Are you hearing or using a lot of business jargon these days or is it just me? I know that over-used words and phrases catch my attention almost on a daily basis.

Once in a while in this blog, I take a look at some of these jargon words and examine what they really mean, because their meanings tend to get lost over time and with repeated usage.

I thought I would take a look at a pretty commonly used word this time: The word "challenge," especially versus using the word "problem." (As we move from 2009 to 2010, I thought the word challenge would be worth examining in terms of anticipating what's coming in the New Year, because when I think of 2010, I think it's going to be a exciting challenge!)

What's the difference between a problem and a challenge? Sometimes when we refer to a particular situation as a problem, we switch to calling it a challenge because the word problem seems to conjure up something that is causing trouble or creates a hassle. It has a negative connotation.

This is especially true when we are talking about data collection on projects. I think we balk at calling anything a problem when interacting with a client, within business consulting or any other kind of work done for clients, because we don't want the work to sound like a hassle for us or an impossibility. Instead, we refer to the missing data as a challenge that both parties can identify with and move toward resolving as a team.

Saying challenge instead of problem does seem more positive. The word challenge conjures up a more exciting picture than the word problem. Challenging something sounds more demanding, as if we are championing a cause or engaging in a particularly difficult or stimulating battle for our desired results.

To the contrary, the word problem sounds distasteful, even emotionless, as if it were a mathematical inquiry we were working on with a uniform solution that offers no room for creativity or excitement. On the other hand, saying something is a challenge seems to leave room for fresh ideas and new ways of operating and thinking.

Although the word challenge is a little over-used as jargon, I do believe it has its place. For instance, I would not call the coming New Year, 2010, anything except a challenge. 2010 is going to be a major year for many companies recovering from the Great Recession, and although 2009 definitely had it share of major, major problems, 2010 is going to be a year of challenges.

I think 2010 will also be defined by another word that is over-used but applies here very well: Opportunities.

So as 2009 closes, what kind of problems, challenges, and opportunities are you anticipating? I’m ready to meet the challenges head on. Happy New Year and don’t forget to Go!Go!Go!

Jim

I cannot fully express how excited I will be to ring in the new year. And it’s not because I’m longing for champagne, confetti and a kiss as the clock strikes midnight. These are all nice things, but mostly, I am elated to finally say good riddance to 2009.

I would bet that most people feel exactly the same way. Let me clarify: I am ready to move out of recovery mode and really make things happen!

It’s time for energy, capital, sustainability efforts, people and big ideas to come together again and grow global business. As executives, one of the things we do early in the year is to challenge ourselves on how to take our business to the next level. And I don’t think this challenge has ever been more welcome than now.

In my view, the most essential thoughts we can take into 2010 are the "5 Rs" plus one: Reduce, Reuse, Recycle, Redesign, Re-imagine, and especially for this season, Rejoice!

These "6 Rs" force innovation into the life cycle of organizations, products and people and take the environmental focus to a whole new level. This is the view that I challenge you to embrace in 2010.

 

1. Reduce: Examine your company’s packaging, redundancies and areas of waste. What can be reduced without affecting customer service and quality? It could be time to streamline materials, handling or logistics. Examine reduction opportunities across the supply chain.

 

2. Reuse: Why throw it away if it can be recycled or repurposed? New products and ideas are great, sure, but creating waste where reusing would be better, this is not so great. What is your company doing with respect to reverse logistics? There could be a revenue opportunity for returned or refurbished products. Inventory will take on a whole new meaning in the next decade.

 

3. Recycle: Sure, many current and future regulations require recycling, but this should just be a matter of sound business these days – sustainable practices that add value and are "green" in terms of the environment and your bottom line. Fly your "green flag" proudly and with cost reduction in mind.

 

4. Redesign: What is a good design today may or may not be a good design tomorrow when your company grows. How can you redesign your distribution center or logistics network to bring new life to your business? Does your information technology need an upgrade? Or perhaps redesigning means simplifying. It varies by industry sector and company but bears looking into in the coming year.

 

5. Re-imagine: This goes to the heart of innovation and big ideas. It’s time to kick-start our creativity again, since it has likely been stalled by the recession. What are the possibilities to expand your organization beyond the pure planning phases? What ideas will knock the competition off its feet? Is the booming China market in your company’s future? Sometimes, the best business ideas begin with a spark of imagination tempered with knowledge.

 

6. Rejoice: Be happy that 2009 is behind us, of course. But also rejoice in the fact that companies are really about people, despite a year that has seen too many lose their jobs as companies lost their footing and their customer bases. Celebrate small and large successes and retain your organization’s talented people, because you will need them. Have some fun in your celebrations and let your staff know that they are appreciated.

Ahhh .. It will be wonderful to get back to risk-taking, creativity with ideas and projects, and increased confidence and all the rewards that come with them. Sure, it will take hard work but that in itself is a reward.

How do you think the "6 R’s" will help you in 2010? I would also be interested in knowing why you want to bid good riddance to 2009; there may be a few things I left out. Happy Holidays.

Go!Go!Go!

Jim

More resources:

Sustainability podcast series, http://www.tompkinsinc.com/podcast/

Service supply chain and reverse logistics, http://gogogosupplychain.tompkinsinc.com/post/Services-Supply-Chain-Aftermarket.aspx

I recently joined Frank Quinn at Supply Chain Management Review (SCMR) for the webcast "Getting Supply Chain on the CEO’s Agenda."

I am glad Frank selected this topic, as we’ve been more and more engaged on this very subject. Although "supply chain" is certainly not a new subject, it is new to some CEOs. So it’s the responsibility of the supply chain professional to help CEOs understand how they can use supply chain technology and strategy as a competitive weapon.

Supply chain leaders need to know how to speak the language of the CEO and how to prepare a successful business case. To do this, they need to be able to convey the importance of the supply chain, understand the CEO’s interests, and ensure the supply chain is meeting the interests of the CEO.

So, first, it is essential to communicate to the CEO the importance of the supply chain:

1. The objective of the supply chain is to increase the top line, reduce the cost of performance, and therefore, maximize profits.

2. Increasing the top line comes from the supply chain focus on responding to the customer.

3. Reducing the cost of performance comes from the supply chain focus on total delivered cost.

4. The supply chain focus on responding to the customer involves synchronizing supply with demand while minimizing the impact of variability.

5. The supply chain focus on total delivered cost involves the synergistic reduction of costs of the supply chain (procurement, manufacturing, inventory management, warehousing, transportation, etc.).

We also need to get to the heart of the CEO’s interests:

CEOs are very interested in profitability and happy customers.

 

CEOs are very interested in mitigating risk, forward-looking strategy, and working with, supporting, and encouraging professionals who can help their organizations become more successful.

 

CEOs are very interested in using their time wisely.

And most importantly, answering the following five questions about your supply chain will help determine your CEO’s interest in supply chain:

1. Does the supply chain have a positive impact on profitability and customer satisfaction?

2. Does the supply chain help mitigate risk?

3. Does the supply chain contribute to the forward-looking strategy of the company?

4. Does the supply chain make the organization more successful?

5. Is the time invested in the supply chain by the CEO time well spent?

As companies are pulling out of the recession, CEOs are dealing with the short-term issue: budget. At the same time, they also have a long-term issue on their minds: preparing for the coming boom.

Now is the perfect time to get supply chain on your CEO’s agenda and prepare your competitive weapon for 2010. How do you talk to your CEO about supply chain, and does it yield results? I’d like to hear your thoughts.

Go!Go!Go!

Jim

Photo credit: lrargerich

2009 has been a very difficult year for all of business. However, as the year comes to a close, it’s evident to me that the most challenging sector has been the retail sector.

I mean, WOW! My thoughts on the most challenging sector are based on the timing of the macro economic recovery and 4th quarter figures. Talk about uncertainty and challenges in predicting the short term requirements – 4th quarter 2009 has been impossible.  

I started writing this blog post in early December, after a lackluster Black Friday and a better than expected Cyber Monday. How will this year fare compared to other years? Recently there were articles in the Wall Street Journal forecasting great results for retail in the 4th quarter and contradicting predictions that the 4th quarter would be well below 2008 figures.

To be perfectly honest, I think I have about as much of a chance of predicting Holiday 2009 as I do predicting the Super Bowl of 2010. Nevertheless, let me tell you what I do know about the retail supply chain that will be true the day you read this:

1. Inventories have been cut based upon financial mandates and not upon a business process of inventory optimization. It is absolutely critical that retail supply chain executives design their Sales & Operations Planning process to allow for the synchronization of supply and demand. By not doing this during the holiday season, retailers will be leaving money on the table. As early as November, some retailers were out of stock on key items with no plans on replenishing their stores.

2. The objective of sustainability efforts is not some environmental utopia, but rather the reality of profitability. The reality of profitability is a result of cost reductions resulting from sustainability efforts and the enhanced revenue growth and goodwill that result from the customers who relate to and appreciate your organization’s stance on sustainability. Sustainability is not a fad. It is a leading business practice and a key ingredient for success in retail.

3. The big picture of the supply chain cannot be over-emphasized. The reality is if all elements of Plan-Buy-Make-Move-Store-Sell are not done in unison, there is little opportunity for the supply chain to truly deliver a competitive advantage. Excellence in the global end-to-end supply chain is required if organizations are to prosper.

4. A real challenge for all retail supply chains is reverse logistics. Reverse logistics is not as simple as "reversing" the supply chain. It is much more complex and sophisticated and involves the 5 R’s of sustainability: reduce, replace, reuse, recycle, and reinvent. Leading retailers have changed the way we think about returns, and are looking at it from a sustainability perspective. Many retailers have reinvented their returns processes and are using returns as an opportunity to create customer loyalty and as a revenue generating source by recycling, refurbishing, and reusing items and selling the items on secondary markets.

5. And finally, what could possibly be the greatest opportunity I see for retail supply chains going forward is the challenge of assuring that the overall business strategy is consistent with the supply chain strategy. For example, if your business model is based on a high level of promotions, does your supply chain support this strategy? Similarly, if the business model is "Every Day Low Prices," how does your supply chain strategy mirror this business strategy? It is critical that your supply chain operation of people, process and technology match your business strategy and that we are in lockstep to make the supply chain a competitive weapon.

So, the retail sector is experiencing the worst timing possible. The economic recovery is precisely overlaid with the 4th quarter of 2009. Whether this plays to your advantage or your detriment depends upon your ability to address the above five issues of inventory management, sustainability, supply chain, reverse logistics, and business supply chain strategy.

What are your thoughts on how this quarter will pan out in retail? Will you dare to make a prediction or would you rather bet on the Super Bowl?

Go!Go!Go!

Jim

Now that all but a few extremely pessimistic economists have decided the worst of the Great Recession is behind us, I continue to be surprised by how folks are surprised by the things that I predicted and wrote about more than a year ago. I guess this can be attributed to the old reality:

In good times many believe good times will never end, and in bad times many believe that bad times will never end.

We are living this reality today. Here are three illustrations:

1. A year ago no one believed the capital markets were as bad as they were (they were not functioning), and now no one believes they are as good as they are. A year ago, companies were starved for capital, and this made the downturn worse. Now the opposite is happening, in that the capital markets are much stronger than most appreciate. The economy is gaining strength and returning to growth sector by sector.

2. A year ago many did not believe unemployment would hit 10%, but it did and worse. This same group of people does not want to believe that now, about 6 months after the bottom of the Great Recession, that the unemployment numbers will begin to fall. Employment numbers will go up, driven primarily by small business, and the American consumer who is returning to the marketplace, with pent-up demand, will restore growth to the global economy.

3. Many felt the China bubble would burst with the Great Recession, and it did not, but now they are saying the Chinese infrastructure investment and credit expansion has beget excess capacity that will result in "The Sky Falling." First of all, it is important to grasp that it is still the American consumer that drives the global economy and not the Chinese consumer, but even more importantly, understand that the 8-9% annual growth of the Chinese economy will continue into the future.

Sure, there will be bumps in the Chinese road, but the reality is that China is in its very early phases of economic development and is handling the residual of the Great Recession very, very well. The continued evolution of China will take place, globalization will be a key factor going forward and the global supply chain will continue to be an important weapon of growing, successful businesses.

What do you think about these three illustrations of reality? Is this what you were expecting?

When many folks see the term "service supply chain," they automatically think "reverse logistics." But lately, I have come to the conclusion that this is a case of bad terminology. For example, if you ask a child what reverse logistics is, he or she may say that it is logistics done in reverse.

But really, this is not the case. Product isn’t going in a backward direction – back up through the supply chain. It’s not like pressing rewind and seeing a product moving backward to its original state before it was created. On the contrary, it’s more like when you come to a fork in the road and have to decide which path to take.

The fork represents the place and time in the supply chain when a company has to decide what to do with

Servicing the products they have previously sold

Retrieving the products they previously sold

Retrieving inventory from the field – whether it’s returned, recalled, overstock, etc.

Service supply chains represents the options (or paths) for handling these product flows.

It’s not a new concept. But as the Tompkins Supply Chain Consortium found in a recent Service Supply Chain Hot Topic Survey, it hasn’t received much attention lately, especially during this recent ugly economic downturn.

The survey also notes the following challenges that companies and individuals in the service supply chain are seeing:

The low degree of outsourcing being done in service supply chain functions;

Inadequate management involvement in the process;

Lack of sound forecasting techniques for service parts;

The amount of wasted effort in the company processes; and

Inefficient and ill-suited IT systems to manage service supply chain activities.

As I’ve repeated over and over, now is a great time to make changes, and improving your service supply chain practices should at least be on your list of areas to assess. With improved practices in this area, you can reduce costs and improve customer satisfaction.

Also, many companies may be interested in the sustainability benefits of service supply chain functions. Product screening, recycling and resale, and remarketing of materials and products, as well as other functions, can help with green supply chain initiatives.

An interesting fact noted by the Consortium is that the companies leading the sustainability efforts are the same companies that lead in managing and executing service supply chain processes. (See the figures below from Tompkins Supply Chain Consortium report, "Service Supply Chain: The Growing Challenge of After-Sales Supply Chain Management," for more information on the disposition of returned product.) 

I’m not trying to get philosophical on you, but when you come to that fork in the road, don’t you want to be prepared? Having your service supply chain in order (and not just thinking that you’ll run the logistics in reverse) will have great results for your company.

Do you share my view on the terminology: It’s service supply chain, not reverse logistics?

I would like to hear your thoughts.

Go!Go!Go!

Jim

Read more on reverse logistics in this article, Returns, Refunds, & Recalls: Reliable Reverse Logistics

See the scope of Service Supply Chain consulting services from Tompkins Associates (PDF).

After further reflection on "innovation" and what it means to be "innovative," I think we have a real problem when it comes to the recent thinking on this topic.

I just read a thought-provoking article on "the discovery skills that separate the true innovators from the rest of us." This article included the things we could learn about innovation from understanding Michael Dell, Steven Jobs, Jeff Bezos, etc.

Well guess what? Interesting read, but we could also probably learn some things from studying Superman, Batman and Spiderman. However, I seriously doubt that any of these six real or fictional men have much to teach us about the reality of business innovation as practiced today. Sure, if you are like Dell, Jobs or Bezos go for it, but for normal companies trying to move forward into 2010, a whole different mindset is needed.

Let me be clear:

1. It’s not about the breakthrough. Rarely is business innovation about a big breakthrough. Most of the time, business innovation is a refinement of an existing product, service or process that has huge value to the marketplace or to our business. Leadership is responsible to capitalize on this value.

2. It’s often in hiding. The greatest enemy of business innovation is not the failure to create innovation, but rather that no one notices the innovation and the resistance to change kills the innovation before it sees the light of day. Leadership must actively seek out and pursue the innovations that are in front of us but are hidden from the view of those too busy to notice.

3. It doesn’t take a superhero. Lastly, most people think innovation comes from "Innovation Centers," think tanks or R&D. Not true. The facts are most business innovation comes from the normal people within your company who have open minds, who listen well and who understand your business and your customers. Leadership must grab innovation and accelerate the value creation brought about from it.

So, clearly, innovation is leadership's job; not to create the innovations, but to stimulate, recognize and obtain value from innovations. My favorite question I hear from CEOs is: " How can I make my organization more innovative?" My answer is always, "Be innovative in how you attack innovation."

What does this mean? Do things differently. Shake some things up. Change reporting relationships, change responsibilities, change internal communications, and so on; do things differently. This is particularly true in today's business climate with the supply chain – a huge hot bed of opportunity for innovation today. It is very clear that only by doing things differently can we achieve innovation.

My top three thoughts on how you can "innovate with innovation" are:

1. Clearly communicate the message that: You expect every person in your organization to be engaged in some aspect of innovation. Interact across the business and across the supply chain. Better understand the needs and challenges of your supplier relationship management and your relationship management with customers. Look for opportunities to improve products, services and processes. Do not be afraid to collaborate outside of your organization or to use outside resources that have value to contribute.

2. Ask good questions. For example:

A. Ask questions about maximizing profits. Can you increase profits by reducing revenue? How can you grow profits?

 

B. Ask questions about elimination. Amazon eliminated the bookstore; Dell the computer store; Sony eliminated speakers. What can you eliminate?

 

C. Ask questions about additions to your products and/or services. Like adding wheels to suitcases, adding a camera to a telephone, adding value-added information to your customers. What can you add?

 

D. Ask questions about the customer experience. How can you alter your product or service to enhance customer value? What are your customers using your product or service for that is outside of your original intent?

3. Ensure that your organization has breadth of experiences and assign people of diverse background to work together. Innovations often occur when cross-functional knowledge of customer needs and industry trends are integrated to understand opportunities for improvement. Consider collaboration with suppliers, customers and outside resources. Engage business and social networking to listen to the marketplace. Understand the competition. Create a culture of identifying, prioritizing, allocating time and resources and recognizing and rewarding innovation. Encourage risk taking and understand the importance of learning from innovations that are not productive.

So, just as the thought-provoking article I referred to at the top of this article says, "Innovation is the secret sauce of business success," this secret sauce needs to be applied by today's leadership. Trying to be Dell, Superman, Jobs or others in that category is not the assignment; being yourself but innovating on innovation is what it is all about today.

Go!Go!Go!

Photo credit: Tostie14