If the United States/Canadian border were to close for an extended period of time, could your business survive?

How much of your regular supplies are sourced in the United States? Do they come in by airplane or by truck?

Will delays at the airports impact your business?

These questions need to be asked by you and your operations managers. You need to understand your supply chain and how its operation, or lack of operation, affects your business.

We think of Business Continuity Program’s as addressing only major emergency or disaster events, but in reality, it could be the small event that you didn’t consider that could seriously impact your businesses operation.

If the border were to close, could you quickly source your materials that you need from a Canadian supplier? Have you made the necessary arrangements now, while you don’t need the alternate supplier or would you have to scramble to find and contract with a supplier?

How about shipping your product outside of Canada. Would a border shut down impact your contractual agreements with your international clients? Are all of your client’s contact information up to date and available? Do you tie your client database into your order management system so that you always know who has ordered what product and at what stage in the manufacturing process that product is within your plant?

These and many other questions need to be answered when you are developing a Business Continuity Program. You need to be very thorough and really understand the complete business process. This includes all aspects of your supply chain and customer chain. Someone else’s emergency or disaster event could put you out of business.

Our job as entrepreneurs is really to build a business in which people depend on. The best we can possibly hope for is having a group of people at both ends of the value chain who really need us. Not just customers, but suppliers as well.

Suppliers who need us to succeed so they can feed off our success. Customers who need our stuff to get through their months, weeks or days. When we are needed, we are on our way to have a solid business.

Do your people in your supply chain need you to exist?

In order to provide superior customer service, you must have your product available. What they want, where they want and when they want! We have already discussed that if the product the customer wants is not available, they will buy the competitors, or delay their purchase. But how do you supply a variety of products, keep them current, and avoid obsolesce?

Lean inventory has been the goal of many manufactures and lean was designed to minimize waste, and improve efficiency. In the automotive industry this was the music that the manufactures marched to for many years. Keep supply ready to build, but minimize the inventory of parts. Only add inventory of parts at the moment they are needed. This lean inventory process was designed to provide stock with a short lead time. In reality the automotive manufactures are running very lean operations, but also probably some of the least agile operations. Lean by definition means with little fat. Agile on the other hand means nimble. If a customer wants a car with the color and the accessories they want, the lead time in weeks or months. Yet the automotive suppliers have inventories of unsold cars. What can we learn from this, and how can we use put agility to use to provide superior customer service?

First, lean does work well with products that are high volume, and low in variety. A video game console for instance. A WII is a WII, but they are also subject to obsolesce. Here lean makes sense; don’t buy the components until there is demand.

But what of a computer? Here there are endless varieties and high volume. In less predictable environment, agility is necessary for superior customer service. Agility is not a single company concept but must reach one end of the supply chain to the other. For a manufactures to have agility in their manufacturing process, they need agile partners. Those partners must be connected in a virtual supply chain based on sharing of information. Here are seven steps to superior customer service through agility:

1. Synchronize activities through shared information. EDI (electronic data interchange) through web portals, or real time with RosettaNet. Quality information available immediately.
2. Work smarter. Analyze business processes to determine where no value is added, and time is wasted.
3. Partner with suppliers to reduce inbound lead times. Choose vendors based not only on price but on response time. Time is money and there is only one opportunity to be first in the market.
4. Reduce complexity. The simpler the process the more likely it can be repeated, and less chance for less than perfect quality and customer satisfaction.
5. Postpone final assembly or configuration. This reduces the risk of obsolesce and minimizes working capital tied up in unwanted finished goods.
6. Manage processes not functions. Division of labor has created silos in business so makes change slow, and department goals and budgets can be at cross purpose.
7. Utilize appropriate performance metrics. Budget based metrics do not encourage agility since cost is the only measure.

Lead time reduction, and perfect order rate create customer satisfaction. A satisfied customer is a retained customer. A retained customer is adds to the revenue of the company and minimizes selling expense, which leads to greater profit.

I welcome your comments.

The most read blogs on Commitment Matters in 2009 reveal the uncertainty that surrounds contract management. As organizations increasingly recognise the importance of this discipline, they are researching how best to define and implement the role.

At its best, contract management is delivering significant added value, both in structuring trading relationships and in ensuring they deliver positive outcomes. However, there are few accepted models for how to achieve ‘best practice’, in large part because this field has lacked strong executive support. As a result, the scope of contract management is not well defined and there is rarely an agreed point of ownership.

Contract management practitioners have been at the forefront of those wanting to read more about the way that the function and its role is changing. But senior management has also been researching, to discover how others are approaching this topic.  While many organizations are investing in the development of a more skilled and increasingly strategic function (buy-side and sell-side), this approach is not universal. In some cases, centralized groups are viewed as an obstacle to closing business and are being dismantled.

Commitment Matters seeks to offer guidance to practitioners and senior management and the volume of readers suggests some success. This year’s most popular article – on The Role Of A Contract Manager – attracted more than 6,000 readers. Other areas that attract attention include the on-going debat eover the distinction between contract managers and lawyers; and perhaps related to this, there is interest in the way that contract management can deliver greater value – for example through encouraging more collaborative relationships or taking a more balanced view of risk.

So in case you missed any f the most popular articles, here are the Top Ten for 2009.

by Guy LeCharles Gonzalez, Director of Audience Development, Digital Book World

If you didn’t know any better, you might be inclined to believe that eBooks had already hit the tipping point, representing far more than their estimated “3% of total trade sales”. Even allowing for the possibility that actual eBook sales might be twice as high as reported, the attention they receive can sometimes seem to be a bit disconnected from reality.

At last week’s eBook Summit, Kneerim & Williams’ Steve Wasserman noted: “I suppose we could sum up this entire two-day conference under the headline ‘too early to tell’.” Of course, eBooks are an important part of Digital Book World’s program — we’ll cover everything from optimization to pricing to their effect on contracts, old and new — but as Wasserman suggested, where they will ultimately fit in the overall picture has yet to be determined.

As such, Digital Book World’s focus is on the big picture — transforming the underlying publishing business model to leverage the advantages, and overcome the challenges, offered by digitization, while recognizing that the model is still predominantly driven by print sales.

Our Supporting Sponsor, SBS Worldwide, has been an integral part of the publishing industry’s supply chain for 26 years as the driving force behind freight management. Their chairman, Steve Walker, will speak at Digital Book World on how the digital transition has affected the supply chain and the opportunities it’s created.

In their latest bulletin, they published a fun interview with me about Digital Book World, reprinted here with their permission:

Registrations for January’s Digital Book World conference in New York, organized by New York-based F&W Media, are in line with expectations – and that’s good news for Guy Gonzalez since his business card reads ‘Director, Audience Development, F&W Media’.“We know potential attendees have to justify the expense of attending and the programme our conference chair Mike Shatzkin (of the Idea Logical Company) and his advisory board have come up with is absolutely on point,” says Gonzalez.  “Reaction to Digital Book World’s underlying premise of ‘less talk, more action’ has been overwhelmingly positive.”

Gonzalez adds that registrants to date represent a broad range of publishers, from Random House and National Geographic to smaller houses such as romance and ‘new worlds’ publisher Samhain of Macon, Georgia.  Gonzalez has a feeling that the talk by Brian Napack of Macmillan on ebooks and piracy “will get some people heated up”, while, as an advocate of publishers moving to “a community-oriented model”, he’s especially looking forward to the presentations by Sourcebooks’ Dominique Raccah and Hay House’s Reid Tracy.

There is much talk about iPod moments in the digital arena these days, but Gonzalez thinks we are not even close yet.  “Books are not like music, at least when it comes to fiction. The album was a commercial construct that digitization made irrelevant.  The ability to purchase only the singles you wanted couldn’t be controlled by record labels once they were available digitally. No one wants to buy Chapter 15 of The Lost Symbol!

“There’s a huge opportunity to revive short stories and poetry, though. And in non-fiction, especially areas like textbooks, cookbooks, and how-to, the iPod moment is already here.  Many publishers, including F+ W Media, slice and dice their content for purchase by chapters or projects.”

There is also much speculation on what the size of the digital market is currently, and how much it will grow.  Gonzalez says: “I’ve seen estimates that put eBooks around 2-5% of total sales, roughly similar to that of audiobooks. They certainly have the potential to expand the market and represent a bigger share down the road, especially as awareness has spiked, but I think projecting anything higher than 25% in the next 5 years is being irrationally exuberant. Certain niches, though, will be much higher than that.”

Born and raised in New York City, “although I’ve tried to move away several times”, Gonzalez now lives across the river in New Jersey with his wife and two children.  He’s worked in publishing since leaving the army in 1993, chiefly on the magazine side of the industry which explains his enthusiasm for the niche approach and engaging directly with readers.  “There are a lot of lessons for book publishers in the current state of the magazine industry, perhaps the most critical being that the closer you are to your readers, the more likely you’ll be to weather the storm of events beyond your control.”

What does he like to do when he’s not immersed in the digital world?  “If you ask my wife she’ll say ‘not enough!’ – but I’m a writer too, so the fate of the publishing industry has personal relevance beyond my day job.”

And finally, it has to asked: “Mets or Yankies?”  “Sadly, the Mets.  I’ve always had a thing for the underdog.  Might explain my love for print…”

Considering print still represents 94-97% of total sales, it’s a bit crazy to think of it as the underdog, no?

The publishing industry is notorious for jumping on new trends and milking them dry — making as many bad calls as good ones in the process — but despite the over-the-top hype around eReaders this holiday season, the reality is the digital transition is much more evolution than revoluti0n. Publishers who take the time to develop an integrated and viable long-term digital strategy are far more likely to survive than those who panic and jump on the fledgling bandwagon.

A love for print is neither nostalgic, nor impractical; for most established publishers, it’s the lifeblood that will fuel their transformation, and if done right, could potentially expand the market for books, not cannibalize it.

Register Today!

I continue working on my paper about data and the cloud. It’s actually a fascinating journey, demonstrating that cloud computing in general, and the public cloud in particular is absolutely not mature. Not being a lawyer, I discover a whole new world. A couple weeks ago I pointed out, in a blog post, titled “Supply Chains in the Cloud”, the lack of transparency about who actually offers you the service.

In an excellent post from last October, David Navetta, addresses the relationships in the cloud from a legal perspective. Many people are looking at the cloud as just another way of doing outsourcing. As it turns out, nothing is farther from the truth. The cloud is not white fluffy and transparent in many situations. The question is really, with whom am I dealing? Who is processing my data? And this is particularly true in the SaaS space. Indeed, if you are buying IaaS services from Amazon for example, you can be reasonably sure you are dealing with Amazon and only with them. But you have to build your application. The more you move up the stack, the more you receive services, the more difficult it becomes to identify who is doing what. You obviously deal only with the service provider whose name is on the portal. But who is behind him?

You are sceptic about what I just wrote. Well, in his post, David gives some examples. The first one is a press release from EnterpriseDB, who provides an OLTP database on Amazon’s cloud, but in doing so, has enlisted Elastra, a company delivering elastic database technology. Zapproved, an online productivity tool, has chosen Mosso’s Cloud sites to host its applications. Mosso’s Cloud Sites in turn are hosted by Rackspace Hosting. And should I remind you of the latest T-Mobile sidekick hick-up about one month ago. Here it turns out the service was provided by a Microsoft subsidiary, called Danger. And I could go on like this. Today some companies even aggregate services from multiple origins (e.g. Jamcracker) with unified provisioning, administration, billing, settlement, support, security and directory services.

The fundamental question is how we ensure “reasonable security” and conformance in such environment. The user may be two or three levels removed from the organization actually processing and storing the cloud user’s data, with no direct relations with them. How do we get all covered by the one agreement we have?  Transparency is critical in the cloud, but today it is not the norm. Cloud Computing will have to adapt itself as legislation and court cases define the legal environment over the next year or so. In the mean time, make sure you think about the implications while putting your head in the cloud. And maybe, you want to involve your lawyer in the decision.

On a different note, Merry Christmas to all. Wish you all the best.

Why do some companies survive a major crisis, and some don’t? How do they survive, if at all? Close calls and near misses are not that uncommon in the business world, but how do companies actually deal with them? The Harvard Business Review Paperback Series are not written for us academics and researchers, but for the professional manager seeking executive perspectives and solutions, and this is a book with essays that “based on a true story”,  told by those who lived to tell how they survived a major crisis.

>>> Read full post >>>

Sixty years of proud Swedish car manufacturing gone: SAAB is no more. I always wanted to have one, but I never got around to buying my own SAAB.  When GM bought SAAB in 1989, who would have thought that it would take no more than 20 years for SAAB to disappear? A true Black Swan event? SAAB is history, but what will happen to its supply chain? The ripple-effect criss-crossing the now defunct supply chain will potentially affect  61,000 jobs all over Sweden, and many suppliers and sub-suppliers and other businesses wholly dependent on SAAB will have to dig up their business continuity plans.

>>> Read the full story >>>

Few companies have embedded their Sustainable Strategies to such an extend as AkzoNobel does. Top Management Bonuses are related to  sustainable KPI’s. Major Business Decisions are made on the basis of both economical as well as environmental impact analyses. My interview with André Veneman, Corporate Director Sustainability,  has been very inspiring. Find hereby ‘Best Practices’ at AkzoNobel.

AkzoNobel is a worldwide operating chemical company, employing 58,300 people generating an annual turnover of 15,4 million euros (2008). AkzoNobel has three business units:  (1) Decorative Paints, (2) Performance Coatings (industrial, car refinishes, marine and packaging coatings) and (3) Specialty Chemicals.

Product examples : Flexa (Decorative Paint), Fluorex (Car Refinishing – Paint Film on PVC of Volvo ) Resicoat (Industrial Application – Valves)

Hans Wijers, CEO as of 2003 was convinced that Akzo Nobel could only survive if it increased its economical value by reducing its ecological footprint.

Andre Veneman, AkzoNobel Corporate Director Sustainability

André Veneman was sked to lead Sustainable business development together with the management of Health, Safety and Environment.. Veneman accepted, under the condition that the Board of Directors would support him to ‘Go All The Way’ :  Implement all processes necessary to embed Sustainability in the organisation. After a career at ‘Doctors Without Borders’ he became determined to organise sustainable processes. He knew this could only be done by throughout analyses, sincere communication and strong interventions.

Veneman started first to create a proper CSR foundation. Veneman and his team analysed all AkzoNobel processes, risks and prepared the company to be ready to match all new standards and legislation. Examples are REACH for Chemical Products, Business Principles embedding, a Vendor Policy to make sure the suppliers actively support AkzoNobel Business Principles and Global HSE standards. A Sustainability Council was installed. NGO’s like Amnesty and WWF were invited to exchange and advise on societal and environmental challenges and the role and responsibility of Akzo Nobel.

An explorative research among suppliers opened they eyes of many. The results of this study, about social and environmental operations of suppliers, showed that some out of 200 suppliers were top class, many of them needed to improve but 8 needed to be removed immediately from the suppliers list. Moreover : The board decided to accompany its key suppliers to improve sustainable circumstances. Nothing to do with philanthropy but business logic : AkzoNobel wants to build partnerships with key suppliers and could not afford that they would be closed down one day or the other. AkzoNobel Sourcing Department now uses Sustainable Supplier Visits to ensure suppliers meet AkzoNobel sustainability standards.

AkzoNobel calculated its ecological footprint in 2007 in six fold, highly structured way: CO2 emissions, water, materials, waste, risk and toxicity. The company generates itself 3 million tons green house gas emissions, but suppliers add 15 million and in the utilisation phase customers are responsible for another 10 million. It makes an overall footprint of 28 million tons C02/year. It is AkzoNobel goal to have reduced its CO2 emissions by 10% in 2015 and by 25% in 2020.

1. What are Corporate Responsibility Objectives of AkzoNobel ?

AkzoNobel has defined three CSR goals (1),defined by the Board in 2008.

1. Remain in the top three of Down Jones Sustainability Indexes. (as of 2007).

2. Reduce total recordable injury rate

3. Deliver step change in people development, partly through substantially improving diversity in the company.

An Eco-Efficiency Analyses for every important Investment Decision (over 5 million euros). For every investment, an ecological summary accompanies the usual financial business case. Veneman explains that it has happens more than once that investment scenario’s with a smaller financial gain for lower ecological are being prevailed above others scenarios that would result in higher revenues but a substantial larger ecological footprint.

Simplified and fictive example of combining financial and ecological summaries as input for the companies investment decisions

2       How does CSR contribute to Innovation ?

AkzoNobel is continuously innovating in its three main key industries : Construction (responsible for 35% of the companies revenues), Transport, (20%) and Energy (40%). Subjects of improvement are functional performance (solvability, drying time and scratch resistance) and eco indicators (toxicity, energy efficiency, natural resources, emissions of waste, land use and risks).

18% of the product portfolio consists of Eco-Premium Solutions. The Eco-Premium Products all have a clear ecological advantages with a normal or better functional performance. By 2015, AkzoNobel wants to have the proportion increased to 30%.

An Eco-Premium example is ‘Dissolvine GL’, a chelating agent. Chelators serve inactivate (metal) ions in liquids. Among other application areas are shampoos and food products. Dissolvine GL is based on 86% non-fossil and sustainable resources. Ammonia is produced as a side-product but can be collected and re-used.

Molecules Model of a chelating agent that is used to inactivate metal ions. Dissolvine GL is one of the ‘chelating agent’ products of Akzo Nobel, an Eco-Premium product representing  a  high economical value with a low environmental impact.

50% of Managers Bonus is now related to Sustainable Development. Half of the yearly variable bonus of the Top 1000 executives is now directly related to sustainable performance, which consists of Eco-Premium Innovations, carbon reduction, safety, operational efficiency  talent development and the companies position in the DJSI index.

Exchanges with NGO lead to new product ideas. An NGO explained AkzoNobel 12 years ago that classical biocidal antifoulings had to be phased out because of their toxicity to marine life. It motivated AkzoNobel to develop non stick, smooth polymer antifoulings. Scallops and see weed will not attach. Due to the very smooth hull, large container sea ships now could save more than 6% petrol use : An economical and ecological gain. global shipping is responsible for 2,7% of the worlds green house gas emissions (2009 numbers). The use of this very smooth Intersleek antifouling alone could potentially reduce global carbon-emissions of containerships with 80 million tons compared to classical antifoulings.

New polymer ship coating (Intersleek 900) that enables an energy consumption of over 6% of vessels

Customer exchanges that launch new product innovations. Akzo Nobel has set up various customer exchanges. Discussions are moving towards a more extensive needs analyses. Questions are ‘What challenges do you face with respect to Sustainability’ ? ‘What would you expect from us in terms of products and services?

An example of a product developed by intensive involvement with stakeholders is ‘Redicet’, launched in 2007. Redicet is an asphalt product (or butimen). Redicet is stronger and more resistant than the other asphalts on the market. It enables a more efficient transport which means energy savings for car drivers. The road workers working circumstances have improved substantial : The asphalt does not to be heated at a very high temperature and pollution has been reduced. Lastly, an overall cost reduction of 20 to 40% is possible.

Redicet, a new asphalt with higher performance, lower pollution and better working circumstances

Painting powder that can be melted at lower temperature. Office furniture makers asked  AkzoNobel to develop lower paint powder temperature (now 230 degrees) that enables to lower the producers energy spend and environmental footprint. It has been the start of  new developments.

Office furniture (Arféo) coloured with powder paint.

3.What are outlooks ?

Sustainability has been embedded and can only accelerate, Veneman concludes. At AkzoNobel, after having created the foundations, and embedding sustainable decisions into the companies strategy, Veneman foresees further cooperation between departments.

One of the next steps will be a structured and common approach for co-creation with customers, NGO and industry partners. In order to create new innovations stakeholders will be increasingly implicated in the process. Among other implications, it will bring new definitions of intellectual property and responsibilities between AkzoNobel and its partners.

Sources : 1. Delivering Tomorrows Answers today, Akzo Nobel 2008 Report ; 2. The Carbon Footprint of Shipping, 2009 by Joint NGO’s (Seas at Risk, Milieudefensie, Noordzee Foundation),

Are you tired of the news string about Tiger Woods sex scandal? I promise you this is not about that.

Needless to say Tiger is a “Great” athlete. He has won hundreds of golf tournaments around the world, and hoisted trophies on every continent. Before this scandal, he is the role model for many young people, and his quotes are used in many leadership discussions, especially in the sports of golf, which requires not just physical strength, but also the power of will.

So how did Tiger Woods stumble?

I happened to just finish the book “How the mighty fall” by Jim Collins, he is well known as the author of “Good to Great”.

Jim Collins discerns the following stages of a failing company:

1. Hubris born of success
2. Undisciplined pursuit of more
3. Denial of risk and peril
4. Grasping for salvation
5. Capitulation to irrelevance or death

Mr. Collins describes that every institution, no matter how great, is vulnerable to decline. There is no law of nature that the most powerful will inevitably remain at the top. Anyone can fall and most eventually do. But as he emphasizes, many can recover from their demises, while many cannot.

So as I was reading “How the mighty fall”, I cannot stop thinking how much Mr. Collins study can apply to an individual case like Tiger Woods. In a way, this is a good news because it shows that this study successfully captures some basic fundamentals; but in my opinion, this is also a bad news because it made me realized that this study only stays at the surface and does not get into the true cause of failures.

External Environment

While Mr. Collins quotes Tolstoy’s novel Anna Karenina, “All happy families are alike; each unhappy family is unhappy in its own way”, his study uses the same methodology as Good to Great to identify which mighty failed.

However, if you only look at stock returns or earning per share in a certain period and try to create a “timeless physics” of good or bad performance, I think you will be trapped by oversimplification, because we neglect or underestimate the effects of external environments, such as what happens in the economy, in the industry or in the technology development …

For instance, can a VCR manufacturer dig itself out and transition to make other products when the technology is obsolete, can a consumer product company turn out a fabulous financial performance in the worst economy recession, or how about a company simply running in a country that are being through political turmoil?

So in my opinion, because of the methodology Mr. Collins is using, he inevitably gets himself into the situation that some “Great” company he identified is no longer “Great”, or not even “Good”, with absolute no changes in leadership and values.

Cause and Effect

When the worse economy recession hitting us and colossus financial institutes collapsed at the end of 2008, some “Great” companies Mr. Collins identified in his “Good to Great” went into Waterloo. Readers including myself are anxiously waiting to find out why these “Great” companies failed so miserably.

After reading this book and going through the above 5 stages, I frankly don’t feel it can really kill my hunger for an answer. I felt Mr. Collins spent most of his time documenting a pattern how a “Great” company fails, but failed to explain why a “Great” company fails.

I will go even further and ask “Why’s” 5 times at least (TPS 5 why’s), because this is how you find the root causes of a failure, and how to put actions together to prevent it from happening again. So in my mind, documenting “How mighty fall” is valuable, but is not as valuable as finding out “Why mighty fall”.

Back to Tiger Woods…as people are very interested in discovering how Tiger Woods had all of these scandals behind his almost impeccable image, I think people should be more interested in finding why he made these mistakes. And this is how he can build himself and rebound from where he failed.

There are many things we associate with the holidays: family, parties, colorful lights, trees, long checkout lines at the mall, no parking and, of course, presents. But besides the obvious things we tend to think of this time of year, there are many other holiday items that actually symbolize the season. One example is euphorbia pulcherrima, more commonly known as the poinsettia.

If you are in the U.S. during the month of December, you can pretty much walk in any direction and expect to see a poinsettia sitting on the steps or window sills of a home or office, creating a beautiful contrast of red and green that catches almost any eye. What most admirers don’t realize is that the poinsettia was placed on that step or window after completing a very complex journey that was made possible by a logistics company specialized in transporting of perishables, like UPS.

So where do they come from? The Paul Ecke Ranch, a leading worldwide grower and distributor of plants, is best known as the primary breeder of poinsettias. Starting out at the Paul Ecke Ranch in Guatemala, the poinsettias are carefully looked after by the ranch’s expert breeders until they are ready to ship out, at which point they are carefully packaged and tagged for the journey ahead.

Being live plants, the complexity behind delivering a poinsettia goes far beyond that of packaged t-shirts or documents. Everything from the time in transit and the temperature in the facilities and vehicles to the amount of time the plants are kept out of the sun plays a role in determining whether you receive a healthy plant with vibrant colors, or a shriveled up weed.

Thankfully for the Paul Ecke Ranch, UPS has more than 15 years of experience moving perishable cargo into the U.S. from Central and South America. With temperature-controlled facilities, a vast technology infrastructure and one of the cargo industry’s most reliable networks, UPS continues to ensure that each poinsettia shipped from Guatemala reaches its final destination in pristine condition, ready to brighten up the walls, rooms doorways and windows of customers throughout the U.S.

It’s too bad you can’t say the same for the condition of your luggage after a holiday flight.

So if you see a poinsettia this holiday season, take a moment to admire the shape, color and health of the plant and then try to imagine how something so fragile kept its appearance after a 2,000 mile journey. Talk about a holiday miracle. Or just a really, really good shipper. Happy holidays.

In recent weeks, I have been hearing frequent mentions of ‘hard’ versus ’soft’ aspects of contracting. The difference seems to be between those terms that are characterisitic of legal and financial risk allocation, compared with those that have more to do with aspects of contract governance and management.

Historically, many lawyers have taken the view that they focus on the ‘hard’ stuff and that the business concentrates on the soft elements. But this has started to change as all those involved with contracting start to grasp the increased importance that the contract has in the broader aspects of relationship success.

A new thought was introduced to me today by complex project expert Dr Andrew Humphries, who asked what consideration has been given to the ’symbolic value’ of a contract. His point was made in respect of some work he is doing on a long-term trading relationship in which the parties feel better outcomes could be achieved. He has identified issues of insecurity that are constraining the commitment of one party. Like so many relationships, a core issue is around trust – and in this case, he feels that the absence of a contract is part of the problem.

Contracts can and should offer a basic security, part of which is explaining the conditions under which they may be amended or terminated and the results of such termination.  The need for these open and honest discussions has increased post-recession. The last year has undermined many relationships, as the more powerful party has often imposed unilateral changes in the terms.

2010 will see a growing interest in some of the ’soft’ elements of contracting, as we seek to restore trust in trading relationships that have been battered by recent events. It is an interesting challenge for contract experts everywhere to rethink some of the fundamental terms and the way we approach defining long term relationships.

Turning a supply chain 180 degrees to become a demand chain is an inordinately difficult organizational challenge, not because it does not make sense, but because it requires organizations and the people in them to be able to see what has always been there, but from an entirely new perspective. The power of the common view, the accepted wisdom, the status quo is never more powerful than when it is under threat.

Seeing what has always been there with new eyes is extraordinarily hard to achieve in a single business, reversing a supply chain to become a demand chain requires that it is done for a series of businesses, all pre-occupied with their own challenges.

This is why if you can do it, the pay-off from the competitive advantage that will come is immense.

Nowadays there is a fresh wind blowing across the retail supply chain landscape, and its name is RFID, which is shorthand for Radio Frequency Identification.  Handled properly, a RFID system solution can result in an evolutionary change incorporating legacy systems with the real-time supply chain management of tomorrow.

Early adaptor Wal-Mart is the prime force behind the change with its decision requiring 100 key suppliers to be ready to implement RFID by Jan 2005, and all suppliers by 2006.  Companies such as Coca-Cola, Gillette, Johnson & Johnson, Kraft, Pfizer, Procter & Gamble, Unilever, and others are all climbing on board.

Just as the European marketplace led adoption of digital wireless cellphone technology, so too has been the case with early adoption of RFID in retail supply chain systems.  United Kingdom retailer Marks & Spencer last year started adding RFID to the 3.5 million reusable plastic containers used to deliver produce, calling it the largest supply chain application of RFID technology in the world.

Smart IT managers are insisting on vendor solutions that are more open, flexible, and less risky, are easier to integrate with existing systems, and have faster ROI with a lower total cost of ownership.  No longer will savvy clients accept proprietary closed systems from a single supplier that locks them into long-term and supposedly seamless solutions.

The challenge is to bridge the gap between what is working today and extending the role of Auto-ID technology into a fully integrated, open system that incorporates the most appropriate devices and IT architecture to suit customer applications.

The idea of automating the retail enterprise is not new.  Bar codes have made a significant contribution to productivity since their general acceptant more than 15 years ago.  They have grown steadily in use and usefulness.  Barcodes are so ubiquitous that they are virtually transparent to users as they track parts and products through manufacturing processes, distribution channels, supply chains and retail operations.

Bar codes have been identified as one of the most significant automation technologies ever put to work.  A study conducted by Hewlett-Packard over a decade ago on the effectiveness of automation technologies found that bar codes boasted the best return on investment of all technologies studied.

RFID tags are similar to bar codes as each employs an identifying code for tracking purposes, but bar codes are limited in that they must be in the line of sight and individually scanned with a reader.

RFID uses wireless radio transmissions to readers with a variety of ranges and material penetration characteristics.  In general, the larger the antenna, and the higher the power, the longer the reading range.  In all cases, the maximum power levels are capped by regulatory and safety limits.

1. Low-frequency (125 kilohertz or 134 KHz) RFID will penetrate most packaging material, but have a short read range – usually from 1 to 30 inches depending on power levels and antenna sizes.
2. High-frequency (13.56 megahertz) RFID is somewhat capable of penetrating packing materials and generally had an operating range of 4 to 40 inches.
3. Ultra High-frequency (UHF) RFID is unable to penetrate many packing materials, and is greatly attenuated by water.  In free air, UHF RFID tags operating at around 915 MHz can be read at ranges from 5 to 20 feet depending on reader and antenna, creating a large read envelope.

If barcode scanning is like spear fishing, then RFID is like fishing with a net.  You scoop everything under your boat, whether you can see it or not. Then, you sift through the results to see if you want to keep what you’ve captured – Clarke McAllister, RFID Solutions Manager

According to Accenture, an RFID open systems solution can increase inventory turns by 10 to 15 percent.  Greater inventory turns facilitate capital resource optimization, increased margin procurement and significant reductions in obsolete inventory levels.

Supply chain metrics postulate that every month inventory remains on the retail shelf 5% – 10% of its resale value and 7%-20% of its revenue contribution is lost.  Retailers must manage on-hand inventory diligently to optimize profitability.  Supply chain managers today must be better informed with accurate real-time data to stay competitive.

While managing inventories to lower levels, care must be taken to avoid out of stock (OOS) situations.  Consumers cannot buy what isn’t there, resulting in brand switching and store hopping both of which reflect negatively on the retailer.  RFID is an enabling technology that promises to help minimize OOS by affording full and accurate visibility of inventory levels in all parts of the retail supply chain.

RFID tags and readers are beginning to show up in more places than just the warehouse and shipping dock.  Ski passes, toll cards, and employee access cards are becoming more commonplace.  Advancement in both technology and standards, coupled with falling prices, are resulting in a rush to incorporate RFID into existing systems.

Info source: Evolution Or Revolution? Bridging The Gap Between Bar Code Legacy Systems And RFID In The Retail Supply Chain

December 10, Health Day News – (International) Pandemic flu could lead to shortages in blood supply. Preparation for an influenza pandemic should include evaluating how the event could affect a nation’s blood supply, since shortages could have potentially fatal outcomes, according to research published online December 9 in Transfusion. A researcher at the Paul-Ehrlich-Institut in Langen, Germany, and colleagues discuss how blood supplies are normally managed in Germany and use computer simulations to estimate how blood availability might be altered during a pandemic. By the researcher’s calculations, a deficit of 220,000 transfusion units could develop in five or six weeks, as units that are released decline by 40 to 50 percent during this period. Based on assumptions of how many units are for urgent needs that can not be postponed, up to 96,000 units would have to be denied, which could lead to deaths. Also, illness among blood-collecting staff and the need to bring donors into smaller collecting sessions to limit exposure could also affect blood availability.

December 3, Endocrine Today – (International) ATA notice: Global radioisotope shortage now impacting I-131 supply. The American Thyroid Association (ATA) is warning health care professionals that no further shipments of radioiodine (I-131) are expected at local hospitals until mid-December 2009 in different regions of the United States. The shortage is driven by production problems experienced by nuclear reactors that supply raw materials for the preparation of radiopharmaceutical I-131 solution. In May, the ATA released a news update warning of a potential shortage of radioisotopes linked to a nuclear reactor shutdown in Chalk River, Ontario, Canada, which has been North America’s main supplier of radioisotopes for medical imaging. The current shortage has led to prioritizing the use of existing I-131 products for patients with thyroid cancer and need urgent treatment as well as the possibility of rescheduling patients who are in the process of preparing for radioactive iodine scans or treatment. In the meantime, the association advises health care professionals to determine the status of the local I-131 supply with the hospital nuclear medicine department or with vendors who provide the product for office-based procedures.

December 2, Washington Post – (National) Fed to review policy after vaccine shortage. A top administration official, citing problems with the swine flu vaccination campaign and other shortcomings in preparedness, announced plans Tuesday for a major review of the federal government’s policies for developing public health defenses. The Health and Human Services Secretary said she had ordered the review in part because the swine flu vaccine shortage had highlighted the nation’s dependence on antiquated technology. “Under the review I’ve announced today, we’ll look for the fastest ways to move to new technologies that will let us quickly produce countermeasures that are more dependable and more robust,” she said in prepared remarks to the American Medical Association’s Third National Congress on Health System Readiness in Washington. The nation’s ability to respond to such threats depends not only on having enough hospital beds, emergency rooms, doctors and equipment such as masks and ventilators, but also on state-of-the-art diagnostic tests, medications and vaccines, she said.