26 Years. Since January 1996.
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Performance versus Execution
After the publication of my second book, Successful Supply Chain Vendor Compliance (Gower/Routledge, 2015), I was interviewed by Dan Gilmore, editor of Supply Chain Digest. Clever me titled each of the 17 chapters in the first (of three) part of the book with a word that begins with the letter “E”. I don’t know why I did this, but it just worked out that way. After Dan reviewed the book, he thought of another word that begins with “E” that summarized the book’s overall objective: Execution. That has stuck with me ever since.
I help companies with a focus on supply chain technologies – ERP (Enterprise Resource Planning), EDI (Electronic Data Interchange), Automatic Identification (barcode labeling and scanning). I also help them with their supply chain metrics and financial penalty reduction. Those last two are examples of measurable performance.
Execution, however, is not always directly quantifiable, but it is just as meaningful. Execution includes the overall impression, the touchpoints, the gap-closers.
So, semantics aside, is performance the same as execution? In my opinion, no. I think that performance is part of execution. I help companies execute better, like it says in the title of my third book: Attack, Parry, Riposte: A Fencer’s Guide To Better Business Execution (Austin Macauley, 2011).
Performance is a product working and lasting as long as it’s engineered, expected, and advertised life, let alone right out-of-the-box. Execution is the notifications that the original order has shipped, the replacement product has shipped, and the damaged original product has been received.
Performance is responding in a timely manner to a customer complaint about a requirement change that may lead to a charge. Execution is having this handled by the completely wrong department and then having to have it transferred to another department to handle. Degrading the execution further is the failure to communicate with the customer by a means other than what looks to be a fraud-phishing scheme that is using hacked emails. Zix messages? Huh? (I never opened them.) Why not send a message back to the customer the way the customer sent it originally: via the secure message system inside the secure online account?
University of Michigan researchers publish a quarterly called American Customer Satisfaction Index which attempts to measure how happy consumers are with the goods and services that they purchase. Based on the edition published around the week of February 18, 2022, the index reported a 5.2% decline in quality since 2018, with the majority of the decline in the COVID pandemic years. Whereas the Consumer Price Index (CPI) reflects that prices increased 7.5% in January 2022, if fully adjusted for quality declination, price inflation would have been approximately 10% according to the researchers.
When the US federal government bailed out automakers and airlines and banks during the financial crisis of 2008 with TARP (Troubled Asset Relief Program), we learned about companies that were “too big to fail”. But what I think we have is a case of companies that are, in certain ways, too big to function. Beyond poor performance, or perhaps underneath their deceptive performance metrics, sometimes driven by ridiculous slanted surveys and misuse or abuse of technology, lies an inability to satisfactorily execute, and the results are customer complaints and brand apathy due to frustration. But the consequences to the company for these dysfunctions are actually higher operating costs.
Being the only choice in a market does not equate to customer loyalty either, for those companies who are actually monopolies.
What matters is not just what you can measure, it is also what you need to execute. Customer anger, customer disloyalty, and customer dissatisfaction are only measurable too far after-the-fact: when sales decline and there is the customary examination as to why. Reduced revenue is measurable, and is an indicator of poor performance, but the reason – or reasons – are more likely due to bad execution. There is a difference, and the truly aware – and successful – companies know it.
Line up the barcode projects!
Ah – the ubiquitous barcode. From its use on products, packages, and in advertisements, it seems that those perfectly parallel lines and seemingly sporadically spaced squares are nearly everywhere. Or, perhaps, maybe they are not.
In the March 2022 edition of Logistics Management (www.logisticsmgmt.com) magazine, the Equipment Survey showcases the response of 114 respondents: 32% corporate headquarters, 26% warehouse / distribution, 25% manufacturing, 13% warehousing in support of manufacturing. The median annual revenue of these companies is $52 million, and the average annual revenue of these companies is $185 million.
For years 2020, 2021, and 2022, when asked the question “which systems and equipment are you likely to evaluate or consider during the next 12 months?”, bar coding was ranked 5th, tied for 4th, and 4th respectively out of a total of 18 considerations.
Not bad, but it gets even better for bar coding.
For years 2020, 2021, and 2022, the information system ranked at the top of all three years, out of a total of 11 considerations, was bar coding, beating out Enterprise Resource Planning (ERP), Warehouse Management Systems (WMS), Transportation Management Systems (TMS), and Distributed Order Management (DOM).
So … what is it about bar coding that has it beating out everything else here, 20 years into the 21stcentury? Shouldn’t everything have a barcode on it by now? Wasn’t that the way science fiction films of the 80s and 90s portrayed everything?
I have been involved in barcode labeling and scanning projects since 1991. You don’t just slap a label on something and call it a day. It is a project in-and-of itself.
There are a whole host of factors that go in to a proper barcode label and scan application. The print, apply, storage, and transportation environments. The label content, data source, and design-and-print software. The label size, media, adhesive, print methodology, and application methodology. The symbology of barcode to use, which may be industry-specific. The ergonomic factors of the barcode scanners or mobile devices that are to be used.
There is no magic wand – or scanner – that can magically make a barcode project happen. Despite the omnipresent nature of barcodes, when it comes to product identification, compliance labeling, asset management, or warehouse / inventory control, barcode projects are a serious and encompassing undertaking.
Barcode labeling and scanning increases productivity and decreases errors. The error rate for barcode scanning is up to 1:36 trillion characters … that is pretty amazing compared to 1:300 errors for manual data entry.
But like any other project, the details matter the most, right down to the number of dots per inch.
Employers should tell work-from-home employees to watch their steps … literally.
According to a court in Germany, the steps a work-from-home employee takes from the bedroom to the … office … can be considered part of the commute, and as such, injurious incidents that take place during this journey are covered by the employer’s – not the employee’s – insurance.
The case in question occurred in 2018 when a man descended via his spiral staircase from his upstairs bedroom to his downstairs workspace home office. The man slipped and broke his back.
The insurance company for the man’s employer refused to cover the medical expenses. However, a federal appeals court for social security cases determined that “first morning journey from bed to the home office [was] an insured work route” and was therefore covered by the employer’s insurance.
There was no indication that the man had been working at home on a temporary basis.
But there was a callout in the court case that the man went from his bedroom to the home office immediately without having breakfast in between. Apparently, going from bedroom to office “to start work for the first time” and is thus “a service in the interest of the employer”.
I am not certain why or what the difference is in bedroom-to-home-office versus introducing, for example, kitchen, dining area, or bathroom prior in-between bedroom and home office in determining whose insurance should be paying for an at-home accident. Does it matter if one goes directly from bedroom to home office just to start-up the computer, and then goes about other personal matters like eating and grooming and dressing?
The German court case did note that the country’s definition of teleworking spaces is: “computer workstations that are permanently set up by the employer in the private area of the of the employees, for which the employer has agreed upon a weekly working time and the duration of the facility”.
“German law takes into account the nature of teleworking spaces” as was noted in the article and in the protection of operating workspaces.
So … employers with work-from-home employees should strongly advise those remote workers to watch their steps, literally. If we all thought that traditional traffic-clogged vehicle-commutes were dangerous, apparently, so too can be the hazardous journeys within our own domiciles.
Too many unnecessary returns.
Statistics in a January 12, 2022 article by Paul Roberts of The Seattle Times point to continued growth in ecommerce due in-part to the COVID-19 pandemic. While January has always been a big month for retail returns because it immediately follows the prior end‑of‑year holidays, this year the COVID crisis has exacerbated the effect by ramping up the returns. This is stressing out shipping companies and giving retailers of all sizes post-holiday headaches.
According to real estate firm and commercial logistics firm CBRE, 2021 retail sales were $222 billion. And of that whopping sales figure, $67 billion, approximately 30%, will be returned to the retailer. That return rate is 13% more than 2020 and 40% more than 2019.
A key reason for these returns is that consumers are hedging their bets when shopping, overbuying due to supply chain shortage scares.
But there was another reason cited in the article that I found of interest, and one that causes me frustration when I shop online … rare as that is, I confess. But as someone who is focused on, among other supply chain issues, master data management and data collaboration, this reason piqued my interest for a newsletter piece.
Per the article, even before the holidays, consumers were already ecommerce buying and returning at a rate two or three times higher than in-store purchases. The reason? Online purchases were more likely not to fit or be satisfactory to the shoppers. And so, consumers would “bracket” items, e.g., buy the same item in multiple sizes and return the ones that do not fit.
Given that small retailers can ill-afford to offer free shipping on outgoing purchases, let alone free shipping for returns, the costs of return logistics for small (think mom-and-pop or local shop) retailers can be an excessive, costly burden. Large retailers can bulk contract with UPS and FedEx and get really great rates; small retailers cannot because they do not have the scale.
As I read the article and thought of my own experiences, one conclusion to this problem, at least to me, is the lousy product descriptions that accompany items on websites. With poor content, no size charts, minimal pictures that fail to include product details (like the inside), and no clear-cut details on materials, care, construction, size, weight, etc., is it any wonder that people return at such a high volume?
I have previously written that people would rather touch-and-feel many of their product purchases, proving that brick-and-mortar retail is not passe as many have incorrectly prior predicted.
I truly believe that to reduce the rate of returns, one solution is to ensure that you communicate clearly to your audience, and your audience is your shoppers who do not know your products. Master data management is an end-to-end exercise and needs to continue through to the consumer.
And where do too many of these returns land? In landfills, because it is too costly to inspect them or recondition them.
Another reason to get product data accurate: save the planet.
No blue Christmas this past year.
Due to supply chain problems resulting in a shortage of key ingredients, there was somewhat of a cancellation of blue Christmases this past year, resulting in fewer than some people would have liked to have had. Apologies to Elvis Presley fans, as it is Elvis’ version of the 1948 Doyle O’Dell song that we all recognize around the holidays.
According to a December 24, 2021 Washington Post article, ultramarine (a.k.a. “true blue”) – which was once more valuable than gold – is now sold in synthetic form and ranks behind whites and blanks in sales volume by leading paint suppliers to artists.
But due to a shortage of pigments such as titanium dioxide used in whites and approximately one-third of artistic paints, the suppliers of blues, whites, and a host of other colors and their shades are at risk of running dry.
Don’t forget that black – even as it can be defined as the absence of all colors – requires pigments to achieve its color (or should I say “shade”) artistically. For example, as noted in the article, each car tire has approximately six pounds of carbon black in it to achieve the black color (shade), or else the car tire would be a milky white.
The materials shortage began with the foundational ingredients. For example, the record-breaking freeze in February 2021 in Texas caused major petrochemical plants to idle, leading to a shortage of resin which is an additive used in paint. A shortage of flaxseed oil, which some people have blamed on the health craze, has also negatively impacted paint company’s abilities to produce artistic paint.
(It is my understanding that it is materials shortages, like resin, that are to blame for some product shortages on store shelves such as popular sports drinks, and not a shortage of the drink contents themselves. Because resin is used for the labeling, the reason for the shortage has to do with packaging, not product production, per se.)
It can take a lot of pigment to make a little bit of paint depending upon the color. For example, as noted in the article, one gram of natural Tyrian purple pigment requires 120 pounds of sea snails. (Yikes! That’s a lot of escargots!) As such, paint companies have developed a synthetic version instead.
The accessibility of pigments enabled historically famous artists like Monet and Picasso to paint some of their most memorable works at the right time, experimenting with new paint colors as they were introduced to the art world.
Ultramarine – “true blue” – is derived from the Latin “beyond the sea” and is representative of the long journey it took from Asia to Europe. It is a calming color, and one that represents expansiveness and openness. It is the color of our oceans and of our skies. It is the color of Elvis’ suede shoes.
Let’s just hope that we don’t run out of any of it: the color, the skies, the oceans. Though perhaps those shoes might not be coming back in style anytime soon.
Happy New Year!