities to address end customer value will emerge. Paul A. Myerson, professor in supply chain management, identifies store- and distribution operations as prime candidates since that’s where the most waste can be cut. He writes:
Distribution is all about optimizing the trade-offs between handling costs and warehousing costs, and maximizing the warehouse’s total cube—utilizing its full volume, while maintaining low materials handling costs and minimizing travel time.
Mastery of lean management principals will come for companies that are both successful in identifying new efficiency opportunities within their existing supply chain and navigating around the pitfalls of businesses that have instituted similar inventory management techniques.
Fronetics Strategic Advisors is a leading management consulting firm. Our firm works with companies to identify and execute strategies for growth and value creation.
Whether it is a wholesale food distributor seeking guidance on how to define and execute corporate strategy; a telematics firm needing high quality content on a consistent basis; a real estate firm looking for a marketing partner; or a supply chain firm in need of interim management, our clients rely on Fronetics to help them navigate through critical junctures, meet their toughest challenges, and take advantage of opportunities. We deliver high-impact results.
We advise and work with companies on their most critical issues and opportunities: strategy, marketing, organization, talent acquisition, performance management, and M&A support.
We have deep expertise and a proven track record in a broad range of industries including: supply chain, real estate, software, and logistics.
by Elizabeth Hines | Jul 13, 2015 | Big Data, Blog, Data/Analytics, Strategy, Supply Chain
Analytics is good for business — as long as you can make sense of it.
Does your business suffer from a case of data overload? Or do you steer clear of new investments in supply chain analytics because you are afraid they could yield more data than your business can handle? You are in good company.
Several recent surveys indicate companies either are wary of advanced analytics tools or say they have failed to leverage the technology. The issue does not seem to be a lack of knowledge of its existence or potential impact — end users are generally well informed — but how to absorb the data effectively and apply it across the entire organization.
According to a Telematics Update, for example, vendors would be wise to spend less time on their sales pitch and more time presenting the data in a digestible format, ensuring compatibility with the end user’s legacy systems, and aligning the solution with the end-user’s key performance indicators.
The challenge is also captured in an Accenture survey in which only one in five companies said they are “very satisfied” with the returns they have received from analytics. And it’s not for lack of trying. Two-thirds of companies have appointed a chief data officer in the last 18 months to oversee data management and analytics, while 71 percent of those who have not created such a position plan to do so in the near future.
This passage from Accenture’s survey report hits the nail on the head:
Companies wanting to compete more aggressively with analytics will move rapidly to industrialize the discipline on an enterprise-wide scale, redesigning how fact-based insights get embedded into key processes, leading to smarter decisions and better business outcomes.
Most organizations measure too many things that don’t matter, and don’t put sufficient focus on those things that do, establishing a large set of metrics, but often lacking a causal mapping of the key drivers of their business.
As the survey suggests, the move away from an isolated approach to an integrated cross-functional model may be the key to squeezing the most out of supply chain analytics. According to Deloitte, the key to delivering strategic insights is creating asingle authoritative data set from which all business units can draw information.
However, only 33% of the Accenture survey respondents said they are “aggressively using analytics across the entire enterprise.” Instead, highly customized data is often collected for units within the organization. A spending forecast by procurement may look nothing like its counterpart coming out of logistics. The inconsistency in reporting makes it hard to share the knowledge, and that takes us back to square one: lots of data and little useful information.
Jerry O’Dwyer, a principal with Deloitte Consulting, summed it up this way in a 2012 post:
If you are performing analytics in different areas of the supply chain — for example, spend analytics or demand planning — you may be missing opportunities that an expansive approach can yield. For companies of all kinds, in-depth supply chain analysis offers an opportunity to create increased value throughout their operations.
Let’s hear it: What do you think companies need to do to put analytics to effective use?
Fronetics Strategic Advisors is a leading management consulting firm. Our firm works with companies to identify and execute strategies for growth and value creation.
Whether it is a wholesale food distributor seeking guidance on how to define and execute corporate strategy; a telematics firm needing high quality content on a consistent basis; a real estate firm looking for a marketing partner; or a supply chain firm in need of interim management, our clients rely on Fronetics to help them navigate through critical junctures, meet their toughest challenges, and take advantage of opportunities. We deliver high-impact results.
We advise and work with companies on their most critical issues and opportunities: strategy, marketing, organization, talent acquisition, performance management, and M&A support.
We have deep expertise and a proven track record in a broad range of industries including: supply chain, real estate, software, and logistics.
by Fronetics | Jul 6, 2015 | Big Data, Blog, Data/Analytics, Internet of Things, Logistics, Marketing, Strategy, Supply Chain
The battle for competitiveness in the cloud.
In this age of radical transformation for supply chains, top companies are tying together prevailing concepts, like big data and the Internet of Things (IoT), with cloud-based computing. Supply chains are being reimagined as digital networks that track not only physical goods, but also people, data, and money. As such, global technology giants continue to invest heavily in cloud computing.
The Chinese e-commerce company Alibaba Group Holding, Ltd. recently announced that it is launching its first international venture – a cloud computing hub in Silicon Valley, proving the fierce competition for market share is stiffening both globally and on the home turf. Notably, all five top-ranked companies listed by the 2013 Strategy & Global Information, Communications and Technology 50 study bet their future on cloud technologies. The companies (IBM, Microsoft, SAP, Oracle, and Cisco Systems) could not, until recently, be perceived as direct competitors, and now they all wield cloud-based portfolios as their competitive weapon of choice.
Analysts note:
The industry leaders are seeking dominant positions, wanting to become the kings of the cloud. As a group, they are putting distance between themselves and the second tier of followers.
For further proof data analytics is driving competition for cloud customers, we can look to a new report by Market & Research that shows data analytics and cloud computing are expected to record a combined growth of 26% annually over the next five years. The implication is that demand is hardly going to lessen as an increasing number of organizations need cloud solutions to manage and store the huge amounts of data that they use to transform manufacturing processes, fine-tune supply chains, forecast customer behavior, and optimize inventories – to name a fraction of potential applications.
And cloud-based computing is even moving the needle of interest in industries that seem inherently averse to making data and information more easily accessible. For example, concerns about data encryption, auditing controls, and transparency have stymied the adoption of cloud-based computing in the financial industry. According to a report by the Cloud Security Alliance, only 28% of American financial institutions have a cloud-based strategy in place, but as a sponsor of the report, Dr. Chenxi Wang, vice president of Cloud Security and Strategy at CipherCloud points out:
Cloud has made solid inroads in this industry with many firms looking to harnessing the power of cloud. There’s plenty of room for growth, particularly for providers who can fill the void for the auditing and data protection controls that are at the top of respondents’ cloud wish list.
Meanwhile, the public cloud services market alone could grow into a $100 billion industry by 2017, according to researcher IDC. Is your business prepared to leverage cloud computing for its supply chain activities? It’s coming, ready or not.
Fronetics Strategic Advisors is a leading management consulting firm. Our firm works with companies to identify and execute strategies for growth and value creation.
Whether it is a wholesale food distributor seeking guidance on how to define and execute corporate strategy; a telematics firm needing high quality content on a consistent basis; a real estate firm looking for a marketing partner; or a supply chain firm in need of interim management, our clients rely on Fronetics to help them navigate through critical junctures, meet their toughest challenges, and take advantage of opportunities. We deliver high-impact results.
We advise and work with companies on their most critical issues and opportunities: strategy, marketing, organization, talent acquisition, performance management, and M&A support.
We have deep expertise and a proven track record in a broad range of industries including: supply chain, real estate, software, and logistics.
by Fronetics | Jun 23, 2015 | Blog, Logistics, Marketing, Social Media, Strategy, Supply Chain, Transportation & Trucking
Drew McElroy, founder of the start-up Transfix, is no newcomer to the trucking industry. McElroy was born into the business; his parents owned and operated the freight brokerage Andrew’s Express, affectionately naming it after McElroy.
“I remember listening to my father structure deals. As a kid, it was all utterly confusing to me,” recalls McElroy. “I finally started to get my head around the economics of the business in my teens. From that point on, I became increasingly aware of the industry’s inefficiencies.”
Not long after McElroy graduated college, his father passed away unexpectedly. McElroy, already working for the family business, took over as president. In that time, McElroy successfully increased annual revenues from $4 million to $12 million. While impressive, McElroy still struggled with how the industry traditionally operated. “It was clear that our family business wouldn’t be the platform for world domination,” laughs McElroy. “But I believed that, fundamentally, there was a better way to get things done.”
Determined to build a new foundation based on his belief in “a better way,” McElroy left the family business and set out for San Francisco. He would spend the next year and a half couch surfing and networking in order to gain the expert business and tech insight he needed to plan what would become Transfix. “I knew logistics and I knew trucking, but I knew nothing about venture capital, or how to move from idea to implementation,” says McElroy. “I decided I should try – and try big. If I fail, I fail, but at least I tried.”
In 2013, McElroy was introduced to Jonathan Salama. Salama was among Gilt’s early engineers, and was pivotal in building the flash sale giant’s infrastructure and inventory software. McElroy knew Salama would be key in taking his idea to the next level; Transfix had claimed its co-founders, and its recipe for industry-leading success.
Transfix is a fully automated marketplace that is all about getting things from one place to another. What sets Transfix apart is the company’s platform and approach is vastly more efficient than the traditional approach, and it is much more user-friendly.
Transfix takes the industry’s inefficiencies head on. Transfix is a digital on-demand freight marketplace. It provides industry-leading mobile technologies and location-based jobs offers for independent over-the-road truck drivers, as well as cloud-based management platforms for small carriers and shippers
Here’s how it works:
A customer logs into the Transfix TMS and enters a new shipment. The platform automatically identifies the best driver depending on location, size of truck, etc., sending a load offer alert to the driver or company dispatcher by mobile SMS message or email. The load is accepted by electronic signature, at which point the customer receives automatic notification and the driver becomes fully visible within the customer’s real-time dashboard. Load management from that point on becomes “as simple as Tinder.” Transfix geofences the driver with a five mile radius, immediately alerting Transfix of any issues. Once the load is delivered, the driver is paid within 24 to 48 hours, significantly faster than the industry standard.
Transfix just launched an app (iOS and Android) that is focused on truck drivers. Transfix’s app integrates with the company’s digital marketplace and is driver-centric. The app gives drivers the ability to manage loads, map their itinerary, and manage payments. The app also provides truck drivers with trip planning essentials including the location of showers, ATMs, weigh stations, fuel prices, and weather. The app is free and can be used by anyone with a valid motor carrier number – the driver does not have to associated with Transfix. “Developing this app and making it freely available to all drivers is just the right thing to do,” says McElroy. “Without drivers, this industry would not exist. We need to do right by drivers by making their lives easier.”
Things are moving fast for McElroy and Transfix. Within 15 minutes of updating his LinkedIn profile, McElroy got a call from a logistics Manager at Barnes & Noble and, before he hung up, had freight loads to manage. Fast forward a few months – with Transfix, Barnes & Noble has realized improvements in their processes and has seen their deadhead runs (times driving without cargo) cut by at least 50%.
Transfix has raised close to $2.5 million to date and is already generating several thousand a month in revenue.
McElroy and Transfix are poised for world domination – mind you, a win-win benevolent hegemony – a la Uber.
Fronetics Strategic Advisors is a leading management consulting firm. Our firm works with companies to identify and execute strategies for growth and value creation.
Whether it is a wholesale food distributor seeking guidance on how to define and execute corporate strategy; a telematics firm needing high quality content on a consistent basis; a real estate firm looking for a marketing partner; or a supply chain firm in need of interim management, our clients rely on Fronetics to help them navigate through critical junctures, meet their toughest challenges, and take advantage of opportunities. We deliver high-impact results.
We advise and work with companies on their most critical issues and opportunities: strategy, marketing, organization, talent acquisition, performance management, and M&A support.
We have deep expertise and a proven track record in a broad range of industries including: supply chain, real estate, software, and logistics.
by Jennifer Hart Yim | Jun 22, 2015 | Blog, Manufacturing & Distribution, Strategy, Supply Chain
This article is part of a series of articles written by MBA students and graduates from the University of New Hampshire Peter T. Paul College of Business and Economics.
Melanie Payeur graduated from the University of New Hampshire in 2007 with a degree in Mechanical Engineering. She has since worked in various roles supporting manufacturing and packaging operations in the food and beverage industry.
Do you know where your byproducts go?
Manufacturing often produces some sort of physical byproduct. Examples range from plastic strapping on a pallet of corrugate boxes to carbon dioxide collected off a tank of fermenting beer. Byproducts are the unspoken of and often neglected “cousin” of manufacturing.
Byproducts of manufacturing can be compared to the stage crew at a Broadway show or on a Hollywood movie set. They serve an important purpose. Without the lights, cameras, and curtains, there is no show. Similarly, without plastic strapping, a pallet of corrugate would fall over during transport because it wasn’t properly secured.
The stars of the show are the finished goods on store shelves. Just like people don’t stick around to see the name of the on-set hair-stylist when the credits roll at a movie, consumers often don’t think about the byproducts associated with the packaged food they eat or other goods they purchase. It’s possible that they don’t even know these things exist.
However, consumers are becoming more conscious of supply chain issues. Many have an awareness what Fair Trade is in association with sourcing of products such as coffee and cocoa beans. They discuss agricultural sourcing and the ethical (or not) treatment of animals raised to be part of the food chain. Even the effects of emissions and chemical waste on the environment are among topics of which many consumers have some awareness.
Plastic old, Plastic new
What about the plastic strapping on that pallet of corrugate though? Where does it go? Who even knows it exists other than the operator that cuts it off the pallet in the factory? Could it become a plastic bottle someday? Or a swing set? Maybe it will become plastic strapping again?
While countless other types of byproducts exist, plastic is a particularly interesting example. Fluctuations in the price of petroleum are directly correlated to the price of brand new, non- recycled plastic pellets. It is completely possible, and often realistic, that it is less expensive to create brand new plastic strapping than it is to recycle old strapping.
Trailer Bags and Trash Bowls
Creative and novel uses of byproducts are happening today. One example is a Swiss company called Freitag who produces trendy messenger bags, wallets, and purses from old side panel tarps (popular on tractor trailers in Europe). At the end of their useful life on the road, these tarps are purchased by Freitag and sewn into functional accessories.
Another example specifically related to plastic are Garbage Bowls made famous by Food Network host, Rachael Ray. These bowls are made from recycled pieces of broken plates. There’s a byproduct in there somewhere!
While these are great examples of repurposing byproducts into something new, the truth is that Freitag was originally looking for a material that would create a durable and functional product. Lucky for them, reusing something that might have otherwise been thrown away is a great marketing story. They charge an average of $200 for a standard messenger bag. Is it realistic that the reverse situation can create profits? Can we find another use for production process byproducts which would create a trendy or otherwise highly desirable product?
Can we do better than throwing our byproducts away?
If it’s not a company’s core competency, it probably shouldn’t get into the business of designing handbags. However, as supply chain professionals, we should understand all of the byproducts of our manufacturing process; especially those related to materials that we source as inputs, like plastic strapping.
It is as important to look at the waste stream from our process as it is to examine how we source raw materials. Are we recycling our byproducts? Is there someone who is looking for our ‘trash’ as an input to their process? Do we have the opportunity to have a profitable side business as a coincidental supplier to someone else? At the very least, can we do better than throwing our byproducts away?
An example of success can be seen in the food manufacturing industry. Some companies donate or sell their byproducts to the Bakery Feeds Program. This organization creates animal feed out of food byproducts such as misshapen cupcakes and other edible process waste. It might be cost neutral to dispose of waste in this way, but that is better than otherwise paying for disposal.
I challenge you to examine the waste streams associated with your process. Identify where at least one of your byproducts could go. From here to there and there to here, your byproducts could end up anywhere.
