Business jargon is something we all use at work to describe common situations or concepts. In fact, we use jargon so much that over the years the words themselves tend to lose meaning, or their meanings get skewed.

As a regular feature on this blog, I take a minute to examine some of these jargon words in an attempt to help us remember what these words really mean.

"Innovation" is one of these words. I would define this word as "finding a new way of doing something that works better than the previously established way."

The part about finding the new way is important. Innovation can happen purposefully due to years of research and work. But, innovation can also happen by accident. One famous example is the Post-it, which was actually the result of an attempt to make stronger glue. It resulted in an accidental creation of a less-sticky glue that, when applied to paper, allows Post-its to be removable and re-usable today.

The word "innovation" has been around since the 1500s, and shares similar roots with the words "alter" and "renew." Because of these roots, innovation goes hand and hand with change, which we are seeing now with the automobile industry. Great change has swept through the industry, as the market redefines what it wants from a car as a product. As the car producers adapt, innovation has cropped up. An example of this is the hybrid car, which consumers like, because they are green and save on fuel.

A more extreme example of innovation, not in the auto industry but in personal transportation itself, was recently covered in a Wired Magazine article. It described a Florida retirement community with 77,000 residents, many of whom use electric golf carts to get around.

But they don’t just use the carts to get around the golf courses and recreation areas of the retirement community - they drive them in the city itself, which has built golf cart access around the roads and shopping centers so these residents can easily access them by golf cart.

Car-sharing is another innovation in transportation from ZipCar, a service that allows you to reserve a car, for a few hours or for a day, that’s already parked at a designated spot. You reserve it online, then go to the parking spot and drive away. When you’re done, you return it to the same parking spot. It’s applicable not only to the general public, but to businesses and to universities, where sometimes students aren’t able to bring their cars.

Paid car-sharing and electric golf carts for running errands around town may sound like strange concepts, especially since they are new. With the many universities and colleges in Raleigh, North Carolina, where I live, I’ve been seeing ZipCars on the roads once in a while. I don’t expect to see any golf carts any time soon though – they would be crushed on the I-440 Beltline!

But back to my word: the way to make innovations like these really work is to try them out in the appropriate market. Innovation, when it’s really good, catches on like wildfire through adaptation as people come to view the new way as better, easier or faster.

How can you foster innovation in your company? This is a burning question now, as the innovators during this recession could be the winners when it’s over and recovery and new growth commences. I suggest you create your company’s Great Comeback plan, as outlined in this Executive Briefing, which has the steps to allow for innovation while keeping ahead of the competition.

What innovations are happening in your industry now that you would have never expected? Leave a comment below and point out some examples.

Photo credit: jdanvers

You know the three Rs: Reduce, reuse, recycle.

But do you know the five Rs? These five should have a major impact on your business!

I explain the five Rs in the latest Global Supply Chain Podcast, which kicks off a five-part series talking about sustainability issues in business and what top companies are doing to green their operations.

I'm really excited about this series, because not only can it help companies with supply chain cost reduction and with other costs, it can have an amazingly positive effect on the world. In the podcast, I talk about how one company set out to reduce their carbon usage, and they were able to hit their goals. In the process, the company ended up saving $1.5 billion dollars!

Listen to this introductory podcast here:

http://www.tompkinsinc.com/podcast/transcripts/11-17-09-podcast31-sustainability-series-1.asp

The next parts of this series will be on:

1. Packaging

2. Transportation

3. Facilities and Buildings

4. Recycling and Reuse

 

This is a great topic, so be sure to subscribe to get updates when the next parts in the series are released every two weeks:

http://www.tompkinsinc.com/podcast/

Speaking of green and sustainability, congratulations to Tompkins Associates’ clients for these recognitions:

Williams-Sonoma for being named a "2009 Green Supply Chain Award" winner by Supply & Demand Chain Executive magazine. The award recognizes companies that incorporate sustainability into their supply chains.

Go!Go!Go!

Photo credit: Pylon757

As more organizations recover from the recession and enter The Great Comeback phase, one of the potential disruptive strategies they may deploy is Mergers & Acquisitions. The combination of organizations seeking to bounce back and the loosening of the credit markets make M&A feasible again after a 12-month hiatus.

However, we need not forget what we have learned over the last five years of M&A. The prime lesson being that M&A can be a major success or a major failure – it definitely depends on how you approach the process.

In a recent article by Russ Banham in Chief Executive magazine, he presents his "Six Deadly M&A Sins." I hear you, Russ, and can speak in detail about more than a few of these sins.

Through the successful acquisitions that Tompkins Associates has supported for both strategic organizations and private equity organizations, we have witnessed many of these sins up close and personal. Steve Ganster and Kent Kedl with our Technomic Asia division can talk for days on woes stemming from mergers and acquisitions in Asia and China business.

But let me focus here on two particular sins that can kill the value of a supply chain in the M&A process.

Deadly Sin #3: Less-Than-Diligent Due Diligence

Due diligence in M&A is so very basic, but honestly, still not done well. Consider the following essential due diligence questions for 1) Sourcing Due Diligence 2) Supply Chain Network Due Diligence, and 3) Supply Chain Systems Due Diligence. These questions below must be fully answered to avoid committing a deadly sin.

1. Sourcing Due Diligence

Level of sourcing understanding of trade agreements, duty and customs and impact on total sourcing cost?

Application of sourcing clusters?

Any challenges on classification, valuation, marking, anti-dumping duties or intellectual property?

Customs compliance risks?

Trade action threats?

Any customs and border protection exposure or disclosures?

2. Supply Chain Network Due Diligence

Proper number and location of facilities?

Correct mode of transportation and appropriate carriers?

Effectiveness of transportation management?

Proper inventory policies and reasonableness of inventory turns?

Proper decisions on insource vs. outsource?

Competitive discounts on transportation?

Appropriate DC level of automation?

Competitiveness of factory and DC efficiency and productivity?

Reasonableness of freight spend?

Validity of inventory valuation?

3. Supply Chain Systems Due Diligence

Is the right IT infrastructure in place?

Are the right supply chain applications in place?

Are the supply chain applications being used to the fullest?

Are the supply chain applications properly integrated?

Are the supply chain applications being used correctly to support day-to-day operations?

Where are the inefficiencies resulting from poor utilization of supply chain applications?

Deadly Sin #4: Post-Merger (Dis) Integration

Don’t forget the "Top 7 Keys to Supply Chain Integration" when doing an acquisition:

1. Supply chain strategy for the integrated business

Due diligence before the acquisition

Understand and create a mitigation plan for any out-of-line costs

2. Operations strategy

Keep the plan consistent with larger strategy

Identify and integrate untapped supply chain potential

3. Organization of the integrated supply chain processes

Thoroughly articulate the desired result before beginning

Identify overlap, gaps, and contingencies, along with…

4. Functions or levels to outsource

Understand and differentiate core functions

Be honest about where others can do it better

5. Differentiation through supply chain performance

Fulfillment of many M&A opportunities resides in the supply chain

Not just economies of scale, but innovation

6. Supply chain technologies utilization

Understand the opportunity and plan for the implementation

Not a silver bullet

7. Employing change management

First 100 days and long-range plan

Reassess assumptions, miscalculations and new opportunities

Overall, if you remember that it’s about adding to the value of the supply chain rather than taking away, the M&A process will go much more smoothly.

More resources on M&A:

M&A Strategy –
http://www.tompkinsinc.com/operations/mergers-and-acquisitions.asp

 

China M&A: An Interview with Dr. Kim Woodard on mergers and acquisitions in China –
http://www.technomicasia.com/blog/2009/10/28/china-ma-an-interview-with-dr-kim-woodard-part-1

Photo credit: Lel4nd

If you like this blog and are interested in learning more about Supply Chain Information Technology, you’ll want to take a look at Tompkins Associates’ new blog. It is written by a bunch of great guys who really know their SCIT.

You can get to know them better by reading the inaugural post.

The technology leadership team’s expertise extends across the entire supply chain – from global sourcing and inventory management to business case development, as well as selection and implementation of supply chain execution systems and warehouse management systems.

And yes, the blog has a barcode at the top because they are geeks, but I mean that in the nicest possible way. They are the best kind of geeks: those with the knowledge and skills to offer advice that keep company systems running like clockwork and save money at the same time.

Check out the first couple of posts on this newly minted blog and learn more as they introduce themselves, get into a few hot topics and explain how to plan for SCIT needs during the Comeback of the economy.

Visit: http://supply-chain-it.tompkinsinc.com/default.aspx

Go!Go!Go!

Jim

Guest blogger Dan Avila, a partner in Global Supply Chain Services for Tompkins Associates, wrote this post on the pulse of retail at this critical time between the economic situation, retail recovery, and the upcoming holiday buying season. Dan's experience includes a focus on retail, with over 20 years in supply chain and 10 years in consulting. Here are his thoughts on the matter.

-Jim

There’s a special "glow" around the retail industry as we move into the holiday season, and it has nothing to do with Rudolph the Reindeer’s nose.

Almost daily, I read a news article predicting what will happen with retail sales this holiday season. In a recession, it makes sense that a brighter light shines on retail and sales predictions. I have seen some predict a 2% decline and others predict as much as a 4% increase over 2008. Either way you slice it, retail is still in the middle of a downturn with some retail sectors performing better than others.

Discounters continue to perform well and luxury item retailers continue to suffer, with all other sectors somewhere in between. While many sources believe the worst of the downturn is over, consumers are still going to be cautious this holiday season. According to a recent survey from the National Retail Federation, Americans are not ready to declare an end to the recession until unemployment levels subside. So the return of retail is not looking good for this holiday season, but many believe that retail will begin to recover in 2010.

It has been vital for retailers to adapt their operations during the downturn in order to keep their doors open. Two significant changes were necessary. First, they reduced their overhead by eliminating unnecessary positions and costs, and secondly, they reduced their inventories by ordering less and by limiting their selection of products to their customers. Because of these two approaches to reducing retail supply chain costs, retailers are in a much better place from an operations and profitability perspective once customers return to their stores.

So what happens in 2010 when retail rebounds and becomes strong again? Will retailers be poised to take advantage when customers come back through their doors? Will the tough lessons learned in 2008 and 2009 help retailers in the future?

The Great Comeback has begun and each of the areas of our economy will slowly rebound, with retail typically lagging behind the other sectors. I see three key areas which will make or break retailers during the Comeback, two of which we have already discussed – reducing operating costs and reducing inventories. The third is evaluating logistics networks.

1) Cost Reduction: The Great Recession has taught surviving retailers many lessons, one of which is to become lean. By eliminating redundant positions, re-thinking the organization structure, and reducing unnecessary costs, retailers are stronger than they have been in a long time. This must continue when the customers return, or they may find themselves in the same situation when we have another downturn.

2) Reduced Inventories: The lessons learned during the Great Recession will be long lasting. Several retailers did not survive due to their high inventory levels and their inability to adapt with the changes in demand. Moving forward, successful retailers will be agile with their inventories and will be quick to pull the plug on low-selling items.

3) Logistics Networks: Many retail logistics networks have not been evaluated in well over five years, and therefore reflect a completely different economic situation. From the cost of fuel to the cost of labor to offshoring and logistics outsourcing, there have been many changes that can make logistics networks obsolete and ineffective.

While we may not be able to predict the exact end of the recession and the beginning of the recovery, one thing is for certain: For retailers to survive, they must take the lessons learned from the Great Recession and use them to fully recover and prosper during the Great Comeback.

Photo credit: timparkinson

I am one of those people who can’t stop thinking about work while on vacation. This is bad in one sense, because I sometimes have trouble fully relaxing, but good in another sense because I learned on my recent vacation cruise how much that my observations about Egypt and our current Tompkins Associates initiatives have in common.

Since my last post, my wife and I have added the Luxor Temple, the Valley of the Kings, the Hatshepsut Temple and the Colossi of Memnon to our vacation highlights. Earlier this week, as you may recall, I blogged about the Nile River and gained a newfound respect for water and its role in sustainability.

Today, my mind is tuned in to leadership and how it has timeless significance. I am also focused on planning for The Great Comeback, which you can read more about here and view a video (organizations should be planning for economic recovery instead of holding back and doing nothing to promote growth during the recession. I also recorded a podcast on the subject of economic downturn supply chain strategies).

Leadership is important and always will be – It has been so since the beginning of time and I promise you, it will not change. I thought of this as I observed the quality of life of many of the people of Egypt. Although I did not visit Egypt 5,000 years ago (I am not nearly that old!) I did view with interest the paintings on the walls of the Tombs depicting life in Egypt back then.

I have a great deal of respect for Egypt as one of the world’s oldest civilizations and wondered about the leadership of its kings and pharaohs, along with the leaders in everyday Egyptian life.

Of course there was a lot of farming, fishing and handcrafts. Progress was powered by donkeys, horses, camels and men. Egyptians lived in tents and stone houses without modern conveniences, just as in other areas of that time.

But what came as somewhat of a surprise to me is that this appears to be exactly the same standard of living I witnessed for many in Egypt today. And I am speaking about just the parts of the country that I was able to visit.

I make this observation not in a critical way, but rather, because it is directly tied into another item on my "To Do" list – an updated speech on The Great Comeback. Of course my speech topic is about the recovery from The Great Recession. But here in Egypt, it seems to me that what is needed is a Great Comeback of a different character.

Ramses II was born around 1300 BC, and when he ruled, Egypt was the wealthiest country in the world. Today, however, much of that wealth is gone, and many Egyptian people live with the same standard of living as their ancestors of over 3,000 years ago. I realize that there has been a huge amount of water under the bridge between Ramses and the 21st Century, but wow, talk about the need for a recovery strategy and then a comeback strategy.

It looks like the need for recovery and comeback planning is equally important for the G-20 countries who got hit by the recession as it is for the developing countries that have never had a robust global economy. There is a huge need for a Great Comeback with a true global impact, and it’s something that our leaders would do well to remember as we climb the steep hill to economic recovery.

I would like to know your insight on leadership and global economic recovery. Now back to work, vacation/work is over.

Go!Go!Go!

Jim

Sometimes we get subtle reminders of core life principles, and other times they just slap us right in the face. I had one of those hard slaps recently, involving water, sand, and environmental sustainability practices.

This time last week, I was on the back of a bus traveling between Safaga, Egypt, and the ancient Egyptian city of Thebes, Luxor. Earlier in the week, my wife and I were in Cairo, Egypt, where we saw the Pyramids of Djoser, Teti, Unas, Userkaf, Keops and Giza, the Tombs of Mereruka, Kagemni and Ankhmahor and the Great Sphinx. We were on a two-week cruise that began in Athens, Greece and ended in Dubai, U.A.E.

My harsh reminder came as I was pondering the Top 7 High Intensity Principles while in the deserts of Egypt and the area around the Nile River. First, I want to note that the American phrase, "the shifting sands of time," is really contrary to reality. Although 85% of Egypt is sand and there is a mighty wind that constantly blows in the desert, the times in Egypt have not shifted all that much. At least my observations are that the lessons learned over the last 5,000 years have not led to that many changes in Egypt – the sands of time have not substantially altered circumstances in light of the past.

Now on from sand to water. Our cruise took us to Port Said, Egypt and then through the Suez Canal to Safaga on the Red Sea. Without the bounty of the Nile – the world’s longest river at 3,470 miles – it seems that Egypt would cease to exist. The Greek historian Herodotus was right on target 25 centuries ago when he wrote that "Egypt is the gift of the Nile." The river is clearly the country’s core.

On the highways between the Suez Canal, or Gulf of Suez or Red Sea, and the Nile River, a bus ride is about 3 to 4 hours through the desert. It is around the Nile where the pyramids, tombs and temples cluster, where the majority of the people live and where most Egyptians have always lived. In fact, without the Nile, the country and its pyramids, tombs and temples would not exist. Although the sands of the Egyptian desert shift continuously, I observed that little has changed in Egypt – it is all about the water and the flowing rhythm of the Nile.

Of course, we all know that water is the essence of all life, and we would do well to remember it in this heightened time of striving for green practices and sustainability in life and business. The center (the core) of sustaining life is clean water – something that is easy to forget when we’re sitting in offices, airports, restaurants, or at home with a steaming cup of tea.

Interestingly, one of the items on my "To-Do" list that I worked on during this trip was a green, environmental sustainability podcast series. This research has taken me well beyond carbon counting and into material consumption, material recycling, pesticides, and herbicides. My mind has been focused on water, air and soil contamination, natural resources, food supply chains, and sustainable business.

Egypt has soared in popularity in the last few years as an offshore destination for Europe and has a young, growing population. Even as the country is gaining increased attention as a location for global business processes and IT outsourcing, the Nile still commands the greatest respect. Water! Egypt is surely dealing with the economic fall-out of the global financial crisis, but it is water that is important for survival and will continue to be so.

Have you been to Egypt recently, and if so, what are your observations?

Jim

Photo credit: Michael Gwyther-Jones