business news in context, analysis with attitude

by Michael Sansolo

Earlier this month a big change took place in my home state of Maryland. Police departments abandoned coded messages like 10-4 on their radios. Now they’ll simply say the message is heard and understood. The reason for this change, which is happening throughout the country, is that neighboring departments frequently used different codes for the same crime and that hampered communication. So say 10-4 to history and welcome to plain language.

Sadly, change to simple solutions doesn’t always work that easily. Usually the opposite is true with the phrase “we’ve always done it that way” winning out more often then it should. Peter Sheahan, a speaker at the FMI Midwinter Executive Conference last week, offered some incredible examples of the opposite: those times when history trumps good thinking. He spoke about Kodak, the film giant now in bankruptcy. Sheahan related the now well-known story of how Kodak actually developed the digital cameras that have destroyed its business, but didn’t capitalize on them because they were wrong business model for a film company.

Kodak isn’t alone in missing such opportunities. Think of the once dominant Blackberry for communication or the Walkman for personal music. As Sheahan put it, companies get caught in the “gravity of success,” unable to break free from what built their success. Once that happens they miss new opportunities, working instead to maximize what they already do well.

Many of us wish we had the power to destroy current systems, but the truth is we spend our days trying to make old systems as efficient as possible. In the process we sometimes ignore lessons telling us to go a new way.

This issue came up recently in a meeting I attended with supply chain professionals from a number of retail chains. The more we all talked about the current state of logistics and the supply chain, the more the realization hit us all: long-discussed changes are far too often nothing less than still-discussed changes. The food industry supply chain is burdened by a range of difficult issues such as empty trucks out on the roads even as fuel oil prices climb and driver shortages grow. Too much information that should be streamlining all elements of the supply chain is not moving properly between trading partners.

The sad thing is, those same discussions and concerns were around 10 years ago and even 20 years ago.

That shouldn’t be possible. We live in the world of Facebook and iPads, of instantaneous and substantial information exchange. In this world it seems absurd that distribution professionals and trading partners still struggle to link all their information to use trucks, space and personnel as best as possible. But they are struggling. In fact, even some of the basic elements of modern communication remain ineffective because data is messy and frequently is pigeonholed in proprietary systems that inhibit open communication.

Think again about the gravity of success. The food industry grew strong through a world-class supply chain, until 20 years ago when the industry realized that new competitors (yes, Walmart was new once) were reinventing the system and performing at a completely different level. Ask yourself if that same gravity of success is now leading the industry to benchmark traditional retailers, while lurks in the background, creating a system unburdened by history and legacy.

Sheahan made an additional point about the fashion industry, where SKUs number in the hundreds of thousands and products are as perishable as produce. As Sheahan explained, no one makes money with fashion; they do it with supply chain, especially companies like Zara who are reinventing the supply chain in ways that provide the Spanish company a currently unassailable competitive edge.

Whether or not you work in supply chain activities, you need to ask yourself the same question: are you working to perfect an old system or could you be part of the change to something new and hopefully a lot better. The discussion has to start somewhere; it might as well be with you.

10-4…or should I say, understood?

Michael Sansolo can be reached via email at . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
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