HP publicly debates getting out of the PC business. Nokia’s market-share has slipped to less than 30% of the market for the first time since 1999. RIM’s “crack-berry” is withering in the sun of iPhone and Android. What’s it all about? And what impact do these OEMs’ market challenges and their operational responses have on their partners – especially the 3rd Party Logistics Service providers and the Electronic Manufacturing Service providers? These partners took over the management of large portions of their OEMs’ supply chains – taking on the assets and associated labor required to operate them. Is there a shift going on with these OEMs that could force major strategic decisions on the part of the 3PLs and the EMS providers? We have some thoughts about this. How about you?

The importance of being “people centric” in all things is a learning that has grown with me as my career evolved from Industrial Engineer to SC/Business Consultant constantly dealing with change. You can have the best idea or plan but are unable to get that shared vision buy in from and with others. Respect for each individual and asking questions about what they think and then testing your understanding of what they said to you is critical. Being on the same page at the same time and having that “shared vision” is critical in the improvement of relationship,organizational and functional stove pipes to enable true collaboration to occur.
I was at Apple in the late 80’s when things were going well and PC margins were at 55% and was fortunate to experience “The Beer Game” workshop lead by Dr. Peter Senge (MIT) of Learning Organization and the 5th Discipline fame. Peter taught us so much about how to best deal with people and understand and utilize “Learn Org” thinking and methods to better understand and manage change. I really grasped onto this continual learning focus and I am a big fan and suggest if you have not “read the book” then do so or better still participate in LO sessions plus buy the book.
I also suggest participating in the Beer Game. Make it happen as the game is one of the best examples of what end-to-end collaboration to achieve business success is all about. Particularly profound when dealing with e2e Supply Chain management change

Quick Reclipse Update – What is so difficult about communicating whats happening in Reclipse when you are deeply focused and working on the client challenges is that we cannot really talk about those activities. Confidentially is a critical key to successfully helping our clients go to new next levels and those plans and changes are what we are working on that become the “Whats Next”. We thrive on working to help move business entities to a new and needed next levels.
Strong current themes are: true collaboration and partnering; outsourcing next’s; innovating; speed; value; communication; ROI’s and breakthroughs.
Rewarding but challenging change management work and very people, subject matter expertise and relationship based consulting/resulting to deliver measurable soft and hard metrics objectives.
A proactive focus and onward into 2011 and building on and around progress made in 2010.

Susan Rosin, our President, came across an interesting article in Supply Chain Digest (http://tinyurl.com/Own-assets-article), which poses the question: “Who will own the Supply Chain?”

The article never totally answers the question, but puts forward a few theories, which conclude that some “poor SOB will”, in the end, own the assets and have to “sweat them out” if they are to succeed.

The “raison d’etre” of outsourcing was/is cost reduction. And while manufacturers claimed they were focusing on their core competencies and outsourcing what they were not able to do well, the fact was that they choose a relatively easy way out to unload assets, reduce costs, and increase profits. Why is it that American companies cannot figure out a way to be cost competitive and manufacture products locally?

Historically, outsourcing, in the logistics area, became very strong in Europe due to a lack of space to build multiple distribution centers and because of complex government trade compliance laws within what is now the EU, in particular. To a certain extent in Europe, outsourcing was not done as a matter of choice, but as a matter of necessity. In the US, logistics outsourcing became more popular as distribution models began to change and the emergence of the Internet forced the brick and mortar players to eliminate assets to be “more competitive.”

The outsourcing of manufacturing and “localization” capabilities was done because manufacturers thought they could become much more competitive if they “off-shored” their manufacturing. When the labor component was a larger portion of the overall cost, this was certainly true. When the contract manufacturers in Asia, whether electronic contractor manufacturers or the textile manufacturers, pay their workers 10% or less than American or European workers make, clearly outsourcing made sense.

But outsourcing led to two very significant developments in the supply chain – globalization and integration. The supply chain quickly became a series of supplier and customer networks integrated together through technology – more or less –  developed. And herein lies the answer to the question: who will own the assets? While these assets may appear only on one company’s balance sheet, without the support of and from this companies’ suppliers and customers, the question becomes irrelevant because this manufacturer or logistics provider will go out of business. The global integration of supply chains today has made it more difficult to distinguish who owns what and for whom. This has become even more apparent since the “Great Recession” of 2008-9 when governments interceded on behalf of major industry players.

So the guy holding the bag and sweating out the assets will never be successful with that approach. The future of the Business Chain is in the more tightly integrated supply/demand networks with perhaps, intermediaries (such as logistics providers, 4PLs) orchestrating the flow of orders to manufacturers who have capacity; the transport of goods either into distribution centers who have capacity or by-passing them to deliver to the final customer; and managing the returns process to manufacturers or other logistics providers who can fix and inventory or return product back to the customer. The technology exists to implement this – the real question today is who is willing to combine and collaborate to make it a reality.

Deby Veneziale
Reclipse Group
Managing Director EMEA