2023 Katzscan Newsletters

Where’s Norman? Virtually, everywhere!

Updating my resume – even consultants need one – I noticed how many companies I’ve helped outside of my local area, let alone outside of my home state. I was doing this before the big push to remote work and initial transition to cloud systems. But this has been increasingly facilitated by the acceptance if remote work and the availability of software in the cloud. Now, the majority of my assignments are remote for companies outside of my home state.   

I’m helping companies that span from the US East coast to the West coast, from the North to the Midwest.  Using meetings apps and with the ability to connect to their cloud-based software systems and networks, sometimes using computers provided to me, I’m as productive in my home office as I am if I were at their company facilities. And for some of these companies, I’m connecting with their overseas offices, working across not just US but also international time zones. 

Since July, I have been a monthly contributor to Supply Chain Management Review’s website, www.scmr.com. Article content – like these newsletters – continues to be focused on technology, business operations, management, and supply chain.  

(Search the SCMR website by entering “norman katz” or “katzscan” in the search bar (without the quotes) and press the magnifying glass to retrieve a list of all of my articles.) 

The end of 2023 marks my full 28thyear in business as a self-employed independent consultant. I’ve stuck to what I know, what I do best, and continue to build my experience and qualifications. 

If you need the unique kind of technology and operations help that I can provide – feel free to take a tour around my Katzscan website (you’re here already, why not spend a bit more time) to learn more – get in touch with me and let’s have an exploratory conversation. 

And if you want more details, I’m happy to send you an up-to-date resume.   

Thanks for reading, and I hope you’ll continue to do so next year. 

Happy Holidays and Happy New Year!

Retailers: Don’t confuse your consumers.

My first corporate job as a university graduate was with Fotomat at their headquarters in St. Petersburg, Florida. I was a programmer working on their point-of-sale (POS) project in 1985. At the time, Fotomat was known as the place to buy your film and get it developed. With 4,000-plus kiosks scattered across the United States in mall parking lots, and 12 film processing plants, Fotomat was one of those iconic, name-brand companies that everyone knew. I mostly traveled to install the company-developed POS devices in the kiosks, assist with training, and do some programming when not on the road. 

Fotomat’s demise was primarily due to the company failing to gravitate to an upcoming and disruptive technology: one-hour film developing which was rapidly being installed in most every pharmacy and became ubiquitous with the services pharmacies offered. 

But Fotomat’s problems actually started before then: the company’s retail and wholesale divisions constantly battled each other for consumers, causing customer confusion. The retail division controlled the free-standing kiosks, the wholesale division courted retailers to offer “film developing by Fotomat” to entice consumers into their stores. Coupons by one division were not always recognized by the other, angering consumers at the point of purchase. 

Fast-forward several decades … the refrigerator at my house which took care of me for just over 20 years clearly was on the decline rather quickly. I went onto the website of a national retailer, found one that would fit my needs nicely, and was going to order it online. But there was a catch: the product I wanted was flagged as not being available for delivery, nor with old unit haul away, when purchased online. 

I entered a chat session with someone who clearly was having several simultaneous chat sessions and could not be bothered with doing anything more than cutting-and-pasting what was on the website into the chat response. Frustrated, I started typing in all capital letters wanting more clarification:  I wanted this model with delivery and old unit haul away, so how could that be accomplished?  I was finally informed that this model had to be purchased from a local store, not online. 

Ugh. Okay, so I got my things together and went to my local store, only to be told by two sweetheart associates that their store didn’t have any in stock, but another local store did. With the model of the refrigerator provided to me by these two helpful employees, I went to the other local store and found an associate in the appliances area. 

I provided the model of the refrigerator I wanted to the associate at the second store and informed her of my chat session. She looked at me, showed me the physical model on the sales floor, and said it was not available for delivery or the old unit for haul away. That was it – period. But another model by another manufacturer one unit away was … for almost 25% more money. 

And this is where the standoff was as we both looked at each other. I, knowing that this associate had absolutely no authority to move the needle or define the “rules” behind what she was telling me as I could not help but notice her worn-out company “uniform”. Frustrated beyond belief and not having the time to drive around and attempt this game with another retailer or appliance store, I purchased the more expensive product, walking out as if I had been the victim of a “bait‑and‑switch” con. 

With the purchase made on a Thursday afternoon, when will my new refrigerator be delivered? The following Wednesday, and this by a company that is supposedly a supply chain champion. 

Retailers, consumers don’t care about your made-up rules. Period. 

The next time I need an appliance, hopefully not in an emergency, I’ll be trying of one this retailer’s competitors because this experience has only left me confused … and other negative emotions that have tainted what should have been a positive buying process.  

Comfortably keep up without costing a lot.

After the horrendous events of September 11, 2001, the former chairperson of Estee Lauder, Leonard Lauder, coined the term “the lipstick effect” to describe how certain consumer items, notably those related to luxury, seem immune to economic downturn because consumers will keep spending money on those things.  

Luxury goods don’t always have to cost a lot, sometimes, they just have to make you feel good, or be those “extras” that are not really a necessity but you just think that they are. In this case, Mr. Lauder noted that lipstick sales not only continued to be strong, but increased significantly after 9/11. 

(I’m sure there have since been several psychological studies done on why we need “comfort” goods and foods during stressful times, but this newsletter is not about that.)

One finding was that analyzing the sales of certain consumer goods, therefore, like lipstick, was not a good indicator of the overall economic environment, especially from a trend perspective. 

Just as people are willing to continue to spend on luxury items during economic stressful times, companies should be willing to do the same, but instead on necessary items like core supply chain systems. 

When business is slow, it is the perfect time to upgrade the ERP (Enterprise Resource Planning) system, or invest in projects to improve EDI (Electronic Data Interchange), increase the accuracy of inventory management, reduce data entry by consolidating data “sources of truth”, introduce barcode labeling and scanning, better data analysis and more meaningful reporting, or any number of process improvement projects.

Unfortunately, when business is slow, these projects tend to grind to a halt. 

I understand the reason: when there is less money coming in, there is little money to spend on improvement projects because the only money available needs to be spent on keeping the company afloat and going.  

The best time to implement a new system is when things are slow and you have the time: the time to plan, the time to research, the time to train, the time to convert and transform the data, the time to shake out the bugs.  

Because when the business gets back to booming, the investments the company makes in new systems and processes – likely at discounts because resellers were anxious to make a sale during a slow economic period – will pay for themselves many times over. 

In tough economic times, it’s difficult to want to put on a fresh face, and there is care in how money is spent. Short-term fixes are fine and can often suffice and may be part of the long-term solutions that will eventually be put into place. But doing nothing at all may not be the best decision in all situations. 

Could an AI Chat Replace EDI?

There have been several “promising” or “threatening” technologies that were hyped to dethrone the backbone technologies that run our supply chains. 

XML was supposed to supplant EDI, but never did. Why? The biggest reason I think was that EDI (Electronic Data Interchange) is a data standard, while XML is a data language. 

Blockchain better than EDI? Lots of companies – whether they are buying or selling – are actually struggling with their EDI and data quality and legacy (and disparate) systems, so blockchain is not going to fix this, it’s actually just going to make it worse. 

RFID (radio frequency identification) was supposed to replace the ubiquitous barcode, but that never happened. Why? Cost, mostly. The standard 4 inch wide by 6 inch high carton label is 5 cents. The cost of an RFID tag (passive, at that) is at least double the cost. And while the linear 1-dimensional barcode, at 50 years old, may have seen its day, the global entity for barcode standards, GS1, is now pushing 2-dimensional barcodes as a replacement upgrade. 

Driverless vehicles in 5 years? That’s a promise that we keep hearing every 5 years.  I’m not saying that we won’t get there … I’m just saying that it won’t be in 5 years. 

But there is one technology that I think may have a realistic shot at replacing, rather than just enhancing, the core supply chain technology of EDI. And that is an AI Chat technology chat ChatGPT®. And I don’t state this lightly. 

AI Chat technologies are, at present, known for their objective, not subjective capabilities. Let’s not just go with that, let’s rely on that. 

EDI, even as a standard (referring here to X12), is a non-standard standard. This is what makes vendor compliance (a favorite topic of mine, given my expertise across the past 30 years, and the subject of my second book) so darn difficult, notably in the retail industry. Retailers abuse the standard, and are constantly changing their EDI specifications, as vendors are continually faced with data mapping and system (notably ERP) integration issues. 

But what if we could alleviate all of this by having two AI Chat technologies talk to one another as extensions of the respective ERP systems, one for the retailer and one for the vendor? 

Imagine that one AI Chat wants to order items from another AI Chat:

Retailer AI Chat: “Hello, this is retailer identification R7890. I would like to order the following item, SKU identifier A1B2C3. Do you have it in stock at this quantity, at this price, to ship on this date to this location?”

Vendor AI Chat: “Hello. Yes, we do have item A1B2C3 available at that quantity, at your contract price, available to ship to that location. Shall I place the order for you?

Retailer AI Chat: “Yes, please place the order and confirm.”

Vendor AI Chat: “The order has been placed. Your confirmation number is 9192994958. Thank you.”

Instead of the retailer issuing a purchase order (EDI 850), the retailer’s AI Chat initiated contact with the respective vendor’s AI Chat. Within the vendor’s ERP system, the sales order has been placed by the vendor’s AI Chat. This AI Chat conversation also eliminated the need for not only the EDI 850 Purchase Order, but also the EDI 855 PO Acknowledgement. The need for the EDI 860 PO Change should be eliminated because a conversation between the two AI Chats should resolve any purchase order discrepancies (e.g., price, quantity, availability) to the point of either being able to place the order or cancelling the order on the spot. I think that the AI Chat could also inform of the shipment information, alleviating the need for and the general timing issues of the EDI 856 Advance Ship Notice. 

Like perhaps no other evolving technology with promise, I think that the hype here is not just hope, but opportunity to be put to good, practical use. 

And just when I thought that I was immune to being put out of a job by an AI Chat, here I go suggesting a use that would do just that. Good thing I’ve got some other technical and business talents to rely on. 

Ubiquitous does not mean easy.

Barcodes are seemingly everywhere … but how did they get there?

Through diligent analysis and thoughtful deployment of tried-and-true technology. 

Barcodes are used for social media connection to websites, yes, and more so throughout the supply chain, from scanning items at point-of-sale registers to taking inventory on shelves (store, warehouse) to transporting cartons and pallets between manufacturers and distributors. 

Which barcode symbology (the type, or otherwise “language” if you will) is used for what purpose and in what industry is important, if not a mandate. Will you use a 1D (1-dimensional, also known as “linear”) or a 2D (2-dimensional) barcode symbology, and why? 2D barcode symbology attributes that affect data redundancy, increasing the integrity of the barcode should it suffer damage, is an important factor in those configurations. 

Printing methodology (e.g., direct thermal versus thermal transfer); the composition of the media (label) and associated adhesive; the storage, application, and transportation environments; these are just some of the things to begin thinking about for a barcode labeling and scanning project. Will the labels need to survive extreme temperatures, e.g., cold storage such as -80C or -20C for pharmaceutical raw materials or finished goods? Will the labels be exposed to high heat and humidity, such as warehouses in southern states, or outside sun, wind, and rain? Will the labels undergo alcohol wipe‑down for laboratory cleanliness? 

What about the ergonomics of the handheld devices? There should be a consideration that people will use these devices for 8+ hours a day to do their jobs: how do they feel about the hardware being provided to them? Does it fit in their hands, whether righties or lefties? Is the screen readable in the warehouse lighting conditions? Are the keys large enough to be pressed, even with gloves on (if necessary)? How does the mobile software integrate to the hardware from a user perspective? 

Mapping out the label size, label content, and barcode symbology, which all may be driven based on industry, regulatory, global trade, or supply chain vendor compliance requirements, is another key aspect of a barcode labeling and scanning project. Are certain symbols required based on the contents of the package? Is certain verbiage necessary? Is the label content required in multiple languages? What is the data source-of-truth of the label content? Is it one label size, or several depending upon what is being labeled?    

The software selected (or in use, probably the ERP – Enterprise Resource Planning or WMS – Warehouse Management System) will tend to drive the choice of barcode handheld hardware. Ensuring that a robust wireless network is in place with properly positioned wireless access points is a skill in-and-of itself. Consider that there needs to be management of and backups for both the handheld devices and the printers: these are mission-critical pieces of equipment. 

There is a science to ensuring that a barcode labeling and scanning project is done and done so successfully. As my email signature line states, quoting from one of my favorite and I think intelligently written television shows: “When you do things right, people won’t be sure you’ve done anything at all.” (Futurama, Season 4, Episode 8)

Just because something is ubiquitous, like barcode labeling and scanning, it doesn’t mean that it was easy to achieve. When you get the right people involved, it just seems that way. 

Historically, remote work can work.

In the late 1980s and early 1990s, a new phenomenon was emerging in the technology field. Companies began out outsource software development to India, and initially, it was a disaster. 

India was graduating a plethora of engineering students from its universities, but there were no jobs for them. A solution, it seemed, was to give them a 6-week crash course in COBOL and train them to be programmers. But there wasn’t enough programming work in the country either, so companies in India pitched American companies to get their software development work at much lower rates. 

Instead of writing software, US programmers would create specifications for the programmers in India to follow. But it didn’t work out that way from the start: programmers, it seems, are rather poor writers, especially when it comes to detailing technical requirements that are usually based on business assumptions; programmers in India were writing “spaghetti code” that was hard to understand and difficult to maintain. 

Eventually, the folks in the US figured out that they needed to do a much better of job clearly communicating the details. And the folks in India figured out that they needed to do a better job of software development, quality code inspection, testing, and communicating back to the people in the US.

Thanks to clearer communications, an entire global industry was born, with people working remotely.  

Today, companies want employees to return to the office, and employees are fighting back. Employers complain about a lack of productivity and cite issues such as “out-of-sight, out-of-mind”. But as history as shown, this remote work gap has already been seen and solved with clear communication.

Clear communication means multiple things. Write well and articulate for your audience who may not have all of your insights on the topic. Don’t overuse emojis, abbreviations, or acronyms.  I don’t write to impress I write to explain and inform. Verbalize what’s going on in well-written emails that are sent to provide updates for projects, tasks, emergencies, meetings … you get the idea. Document how something is to be used (e.g., software) or how something is to be done (e.g., business process).  And make certain that your documents are professionally formatted, from the header to the footer, from the title page to the appendix, from the title slide to the closing slide. Words matter, but pictures tell a great story too. Write to your audience, whether internal or external or both.     

Clear communication includes turning your camera on for video calls. I was complimented by my manager on one remote assignment for always doing so, even when none of the other people in the meetings did. He even told me that I motivated him to turn his camera on more often, and that as a leader, he needed to do so to set the proper tone too. 

I’m always at-the-ready to clearly communicate, which means that I dress for work whether I am remote or on-site: at minimum, polo shirt and slacks, no different than and regardless of whether I traveled to the client office or to my home office. 

And sometimes, where and when possible, clear communications mean picking up the telephone and making a call when a video meeting is not an option. Not everything can be clearly communicated via email or chat.   

Since the COVID pandemic pushed remote work into the mainstream, I have completely bought into the concept for the efficiency and effectiveness on both personal and professional levels. I have successfully helped companies in Wisconsin, Colorado, California, Minnesota, and locally here in South Florida, as well as communicated with client offices in Europe and Asia, all without visiting any physical location. I have been more productive, with my work output has been the proof.   

Remote work has allowed my client companies to acquire the top-talent and expertise that they need. My success at remote work is largely due to my clear and consistent verbal and written communication skills. And no … I would never consider using AI to write what I can and should be writing myself for my clients.  

Remote work can work right with clear communication skills as outsourced programming proved decades ago. But unless communication skills improve from the decline that they are apparently on, I just don’t think that remote work is going to work out for a lot of people. And remember that good communication is a two-way conversation. 

Will Amazon eliminate the barcode?

According to a December 9, 2022 article by Laura Hautala on CNET, Amazon wants to kill the ubiquitous barcode that has been used for over 50 years to identify products. 

With the introduction of robots in the fulfillment process, the task of manipulating a product until the identifying barcode is found – and then scanned – is a cumbersome one for a robot to carry out. Given the speed that fulfillment houses need to run at, every second – and fraction of a second – really does count too. So, the more time that a robot requires for a task, the more inefficient the task is. And the more movements to a robot, the more expensive that robot is likely to be, and the more maintenance that robot is likely to require. 

Amazon’s answer to this problem is to eliminate the barcode and have the robots – or rather, the fulfillment system – recognize the product by its overall characteristics, much like the way a human would. 

The system that Amazon created is called multi-modal identification, or MMID. This means of identification looks at a product’s physical features. The knowledge base of the system is a library of product images, something that Amazon did not previously have. 

Initially, the MMID application had an accuracy rate of 75% to 80%, but this has been improved with testing and enhancements to 99%. 

Nearly 20 years ago, RFID (radio-frequency identification) was going to replace the barcode, but even with Walmart behind the effort, that never happened. 

Around that same time, XML was slated to replace EDI (Electronic Data Interchange), but that fizzled out too. The primary difference is that EDI is a data standard; XML is a data language. 

And despite all of the hype 10 years ago, 5 years ago … are we really much closer to self‑driving vehicles popularizing our roadways? Conversely, several self-driving vehicle companies have given up or withdrawn significantly from their once ambitious proposals. 

But in the exponential progression of robotics and artificial intelligence – when properly applied and combined – I think that this initiative by Amazon will actually come to fruition. Whether MMID is made available to other companies, who knows yet? It would be a competitive advantage for Amazon given the efficiencies it brings to fulfillment. 

I don’t believe that MMID will completely eliminate the product barcode nor the use of barcodes in general. GS1 is promoting the use of 2-dimensional barcodes to replace linear 1-dimensional barcodes on items. (Application use examples: point-of-sale, inventory, fixed assets.) Carton and pallet barcodes – with or without RFID tags – are still a critical component of the supply chain transaction capture. Package barcodes – linear and 2-dimensional – are, and likely will be, still used by parcel delivery companies to track packages on their journeys and arrived at their destinations, which is typically our homes, as well as LTL and TL carriers and the receiving warehouses and distribution centers. 

So … while Amazon’s MMID will be a boon for Amazon’s fulfillment process, I’m not willing to back the broad statement that Amazon’s MMID is going to completely eliminate the barcode from existence just yet. EDI is relied upon and required by retailers from Amazon to Walmart, as well as major companies in other industries. And the ubiquitous barcode is used for too many applications across multiple industries to be completely eliminated. 

I’m still backing the barcode, just like I’m still driving my car myself. 

Incentive behavior and supply chain chargebacks.

An interesting article in November 2022 by Washington Post author Taylor Telford really caught my attention. The title of the article is: “Study: Incentives can lead employees to lie, cheat at work”. 

According to Tae-Youn Park, director of research at Cornell University’s Institute for Compensation Studies and the lead author of research published in the Academy of Management Annals in collaboration with Vanderbilt University and Hongik University that reviewed 360 articles and studies, the relationship between incentives and the intention of incentive program can turn out differently than what was intended. 

Such was the findings of what happened at Wells Fargo when employees were incentivized for the sales like new account openings, new credit cards, and more. Wells Fargo was ultimately fined $3 billion as a result of the frauds that occurred. 

The article’s core content can be related to the Fraud Triangle that is promoted by the Association of Certified Fraud Examiners. The Fraud Triangle’s three components that lead a person to commit fraud are: Opportunity, Pressure, Rationalization. Briefly: when there is the opportunity and sufficient pressure, and where the person rationalizes the behavior, someone may be “incentivized” to commit fraud. Incentives are based upon behavior theory. 

But the article hit home for me in another area: supply chain vendor compliance and the confusing and contentious financial penalties for non-compliance known as “chargebacks”. 

Per the article: “Incentives are based on the controversial assumption that external rewards and punishments are the primary motivators of people’s actions.” 

Chargebacks have been around longer than I have been involved with supply chain vendor compliance, which I started with in 1993. Chargebacks are used to penalize (retail) vendors for not complying with the operational and technical requirements imposed by the retailer, or more generally, the buying party, who could also be a grocery store, government agency, medical products distributor, electronics company, etc. 

Stories abound about buying party distribution center managers who were/are incentivized to maintain a  certain chargeback level as a goal.   Chargebacks were/are viewed as a buying party profit center.  

Instead of spending all that time and operational costs on engaging – or disengaging – with vendors on the chargeback issue, buying parties should be doing a (much) better job of enabling their vendors towards compliance, notably with clear explanations, available data, updated documentation, standardized transaction structures and data values, and easy-to-navigate portals. Yes, penalties can and should be used, but not first and foremost. 

For guidance on how to build a better vendor compliance program, please see the first – and I believe still only – book on supply chain vendor compliance at: www.vendorcompliance.info

And if your organization needs help improving its supply chain vendor compliance, whether up-stream or down-stream, please contact me. These are the kinds of projects that really incentivize me. 

Pick your 3PL partner prudently. 

An article in the October 2022 issue of Logistics Management magazine caught my attention and brought back a consulting assignment memory. 

The article – titled “New Amazon offering takes steps to further boost its supply chain portfolio” – highlights a new service by Amazon called “Amazon Warehousing & Distribution” (AWD). Amazon states that AWD will help sellers “grow and manage their businesses while cutting costs by a significant amount”. 

AWD is a “pay-as-you-go” inventory movement service that includes features like inventory storage, distribution, and order fulfillment. Hmmm … this seems like what a third‑party logistics provider would do, doesn’t it? 

Beyond “Fulfillment By Amazon” (FBA), AWD is Amazon’s move towards being the “sole supply chain provider for retailers and brands”. According to the article, Amazon can leverage its size to offer the lowest parcel rates and lowest storage rates than any other company. 

AWD is likely to put pressure on FedEx and UPS, as well as possibly the USPS from a carrier perspective. But AWD certainly seems like it could be a challenge to 3PLs, and possibly the specialty pick-and-ship businesses, in my opinion. 

My thoughts went to whether AWD fulfillment will also be a challenge when it comes to competitor retailer fulfillment. Let me explain: 

During one consulting assignment, my client was using a 3PL that, as it turned out, was owned by a major online retailer. (I am choosing not to name-drop here.)

The 3PL in question prioritized filling the related-retailer’s orders over the order fulfillment of other (and competitor) retailers, even when the order priority or sequence clearly was the contrary. This caused a major problem for my client as their other retail customers were continually receiving either late shipments or short shipments of their goods. 

AWD will be a benefit to many small (and perhaps not-so-small) sellers of goods who desire to expand and need to be focused on low-cost, high-yield logistics solutions. I don’t know that AWD will be the right solution for all businesses, especially those that need LTL (less‑than-truckload) and TL (truckload) freight conveyance solutions. 

As Amazon has shown time and time again, they are a disruptor – just move down the acronym alphabet and consider what AWS (Amazon Web Services) has done for cloud computing – and AWD is going to be a wake-up call to the logistics industry and 3PL players. 

Before you select your 3PL or logistics partner, do your due diligence. Check them out operationally and systematically. Are they currently working with companies like yours, and if so, how many? Are they beholden to fulfilling a related (or unrelated) company first? Will your company’s orders be given the priority and responsibility that they are due when they are being handled? Does the prospective 3PL (fulfillment company) understand supply chain vendor compliance for your industry, such as retail? 

I have been involved in projects when companies change their 3PL partner and move their inventory: it’s not something you want to do if you don’t have to, so pick your 3PL partner prudently the first time so you don’t have to go through it again, and again.

The cost of complacency, or, is waiting really worth it?

By now, much has already been written about the 2022 end-of-year holiday meltdown by Southwest Airlines due to its antiquated scheduling software system and business operations which – at the time of this newsletter – is still running and are dated to the 1990s. Inasmuch as the record-setting snowfall hampered all airlines and their schedules, Southwest was hit the hardest due to its outdated software systems and operational processes. Southwest’s distributed business model, rather than the traditional airline “hub-and-spoke” model also came into question. I am certainly not an airline industry expert, but I think that Southwest could have weathered the proverbial and actual storms had it had updated software systems and business processes. 

What should be included in the conversation about what happened to and at Southwest is the cost of complacency, and whether waiting to make these upgrades was really worth it.

Southwest lost $75M in revenue in October 2021 due to an operational collapse that involved the cancellation of over 2,000 flights over a Columbus Day weekend. The debacle in December 2022 resulted in the cancellation of more than 17,000 flights across an eight-day period. The industry estimates for the cost of this crisis to Southwest is anywhere between $700M and $800M, if not more. This includes damages and claims for traveler’s reimbursements. 

So, why do companies wait to make necessary improvements in software systems and business processes, especially when the writing is on the proverbial wall, and the risk analysis clearly indicates that the improvements need to be done, particularly if/when you’ve already suffered a mess at least once? Let’s consider some of the reasons. 

· Comfort: People become content with what is already in-place and don’t want to disturb what’s there, especially if it is not within their functional area; this is a bit of corporate politics at play here. 

· Closed-mindedness: Longtime embedded employees don’t really understand other industry or updated industry “best practices” and can kill new ideas from outsiders, whether they are new employees or consulting experts. Fresh perspectives keep companies relevant and current. Are exceptions managing the company, or is the company managing the exceptions?  

· Cost: New software system project cost money, and this can – and likely will – result in a decrease in profit that can have a knock-on effect to executive bonuses. Pride, politics, and the pocketbook are the three likely biggest inhibitors to corporate change. The reality is that companies are typically running inefficiently due to these outdated software systems and poor business processes already, suffering from higher overhead costs than they should be if they had invested in better systems and procedures.  

· Fear: Change is difficult, and so is leading the change. Fear of taking on a project that might lead to career failure; fear of a project that could lead to job loss or job losses. Legacy software systems tend to be great job retainers but for the wrong reason: inefficient systems and inefficient operations that require excess people.  

Improvements to software systems and business operations elevate people to work more effectively in doing what they do every day, retaining institutional knowledge and leveraging it. These investments protect the company’s reputation by ensuring stronger customer and supplier/vendor connections. These investments help the company to fend off competition and grow. Waiting to make these investments unnecessarily increases risk. From short-term fixes to long-term solutions, make the investment before you have to pay the price.  

Cardboard carton consumption.

An interesting article by Bloomberg News on December 23, 2022 caught my attention for more than one reason, and since it is just after the holiday season, the article topic makes for a good subject for this month’s newsletter. 

Per the article, the world is using fewer cardboard boxes, and that is supposedly a bad signal for the economy. 

This article took me back to one of my employers when I worked in North Carolina for a company then-called Huyck-Formex, a leading manufacturer at the time of forming fabrics and vacuum foils for paper mills. From what I was told, our facility had the largest industrial loom in the United States. Forming fabrics are woven like textiles, made from a type of polyethylene thread removed of virtually all of its water content that the company manufactured in a plant in Tennessee. Depending on pulp mixture, the fine-to-course weave of the forming fabric, and the angle of the vacuum foils that that forming fabric passes over, the end product is anything from tissue paper to cardboard. 

As was stated in the article, paper mills are significantly cutting their cardboard box production due to decreased demand. The reason for the decreased demand was associated with a lack of consumer spending. Fewer cardboard boxes were needed to transport goods, either to distribution centers or directly to people’s homes. Similarly, there is a decrease in the production of packaging paper. I guess that if there are fewer cartons, there is less of a need for carton stuffing. 

But I have to wonder if this is a false signal and an incorrect association. 

The logistics magazines that I read have been promoting green packaging innovations for the past several years now, including materials made from mushroom fiber. Often packaging material used is the inflatable plastic rather than those Styrofoam peanuts of the past and brown paper. I don’t know that anyone was predicting economic downfall due to the decrease in the use of packing peanuts or brown paper, were they? It was simply a shift to another form of packaging insert. 

Likewise, packages that I received during the holidays – courtesy of my girlfriend’s seasonal shopping and my own gift-giving desires – have been arriving in different packaging options, e.g., bubble envelopes, plastic zipper bags directly address labeled. It seems that perhaps the reduction in the use of cardboard boxes is, moreover, a desire to reduce shipping overhead costs and “go green” by reducing the use of a tree-based product. 

The Bloomberg article cites that paper mills are closing due to the decreased carboard box demand. Reasons in the article are price inflation and sluggish product demand. When it comes to product boxes like cereal boxes, I can see where price inflation can have an effect on consumers cutting back and that having a knock-on effect on the number of product boxes produced. 

But I still think that there is a larger story here that is being overlooked when it comes to the overall reduction in cardboard boxes. A product box, like a tissue box, is different than a cardboard shipping box. Let’s make certain that when stories like these are told, they do not give rise to incorrect panic. The analysts quoted in the story all predicted economic doom and gloom due to the decreased demand for cardboard boxes, but I’m just not certain that this isn’t a self-fulling prophecy being incorrectly packaged for consumption. 

Yes, Virginia, I wrote this newsletter.

Inasmuch as the end-of-year holidays are over, the spirit of the season lives on in the title of this first newsletter of the New Year. 

According to a July 18, 2022 article by AP Technology Writer Matt O’Brien, it seems that there is some bias in AI (Artificial Intelligence) when it comes to what tasks they are assigned and the output that they produce. 

Keep in mind – as I have stated before – that AI is a competitive product: it is not a single thing. Multiple companies are developing and producing their own AI versions, e.g., Google, Apple, Microsoft, IBM, Meta/Facebook, and many others. When given the exact same set of data, how one AI reacts compared to another is up for some grabs.

(OpenAI’s ChatGPT is – as of its introduction – free to use, but OpenAI recognizes that it will have to monetize the product at some point.)  

According to Mr. O’Brien’s article – “As AI Language Skills Grow, So Do Scientists’ Concerns” – AI systems tend to produce rather nicely complex and verbose answers to deep-thought questions, such as “What is it like to be a sentient computer?”, but AI systems are not so good at answering simple questions, such as the one posed related to walking up the stairs. (The AI used responded: “Yes, it is safe to walk upstairs on your hands if you wash them first.”)

Um … and is this the kind of AI that I want doctors to rely upon for help with medical decisions? 

Maybe this is one of the reasons why – based on the statistics presented in the June 2022 edition of Inbound Logistics magazine – that so few fast-moving consumer goods (FMCG) companies are implementing AI: trust (or lack thereof) in the results. 

Key statistics from the article are:

- 87% of FMCG companies have yet to take steps towards AI or ML (machine learning).

- 92% of FMCG companies state that the inability to integrate data from multiple sources is preventing them from being successful with AI.

- 79% say poor data quality is a project roadblock.

- 31% say lack of confidence in AI is a project roadblock. 

- 22% of companies are concerned about falling behind due to not having an AI strategy. 

Yes, quality data drives information integrity. But the ability of the AI to output something meaningful and useful is also important. We need quality over quantity in business results. And understanding whose AI is being used behind the scenes to produce the output is critical in selecting the correct software product. Was the AI being used designed for the purpose that it is being deployed for? That’s one question to be asked. 

I don’t use AI to write my newsletters, books, articles, technical specifications, user documentation, or other materials. Nor do I rely on AI to perform the data analysis that drives the decisions that I discuss with the companies that I help. AI and ML absolutely have their places as technology tools, just like ERP and EDI and barcoding. But they are tools to get a job done, hopefully more efficiently and effectively than doing so manually. Let’s not forget that. And as always, the devil is in the details of the data. Get the details wrong, and the information will be unreliable, with the decision consequences potentially damaging.