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Category Archives: Manufacturing

Microsoft Reinvents its Supply Chain by Leveraging SAP Ariba & Intrigo Systems

Microsoft Corp. has one of the most complex supply chains in the world.

And to keep it humming and ensure supply keeps up with demand for its hottest products, the company is reinventing its supply chain.

In a newly released Webcast (watch the video above), the company discusses how it is teaming with SAP Ariba and Intrigo Systems to create a scalable, modern platform to support the efficient, cost-effective manufacturing of its most popular products, including the Xbox and Surface.

“At Microsoft, our mission is to empower every person and organization on the planet to achieve more. And our strategy to achieve this is to build best-in-class systems and platforms and productivity systems,” said Ali Khaki, Principal PM, Supply Chain Engineering, Microsoft.

“When we looked at our supply chain, it was clear we needed to build a flexible, scalable platform that could support the complexity of our hardware business.”

And it is using SAP Ariba solutions for direct spend to do it.

“The Ariba® Network is the backbone for Xbox and Surface line of products supply chain,” Khaki said.

Through the Ariba Network and the cloud-based applications delivered on it – including SAP Ariba Supply Chain Collaboration™, Microsoft has created a modern platform from which it can safely and easily collaborate with multiple tiers of contract manufacturers and suppliers across key supply chain planning and execution processes, including:

  • Sharing production forecasts, orders, quality, and inventory information.
  • Anticipating and resolving supply assurance problems.
  • Onboarding suppliers.

And the company is seeing results. Since implementing the solutions with Intrigo’s support, Microsoft has:

  • Enabled multi-tier planning and collaboration with contract manufacturers and suppliers.
  • Reduced the supplier commit process from three days to 30 minutes.
  • Cut the time it takes to onboarding for suppliers from four months to four days.
  • Standardized vendor engagement through B2B, flat files and web-user interface.

“It’s a very clear and transparent process because of all the communication that happens within the SAP Ariba system itself,” Khaki said.

“And it has allowed us to create a very positive user experience for everyone involved in it.”

To hear more from Khaki on Microsoft’s supply chain transformation, listen to the Webcast “Microsoft Re-invents Its Manufacturing Supply Chain” above (download slide deck).

To learn more about SAP Ariba’s direct spend solutions and the value they can deliver, visit www.ariba.com.

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How to Build a Supply Chain Champion Following Chicago Cubs Theo Epstein’s 5R Strategy

On November 2, 2016, the Chicago Cubs did the unthinkable:

They won the World Series after coming back from a 1-3 deficit to the Cleveland Indians.

For Cubs fans, the victory marked the end of a 108-year streak of competitive futility.

Although the Cubs game seven, extra-inning victory is inspirational, you may be wondering: “As a supply chain professional, why should I care?”

Answer: Because of Theo Epstein, the Cubs President of Baseball Operations, knows how to build a championship team, a task that is likely high on your to-do list.

Vitally, Epstein’s role in the Cubs turnaround wasn’t a fluke.

In 2004, Epstein, as Red Sox General Manager, helped Boston vanquish the Curse of the Bambino and end an 86-year title drought.

Deciphering how Theo Epstein took the Cubs, a perennial loser, to a World Series championship has been a hot topic in the sports world.

Based on our 20-plus years working with supply chain leaders, we argue that Theo Epstein’s job assembling a champion on the field is a model for the supply chain leader’s quest to build a winning supply chain.

Let’s take a closer look at how Epstein transformed the Cubs into champions.

His approach highlights five principles of supply chain design that we call the 5Rs (Figure 1). The 5Rs have enabled companies from Amazon to Zara to win on the world’s toughest playing field – today’s global marketplace.

Figure 1
The 5Rs of Supply Chain Excellence

Strategic Supply Chain Management: The Five Disciplines for Top Performance

Know the Rules and Break Them When Necessary

If you want to win on the baseball field – or in the marketplace – you need to know the rules of the game. The rules define not just your strategy and value-added capabilities, but also your team’s composition.

Rules, however, change and disrupt industries and dethrone champions. For proof, look no further than A&P, Compaq, and Pan Am. Thus, it’s not enough to know the rules; you also need to pay attention to how they are changing. Spotting inflection points before rivals – and responding effectively – can give you a competitive edge.

Andy Grove modeled this reality when he made the case for Intel to make the leap from RAM/DRAM to CPUs before the memory market crashed. Grove’s anticipation of a threat before it was widely discerned is a big reason you know the phrase “Intel Inside.”

Of course, sometimes the rules aren’t fair, which is a plus if they favor you and a travesty if they don’t. When you find your team disadvantaged, your job is to change the rules.

This is the scenario Billy Bean, general manager of the Oakland Athletics, faced in 2001. The A’s $40 million payroll couldn’t compete with the New York Yankees $115 million player budget. Not only did the Yankees beat the A’s in the divisional championship series but they signed the A’s Jason Giambi to a big-budget free agent contract.

To compete, Bean needed to build a different type of team. He stepped away from traditional approaches to player evaluation and embraced sabermetrics, a novel statistical approach that became known as “Moneyball.” His goal: Identify players undervalued by other teams. Bill Henry, the new owner of the Boston Red Sox, saw value in Bean’s approach and offered him the Sox’ GM job.

When Bean declined, Theo Epstein stepped in. He levered Boston’s big payroll with sabermetrics to assemble a team that won the World Series in 2004, followed by two more championships in 2007 and 2013.

Great companies do the same thing. They execute within the rules better than rivals, or they exploit opportunities to change the rules.

Search Amazon

Consider Amazon, the poster child for e-commerce. Launched in 1995 as the “Earth’s largest bookstore,” Amazon began life as a pure-play e-tailer, with no inventory or brick and mortar presence.

It acted as a broker, linking customers to publishers. Amazon went public in 1997 and immediately began to rewrite the rules of online retailing and expand its product line. At a time when other organizations were outsourcing fulfillment operations, Amazon invested in its own distribution network.

By 2016, Amazon operated 383 fulfillment centers worldwide, supporting sales of $136 billion. Amazon even began to build out an in-house network of trucks and planes to “own” the delivery experience all the way to the customer door.

Today, Amazon sports a market capitalization of $400 billion. Its allure is a willingness to push boundaries and redefines rules. Amazon made two-day “Prime” delivery an industry standard that customers were willing to subscribe to. Amazon also enabled eager consumers and intrigued investors to envision the day when drones, predictive shipping, and check-out free shopping will be common.

The result: Amazon is forecast to reach half a trillion in sales over the next decade. More amazing, Amazon achieved this unparalleled success without ever making a meaningful profit on operations. According to The Economist, 92% of Amazon’s value is due to profits that won’t be earned until after 2020. Amazon’s story stresses a point that you need to remember.

To build a winning team, you must change the competitive rules even as you execute the daylights out of existing rules. The remaining four Rs of supply chain design can help.

Assess Readiness; Your Own and That of Potential Partners

By winning the World Series, the Cubs proved their greatness. Nonetheless, you wouldn’t bet on the Cubs to win the Rugby World Cup. After all, the Cubs weren’t built to play rugby. Yet, many companies try to do the equivalent every day. They come to market with the wrong supply chain. How do smart managers get stuck in such a predicament? Two explanations persist.

Wrong focus. Great ideas spawn companies. But, source, make and deliver decisions are often an afterthought, following marketing, engineering or finance. No one asks whether, or how, SCM can confer a competitive edge. Market mediocrity is the result.

Poor scanning. Even cutting-edge supply chains can fall behind the obsolescence curve. You’ve read, for instance, about the woes of some high-profile brick-and-mortar retailers. As the Internet changed the rules of retail, they didn’t adapt. Now, they are dying. The readiness assessment is a key weapon in Theo Epstein’s arsenal. By conducting a two-step readiness assessment – the second R – you can avoid these losing outcomes.

Step 1 is an honest self-appraisal of the team’s current competencies. Simply put, ask: “Do we have the skills we need to play, and win, our industry’s competitive game?” If not, ask two questions:

1. Which skills are you missing?

2. What do the gaps look like?

By making capability gaps visible, you can prioritize your skill-acquisition efforts.

Step 2 is to assess potential partner competencies. Your job, like Epstein’s, is to close the gaps by building or buying the right capabilities.

Now, let’s take a peek into how Epstein leveraged the second R to turn the Cubs into champions.

The key to winning a baseball game is to score more runs than the other team. The emphasis on runs scored has always placed a premium on two player-evaluation metrics: Batting average and RBIs (runs batted in).

Sabermetrics argues you should set these metrics aside in favor of on-base percentage. After all, you can’t score unless you get on base, and it doesn’t matter whether you get on base via a hit or a walk. The logic of sabermetrics is simple: By using more-valid-but-less-used metrics, you can acquire the right skills at a lower price.

Of course, winning attracts benchmarking, and rivals quickly copied Epstein’s approach. Epstein’s response: Keep refining the readiness-assessment process.

Neuroscouting. Neuroscouting uses a computer simulation to make the connection between a player’s cognitive function (recognizing a pitch) and motor skills (swinging a bat). A player who picks up a pitch five feet out of the pitcher’s hand will get on base more frequently than a player who doesn’t read the pitch until 20 feet or 30 feet out. Neuroscouting helped Epstein identify Mookie Betts as a top prospect in the 2011 draft. Betts is now a rising star.

Wins above replacement (WAR). Epstein has grown fond of WAR, a metric that estimates how many wins a player contributes to above a replacement player at the same position. Going into the 2016 season, WAR indicated that the Cubs excelled in starting pitching, first base, and third base. But, right field was identified as a liability. To fill the gap, Epstein acquired Jason Heyward in free agency.

Predictive analytics. Epstein is now experimenting with simulations to predict how a given team composition will fare in each game throughout the season. Inputs can be quite detailed and include things like ballpark where the game is played, time of day and pitcher-versus-batter matchups.

Beyond closing capability gaps, readiness assessment serves another purpose. In 2011, as Epstein’s tenure with the team began, Cubs owner Tom Ricketts asked when the Cubs would be ready to compete for a championship.

Epstein’s response: The Cubs would get worse before things could get better. Building a strong farm system and young talent meant that the Cub faithful would need to be patient. Epstein’s plan, however, leveraged the “rules” of the collective bargaining agreement, one that allocated larger draft budgets to losing teams. Losing early to win later enabled the Cubs to acquire players like Kris Bryant and Kyle Schwarber, who were key contributors to the 2016 championship run.

The readiness assessment is a pivotal part of Zara’s story. Zara, like Amazon, is a rule breaker; its fast-fashion business model is truly game-changing. So too are the supply chain capabilities needed to make fast-fashion work. Compare the Zara way to Gap’s approach (see Table 1).

Table 1
Zara Has Built Unique Capabilities to Change the Rules

The backstory: Amancio Ortega, Zara’s founder, got his start in the apparel industry as a 14-year old errand boy. A decade later, Ortega began developing his own designs, reproducing popular styles, but with his own twists. He soon realized that if he could bring trendy designs to market quickly and inexpensively he could wow consumers. Ortega simply needed to convert the concept into capabilities. Readiness assessment provided Ortega the insight needed to build the capabilities that would fuel Zara’s fast-fashion strategy. Let’s highlight two points here.

Infrastructure. Capabilities derive from infrastructure. For instance, Zara brings its 30,000 distinct designs from concept to rack in only 14-24 days (a 10X advantage over rivals). To reliably hit this target, Zara sources over 50% of all items from local subcontractors in Spain (over 75% in Europe) and preps all product to be rack ready in its 400,000 square meter DC called the Cube. Zara’s infrastructure links supply to demand.

Decision processes. At Zara, decision makers evaluate every investment based on how it will enhance Zara’s capabilities. For instance, Xan Salgado Badas, Zara’s head of IT, stuck with an outdated, DOS-based point of sales system (POS) for years because newer systems didn’t offer any strategic capability upgrade. Yet, when Zara figured out how to use RFID to gain insight into fashion trends and hasten replenishment, it rolled out the technology at a scale and speed that startled rivals (in 2016, Zara bought 500 million RFID chips, 16% of that year’s total RFID sales).

Being fast and driving trends pays serious dividends. Customers visit Zara stores 17 times a year, compared to three times to five times for rivals. That’s because they know if a trendy new outfit sells out, it may not be back. In effect, Zara has turned customers into treasure hunters, transforming stockouts into a sales pitch.

Along the way, Zara became the world’s largest fashion retailer and Amancio Ortega the world’s second richest person. But, Zara’s team also knows that readiness assessment and capability development must be a lifestyle, not an event. If Zara isn’t always getting better, a rival like BooHoo or ASOS might make Zara’s version of fast-fashion obsolete. Just like the Cubs and Zara, you are only as good as you are ready.

Assemble the Right Players; Build or Buy Needed Competencies

Redefining rules and assessing readiness are tough tasks. But, the outputs – a capability-development matrix and a talent-acquisition map – are critical to devising a winning game plan.

Bringing all of the right pieces together and molding them into a champion is equally daunting. Emotional fortitude is needed. Executives like Theo Epstein, however, embrace the team-building challenge. Team ego results when you holistically progress through the remaining 3Rs – right players, right roles and right relationships. Let’s explore how Epstein brings these Rs together.

Through experience or intuition, Epstein knows the best players aren’t always the right players. Many so-called super teams never hoist the Commissioner’s Trophy at season’s end. So, what type of player does Epstein look for?

Talent is critical, but even more so, Epstein seeks a mix of athleticism and positional skill backed up by EQ and a team-first mindset. After all, when a crisis arises – and it will during the course of a 162-game regular season – team ego decides whether the team steps up or collapses.

The better question is, perhaps, how does Epstein put the right mix of skills on the field? Like you, Epstein has two options. He can build competencies or he can buy them. To field a consistent contender, he must do both exceptionally well. Figure 2 depicts Epstein’s method.

Figure 2
Assembling the Right Players

Phase 1: Long game. The core of an Epstein team emerges from the draft. Young talent like Javier Baez (2011) and Kris Bryant (2013) is identified and developed. The process takes time, but it provides a big bang for the buck. Baez and Bryant both made pivotal contributions to the Cubs’ World Series run. Of note, when Epstein arrived in 2011, he began to trade valuable players that didn’t fit his vision and culture, giving the Cubs more draft picks.

Phase 2: Close key gaps. Epstein opportunistically closes key skill gaps by acquiring proven talent via free agency or a well-timed trade. Consider Jake Arrieta, a starting pitcher acquired from the Baltimore Orioles just before the 2013 trading deadline. Arrieta won the 2015 NL Cy Young Award and was the ace of the Cubs’ 2016 pitching staff.

Phase 3: Win now. By July 25, 2016, the Cubs had the best record in MLB. But, by Epstein’s estimation, the Cubs still lacked a critical piece: a hard-throwing lefty closer. To bring Aroldis Chapman, the hardest thrower in baseball (105-MPH fastball), to Chicago, Epstein traded four up-and-coming prospects – a steep price Epstein was willing to pay to win it all in 2016.

One more point: Epstein knows that the concept of right “players” extends beyond the playing field. To help make things click, Epstein brought on Joe Maddon, former manager of the Tampa Bay Rays. Maddon’s keen sense of strategy and a sabermetrics-driven willingness to tweak the batting order and defensive alignment helped position the Cubs to win a league-leading 103 games.

Simply summarized, getting ready to compete means bringing the right players on board, whether drafting undervalued prospects, signing free agents, making pivotal trades or signing a manager whose true talents are being underutilized.

Apple has shown an uncanny ability to bring the right players together to develop and deliver hit products and services. Figure 3 shows how Apple uses Epstein’s playbook.

Figure3
Apple’s Path to Developing the HomePod

Phase 1 – Long Game: At the turn of the millennium, Apple began to invest in what has become the source of its success – software. The iTunes Music Store, paired with iOS, set in place the foundation for Apple’s ecosystem, which consists of over one billion active devices worldwide and includes services such as App Store, Apple Pay, Apple Music and iCloud. Apple touches its owners’ lives every day – and in an increasing variety of ways.

Phase 2 – Close key gaps: By buying Siri in 2010, Apple forged into both the search and mobile “assistant” markets. More recently, in 2014, Apple acquired Beats Electronics, quickly integrating Beats Music into its own streaming service, Apple Music. Pundits, nevertheless, questioned Beat’s $3 billion price tag. But, Apple appeared to have a compelling goal: To close gaps that powered Google Android’s foray into Apple’s turf.

Phase 3 – Win now: In August 2016, Apple quietly acquired Turi, an artificial intelligence startup, for $200 million. Less than a year later, on June 5, 2017, Apple introduced HomePod, a device designed to “reinvent music in our homes.” The Beats acquisition now made sense. But, that’s not all. HomePod is a home assistant – Apple’s answer to Amazon’s Echo and Google Home. Turi’s machine learning makes Siri smarter, giving Apple the win-now capability needed for HomePod to become the central nervous system for the IoT-enabled home, a nascent market with fantastic growth potential.

Apple is seldom first to market, but the design, user-friendly interface and massive ecosystem that support Apple products and services make it a game changer. The result: Apple’s market capitalization hit $800 billion in 2017 – 2X Amazon’s. Consider two facts: Despite owning only 30% of the mobile operating system market, Apple earned 90% of the industry’s 2015 profits. And Apple earns developer loyalty by delivering 75% more revenue vis-à-vis Google Play, making App Store the go-to place for the latest and greatest apps. Bringing the right players to the game has made Apple a perennial industry champion.

Put Players in the Right Roles; Shift As Needed

Getting the right players is just one step in the team-building process. Jim Collins described what comes next: “Get the right people on the bus, the wrong people off the bus, and the right people in the right seats.” Matching players to roles is critical. Yet, the way most companies do this won’t deliver a true – i.e., inimitable – competitive edge.

To be a supply chain champion, you have to think differently about how to mix and match key capabilities. With Epstein at the helm, the Cubs tinker incessantly with player roles. That’s one reason Epstein hired Maddon: His teams led the league in distinct batting lineups and in-game positional shifts every year from 2006 to 2014.

The goal: Tweak the lineup to improve the Cubs’ chance to win any given game. Imagine sending your catcher out to pitch. Maddon did just that, inserting David Ross to pitch against the Milwaukee Brewers. Ross had never pitched in the MLB, but he recorded a perfect inning. Maddon’s penchant for moving players around led the Cubs to acquire Ben Zobrist. Maddon called Zobrist a “super-U,” someone who can play multiple positions.

In fact, during his career, Zobrist has played every position except pitcher and catcher. Proactive role shifting made the Cubs improbable season possible.

Best Buy

In 2015, many pundits had already written Best Buy’s obituary, claiming the electronics retailer couldn’t survive Amazon’s assault and consumers’ affinity for “showrooming.”

Yet, Best Buy did survive, showing how role shifting can create a competitive edge even against Amazon.

How did Best Buy do it? Consider three pivot points that enabled Best Buy to become an experienced retailer.

Reduced costs. To contest showrooming, Best Buy began matching prices. To reduce costs and make price matching economically viable, Best Buy deepened collaborative relationships with suppliers, especially in the areas of merchandising, forecasting and replenishment.

Repurposed bricks. For brick-and-mortar retailers, Amazon’s onslaught turned what once was an asset into a liability. Yet by shipping online orders direct from local stores and encouraging in-store pickup of online orders, Best Buy can deliver with Amazon-like speed, turning its 1,600 physical stores back into an asset.

Reimagined roles. Clicks and mortar wasn’t Best Buy’s only proactive role shift. Best Buy invited top suppliers like Samsung, Apple, LG, Microsoft, Sony and Google to set up shops within its cavernous stores. Best Buy charges rent and benefits from high-margin sales of high-end appliances and electronics.

What’s in it for suppliers? The opportunity to create immersive customer experiences without the cost of owning stores. Google Guides, full-time Google staff, offer tutorials and tech classes, helping customers discover, play and have fun. Samsung Experience shops are located in every Best Buy store.

The result of role shifting: In 2017, Best Buy shares surged to an all-time high. However, as the Cubs know from first-hand experience, some role shifts backfire. Boeing discovered this the hard way with the launch of its vaunted 787 Dreamliner. Poorly conceived and managed shifts cost Boeing five years in first-mover advantage and, by some estimates, $20 billion in design, production and launch costs.

To avoid such misfires, you really do need to do the work entailed by all five Rs. Despite the risks, as Table 2 highlights, game changers from rivals’ strategic moves to disruptive technologies dictate that you begin to experiment with proactive role shifting.

Table 2
Forces Driving Role Shifting

The Future of the Supply Chain Workforce Will Be Determined By Technology Talent

Cultivate the Right Relationships; Build Identity and Trust

Having the right players in the right roles does guarantee that your team looks good on paper. Sadly, looking good on paper is no guarantee your team will win once the game begins. What separates paper tigers from competitive champions, both on the sporting field and in the boardroom? Champions possess chemistry; that is, a common vision backed by a willingness to work together to achieve strategic goals – even if someone has to play a less visible role.

Critically, chemistry derives from trust. To fully sense the value of trust, consider this key fact from the auto industry: The most trusted automakers are also the most profitable. Your takeaway: Ultimate success requires that you invest in a culture of trust.

Theo Epstein is a culture guy. Organizational culture, after all, endures beyond the departure of talent. So, what are the core tenets of an Epstein-inspired culture? For starters, Epstein believes people perform best, especially under pressure, when they are part of something bigger than themselves. He also believes that environment matters. That’s why the Cubs’ new $300 million stadium renovation included a round clubhouse – 60 feet, 6 inches in diameter (the exact distance from the pitcher’s mound to home plate). Epstein wanted to promote collaboration by putting everyone within eyesight of each other and encouraging serendipitous conversations. The space eliminated hierarchy, engendering camaraderie and team identity. David Ross, the Cubs catcher, described the design as, “a subliminal message they’re sending.”

Beyond facilities, Epstein cultivates “lever points”other people who help drive the culture. Epstein then steps back and lets them do some heavy lifting. Joe Maddon, the Cubs manager, is an ideal lever for an Epstein-built team. “Try not to suck,” a key Maddonism, communicates big-time expectations without big-time pressure. Madden helped nurture the Cubs culture: Trust each other; do the right things consistently, including stretching for better results; have fun, but hold each other accountable; expect greatness. Epstein and Maddon know that if you build the right culture, that comes crunch time, someone will step up.

And that’s exactly what happened in game seven of the World Series. After digging out of a 1-3 deficit and building a commanding three-run lead going into the bottom of the 8th inning, the Cubs did the unimaginable – they gave up the lead and gave away the momentum. The 103 wins didn’t matter anymore; the dream was slipping away. Then, it began to rain – and culture took over. As the grounds crew came on the field, the Cubs exited toward the locker room.

Jason Heyward impulsively called his teammates into a weight room for a player’s only meeting. Never the outspoken leader, and struggling at the plate throughout the playoffs, Heyward reminded his teammates just who the Cubs were. David Ross recounted Heyward’s message: “He just said: ‘We’re the best team in baseball for a reason. Continue to play our game, support one another. These are your brothers here, fight for your brothers, lift them up, continue to stay positive. We’ve been doing this all year so continue to be us.’”

What would’ve happened if Heyward hadn’t spoken up? The Cubs may still have won. But, Epstein knows that you leave less to chance when you invest in the right culture.

Honda

Honda is a Cubs type of culture warrior.

More reliant on suppliers than rival carmakers, Honda’s buyer-supplier culture is truly unique, even a little quirky. Honda treats strategic suppliers as an extension of Honda itself.

Simply put, Honda invests in supply partners as if it is buying their capacity and capabilities, not just their parts. By the way, 90% of Honda’s spend is with strategic partners.

To help these partners succeed, Honda sends engineering teams to work on-site at suppliers for three months – and as long as 24 months – at no cost to the supplier.

The goal: Help suppliers optimize manufacturing and business processes. A typical best practices (BP) improvement initiative improves quality by 30% and labor productivity by 50%. More importantly, under Honda’s coaching, suppliers develop critical skills. Honda, in turn, gains stronger supply partners. Cost savings are shared 50/50 with the supplier.

Honda’s investments aren’t limited to BP projects. Honda expects supply partners to participate in corporate training, senior-leader business reviews and new product and target costing programs.

You may be wondering why Honda invests so much in its suppliers instead of switching to more capable suppliers. Honda’s response: Other suppliers would have similar problems. The nuanced answer, however, runs deeper.

Like Epstein, Honda is playing the long game, building a trusted team that can compete the “Honda Way.” Identity is critical.

One result: Honda is the most trusted carmaker among suppliers. Almost 40 years after launching U.S. operations, nearly all of Honda’s original supply team remains intact. The trust also shows up in Honda’s profitability.

Despite Toyota’s superior scale – producing twice as many cars per year – Honda has consistently delivered higher profit margins.

General Motors

Now, let’s go back to the early 1990s. J. Ignacio Lopez, General Motor’s purchasing czar, tore up supplier contracts, putting everything out to bid.

By saving $4 billion dollars, Lopez saved GM from bankruptcy. But, Lopez alienated suppliers, solidifying a culture of mistrust.

Over a decade later, supplier resentment still ran hot. Suppliers scored GM a 114 on the 2005 Supplier Working Relations Index(the lowest score ever – 300 points behind Toyota’s 415).

The real cost: Suppliers were holding back on GM, dedicating their best engineers and sharing their latest technology with more trusted partners like Honda and Toyota.

The rise of autonomous vehicles, however, forced GM in 2015 to acknowledge an existential threat, that its future depended on supplier innovation.

Compelled to change, GM began offering longer-term contracts to urge suppliers to more openly share their best ideas. Two years later, GM’s 2017 WRI score reached its all-time high of 290, lagging behind only Toyota and Honda.

The Journey Continues

The Cubs faithful view Epstein as a miracle worker. In truth, Epstein simply embraced core tenets supply chain champions put to work every day as they design and manage world-class value-creation teams. What then is your key takeaway?

Epstein succeeded by executing each R as part of an integrated 5Rs strategy.

In Epstein’s words:

“Acquiring the talent is only half the battle. The other half of the Cubs’ rebuilding required the organization to establish a winning culture. This meant devising a ‘Cubs Way.’”

In our experience, putting all five pieces of a 5Rs strategy together is quite a feat. Even supply chain champions struggle to implement all five Rs.

But, Maddon offers a word of advice: “The process is fearless.”

If you continue to work the process, the 5Rs will help you break whatever supply chain curse you’re facing.

About the Authors
Stanley E. Fawcett, Ph.D., is the Goddard Professor of global supply chain management at the Goddard School of Business at Weber State University. He can be reached at stan.e.fawcett@gmail.com.

A. Michael Knemeyer, Ph.D., is a professor of logistics at Fisher College of Business at The Ohio State University. He can be reached at knemeyer.4@osu.edu.

Amydee M. Fawcett, Ph.D., is an assistant professor of supply chain management at the Goddard School of Business and Weber State University. She can be reached at amydeefawcett@weber.edu.

Sebastian Brockhaus, Ph.D., is an assistant professor of supply chain management at the Boler School of Business at John Carroll University. He can be reached at sbrockhaus@jcu.edu.

Image Credit: Dan Vasconcellos

Related: How The Chicago Cubs Baseball Team Brought Data-Driven Decision Making to Wrigley Field

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Today’s Millennial Supply Chain Professionals

APICS, the professional association for supply chain management, has published the results of its Millennials in Supply Chain research report, conducted by Peerless Research Group in conjunction with Supply Chain Management Review(SCMR) and the American Productivity & Quality Center (APQC).

A survey carried out in April 2017 was designed to gain insight into millennials as a critical segment of the supply chain workforce.

The report finds that millennials are focused, engaged, enthused and committed to working in supply chain management, and reveals that supply chain represents a sought-after, dynamic and rewarding long-term career choice for professionals in their 20s and 30s.

“The results of the report are eye-opening, especially when compared to the more senior supply chain professionals in leadership positions, who were part of a previous study from APICS and SCMR in 2016,” said APICS CEO, Abe Eshkenazi, CSCP, CAE, CPA.

“We see that more millennials started their career in supply chain, are moving around less, are highly satisfied with their jobs and see more opportunities for advancement in the field.”

APICS CEO Abe Eshkenazi

“Despite some noted frustrations, millennials are continuous learners and fast movers who are eager to advance”APICS CEO Abe Eshkenazi

The report shows millennials have a diverse interest in activities that span the end-to-end supply chain. Notably, the area that holds most appeal, supply chain design, and planning, is a role that touches all areas of supply chain.

The millennials surveyed also said they find their careers personally rewarding. Eighty-one percent feel they can make a difference in the supply chain field, 87 percent believe working in the field will help with their personal growth and development, and 88 percent agree that there are opportunities for advancement within the field.

Diversity topped the list of what millennials consider most important about the field and the companies for which they work. Eighty-five percent noted that supply chain involves a diverse workforce and encompasses people of all types, which additional findings that more women are now entering the field also reflect.

Respondents were roughly two-thirds male (61 percent) and one-third female (39 percent), compared to the 2016 survey of senior supply chain leaders, in which 76 percent of respondents were men while only 24 percent were women.

However, just as earlier research of senior managers in 2016 showed a pay gap between males and females, there is a gender wage gap among millennials. Men and women start at roughly the same salary, but the disparity grows larger as they move up the career ladder.

This disparity is chief among complaints from millennials surveyed, along with frustration around the attitude towards millennials by older generations in their organizations and a disconnected feeling from the big picture or a lack of purpose in the workplace.

“Despite some noted frustrations, millennials are continuous learners and fast movers who are eager to advance,” Eshkenazi concluded.

“To address the ongoing skills gap, industry expectations, priorities and communication styles must adapt to and embrace the different needs of this younger generation. Millennials are growing and learning on the job in an era of lean, optimized, end-to-end supply chains and are critical to the ongoing transformation of the industry.”

SC24/7 Search Term: Millennials

Millennials Don’t Just “Fall Into” Supply Chain

This generation comes to the field with early and prolonged commitment

A generation ago – or even a decade or two ago – if you asked a group of students about their career goals, the field of supply chain management probably wouldn’t rank highly, if at all, among their responses. Most Gen X and baby boomer supply chain professionals didn’t plan for, prepare for, and intend to work in supply chain. It was a field they found themselves in, having landed there as they evolved from previous roles in engineering, finance, planning or management.

Millennials in Supply Chain research report

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Utilizing Logistics Technology to Manage & Exceed Customer Expectations

We started our seven blog series on Logistics, Tech in Logistics, beginning with a blog on Managing the Dynamic Environment.

This blog is the second in the series (see below) and covers another important aspect in the logistics space.

With most logistic influencers clamoring for attention – from globalization to competitive markets – one unlikely contender suddenly rose to prominence as being one of the most significant performance indicators and a key differentiator of every logistics provider.

This interesting influencer is the customer!

The position of end customer and customer-centric organizations has been steadily rising in the list of top 10 priorities for every logistics provider.

Managing customer expectations and nurturing lasting relationships with their customer base is fast becoming a core focus of this landscape ensuring a distinct competitive advantage.

Interestingly, with the customer rising in prominence, the complexities of the relationship are also becoming exceedingly complex and demanding.

Customers have smartly realized their power, as is evident from their ever-increasing expectations and demands from the logistics ecosystem. What are these demands?

Let’s take a look.

The Ever-Growing List of Customer Expectations

Transparency and visibility across the ecosystem: The ability to track consignments from the placement of the order right up to delivery in real time is a common request. Track-and-trace involves having real-time information at your fingertips of the current status of consignments to the immediate intimation of unanticipated delays.

Time is money: This phrase has incredible relevance in the logistics ecosystem, with timeliness becoming a primary indicator of Perfect Order and a strong logistic differentiator. Logistics service providers are hence looking for solutions that will help them work in a time-bound manner.

Seamless, end-to-end process: The expectation of a smooth process from order to delivery and invoicing has become the norm. Customers comprehend the complexities of the landscape, yet expect the provider to manage these intricacies in the background. The emphasis on seamless logistics is hence challenging the entire network.

Managing disruptions in real time: Customers expect a foolproof plan with zero deviation in implementation, but in reality, logistics providers have to constantly battle to stay on plan. The possibility of things going wrong is quite high – from poor weather and vehicle breakdown to poor road conditions and change in route plan. Handling such sudden disruptions is one of the toughest challenges of the landscape.

On-the-go: Mobility-first approaches across verticals have placed a lot of importance on anytime anywhere access. From access to information to carrying out simple to complex tasks seamlessly across multiple channels – from mobiles to desktops – has highlighted hurdles in terms of efficient integration, version control, and other challenges.

Logistics companies are hence forced to look at options that will help them deliver a top-notch performance and unmatched customer experience, without compromising on cost.

 

The Magic of Technology

Yes, the customer wish list is long, but with the magic lamp of technology at their service, logistics providers are effectively meeting most the customer expectations.

Let’s look at a few examples.

Mobile-first access to the logistics network: Comprehensive mobile strategies go a long way in enabling a transparent logistics network and providing simple app-based interfaces to interact easily with the system for any type of information anytime from anywhere. This advantage certainly makes a huge difference in a world where ease of multi channel access and security are critical in ensuring customer satisfaction. The advent of Bots in Logistics Industry has raised the bar even higher.

Visibility and real-time track-and-trace: Knowing the exact status of their consignments in real time with minimal effort is crucial in building the customer’s confidence. If this feature includes the option to drill down extensively to dig out further information (such as projected time of arrival, consignment and transit information) through simple user interfaces, then it further cements a strong customer-provider relationship.

Robust systems to manage issues before or as they occur: An ideal system is so well oiled that there would never be any disruptions. But the reality is far from desirable. The entire route from point of origin to the very last mile has innumerable chances of unexpected delays and deviations. A technology-enabled, intuitive, and cognitive system can integrate embedded intelligence and data analytics to overcome this hurdle. This system automatically highlights possibilities of deviations and delivers data-based insights that will help the providers take well-informed decisions to overcome the disruption.

End-to-end platforms enabling a seamlessly integrated process: A smoothly flowing process that integrates not only multiple stages but also all stakeholders of the landscape is a key demand of customers. This demand can only be achieved by a process that delivers an easy process from request for quote to delivery. Such a well-orchestrated system closes all possible loopholes within the system and delivers accurate, consistent, and version-free information to every stakeholder – especially the customer.

Simplifying invoicing process: What scares most customers is not just the transit complications but also the painfully long order placement and billing process. Technology solutions such as sign-on-glass and combined invoices go a long way in generating POD with zero delays and immediately triggering the invoicing process.

Feeding the on-demand requests: It’s the fast food generation – where every aspect of living must be completed in a snap. This burden on the logistics world can be overcome by “Uberization” of the logistics landscape. Customized, on-demand sharing of transportation options are the most trending approaches logistics providers use to meet such sudden customer demands.

These indicators are a clear reflection of the power of the customer in today’s logistics landscape. The robust weapon of technology is the only solution for logistics providers to meet the ever-changing demand of the customers. But technology has a crucial buddy that simplifies all the complexities of the landscape – Data!

In our blog post “The Value of Real-Time Data Collection” we look at the importance of data – especially real-time data for the logistics network – and the options available to logistics providers to leverage data and solve the pain points of the system.

Tech in Logistics Blog Series

  1. Managing the Dynamic Environment
  2. Exceeding Customer Expectations
  3. The Value of Real-Time Data Collection
  4. Predictive Analytics for Decision Making in Logistics Management
  5. Importance of Data Enabled Visibility in Logistics
  6. Where’s Your Shipment Right Now?
  7. Automation in Logistics: Ideal or Attainable?

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Real-Time Supply Chain Visibility & Connectivity

Through the rich integration of experienced supply chain professionals, world class technology, and customer insights, C.H. Robinson is reinventing global supply chains by making them more prescriptive, automated and efficient.

Navisphere Vision continues to advance the powerful and proven capabilities of C.H. Robinson’s proprietary Navisphere technology platform.

Microsoft, an innovator in fulfillment and logistics capabilities and a customer of C.H. Robinson’s TMC division, has been using Navisphere Vision since its alpha release in 2016.

“Navisphere Vision helps us understand the things that we couldn’t before. It provides the visualization that connects data and the real-time events that are happening within our supply chain,” said Alaina Hawkins, senior manager of global logistics at Microsoft.

Alaina Hawkins, senior manager of global logistics at Microsoft

“Navisphere Vision provides the visualization that connects data and the real-time events that are happening within our supply chain”Alaina Hawkins,
senior manager of global logistics at Microsoft

“Navisphere Vision helps us make decisions on a more precise, real-time level so we can address any challenges that might occur, react in a less randomized fashion, create predictability throughout our supply chain, and increase collaboration so we can deliver our products to customers on time. It’s tremendously powerful.”

In addition to providing real-time visibility down to an SKU level, Navisphere Vision delivers insights and impacts of potential disruptions from weather, traffic or current events, as well as predictive analytics to help shippers make better, faster decisions.

This next generation of real-time supply chain visibilityenables shippers to improve customer service and cost controls through the management of inventory in motion, proactive status updates, limiting disruptions and risk mitigation.

Shippers can gain a single view of all global inventory to support working capital needs and cash to cash cycle management. Access to real-time global visibility, combined with new supply chain insights, empowers shippers with new agility, accuracy and real-time decision-making to stay a step ahead of the competition.

“The industry has seen supply chain visibility tools before, but Navisphere Vision represents the next generation,” said Jordan Kass, president of TMC.

“Not only is it global, but Navisphere Vision goes far beyond visibility and helps our customers predict supply chain disruptions before they even occur.”

“This solution provides unique benefits for our customers. Its ability to serve all global regions across any transportation mode, as well as layering in potential disruptions, provides our customers with powerful data, insights, and opportunities to make changes quickly,” said Chad Lindbloom, chief information officer at C.H. Robinson.

“Navisphere Vision utilizes API technology to aggregate all other supply chain and information sources into one single location, giving our customers the most streamlined, real-time solution available. And it brings a new level of machine-learning and data science the supply chain industry hasn’t seen to date.”

Related: C.H. Robinson Improves Contract Carriers’ Access to its Technology Platform via Mobile App

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C.H. Robinson Acquires Milgram & Company Ltd., Expands Global Forwarding Network

“Today, we are bringing one of Canada’s most respected forwarding companies into C.H. Robinson,” said John Wiehoff, Chairman and Chief Executive Officer of C.H. Robinson.

“This acquisition continues our global expansion and marks our third Global Forwarding acquisition in the past five years.”

“We are extremely proud of the progress we have made in bringing these companies into C.H. Robinson, and Milgram & Company Ltd. (“Milgram”) provides another unique opportunity to strengthen our global forwarding and customs brokerage offerings in Canada.”

“We look forward to working with Milgram’s customers to offer our full suite of logistics services to help improve their supply chains.”

John Wiehoff, Chairman and Chief Executive Officer of C.H. Robinson

“This acquisition continues our global expansion and marks our third Global Forwarding acquisition in the past five years”John Wiehoff, Chairman and CEO of C.H. Robinson

Milgram is a leading provider of customs brokerage and freight forwarding, in addition to providing surface transportation and warehousing services, to 3,500 active customers.

Headquartered in Montreal, Quebec, Milgram employs approximately 330 employees and has six offices in Canada and one office in the United States.

Milgram is a gold standard winner of Canada’s Best Managed Companies®. For the fiscal year ending May 31, 2017, Milgram had approximately $155.3 million CAD (approximately $124 million USD) in gross revenues.

C.H. Robinson purchased Milgram & Company Ltd. for approximately $62 million CAD (approximately $50 million USD) in cash. The acquisition is expected to be approximately neutral to earnings in 2017 and slightly accretive in 2018 and will be financed through cash and funds drawn from C.H. Robinson’s existing revolving credit facility.

“We are excited to build on our success providing supply chain expertise and execution, refining processes, and being an integral part of our customers’ businesses,” said Jay Goldman, President and Chief Executive Officer of Milgram & Company Ltd.

“We now look forward to collaborating with C.H. Robinson to grow our presence and provide our customers with the opportunity to leverage C.H. Robinson’s worldwide network and world-class service offerings.”

C.H. Robinson’s Global Forwarding business currently serves five continents and 31 countries, with over 4,000 employees and 125 offices worldwide, and is the #1 non-vessel operator (NVO) from China to the United States. Global Forwarding customers leverage C.H. Robinson’s considerable freight volumes to access available capacity at competitive rates.

“This acquisition strengthens our ability to continue to serve the world’s shippers and help them meet their global supply chain goals,” said Mike Short, President of C.H. Robinson’s Global Forwarding division.

“Milgram has built a successful business doing things the right way, serving customers, and exceeding their expectations. We look forward to bringing their talented team to C.H. Robinson.”

C.H. Robinson will integrate Milgram into its Global Forwarding division and single global technology platform, Navisphere®.

Related SC24/7 Article: Freight Forwarders Face ‘Significant Change from New E-Business Models’

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The Supply Chain Link Both Walmart & Amazon Are Missing – The ‘Perfect Order’

Fortune reported in February that Amazon captured 53 percent of retail e-commerce growth last year to net 43 percent of U.S. online revenue.

That research finding from Slice Intelligence, further revealed a key Amazon advantage: “The average Amazon package was delivered in 3.4 days, compared with 5.6 from everyone else.”

Online competition has led to hundreds of store closures by brick-and-mortar retailers, who continue to retool everything from in-store brand experience to mobile apps and overall e-commerce strategy.

More of their stores offer custom orders, better service to customers who place orders online through their own channels and even orders placed through Amazon.

For its part, Walmart has invested heavily in North American manufacturing, and forged alliances with Facebook, Uber and Lyft to test and expand options for mobile device-based grocery ordering and delivery.

Dr. Yossi Sheffi, Director, MIT Center for Transportation & Logistics

“Walmart will win the rapid (same-day) delivery game and beat Amazon ”Dr. Yossi Sheffi, MIT Center for Transportation & Logistics

As early as 2014, MIT Center for Transportation and Logistics’ Dr. Yossi Sheffi predicted that Walmart will win the rapid (same-day) delivery game and beat Amazon. One key reason: the brick-and-mortar giant’s thousands of “small warehouses – they’re called stores.”

Amazon is competing online and off. The company Amazon is operating several brick-and-mortar bookstores with more rollouts planned throughout the year.

Next up: grocery stores that eliminate check-out linesby using sensors to automatically charge shoppers as they pick products and walk out the door. Upstream in the supply chain, investments and/or plans range from warehouse robots to cargo planes and truck trailers to a 2016 patent on blimp-like Airborne Fulfillment Centers to launch drones.

The omnichannel line-blurring between traditional and online retailers will bring new technologies to the fore, but none will address problems both share in common: a lack of data visibility to more efficiently and effectively plan, produce, customize and deliver real products to real people. At present, most supply chains are lacking the critical functionality to do so.

What’s Missing? The ‘Perfect Order’
Upstream of the retailer (or e-tailer) are vast collections of brands, manufacturers, contract manufacturers/packagers, logistics firms and many more suppliers.

Leading brands long ago adopted enterprise resource planning (ERP) systems, while their suppliers have largely failed to gain usable data in the warehouse management systems (WMS) they use to produce (and customize) products, resorting to oft-cobbled spreadsheet solutions.

Evolution of Supply Chain Management Solutions

 

Both ERP and WMS systems lack the specificity to properly manage major order execution and fulfillment in the age of mass customization, which increasingly entails manufacturing and packaging outsourcing.

Leading ERP systems are based on the time-honored SCOR Model for characterizing production operations. (APICS pros know the hierarchy well: Plan, Source Make, Deliver, Return; and make-to-stock, make-to-order, etc.) One sub-discipline called “perfect order” has been on the backburner, with proponents waiting for it to become a more practical reality.

One proponent, Dave Blanchard (of IndustryWeek and Material Handling & Logistics), stressed the importance of the perfect order concept as a metric to improve order execution and fulfillment in his book on supply chain best practices. In short, the concept is based on the percentage of error-free steps throughout the life of a purchase order – right product, right condition, delivered on time and damage free, and so on.

The problem is that ERP and WMS systems lack the functional specificity to track operational data at contract packaging and related outsourced locations. Without the right technology to fill the functional gaps, it’s impossible to measure and improve in order to become “more perfect.” SCOR to ongoing work at WERC, the Warehouse Education, and Research Council, we have hope for the further advancement of the perfect order discipline.

Steve Banker, Vice President, SCM at ARC Advisory Group

“The perfect order metric is one of the most critical metrics in fulfillment ”Steve Banker, Vice President, SCM at ARC Advisory Group

As the well-known consultant, Forbes contributor and deep thinker Steve Banker wrote in Logistics Viewpoints, the perfect order metric “is one of the most critical metrics in fulfillment,” and bears close attention.

Brands and their manufacturing and packaging outsourcing partners can use the specific features in solutions such as Nulogy’s PackManager to pursue perfect order-type metrics and key performance indicators.

Rather than target too many variables, experts advise users to start with a few key metrics such as on-time-in-full delivery, correct invoice, and damage-free rates to gain a foothold on optimal execution.

In addition to internal improvements, companies can then target greater integration with partners. When deployed across the operations of multiple supply chain partners, Nulogy says the goal becomes that of achieving a Perfect Order Network™.

The goal is to achieve a unified, collaborative enterprise for last-mile product customization with reductions in waste on a global scale for service to retailers and end-consumers.

The days are long gone when “brand” is synonymous with “manufacturer,” and the technology has advanced to the point where today, it is possible to create a transparent and extended enterprise capable of unifying brands and their last-mile service providers.

Without such integration, the kind of market velocity desired by the Amazons and Walmarts of the world will be hobbled by inefficiency. But when brands and their suppliers share the same data – a single source of the truth – new opportunities emerge.

Of course, new opportunities entail new challenges, including those of giving retailers – online and off – greater data visibility.

“Some large retailers have a far more demanding view of what a perfect order is,” Banker says, adding that “a manufacturer must now collaborate with its retail partners to ensure strong in-stock performance at the retail shelf, which ultimately leads to increased revenues and profits for both parties.”

About the Author
Bob Sperber
Bob joined Nulogy following 30 years of experience as a business, industry and technology media writer and editor. His work with media outlets and marketing clients have imparted in him a solid understanding of the changes, challenges, and opportunities relevant to many sectors of the global economy.

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Is Your 3PL Ready For The 2017 Holiday Season?

It’s only August and we are already talking about turkey, vacations, and gift lists.

The holiday season is that special time of year when we all gather together with our friends and family and catch up and look forward the New Year.

However, the holidays have a tendency sneak up on many of us and before you know it, we’re ordering last minute gifts online hoping for a just-in-time delivery.

I’m sure as a 3PL warehouse, you’re no doubt aware of this scenario.

This is especially true as the holidays are a huge profit center for many warehouses.

But have you ever stopped to wonder how massive the holiday numbers are and their impact industry-wide? After considering last year’s growth, we took a look at 2016 to find out more.

So we did our due diligence and compiled the final statistics from the record-breaking Holiday Season of 2016.

These totals will amaze, inform and, we hope, further inspire you to ensure your warehouse is 100% ready for the forthcoming onslaught known as “Holiday Season 2017.”

Is your warehouse prepared to capture the Trillion-dollar e-Commerce sales this year?

After taking a look at these numbers, I think you’re going to want to get ready sooner than later.

Here are the Holiday Season 2016 final totals by the numbers:

After reading these impressive stats, we can imagine you’re thinking about how to fine-tune your warehouse logistics and prepare for a smooth operating season.

To help out, we’ve complied five tips for holiday success.

Download our latest eBook “How your 3PL Warehouse can prepare for the Holiday Rush” to explore how to get your operations in tip-top shape.

As you know, we’re all going to be very, very busy – and sooner than we think. To ensure your 3PL is 100% prepared for everything coming your way, we invite you to download our eBook today.

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The Economist ‘Imagines’ an Ideological Echo Chamber Email from Larry Page to James Damore

Created on: 15th August 2017 at 15:15 (Delivered after 1 seconds)
From: Larry Page <*********@google.com>
To: James Damore <***********@hotmail.com>
cc: <all-staff-worldwide@google.com>
Subject: Re: “Google’s Ideological Echo Chamber”

Dear James,

You’re probably expecting me to start by claiming that there are no differences in the average abilities, aptitudes, and interests of men and women. Or that the fact that four times as many of Google’s software engineers are men than are women is proof of discrimination. I’m not going to do that. There is good evidence for dozens of such differences between the average man and average woman. And as a matter of pure logic, you are correct that the gender gap in our team of software engineers is not of itself proof of sexism or discrimination.

I am happy to acknowledge that you state your support for gender diversity and fairness. Your memo starts: “I value diversity and inclusion, am not denying that sexism exists, and don’t endorse using stereotypes.”

So, you and anyone else who reads this may be wondering, why the fuss? Why did your memo go viral? Why did it cause such fury? Why did we fire you? In interviews and an op-ed in the Wall Street Journal, you have said it’s because Google is “ideologically driven and intolerant of scientific debate”, and therefore unable to tolerate your “reasoned, well-researched, good-faith argument”. You’ve driven the point home with your “Goolag” T-shirt and new twitter handle, @Fired4Truth. You’re wrong. Your memo was a great example of what’s called “motivated reasoning” – seeking out only the information that supports what you already believe. It was derogatory to women in our industry and elsewhere. Despite your stated support for diversity and fairness, it demonstrated profound prejudice. Your chain of reasoning had so many missing links that it hardly mattered what you based your argument on. We try to hire people who are willing to follow where the facts lead, whatever their preconceptions. In your case, we clearly got it wrong.

Have you ever noticed that no one takes sentences that start “I’m not a racist, but…” at face value? Here’s why, in the words of Jon Snow in “Game of Thrones” (season 7, episode 1). When Sansa Stark tells him: “They respect you, they really do, but…,” Snow laughs and comes back with: “What did father use to say? Everything before the word ‘but’ is horseshit.”

I thought of that line when I read this section in your memo: “Of course, men and women experience bias, tech, and the workplace differently and we should be cognizant of this, but it’s far from the whole story. On average, men and women biologically differ in many ways…” All your comments about valuing diversity and fairness came before that giant “but”. What came after it was a description of a few gender differences, your argument that they explain why so many of our software engineers are men and your complaint that Google’s attempts to change that balance, far from being about fairness to women, amount to anti-male bias. You use the words “discriminate” or “discrimination” 17 times, exclusively to describe men as victims.

Now that we’ve worked out what your memo’s really about, let’s examine its argument. These are the main gender differences you cite: women’s on-average greater interest, compared with men, in people and lesser interest in things; their relatively greater tendency to “empathize” rather than “systematize”, and to be agreeable rather than assertive, and their relatively higher anxiety and lower tolerance for stress.

You present a diagram of two normal distributions, with the same standard deviations but slightly different means, to demonstrate that small differences in group averages produce large differences when it comes to outliers. (The Economist’s data team has kindly redrawn this for me, highlighting the “tail” of the distribution with the higher mean.) The point of this simplified model is to demonstrate that, of everyone who scores very highly on the variable under consideration, many more will be from the group with the higher average.

Then you seem to make a giant leap from group differences between men and women on such measures as interest in people rather than things or systematizing versus empathizing, to differences in men’s and women’s ability to code. At least that’s what you seem to be doing; you don’t quite say so. There is no evidence for such an inference. And that is only the first flaw in your argument. I can see at least six more, any of which would derail it on its own.

First, you ignore many other gender differences, basing your argument only on a few that you think support your conclusion. Second, you’re ignoring everything else that could explain the gender gap. Third, the gender differences you cite differ between countries and over time. Fourth, they don’t even support your argument, because you don’t seem to understand what makes a great software engineer. Fifth, you clearly don’t understand our company, and so fail to understand what we are trying to do when we hire. And sixth, even if you are right that more men than women are well-suited to the job of a software engineer at Google, you are wrong that taking steps to recruit more women is inherently unfair to men.

Your memo was a triumph of motivated reasoning: heads men win; tails women lose. Here are a few psychological differences between the sexes that you didn’t mention. Men score higher on measures of anger and lower on cooperation and self-discipline. If it had been the other way round, I’m betting you would have cited these differences as indicating a lack of suitability for the job of a coder. You lean on measures of interest and personality, rather than ability and achievement, presumably because the latter doesn’t support your hypothesis. In many countries girls now do better in pretty much every subject at school than boys – again, if it had been the other way around I’m sure you wouldn’t have neglected to mention that fact. The solely published comparison of actual competency in coding I am aware of found that women were more likely than men to have their GitHub contributions accepted – but if they were project outsiders, this was true only if their gender was concealed.

There is plenty of evidence that women in Silicon Valley suffer harassment and discrimination. Read Susan Fowler’s description of the harassment she experienced at Uber before leaving the firm in December. Look at the responses to “Elephant in the Valley”, a recent survey of senior women in tech: among its findings was that two-thirds had been excluded from networking opportunities because of their sex. And beyond our industry, women are less likely to be given plum assignments, are given less useful feedback, are seen as pushy when they ask for pay rises (men are seen as ambitious) and, in leadership roles, may be seen as either competent or likable, but rarely both. “We need to stop assuming that gender gaps imply sexism,” you write. But we know there is sexism! We don’t need to infer it from the existence of gender gaps.

It is more than likely that some psychological differences between men and women have been baked in by evolution, as you note. We see such differences, in varying degrees, in pretty much every animal. With humans, though, you must take great care before concluding that any specific difference is innate since our societies are so much more complex and varied than those of other animals. (By the way, I find it blackly funny that some of the conservatives who have seized on you as a hero don’t believe in evolution at all.)

Here are some reasons to be doubtful about evolutionary basis for the specific differences you cite. Before the 1980s, when personal computers became more common and were almost exclusively marketed to men and boys, a much bigger share of those studying computer science at a university were girls. The share of computer scientists who are women varies wildly from country to country. Even personality differences vary from time to time and place to place – for example, men are more agreeable (the term used by psychologists for a cluster of traits such as modesty, altruism, and tender-mindedness), and less ambitious and status-seeking, in more hierarchical countries. That suggests that at least some of the gaps we see in America are because women are still relatively powerless – just as most men are in more traditional societies. Moreover, those supposedly “female” traits vanish in the rare arenas where the competition is entirely among women. Sopranos and ballerinas are hardly famous for being indifferent about who gets top billing.

I said you didn’t understand what made a great software engineer. If we were talking about weight-lifters or contortionists, it would be simple – and your stylized bell-curve diagram would be the whole story. Men are on average so much stronger, and women so much more supple, that almost all the highest performers are from one sex or the other. But few jobs are that one-dimensional. Software engineering requires a broad mix of skills involving both “people” and “things”. Teamwork, in particular, is important – the stereotypical image of the geek working alone in his basement is far from reality. Senior engineers must manage teams – and by your own reasoning that should mean that women, with their greater empathy and interest in people, should be over-represented at that level, compared with their numbers in more junior jobs. That they are not should have given you pause.

Many of the problems in our industry are caused by the sorts of misconceptions about the work that you clearly hold. Failures of teamwork and product testing are part of the reason so many new releases are glitchy, and so many projects run over time and over budget. I can even point you to ways that products fail because too few women have been involved in their development. When Google Plus was launched users had to state their gender to sign up. The intention was to make it easier to send notifications such as “She shared a photo with you.” Presumably, it didn’t occur to anyone involved in development – all of them men – that many women choose to conceal their sex online to cut down on harassment. Such failures matter far beyond our industry because tech increasingly reaches into every aspect of modern life. I don’t want Google to be part of building a virtual world that is a bad fit for a large part of humanity, as office designers, carmakers and pharmaceutical companies already did in the offline world. (Did you know that car seats and office desks are the wrong proportions for most women, or that many drugs in widespread use were only ever tested on men?)

Finally, let’s look at your contention that by trying to recruit more women Google is discriminating against men. You seem to think that if we stopped paying any attention to applicants’ gender when deciding who to hire, we would naturally converge on the “right” share of men and women, that is, the share that matches the distribution of talent in the recruitment pool. I don’t believe that. Some women will be put off applying by the heavily male culture; those doing the hiring will be influenced in their assessment of ability by the stereotypes they’ve formed in it. We should “treat people as individuals, not as just another member of their group,” you write. That is what we are doing! We’re trying to hire the best, aware that there are forces militating against us.

When you first wondered why so few of our software engineers were women, and why we’re trying to hire more and whether that was fair, there were plenty of smart things you could have done. You could have asked some of your female colleagues about their experiences in the industry. You could have looked for evidence that conflicted with your biases (there’s a good search engine you could have used). Here’s a brief reading list for you. At Heterodox Academy, Sean Stevens and Jonathan Haidt have compiled a pretty comprehensive list of psychological differences between the sexes – there are plenty, not all point the same way and there are many caveats. J. Doe, on Medium, has summarized the evidence that women are treated worse in the tech workplace than men. Suzanne Sadedin, an evolutionary biologist, debunks your pop evo-psych on Quora. Yonatan Zunger, a former senior engineer at Google, discusses your misconceptions about our industry on Medium. Claire Cain Miller talks about the damaging myth of the loner genius nerd in the New York Times. In Vox, Cynthia Lee “ladysplains” your errors from the viewpoint of a woman coder.

I shouldn’t have had to write this: I’m busy and a little effort on your part would have made it unnecessary. But I know I have it easy. Women in our industry have to cope with this sort of nonsense all the time.

Yours,
Larry

Source: The Economist

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The Supply Chain Digital Age Requires New Restructuring Initiatives

The digital age is upon us – and how organizations manage the transition to leveraging data more holistically will decide supply chain success and defeat.

In fact, the only thing that will be constant is change.

A recent white paper from market research firm IDC, titled White Paper Digital Transformation Drives Supply Chain Restructuring Imperative, explained:

There’s every reason to believe that this pace of change will accelerate and that the supply chain of the future will be in a constant state of flux. Companies that can build supply chain flexibility more quickly will be better positioned to support their consumers/customers and thus grow their business more effectively.

In its white paper, IDC identified five stages of maturity for the digital supply chain as follows:

  • Ad hoc. This stage is characterized by poorly defined goals that sometimes lead to chaos. Movement and change come from individuals, and the positive results are often siloed within the organization. Business goals and IT digital initiatives are not effectively paired for best results and the needs/wants of the customer are neglected.
  • Opportunistic. In this stage, the company has captured basic capabilities, and there are processes in place to achieve repeatability on an ongoing basis. However, these organizations are not leaders but instead lag in efforts to develop a comprehensive strategy and execute across the entire organization. Progress tends to be unpredictable.
  • Repeatable. The organization has clearly aligned business and IT goals for the near term at the enterprise level. “Digital initiatives for product or service delivery and customer experiences but are not yet focused on their disruptive potential,” the report said. At this stage, the organization has documented, standardized, and integrated capabilities at the business level. These organizations tend to be on par with competitors.
  • Managed. An agile management vision combined with embedded digital transformation capabilities are tightly linked at this stage. These business leaders deliver integrated and synergistic business-IT disciplines in order to continuously deliver digitally enabled products and services.
  • Optimized. At the most mature level, organizations are affecting markets by using new digital technologies and business markets. A continuous feedback loop has been created to ensure improvement and innovation. Leaders in these organizations encourage risk taking and experimentation in pursuit of innovation.

The infographic below offers more details of the Digital Transformation in the Supply Chain Survey, which was sponsored by OpenText. IDC conducted its study, in the fourth quarter of 2016.

It polled 254 respondents from manufacturing, retail, and consumer products across three company size ranges in seven countries.

Where is your organization in terms of embracing digital transformation? Let us know in the comments section below.

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