By RAY A. SMITH
[LINESjp] Associated Press
A line at a Brentwood, Tenn., Best Buy during Black Friday last month.
The wait feels endless. The checkout line hasn't moved in 10 minutes. Why did you pick this line? But you can't risk jumping into another queue that may be slower. Tick, tick, tick. Maybe you don't even want this sweater. Would it be quicker to bail and buy it at home online?
The retail checkout line may be tedious any time of year, but it is worse at the holidays, when stores are packed and people are more likely to wait it out to meet a Dec. 25 deadline than walk away empty handed.
Several retailers are trying new approaches to get shoppers through more gracefully as online shopping threatens to continue siphoning off sales. Nearly half of U.S. consumers say they plan to shop online this holiday season, up from about a third last year, according to a recent survey from consulting firm Deloitte.
Much of the work grows from more nuanced understandings of how people perceive waiting in line. Shoppers tend to become impatient quickly and fail to take into account key indicators of what may slow down a line. They experience remorse when they feel they've chosen the wrong (i.e. slower) line. And they prefer to choose their own line rather than wait in a single-file line for the next available register—even though that set-up has proven to be faster, research on queuing shows.
Stores have tried to solve line issues in various ways, including copying the way Apple Inc. stores use hand-held devices to ring up purchases anywhere in the store. Among other steps, Home Depot Inc. has added mobile checkout, and, like Whole Foods Market Inc. and various big-box retailers, has been expanding self-checkout lanes.
For the holidays and peak times, Walt Disney Co. store employees are trained to entertain customers with Disney trivia while they are in line. Once customers reach the cashier, Disney employees switch to focus on efficiency, not entertaining. "Once they get to the register, it's about ensuring they have everything they need, do they need more than one bag, do they need a gift receipt, a gift certificate," says Paul Gainer, senior vice president of retail for Disney Store.
For the first time, Disney employees this year are also prescanning items while shoppers are in line. Disney is using this approach in 140 of its 215 North American stores after testing it in 30 last year, Mr. Gainer says. And the stores maintain a single-file line, which Mr. Gainer says is perceived as less chaotic to shoppers than multiple lines.
Home Depot is trying to cut through checkout chaos by instructing cashiers to stand at the front of their registers so customers can tell they are open, a move it began last year while updating its cashier training. "We've come to understand that we're a very large convenience store to consumers," and they expect to get in and out of the store similarly quickly, says Matt Carey, the home improvement chain's chief information officer.
Another change: As soon as there are three or more people waiting in a line, the retailer deploys "line busters," employees who scan items in shoppers' carts before they reach the cashier, says Mr. Carey, who works closely with the retailer's operations team on line speed.
Most shoppers simply develop their own strategies and superstitions. "I make my selection based on how full the carts of other shoppers are, the age of the person or if the person has children with him or her. These shoppers are almost always slower," says Rebecca Mecomber, a married mom of four teenagers from Utica, N.Y. She also factors in the cashier's gender and age. "Young male cashiers are usually faster but are very sloppy and careless when they bag items. Middle-age ladies are slower but take better care of glass objects."
Holiday Gift Guide
Here's a range of bargain and splurge gifts chosen by Wall Street Journal columnists and reporters. Click the image to launch the graphic. Vote for your favorites and create a handy shopping list of your picks. Happy holidays!
[WSJGiftGuide11]
Shoppers are likely to abandon a line that might take between one and 10 minutes to get through after the first two or three minutes if they feel it isn't moving sufficiently fast enough for them, says Narayan Janakiraman, an assistant professor of marketing at Eller College of Management at the University of Arizona. Dr. Janakiraman is lead author of a paper to be published this month based on studies of 400 adults between 2006 and 2009 by professors from the University of Arizona and the Wharton School, on how impatient shoppers get in lines.
Envirosell, a retail consultancy, has timed shoppers in line with a stopwatch to determine how real wait times compared with how long shoppers felt they had waited. Up to about two to three minutes, the perception of the wait "was very accurate," says Paco Underhill, Envirosell's founding president and author of the retail-behavior bible "Why We Buy: The Science of Shopping."
But after three minutes, the perceived wait time multiplied with each passing minute. "So if the person was actually waiting four minutes, the person said 'I've been waiting five or six minutes.' If they got to five minutes, they would say 'I've been waiting 10 minutes,'" Mr. Underhill says.
Consumers felt less stressed when there was an employee or an electronic screen near the front of the line to direct shoppers to the next open register, Mr. Underhill found. Food stores such as Whole Foods, Starbucks Corp. and Trader Joe's take this approach, and clothing stores such as Uniqlo and Nordstrom Rack at times also use this strategy.
Gap Inc.'s Old Navy is in the process of adding lanes chock-a-block with inexpensive impulse items. Though grocery stores have long put impulse items near the register, Old Navy wanted to avoid a supermarket-like ambience so selected specialty sodas, superhero lunch boxes, glitter-covered piggy banks and other items it thought looked "nostalgic and convenient," a spokeswoman says. Old Navy's line makeover is part of an overall store revamp.
When shoppers look back at their overall waiting experience, they tend to put more weight on how fast or slow a line moved toward the end of their wait. Ziv Carmon, a professor of marketing at INSEAD, the international business school with campuses in Abu Dhabi, France and Singapore, co-conducted research with Nobel laureate Daniel Kahneman, to determine people's feelings about a line's progression.
Participants recorded how they felt at any given time while in line. If a line moved slowly toward the end, even if it moved swiftly at the start, "the person expressed dissatisfaction, not only with the line but sometimes even the store," Mr. Carmon says. "If the line moves quickly toward the end, they expressed positive feelings."
In a separate study, Mr. Carmon found shoppers tended to be attracted by how short a line was rather than how quickly the line was moving or how many items people waiting had in their carts. "Short lines may be short for a reason," he says, adding that others may have left a short line because it was taking too long.
In a research project conducted during last year's holiday season and posted on YouTube, Bill Hammack, a professor of chemical and biomolecular engineering at the University of Illinois at Urbana-Champaign, concluded that a single-file line leading to three cashiers is about three times faster than having a separate line for each cashier.
Any delay in the multiple-line system will stop the line completely, while a delay in a single line might just delay one shopper. Although the single-line method may be faster, Mr. Hammack says customers generally prefer to "jockey for position" in separate lines.
Thursday, December 8, 2011
Tuesday, February 16, 2010
Office supplies distributors attack procurement costs
By By Bob Mueller --
Once a low-visibility industry dominated by family-run businesses, office products distribution has in the past few years moved aggressively into the spotlight with national retail chains, growing e-commerce operations and sophisticated procurement programs. Heightened competition has led to aggressive pricing, a well-tuned distribution system, and a raft of new services and non-traditional product lines aimed at capturing a greater share of corporate spending.
A focus on price competition has turned the industry's resellers into commodities businesses, where service and delivery matter more than product differentiation. That's mostly been good for corporate buyers because it's nudged the resellers into concentrating on lowering procurement costs-historically high in proportion to product costs.
Estimates of the industry's size vary widely, and always have. That's partly because much of the industry is closely held, and partly because there isn't much agreement on what an office product is. The six large, publicly traded companies that dominate the office supply business account for about $35 billion in U.S. sales, roughly half the industry's total, according to more conservative estimates. Staples, Office Depot and Office Max operate highly visible big-box stores that cater mostly to the so-called SOHO (small office/home office) market. But Staples and Office Depot also have significant contract businesses aimed at midsize and larger commercial accounts, and all three have relatively small (compared to store sales) but growing e-commerce operations.
Three other companies-Boise Cascade Office Products, Corporate Express and USOP (US Office Products) cater primarily to contract customers and operate from distribution centers and sales offices, rather than retail stores. All three have e-commerce sites, but sell primarily through outbound sales forces.
The Big Six operate on a big scale. Office Depot (the largest of the six), Staples and Office Max each have between 800 and 1,000 retail stores. Boise has 46 distribution centers and 1,200 salespeople; Corporate Express operates 31 distribution centers in the U.S., along with additional sales offices. All operate internationally, some directly and some through subsidiary companies.
Somewhere between 5,000 to 6,000 independent dealers serve local and regional mid-market companies and, through marketing and buying cooperatives, some also serve national accounts. Many of the independents are survivors of a massive consolidation in the mid-1980s that cut their population from perhaps 15,000 to today's number. Some of the larger independents were acquired by the national companies and became the core of their contract business. Many of the direct mail office suppliers, a SOHO (small office/home office) market mainstay, have been rolled into the Big Six. Quill, for example, is now part of Staples; Reliable is part of Boise Cascade; and Viking Office Products is part of Office Depot.
Not every dealer inventories merchandise, but most do-typically a core line of somewhere between 6,000 and 10,000 faster-moving SKUs, according to Kathleen Dvorak, vice president of investor relations and financial administration at United Stationers. For slower-moving and more specialized products, they rely on wholesalers like United and S.P. Richards, the two dominant general-line distributors. Originally, says Dvorak, office supply wholesalers did what wholesalers do in most industries-they bought in big quantities, sold in smaller quantities, and made their living on a few points' spread in pricing and lots of volume.
Today, she continues, "wholesaler" probably isn't even accurate. Instead, United is in effect a backup warehousing and distribution operation. When a Staples or a Corporate Express advertises 40,000 items, most come out of wholesaler stock, and if a dealer's customer orders an item that's not in its core inventory, it's supplied by the wholesaler and the customer is none the wiser. In fact, says Dvorak, some of the dealers it serves have ordering systems that automatically roll over to United if the reseller doesn't have an item in stock.
A key to success in the contract segment of the industry is the ability to deliver complete orders quickly-next-day delivery is standard. That dictates well-stocked distribution centers, and lots of them. United operates 77.
One of the advantages the big, national outfits originally offered their customers was rock-bottom pricing. Thanks to their size, they were able to buy directly from suppliers at low prices and pass the savings along to their customers-even relatively low-volume customers. The independents, by contrast, were often part of a two-tier distribution system, and some couldn't even put together large enough orders to buy direct from manufacturers.
Today, thanks in large part to the growth of buying groups, independents say they're getting the same deals as the national outfits, and are price-competitive with them. Price differences still exist among the office supply outlets, especially on negotiated contract deals, but with increasing commoditization has come a greater emphasis on reducing customers' total acquisition cost.
"We've done some studies," says Mark Hoffman, president, North American office products, at Corporate Express. "There's still a lot of opportunity to cut costs, and we're working with people not only to be competitive on price, but we're also trying to help people streamline their processes."
Others note similar trends. "People are being asked to do more with less," says Jim Pollman, New England regional sales director for Office Depot. As purchasing professionals spread their buying over more commodity lines, office supplies become a low percentage of their overall spending, and high transaction costs become all the more glaring. "We want to understand what their needs are and take cost out of the business," he adds.
Private procurement systems in individual organizations are also becoming increasingly common, says Dave Goudge, senior vice president of marketing for Boise Cascade Office Products. Boise provides catalog content-alongside content from suppliers of other commodity lines-and the system screens purchases for authorization, budget limits and similar restrictions before passing the order through.
Web strategy varies from company to company, and some distributors employ multiple strategies. Staples, for example, operates Staples.com for its SOHO customers, StaplesLink.com for contract customers, Quill.com for its mail-order customers. A fourth site, BusinessDepot.com, serves Canadian customers. Corporate customers can shop in stores or online and automatically get their contract prices (or the retail price, if that's lower) and get a single, consolidated invoice, according to Anne-Marie Keane, vice president of business-to-business e-commerce.
Why buy from one of the Big Six rather than another, or from an independent? Predictably, each of the big resellers has put together an assortment of services and outlets it believes give it an advantage over the others. Goudge counsels corporate buyers to look for reliable, committed service, significant investments in technology and solid management.
Hoffman cites his firm's business-to-business focus as a plus for its corporate customers. "We're not being pulled in multiple directions," he says. Further, the company's recent acquisition by Dutch-owned Burhmann Corp. gives it a strong presence in Europe and Australia, and puts it in a good position to handle international contract business.
Local, highly personalized service keeps the independent dealers favor, says Jim McGarry, president of the Independent Office Products and Furniture Association. "Customers are telling us that they want the same type of opportunities in working with a dealer that they'd have with any large, multinational or national company. They're very comfortable with their local business relationship, however. So as long as the independent dealer is competitive in both service and price, that's a model customers continue to support."
The office products industry is predicting only modest growth in 2001. In a recent survey of independent dealers, anticipated sales changes for the year ranged from small declines to 10% increases, but nearly half expected increases of 5% or less, and those results are from a survey conducted last year.
How will the industry support future growth? Partly, says McGarry, growth among independents will come from selling in greater depth to existing customers. Beyond that, branching into non-traditional product lines could offer additional opportunities.
Some of the publicly held companies are also looking to expanded product and service offerings for growth. Staples, for instance, offers stationery and sign printing, Web hosting, IT (information technology) consulting, employee benefits plans and more, mostly through third-party providers.
On the contract side, growth in the future is likely to come at the expense of competitors, says Corporate Express' Hoffman. "A lot of it's going to be share. I think the industry is going to show moderate growth, and I think success will go to those who penetrate and take share from other people." Office Depot's Pollman agrees: "We have a very large existing base of customers, and we have goals for account penetration. If our customers are dealing with multiple suppliers, we need to find out what products they're ordering from other companies, because we can offer those solutions, too."
It's still possible to grow through acquisition, says Boise's Goudge, but there's not much left to acquire. "We see the economy slowing rapidly, especially in the large-business sector. That means fewer white-collar workers and, typically, lower sales. Consequently, in order to grow in that large-business sector, you have to take share-and I think all of us continue to be absolutely focused on taking market share. Adding product lines can help, but you still have to out-service your competitor in a world where it's really hard to do that."
Once a low-visibility industry dominated by family-run businesses, office products distribution has in the past few years moved aggressively into the spotlight with national retail chains, growing e-commerce operations and sophisticated procurement programs. Heightened competition has led to aggressive pricing, a well-tuned distribution system, and a raft of new services and non-traditional product lines aimed at capturing a greater share of corporate spending.
A focus on price competition has turned the industry's resellers into commodities businesses, where service and delivery matter more than product differentiation. That's mostly been good for corporate buyers because it's nudged the resellers into concentrating on lowering procurement costs-historically high in proportion to product costs.
Estimates of the industry's size vary widely, and always have. That's partly because much of the industry is closely held, and partly because there isn't much agreement on what an office product is. The six large, publicly traded companies that dominate the office supply business account for about $35 billion in U.S. sales, roughly half the industry's total, according to more conservative estimates. Staples, Office Depot and Office Max operate highly visible big-box stores that cater mostly to the so-called SOHO (small office/home office) market. But Staples and Office Depot also have significant contract businesses aimed at midsize and larger commercial accounts, and all three have relatively small (compared to store sales) but growing e-commerce operations.
Three other companies-Boise Cascade Office Products, Corporate Express and USOP (US Office Products) cater primarily to contract customers and operate from distribution centers and sales offices, rather than retail stores. All three have e-commerce sites, but sell primarily through outbound sales forces.
The Big Six operate on a big scale. Office Depot (the largest of the six), Staples and Office Max each have between 800 and 1,000 retail stores. Boise has 46 distribution centers and 1,200 salespeople; Corporate Express operates 31 distribution centers in the U.S., along with additional sales offices. All operate internationally, some directly and some through subsidiary companies.
Somewhere between 5,000 to 6,000 independent dealers serve local and regional mid-market companies and, through marketing and buying cooperatives, some also serve national accounts. Many of the independents are survivors of a massive consolidation in the mid-1980s that cut their population from perhaps 15,000 to today's number. Some of the larger independents were acquired by the national companies and became the core of their contract business. Many of the direct mail office suppliers, a SOHO (small office/home office) market mainstay, have been rolled into the Big Six. Quill, for example, is now part of Staples; Reliable is part of Boise Cascade; and Viking Office Products is part of Office Depot.
Not every dealer inventories merchandise, but most do-typically a core line of somewhere between 6,000 and 10,000 faster-moving SKUs, according to Kathleen Dvorak, vice president of investor relations and financial administration at United Stationers. For slower-moving and more specialized products, they rely on wholesalers like United and S.P. Richards, the two dominant general-line distributors. Originally, says Dvorak, office supply wholesalers did what wholesalers do in most industries-they bought in big quantities, sold in smaller quantities, and made their living on a few points' spread in pricing and lots of volume.
Today, she continues, "wholesaler" probably isn't even accurate. Instead, United is in effect a backup warehousing and distribution operation. When a Staples or a Corporate Express advertises 40,000 items, most come out of wholesaler stock, and if a dealer's customer orders an item that's not in its core inventory, it's supplied by the wholesaler and the customer is none the wiser. In fact, says Dvorak, some of the dealers it serves have ordering systems that automatically roll over to United if the reseller doesn't have an item in stock.
A key to success in the contract segment of the industry is the ability to deliver complete orders quickly-next-day delivery is standard. That dictates well-stocked distribution centers, and lots of them. United operates 77.
One of the advantages the big, national outfits originally offered their customers was rock-bottom pricing. Thanks to their size, they were able to buy directly from suppliers at low prices and pass the savings along to their customers-even relatively low-volume customers. The independents, by contrast, were often part of a two-tier distribution system, and some couldn't even put together large enough orders to buy direct from manufacturers.
Today, thanks in large part to the growth of buying groups, independents say they're getting the same deals as the national outfits, and are price-competitive with them. Price differences still exist among the office supply outlets, especially on negotiated contract deals, but with increasing commoditization has come a greater emphasis on reducing customers' total acquisition cost.
"We've done some studies," says Mark Hoffman, president, North American office products, at Corporate Express. "There's still a lot of opportunity to cut costs, and we're working with people not only to be competitive on price, but we're also trying to help people streamline their processes."
Others note similar trends. "People are being asked to do more with less," says Jim Pollman, New England regional sales director for Office Depot. As purchasing professionals spread their buying over more commodity lines, office supplies become a low percentage of their overall spending, and high transaction costs become all the more glaring. "We want to understand what their needs are and take cost out of the business," he adds.
Private procurement systems in individual organizations are also becoming increasingly common, says Dave Goudge, senior vice president of marketing for Boise Cascade Office Products. Boise provides catalog content-alongside content from suppliers of other commodity lines-and the system screens purchases for authorization, budget limits and similar restrictions before passing the order through.
Web strategy varies from company to company, and some distributors employ multiple strategies. Staples, for example, operates Staples.com for its SOHO customers, StaplesLink.com for contract customers, Quill.com for its mail-order customers. A fourth site, BusinessDepot.com, serves Canadian customers. Corporate customers can shop in stores or online and automatically get their contract prices (or the retail price, if that's lower) and get a single, consolidated invoice, according to Anne-Marie Keane, vice president of business-to-business e-commerce.
Why buy from one of the Big Six rather than another, or from an independent? Predictably, each of the big resellers has put together an assortment of services and outlets it believes give it an advantage over the others. Goudge counsels corporate buyers to look for reliable, committed service, significant investments in technology and solid management.
Hoffman cites his firm's business-to-business focus as a plus for its corporate customers. "We're not being pulled in multiple directions," he says. Further, the company's recent acquisition by Dutch-owned Burhmann Corp. gives it a strong presence in Europe and Australia, and puts it in a good position to handle international contract business.
Local, highly personalized service keeps the independent dealers favor, says Jim McGarry, president of the Independent Office Products and Furniture Association. "Customers are telling us that they want the same type of opportunities in working with a dealer that they'd have with any large, multinational or national company. They're very comfortable with their local business relationship, however. So as long as the independent dealer is competitive in both service and price, that's a model customers continue to support."
The office products industry is predicting only modest growth in 2001. In a recent survey of independent dealers, anticipated sales changes for the year ranged from small declines to 10% increases, but nearly half expected increases of 5% or less, and those results are from a survey conducted last year.
How will the industry support future growth? Partly, says McGarry, growth among independents will come from selling in greater depth to existing customers. Beyond that, branching into non-traditional product lines could offer additional opportunities.
Some of the publicly held companies are also looking to expanded product and service offerings for growth. Staples, for instance, offers stationery and sign printing, Web hosting, IT (information technology) consulting, employee benefits plans and more, mostly through third-party providers.
On the contract side, growth in the future is likely to come at the expense of competitors, says Corporate Express' Hoffman. "A lot of it's going to be share. I think the industry is going to show moderate growth, and I think success will go to those who penetrate and take share from other people." Office Depot's Pollman agrees: "We have a very large existing base of customers, and we have goals for account penetration. If our customers are dealing with multiple suppliers, we need to find out what products they're ordering from other companies, because we can offer those solutions, too."
It's still possible to grow through acquisition, says Boise's Goudge, but there's not much left to acquire. "We see the economy slowing rapidly, especially in the large-business sector. That means fewer white-collar workers and, typically, lower sales. Consequently, in order to grow in that large-business sector, you have to take share-and I think all of us continue to be absolutely focused on taking market share. Adding product lines can help, but you still have to out-service your competitor in a world where it's really hard to do that."
Purchasing calls on office supplies distributors for help with managing demand OfficeMax, Staples offer up advice to lower costs for office buyers
By Nancy Hitchcock -- Purchasing,
Demand management, a strategy office supplies companies have been using for years, is gaining momentum in today's challenging business environment.
"What we are finding from the end user, especially in today's economic environment, is that people do want to help their companies save money," says Jim Durkin, executive vice president of North American sales at OfficeMax in Naperville, Ill. "When you give them tools to help them realize that they can benefit the company and save money, their inclination is to take advantage of that."
Staples recognizes a similar trend. "Something new has happened in the past several months because of the financial crisis: People have been self selecting demand management much more frequently," says Tom Heisroth, senior vice president of sales, at Staples National Advantage in Framingham, Mass. "The user community has moved to a greater adoption of it. It's a big benefit to Staples too because people streamline their purchases and they buy what we have in inventory, which creates fewer special orders for customers and for Staples."
Companies such as Staples and OfficeMax continuously develop solutions to help their customers cut costs. They are expanding their private label brands and offering more information on the benefits of contract compliance. Furthermore, tools on their websites provide easily accessible information to the purchasing pros that steer them to less expensive products.
WEBSITE TOOLS HELP SHAPE DEMAND. OfficeMax finds that to help customers reduce their spending, they need to provide savings information to the end user at the point of purchase. Therefore, the company developed a feature on its website, called Best Value, that shows the user less expensive alternatives to the item selected.
"We do a lot of work in the merchandising area to develop the cross-reference tables to make sure that the same items, in terms of form, fit, and function, will recommend other brands and our private-label brands as long as they fit the same form and function and that they meet the criteria that they save money for the customer," says Durkin.
Another initiative office supplies companies undertake to drive savings is continuously developing private-label brands.
Staples offers a range of branded products from file folders to furniture. The company continues to deliver value added products and environmentally friendly items such as a line of Sustainable Earth cleaning products.
A few years ago, OfficeMax began creating products with their own brand names, instead of using the OfficeMax brand. The company has launched lines of pens, pencils, highlighters, markers, and desk accessories under the TUL brand, for instance, which has been successful. Last year the company launched office accessories under the DiVOGA brand. Now, Office Max has launched a series of organizational products.
OfficeMax is also shaping demand with its managed print solution. This solution helps create a more efficient printing environment by narrowing down the number of printers a company uses and driving demand to more standardized equipment, toner, and supplies, for example.
With new tools and technology providing helpful product, company, and compliance information, office supplies companies help end users cut costs for their companies. "It's a win-win for everyone," says Staples' Heisroth.
Demand management, a strategy office supplies companies have been using for years, is gaining momentum in today's challenging business environment.
"What we are finding from the end user, especially in today's economic environment, is that people do want to help their companies save money," says Jim Durkin, executive vice president of North American sales at OfficeMax in Naperville, Ill. "When you give them tools to help them realize that they can benefit the company and save money, their inclination is to take advantage of that."
Staples recognizes a similar trend. "Something new has happened in the past several months because of the financial crisis: People have been self selecting demand management much more frequently," says Tom Heisroth, senior vice president of sales, at Staples National Advantage in Framingham, Mass. "The user community has moved to a greater adoption of it. It's a big benefit to Staples too because people streamline their purchases and they buy what we have in inventory, which creates fewer special orders for customers and for Staples."
Companies such as Staples and OfficeMax continuously develop solutions to help their customers cut costs. They are expanding their private label brands and offering more information on the benefits of contract compliance. Furthermore, tools on their websites provide easily accessible information to the purchasing pros that steer them to less expensive products.
WEBSITE TOOLS HELP SHAPE DEMAND. OfficeMax finds that to help customers reduce their spending, they need to provide savings information to the end user at the point of purchase. Therefore, the company developed a feature on its website, called Best Value, that shows the user less expensive alternatives to the item selected.
"We do a lot of work in the merchandising area to develop the cross-reference tables to make sure that the same items, in terms of form, fit, and function, will recommend other brands and our private-label brands as long as they fit the same form and function and that they meet the criteria that they save money for the customer," says Durkin.
Another initiative office supplies companies undertake to drive savings is continuously developing private-label brands.
Staples offers a range of branded products from file folders to furniture. The company continues to deliver value added products and environmentally friendly items such as a line of Sustainable Earth cleaning products.
A few years ago, OfficeMax began creating products with their own brand names, instead of using the OfficeMax brand. The company has launched lines of pens, pencils, highlighters, markers, and desk accessories under the TUL brand, for instance, which has been successful. Last year the company launched office accessories under the DiVOGA brand. Now, Office Max has launched a series of organizational products.
OfficeMax is also shaping demand with its managed print solution. This solution helps create a more efficient printing environment by narrowing down the number of printers a company uses and driving demand to more standardized equipment, toner, and supplies, for example.
With new tools and technology providing helpful product, company, and compliance information, office supplies companies help end users cut costs for their companies. "It's a win-win for everyone," says Staples' Heisroth.
Tuesday, November 18, 2008
Shorter is better for Toyota's supply chain
Automaker aims to localize production and supply base.
By David Hannon -- Purchasing, 8/14/2008
When Japanese carmaker Toyota first began selling cars in the U.S. 50 years ago, it was importing completed vehicles from Japan, which were made entirely from Japanese parts. Today, while many other U.S. manufacturers look overseas for low-cost manufacturing and supply, the Toyotas sold in the U.S. are manufactured at North American plants and the majority of the $30 billion in parts bought to make those vehicles are sourced from North American suppliers.
"We've had an overriding philosophy in place that we want to produce our vehicles where the customers are and we want to buy the parts near where we produce the vehicles," says Chris Nielsen, vice president of purchasing at Toyota Motor Engineering & Manufacturing North America (left) in a recent interview.
And that philosophy is becoming more entrenched as Toyota increases its production in North America, with new plants coming online in Canada later this year and in Mississippi in 2010. "In both those cases we'll be localizing vehicle production so most of the parts and materials used in those vehicles will come from local suppliers," Nielsen tells Purchasing. "As we continue to localize our production, our supply base will continue to localize as well."
Locally grown
As an example of that strategy at work, Nielsen says the new version of Toyota's Tundra truck launched last year went from 60% locally sourced parts to 90% local parts. (The majority of the remaining 10% comes from Japan).
Toyota is not a big proponent of supplier-hopping due primarily to the lifecycle of its product. Toyota buyers may be required to source parts up to three years prior to production for a vehicle that could stay in production up to seven years. "It's very difficult to forecast supplier-facing issues that far in advance," Nielsen says. "So we find a simpler model of supplier evaluation that focuses on the things we can control such as supplier productivity makes good sense."
The company looks at a variety of metrics to measure a supplier's productivity including: labor rates, manpower allocation, production time and scrap rates. Nielsen is quick to point out that the philosophy does not mean Toyota ignores lower cost suppliers in overseas markets, but says that when a total cost analysis is completed, most often the local suppliers prove to be the most cost-effective.
"We don't get swayed by short-term changes—you can get too wrapped up in what country has the lowest wage rate this year or which country provides the best exchange rate today. That can cause a lot of disruption and impact quality."
Toyota's total cost analysis typically includes a deep-dive on the supplier's manufacturing costs. "For example, the wage rate in China will usually be much lower than in the U.S., but productivity rates may be vastly different—likely better in the U.S. which adds to their competitiveness. And when you factor in transportation costs, productivity and the level of technology that's used to make the parts, North American suppliers are usually more productive."
But the strategy doesn't work unless those North American suppliers are constantly challenged to find new ways of increasing their value vs. their overseas competitors. That deep analysis of a supplier's manufacturing processes and costs allows Toyota's purchasing staffers to identify exactly where a local supplier may be able to improve its cost-competitiveness.
Toyota recently kicked off a value analysis campaign with its North American suppliers in an effort to further reduce costs. While value analysis is an ongoing priority at Toyota, according to Nielsen, the latest emphasis focuses on finding ways to reduce costs in both supplier products and processes, which can then be shared at its various manufacturing locations around the world.
Learning to obeya
To better facilitate the cross-functional meetings required for true value analysis work, Toyota employs a Japanese concept called obeya: while the literal translation is "big room" the true meaning focuses on bringing members of various organizations together to discuss ideas and projects.
While the obeya concept started at Toyota with purchasing and engineering coming together to discuss supplier-facing value analysis projects, today obeya has been so institutionalized at Toyota that there is an obeya phase of every project after the concept design is completed but before the final design.
"There are also obeya teams between sales and production and within organizations," says Nielsen. "We're using it to break down functional silos that often exist."
Minimizing risk
To put it simply, Nielsen says: "Shorter is better than longer in your supply chain. That is a simplified way of looking at it, but those simple philosophies provide direction and guidance to our organization in the long-term."
Nielsen says extending supply chains around the world can mean logistics rates, energy costs, labor issues and leadtimes are unpredictable at best. And where there's unpredictability, there is risk. "Ocean freight rates have fluctuated a lot recently and those are hard to forecast," he says. "Exchange rates can also change quickly, so those things add a little bit of extra unknown in the suppliers' overall costs. That's why we like our basic model of buying locally as much as possible. It reduces risks."
Toyota is so focused on reducing risk in its supply base that two years ago it created a six-person risk management team within its purchasing organization. That team had two primary goals: First monitor the financial health of Toyota's supply base and secondly, build tools to streamline that supplier risk assessment process. Last year, the team rolled out its proprietary supplier assessment tool that uses a variety of metrics to assign all suppliers—public or private—a risk score. This year, Toyota pushed the tool out to its tier one suppliers so they could, in turn, use it to assess the status of their own supply base. While it's still too early to get any real feedback from the tier ones, Nielsen says the idea has a lot of support internally at Toyota.
"While our risk management team has a pretty good handle on the tier one supply base, the tier two and beyond supply base is more of an unknown for us," Nielsen says. "That's where we're focusing this year. Some of the tier ones had good assessment practices already, but this will drive a common standard across the entire supply base."
By David Hannon -- Purchasing, 8/14/2008
When Japanese carmaker Toyota first began selling cars in the U.S. 50 years ago, it was importing completed vehicles from Japan, which were made entirely from Japanese parts. Today, while many other U.S. manufacturers look overseas for low-cost manufacturing and supply, the Toyotas sold in the U.S. are manufactured at North American plants and the majority of the $30 billion in parts bought to make those vehicles are sourced from North American suppliers.
"We've had an overriding philosophy in place that we want to produce our vehicles where the customers are and we want to buy the parts near where we produce the vehicles," says Chris Nielsen, vice president of purchasing at Toyota Motor Engineering & Manufacturing North America (left) in a recent interview.
And that philosophy is becoming more entrenched as Toyota increases its production in North America, with new plants coming online in Canada later this year and in Mississippi in 2010. "In both those cases we'll be localizing vehicle production so most of the parts and materials used in those vehicles will come from local suppliers," Nielsen tells Purchasing. "As we continue to localize our production, our supply base will continue to localize as well."
Locally grown
As an example of that strategy at work, Nielsen says the new version of Toyota's Tundra truck launched last year went from 60% locally sourced parts to 90% local parts. (The majority of the remaining 10% comes from Japan).
Toyota is not a big proponent of supplier-hopping due primarily to the lifecycle of its product. Toyota buyers may be required to source parts up to three years prior to production for a vehicle that could stay in production up to seven years. "It's very difficult to forecast supplier-facing issues that far in advance," Nielsen says. "So we find a simpler model of supplier evaluation that focuses on the things we can control such as supplier productivity makes good sense."
The company looks at a variety of metrics to measure a supplier's productivity including: labor rates, manpower allocation, production time and scrap rates. Nielsen is quick to point out that the philosophy does not mean Toyota ignores lower cost suppliers in overseas markets, but says that when a total cost analysis is completed, most often the local suppliers prove to be the most cost-effective.
"We don't get swayed by short-term changes—you can get too wrapped up in what country has the lowest wage rate this year or which country provides the best exchange rate today. That can cause a lot of disruption and impact quality."
Toyota's total cost analysis typically includes a deep-dive on the supplier's manufacturing costs. "For example, the wage rate in China will usually be much lower than in the U.S., but productivity rates may be vastly different—likely better in the U.S. which adds to their competitiveness. And when you factor in transportation costs, productivity and the level of technology that's used to make the parts, North American suppliers are usually more productive."
But the strategy doesn't work unless those North American suppliers are constantly challenged to find new ways of increasing their value vs. their overseas competitors. That deep analysis of a supplier's manufacturing processes and costs allows Toyota's purchasing staffers to identify exactly where a local supplier may be able to improve its cost-competitiveness.
Toyota recently kicked off a value analysis campaign with its North American suppliers in an effort to further reduce costs. While value analysis is an ongoing priority at Toyota, according to Nielsen, the latest emphasis focuses on finding ways to reduce costs in both supplier products and processes, which can then be shared at its various manufacturing locations around the world.
Learning to obeya
To better facilitate the cross-functional meetings required for true value analysis work, Toyota employs a Japanese concept called obeya: while the literal translation is "big room" the true meaning focuses on bringing members of various organizations together to discuss ideas and projects.
While the obeya concept started at Toyota with purchasing and engineering coming together to discuss supplier-facing value analysis projects, today obeya has been so institutionalized at Toyota that there is an obeya phase of every project after the concept design is completed but before the final design.
"There are also obeya teams between sales and production and within organizations," says Nielsen. "We're using it to break down functional silos that often exist."
Minimizing risk
To put it simply, Nielsen says: "Shorter is better than longer in your supply chain. That is a simplified way of looking at it, but those simple philosophies provide direction and guidance to our organization in the long-term."
Nielsen says extending supply chains around the world can mean logistics rates, energy costs, labor issues and leadtimes are unpredictable at best. And where there's unpredictability, there is risk. "Ocean freight rates have fluctuated a lot recently and those are hard to forecast," he says. "Exchange rates can also change quickly, so those things add a little bit of extra unknown in the suppliers' overall costs. That's why we like our basic model of buying locally as much as possible. It reduces risks."
Toyota is so focused on reducing risk in its supply base that two years ago it created a six-person risk management team within its purchasing organization. That team had two primary goals: First monitor the financial health of Toyota's supply base and secondly, build tools to streamline that supplier risk assessment process. Last year, the team rolled out its proprietary supplier assessment tool that uses a variety of metrics to assign all suppliers—public or private—a risk score. This year, Toyota pushed the tool out to its tier one suppliers so they could, in turn, use it to assess the status of their own supply base. While it's still too early to get any real feedback from the tier ones, Nielsen says the idea has a lot of support internally at Toyota.
"While our risk management team has a pretty good handle on the tier one supply base, the tier two and beyond supply base is more of an unknown for us," Nielsen says. "That's where we're focusing this year. Some of the tier ones had good assessment practices already, but this will drive a common standard across the entire supply base."
Focus on the Process Industries: Pharmaceuticals: Reworking the Pharma Supply Chain As multiple forces challenge the pharmaceutical industry, SCM
By Jill Jusko
Dec. 1, 2008 -- If ever an industry were undergoing explosive change, it's the pharmaceutical industry. One could even call the change "unprecedented," says Paul Papas, partner and Americas Life Sciences leader, IBM Global Business Services. High levels of patent expiration among pharmaceutical companies are impacting their top-line growth, which is then driving a whole series of additional events, he points out. Among them: more mergers and acquisitions to augment the product pipeline, changes to fundamental operating models, increasing globalization and a growing emphasis on partnering. Additionally, "if the top line isn't growing, it makes sense to try to rationalize your cost basis to deliver your bottom line," Papas points out.
Add to that changing compliance demands in sales and marketing, manufacturing, and research and development, as well as a shifting client base, and really, pharmaceutical manufacturers -- and the supply chains in which they operate -- have little choice except to change and adapt to the volatile environment in which they operate. Indeed, Papas says these forces impacting pharmaceutical manufacturers are consistent with findings from IBM's most recent global CEO study. Some 79% of life sciences CEOs in that survey anticipate significant change over the next three years.
That change is already happening. For example, at pharmaceutical giant Pfizer, Anthony J. Maddaluna is overseeing a massive overhaul of the company's manufacturing and supply network worldwide. Just how large? Maddaluna, who is vice president of Pfizer Global Manufacturing (PGM) Strategy and Supply Network Transformation, points out that PGM supplies more than 500 products and 22,000 stock-keeping units (SKUs) for the New York-based global giant. Like Papas, he describes the changes in the pharmaceutical industry as unprecedented in his 34 years of experience working in the industry. Until a few years ago there wasn't the globalization of competition that exists today, he says. And during his lengthy industry tenure, Maddaluna has watched manufacturing and delivery processes change and grow more sophisticated. He doesn't expect that to change.
"It yields a different end product and may also necessitate the development of technologies we don't even have now in our manufacturing plants," Maddaluna states.
Meeting Change with Change
Pfizer is meeting those changes with changes of its own. For example, where it once was geographically segmented, PGM is now moving to segmentation by customer type. Integrating lean thinking and actions throughout its manufacturing facilities, as well as revamping business processes, is on PGM's plate. On a more public stage, the pharmaceutical firm is whittling down its internal network of manufacturing sites and increasing its outsourcing options. PGM's target by the end of 2009 is to have an internal network of 43 plants operating from a one-time internal network of 100 plants. Some facilities have closed entirely; others have been sold outright or sold to a partner with trailing supply agreements.
The goal of the transformation? "For the longest time -- and I think it's been the model for most pharmaceutical companies -- it was always ‘you sell what you make, you make what you sell,'" Maddaluna says. "What we're doing now is an active transformation to become a globally competitive supply network. So, even though our name [PGM] says ‘manufacturing,' it's sort of a vestige of our name. We're really a supply organization. We'll be a very competitive ‘make or buy' network. Our mission is to provide Pfizer with an innovative and powerful competitive advantage. That is the end goal."
Pfizer Manufacturing Deutschland GmbH, located in Illertissen, Germany, is a strategic plant in the Pfizer Global Manufacturing network. As shown, processing stages are controlled from a separate control room to prevent operator contact with material during a production run.
That means increased outsourcing where and when it makes sense, and manufacturing internally when that makes sense. And it's not all about cost, Maddaluna emphasizes. "It's all about the whole value proposition for our customers. It's about cost; it's about quality; it's about supplier reliability. They're not mutually exclusive," he says. Additional factors that help drive outsourcing decisions are product development considerations (off-patent or on-patent, for example), as well as who can more quickly bring a product to market, where speed is a factor.
By the same token, the right business mix for Pfizer means that key plants remain part of PGM's internal network. Among the factors that influence whether a plant remains an internal facility is whether it's involved in the co-development and launch of new products. It's also important that PGM retains its expertise in process capabilities and the expertise to improve those processes. "That's an important reason to have plants," Maddaluna says.
He points out that relatively recent large mergers (with Warner-Lambert in 2000 and Pharmacia in 2003) had the added effect of immediately adding a wealth of manufacturing facilities to the Pfizer name. "It's the issue of putting together three different, major pharmaceutical companies that all had very good independent strategies, but when you put them together, it doesn't quite mix. So you have to look at this now as the new company and what makes sense from a supply standpoint," he says.
For Pfizer, from a supply standpoint, appropriate outsourcing makes sense. "One of the biggest things that outsourcing does is give you supply chain flexibility," Maddaluna explains. "If you have a network of internal plants that are configured for a certain product type and you can't fully load those plants to the right capacity, then you're going to have an internal cost disadvantage. And somebody has to pay for those plants, whether they're running one unit or they're running a million units. So what we're trying to look at is the [right] mix for our business."
In fact, many pharmaceutical firms are taking that same approach, according to Global Industry Analysts. The market research firm estimates that the global market for pharmaceutical contract manufacturing, estimated at $20.4 billion for 2008, will exceed $31 billion by 2012. Furthermore, the United States is the single largest market for pharmaceutical contract manufacturing, with projected revenues of $12.8 billion in 2012.
Increased partnering along the supply chain adds a level of complexity to that chain. Pfizer, which is no stranger to contract manufacturing, is very stringent when looking at partnering arrangements, Maddaluna says. "We don't partner with just anybody," he says. "We take the right steps with our partners to make sure they are aligned with what we do. And we take a hands-on approach; we're in there with our partners, we look at them every which way, including the quality aspects, science, finances, environmental health and safety, and work practices. All of that is important to us and we expect our partners to meet our standards."
What he also expects is the continued dynamism of the industry, which means that what constitutes the right mix of internal plants and external partners also remains dynamic. Even if PGM reaches what it believes is a manageable level of internal plants and a "core" supply network, "there's always going to be inputs," Maddaluna says. "Pfizer's business may change. We may do an acquisition. We may acquire a product that requires special manufacturing. This is also the plus of having an agile network that's flexible. And when you have internal plants you tend to be less flexible than when you're partnering with external partners. So having that right mix actually helps us as the environment changes around us."
Improving Supply Chain Integrity
Among the many challenges facing the pharmaceutical supply chain is that of supply chain security. "It's probably the biggest single issue in our industry today," says Jorge Rodriguez, vice president of operations and compliance officer at pharmaceutical distributor Novis Pharmaceuticals. While a safe, secure supply chain has always been important, "it wasn't necessarily on the forefront three or four years ago," Rodriguez says. How times change.
While security may be paramount now, there exists no uniform national regulation. Instead, differing state regulations mean pharmaceutical firms aren't necessarily all in agreement about what constitutes the right approach to take in securing their supply chains. "We [Novis] came to a conclusion and moved forward in that direction," Rodriguez says.
Novis Pharmaceuticals is bolstering its own efforts to improve security and patient safety with the introduction in December of a prototype version of RxID, an inventory tracking system to enhance drug product traceability and extend that protection to its customers. It's one component of Novis Pharmaceuticals' general patient safety initiative, Rodriguez says. Integral to that is an e-pedigree solution from SupplyScape coupled with an internal serialization solution, all integrated within the company's SAP ERP solution. "We're always looking for ways to improve patient safety," he notes.
The introduction of the fully functional prototype will be followed by a pilot program with selected customers. The testing phase is projected to last about six months or so, Rodriguez estimates, with a full rollout of the system slated for June or July 2009 as an option for Novis Pharmaceutical customers. The SupplyScape e-pedigree solution will allow participating customers to check the pedigree of their products via a Web portal.
Dec. 1, 2008 -- If ever an industry were undergoing explosive change, it's the pharmaceutical industry. One could even call the change "unprecedented," says Paul Papas, partner and Americas Life Sciences leader, IBM Global Business Services. High levels of patent expiration among pharmaceutical companies are impacting their top-line growth, which is then driving a whole series of additional events, he points out. Among them: more mergers and acquisitions to augment the product pipeline, changes to fundamental operating models, increasing globalization and a growing emphasis on partnering. Additionally, "if the top line isn't growing, it makes sense to try to rationalize your cost basis to deliver your bottom line," Papas points out.
Add to that changing compliance demands in sales and marketing, manufacturing, and research and development, as well as a shifting client base, and really, pharmaceutical manufacturers -- and the supply chains in which they operate -- have little choice except to change and adapt to the volatile environment in which they operate. Indeed, Papas says these forces impacting pharmaceutical manufacturers are consistent with findings from IBM's most recent global CEO study. Some 79% of life sciences CEOs in that survey anticipate significant change over the next three years.
That change is already happening. For example, at pharmaceutical giant Pfizer, Anthony J. Maddaluna is overseeing a massive overhaul of the company's manufacturing and supply network worldwide. Just how large? Maddaluna, who is vice president of Pfizer Global Manufacturing (PGM) Strategy and Supply Network Transformation, points out that PGM supplies more than 500 products and 22,000 stock-keeping units (SKUs) for the New York-based global giant. Like Papas, he describes the changes in the pharmaceutical industry as unprecedented in his 34 years of experience working in the industry. Until a few years ago there wasn't the globalization of competition that exists today, he says. And during his lengthy industry tenure, Maddaluna has watched manufacturing and delivery processes change and grow more sophisticated. He doesn't expect that to change.
"It yields a different end product and may also necessitate the development of technologies we don't even have now in our manufacturing plants," Maddaluna states.
Meeting Change with Change
Pfizer is meeting those changes with changes of its own. For example, where it once was geographically segmented, PGM is now moving to segmentation by customer type. Integrating lean thinking and actions throughout its manufacturing facilities, as well as revamping business processes, is on PGM's plate. On a more public stage, the pharmaceutical firm is whittling down its internal network of manufacturing sites and increasing its outsourcing options. PGM's target by the end of 2009 is to have an internal network of 43 plants operating from a one-time internal network of 100 plants. Some facilities have closed entirely; others have been sold outright or sold to a partner with trailing supply agreements.
The goal of the transformation? "For the longest time -- and I think it's been the model for most pharmaceutical companies -- it was always ‘you sell what you make, you make what you sell,'" Maddaluna says. "What we're doing now is an active transformation to become a globally competitive supply network. So, even though our name [PGM] says ‘manufacturing,' it's sort of a vestige of our name. We're really a supply organization. We'll be a very competitive ‘make or buy' network. Our mission is to provide Pfizer with an innovative and powerful competitive advantage. That is the end goal."
Pfizer Manufacturing Deutschland GmbH, located in Illertissen, Germany, is a strategic plant in the Pfizer Global Manufacturing network. As shown, processing stages are controlled from a separate control room to prevent operator contact with material during a production run.
That means increased outsourcing where and when it makes sense, and manufacturing internally when that makes sense. And it's not all about cost, Maddaluna emphasizes. "It's all about the whole value proposition for our customers. It's about cost; it's about quality; it's about supplier reliability. They're not mutually exclusive," he says. Additional factors that help drive outsourcing decisions are product development considerations (off-patent or on-patent, for example), as well as who can more quickly bring a product to market, where speed is a factor.
By the same token, the right business mix for Pfizer means that key plants remain part of PGM's internal network. Among the factors that influence whether a plant remains an internal facility is whether it's involved in the co-development and launch of new products. It's also important that PGM retains its expertise in process capabilities and the expertise to improve those processes. "That's an important reason to have plants," Maddaluna says.
He points out that relatively recent large mergers (with Warner-Lambert in 2000 and Pharmacia in 2003) had the added effect of immediately adding a wealth of manufacturing facilities to the Pfizer name. "It's the issue of putting together three different, major pharmaceutical companies that all had very good independent strategies, but when you put them together, it doesn't quite mix. So you have to look at this now as the new company and what makes sense from a supply standpoint," he says.
For Pfizer, from a supply standpoint, appropriate outsourcing makes sense. "One of the biggest things that outsourcing does is give you supply chain flexibility," Maddaluna explains. "If you have a network of internal plants that are configured for a certain product type and you can't fully load those plants to the right capacity, then you're going to have an internal cost disadvantage. And somebody has to pay for those plants, whether they're running one unit or they're running a million units. So what we're trying to look at is the [right] mix for our business."
In fact, many pharmaceutical firms are taking that same approach, according to Global Industry Analysts. The market research firm estimates that the global market for pharmaceutical contract manufacturing, estimated at $20.4 billion for 2008, will exceed $31 billion by 2012. Furthermore, the United States is the single largest market for pharmaceutical contract manufacturing, with projected revenues of $12.8 billion in 2012.
Increased partnering along the supply chain adds a level of complexity to that chain. Pfizer, which is no stranger to contract manufacturing, is very stringent when looking at partnering arrangements, Maddaluna says. "We don't partner with just anybody," he says. "We take the right steps with our partners to make sure they are aligned with what we do. And we take a hands-on approach; we're in there with our partners, we look at them every which way, including the quality aspects, science, finances, environmental health and safety, and work practices. All of that is important to us and we expect our partners to meet our standards."
What he also expects is the continued dynamism of the industry, which means that what constitutes the right mix of internal plants and external partners also remains dynamic. Even if PGM reaches what it believes is a manageable level of internal plants and a "core" supply network, "there's always going to be inputs," Maddaluna says. "Pfizer's business may change. We may do an acquisition. We may acquire a product that requires special manufacturing. This is also the plus of having an agile network that's flexible. And when you have internal plants you tend to be less flexible than when you're partnering with external partners. So having that right mix actually helps us as the environment changes around us."
Improving Supply Chain Integrity
Among the many challenges facing the pharmaceutical supply chain is that of supply chain security. "It's probably the biggest single issue in our industry today," says Jorge Rodriguez, vice president of operations and compliance officer at pharmaceutical distributor Novis Pharmaceuticals. While a safe, secure supply chain has always been important, "it wasn't necessarily on the forefront three or four years ago," Rodriguez says. How times change.
While security may be paramount now, there exists no uniform national regulation. Instead, differing state regulations mean pharmaceutical firms aren't necessarily all in agreement about what constitutes the right approach to take in securing their supply chains. "We [Novis] came to a conclusion and moved forward in that direction," Rodriguez says.
Novis Pharmaceuticals is bolstering its own efforts to improve security and patient safety with the introduction in December of a prototype version of RxID, an inventory tracking system to enhance drug product traceability and extend that protection to its customers. It's one component of Novis Pharmaceuticals' general patient safety initiative, Rodriguez says. Integral to that is an e-pedigree solution from SupplyScape coupled with an internal serialization solution, all integrated within the company's SAP ERP solution. "We're always looking for ways to improve patient safety," he notes.
The introduction of the fully functional prototype will be followed by a pilot program with selected customers. The testing phase is projected to last about six months or so, Rodriguez estimates, with a full rollout of the system slated for June or July 2009 as an option for Novis Pharmaceutical customers. The SupplyScape e-pedigree solution will allow participating customers to check the pedigree of their products via a Web portal.
Continuous Improvement -- Engaging the Hearts and Minds of Your Employees The most successful leaders openly respect their staffs and care about their
By Ralph Keller
Dec. 1, 2008 -- At the recent AME conference this past October, the same message was heard over and over again: the need to engage everyone in your organization in order to achieve a sustainable continuous improvement program in your enterprise. Failure to win over the hearts and minds of all of your people will result in less-than-desired results, and will not achieve the sustainable continuous improvement efforts that conditions today demand in order for companies to succeed.
There are countless examples of lean transformations and continuous improvement programs where the gains achieved are not sustained because the hearts and minds of the people in the organization were not captured and engaged in the effort. At the conference, Captain Michael Abrashoff, the author of It's Your Ship, talked about his grass roots leadership that took the USS Benfold from the worst ship in the U.S. Navy's Pacific fleet to the best in two years. How did he accomplish that? He demonstrated every day to the 380-plus sailors and officers of the ship that he cared about them and valued their ideas on the journey to continuously improve the operation of their ship. He found, as have many others, that you can't accomplish this by sitting in your office and issuing orders. He did it using the tried and tested technique of MBWA (Management by Walking About) and engaging everyone on the ship so he knew each one of them personally and demonstrated to them that he cared about them and valued their input.
It takes time and a lot of hard work to win over people who have not been engaged, especially when previous leaders have not respected them, but Captain Abrashoff persevered every day with the same message until everyone on board bought into his program. That's when the improvements were made and sustained.
Office furniture manufacturer Herman Miller Inc. is transforming manufacturing by focusing on two things: the safety of each and every employee by making their jobs less strenuous, and getting everyone involved in satisfying the needs of the customer. As Ken Goodson, executive vice president of operations, explains, the employees come first and what's more, Herman Miller told everyone -- including its customers -- that the people of Herman Miller came first.
Herman Miller has a formal system where it measures every job and rates them on a scale of zero to 10 (with 10 being the most strenuous); the goal is to have every job in the operation a zero. So far, according to Goodson, the company has modified all of the highly strenuous jobs to the point that today nothing is rated higher than a 5, and efforts are ongoing to make these jobs even easier for people to perform. By following this formula, Herman Miller has found that the continuous improvement goals of improved quality, shorter lead times, less inventory, smaller footprint, less capital and higher productivity are all achieved, and the performance numbers of the operations reflect that, both in the factory and in the office.
This focus on engaging the people in an organization by having the top leadership demonstrate every day that they respect everyone and care about their ideas and well being is a recurring theme in successful, sustainable continuous improvement efforts. We have all seen the results of tools-based programs where people are directed, but not engaged, and the lack of sustainability that results. The gains that are made are not captured and quickly erode as people return to their old way of doing things.
Put succinctly, leadership matters, and it's the leaders who demonstrate every day that they respect, value and care about everyone in the organization who are able to achieve sustainable results in their continuous improvement efforts. What kind of leader are you, and will you be able to win in this competitive and difficult global business environment we operate in?
Dec. 1, 2008 -- At the recent AME conference this past October, the same message was heard over and over again: the need to engage everyone in your organization in order to achieve a sustainable continuous improvement program in your enterprise. Failure to win over the hearts and minds of all of your people will result in less-than-desired results, and will not achieve the sustainable continuous improvement efforts that conditions today demand in order for companies to succeed.
There are countless examples of lean transformations and continuous improvement programs where the gains achieved are not sustained because the hearts and minds of the people in the organization were not captured and engaged in the effort. At the conference, Captain Michael Abrashoff, the author of It's Your Ship, talked about his grass roots leadership that took the USS Benfold from the worst ship in the U.S. Navy's Pacific fleet to the best in two years. How did he accomplish that? He demonstrated every day to the 380-plus sailors and officers of the ship that he cared about them and valued their ideas on the journey to continuously improve the operation of their ship. He found, as have many others, that you can't accomplish this by sitting in your office and issuing orders. He did it using the tried and tested technique of MBWA (Management by Walking About) and engaging everyone on the ship so he knew each one of them personally and demonstrated to them that he cared about them and valued their input.
It takes time and a lot of hard work to win over people who have not been engaged, especially when previous leaders have not respected them, but Captain Abrashoff persevered every day with the same message until everyone on board bought into his program. That's when the improvements were made and sustained.
Office furniture manufacturer Herman Miller Inc. is transforming manufacturing by focusing on two things: the safety of each and every employee by making their jobs less strenuous, and getting everyone involved in satisfying the needs of the customer. As Ken Goodson, executive vice president of operations, explains, the employees come first and what's more, Herman Miller told everyone -- including its customers -- that the people of Herman Miller came first.
Herman Miller has a formal system where it measures every job and rates them on a scale of zero to 10 (with 10 being the most strenuous); the goal is to have every job in the operation a zero. So far, according to Goodson, the company has modified all of the highly strenuous jobs to the point that today nothing is rated higher than a 5, and efforts are ongoing to make these jobs even easier for people to perform. By following this formula, Herman Miller has found that the continuous improvement goals of improved quality, shorter lead times, less inventory, smaller footprint, less capital and higher productivity are all achieved, and the performance numbers of the operations reflect that, both in the factory and in the office.
This focus on engaging the people in an organization by having the top leadership demonstrate every day that they respect everyone and care about their ideas and well being is a recurring theme in successful, sustainable continuous improvement efforts. We have all seen the results of tools-based programs where people are directed, but not engaged, and the lack of sustainability that results. The gains that are made are not captured and quickly erode as people return to their old way of doing things.
Put succinctly, leadership matters, and it's the leaders who demonstrate every day that they respect, value and care about everyone in the organization who are able to achieve sustainable results in their continuous improvement efforts. What kind of leader are you, and will you be able to win in this competitive and difficult global business environment we operate in?
Book Review: The Customer Rules: The 14 Indispensable, Irrefutable and Indisputable Qualities of the Greatest Service Companies in the World
By C. Britt Beemer and Robert L. Shook, McGraw-Hill Companies, 2008, 332 pages,
By John Teresko
Dec. 1, 2008 -- It's a simple, logical premise: "Everyone should be constantly thinking about the customer -- the CEO, the people in the accounting department, the people in the warehouse -- everyone," says author C. Britt Beemer. It's a simple premise, but few admit to it, says Beemer and co-author Robert L. Shook. Confirmation comes from a survey involving more than 9,000 interviews conducted by Beemer's America's Research Group. (He's ARG's founder and CEO).
ARG's survey asked: "Have you ever considered the notion that everyone has a job in your company that involves the customer?" Beemer reports that four out of 10 working Americans report that neither they nor their coworkers' jobs have anything to do with customers. Second question: "Does your supervisor talk to you about how your personal efforts affect the customer?" Beemer reports 51.5% of the respondents answered "no."
Motivated by those negative findings, the authors have based their book on providing insights on how 14 companies have committed to solutions. Each company organized programs that successfully focus the entire organization on creating and supporting the customer. Through a description of the 14 companies and their practices, the authors offer advice for companies wanting to strengthen brands and market share.
The best practices range from Johnson & Johnson's carefully crafted credo specifying employee/customer behavior to Harrah's hotel rooms each being equipped with two bathrooms for married couples. ARG notes that 40% of American workers do not have a written job description. That written description would be the perfect place to mention job responsibilities to customers, ARG notes.
The authors include the following recommendations:
* Instill the importance of customer service in every employee.
* Use a "small-town" approach to meeting customers' needs no matter how big your company is.
* Develop a unique identity your customers will seek out.
* Maintain a focus on the customer before, during and after the sale.
By John Teresko
Dec. 1, 2008 -- It's a simple, logical premise: "Everyone should be constantly thinking about the customer -- the CEO, the people in the accounting department, the people in the warehouse -- everyone," says author C. Britt Beemer. It's a simple premise, but few admit to it, says Beemer and co-author Robert L. Shook. Confirmation comes from a survey involving more than 9,000 interviews conducted by Beemer's America's Research Group. (He's ARG's founder and CEO).
ARG's survey asked: "Have you ever considered the notion that everyone has a job in your company that involves the customer?" Beemer reports that four out of 10 working Americans report that neither they nor their coworkers' jobs have anything to do with customers. Second question: "Does your supervisor talk to you about how your personal efforts affect the customer?" Beemer reports 51.5% of the respondents answered "no."
Motivated by those negative findings, the authors have based their book on providing insights on how 14 companies have committed to solutions. Each company organized programs that successfully focus the entire organization on creating and supporting the customer. Through a description of the 14 companies and their practices, the authors offer advice for companies wanting to strengthen brands and market share.
The best practices range from Johnson & Johnson's carefully crafted credo specifying employee/customer behavior to Harrah's hotel rooms each being equipped with two bathrooms for married couples. ARG notes that 40% of American workers do not have a written job description. That written description would be the perfect place to mention job responsibilities to customers, ARG notes.
The authors include the following recommendations:
* Instill the importance of customer service in every employee.
* Use a "small-town" approach to meeting customers' needs no matter how big your company is.
* Develop a unique identity your customers will seek out.
* Maintain a focus on the customer before, during and after the sale.
Subscribe to:
Posts (Atom)
