Teleworking is Changing Culture, Workflows, and Compensation

Empty chairs and empty desks in darkened rooms,

A hundred thousand fingers on ten thousand distant keyboards,

Electrons report.

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As many people all over the world have been forced to deliver their effort to employers in new ways, tech companies are leading the way in terms of both acceptance of telework, and adaptation to it’s unique challenges. Facebook began their 100% telework policy on 05 March, while most large businesses closed down in response to the pandemic after 17 March. Facebook’s offices will reopen for those who are required to be there (these positions have yet to be identified) on 06 July, but Facebook has also canceled all events larger than 50 people until June of 2021.

Other tech giants such as Amazon have implemented 100% telework until October, and Slack until September. Google has just announced telework until January 2021.

A period of teleworking this long will no doubt make a lasting impact on the organizational cultures of each company, and certainly the industry as a whole. I personally believe this will be the end of the “normal-office-environment” for both open floor plan companies and the older cube farm format. As an intermediate measure, many offices will soon be exploring hotel-ing or hot desk setups for workers to use on days that they must report in person to the office. It is possible that health screening, similar to security screening will takes place at entry control points, and that temperature and vital statistics may be recorded.

Collaboration that previously took place across the table or face to face is now taking place via various conferencing apps, or being converted into multi step workflows with documented approvals to account for schedule differences. I believe this will allow employers to collect additional process metrics where previously it might have been considered a hassle, or overly burdensome to require their employees to document each step.

Another impact of teleworking is that employees who enjoyed perks such as free lunches and fitness centers- and conceptualized this as part of their compensation- are now unable to enjoy such benefits. Because events are canceled, budgeted travel is also not taking place. This is actually delivering a significant reduction in operating costs to the companies while they still expect and obtain the same amount of labor and effort from the employee. After a long stretch of telework, this will present difficult inertia against converting back to the old model.

https://www.forbes.com/sites/rachelsandler/2020/05/07/facebook-will-reportedly-allow-employees-to-work-from-home-until-the-end-of-2020/#51b0e71e7346

https://www.pymnts.com/google/2020/google-to-workers-office-perks-dont-carry-over-to-remote-work/

 

AI and automation could impact supply chain roles

This was a very interesting article for me because I often work on projects involving RPA (Robotic Process automation). While essentially the output of these projects require that a human task is automated so that it can be handled by system without any manual intervention – This obviously means that the people who are doing that task now will no longer be required for that work.

However, things tend to get better after the tasks are automated. People are not bothered by issues middle of the night – because the system auto recovers. Less business failures, and on a bright side – people get to improve their skils and are assigned to do more creative tasks which they couldn’t have done before.

While I considered supply chain a very human intensive task, looks like AI and automation will soon play a big role here too. Recent advancements in this area mean that the skills of computers and robots will soon surpass that of workers in numerous tasks. Consequently, when these advanced technologies also become more cost effective, the workforce will be automated away. Hopefully creating new avenues of work which we are not aware yet. This is how the industrial revolution started and change our lives.

In the near future, workers could not just be substituted in low skilled jobs such as warehousing and transportation. But with advancements in automated forecasting, exception handling and supply chain planning, skilled roles are also at risk. One study has forecasted that about 47% of US jobs are at risk of computerisation. Another study looked at the impacts of robots in employment opportunities in US manufacturing and found significant decreases in both employment and wages.

When one door closes, another one opens. Let’s hope that these advancements will make lives easier for us and efficient for supply chain roles.

https://www.supplychaindigital.com/technology/how-ai-and-automation-could-impact-supply-chain-roles

How COVID-19 is affecting the global supply chain

As we all know, the impact of COVID-19 has been devastating to our global supply chain and causing many businesses to close their doors or seek government relief to survive. Imran Ghori wrote the article “How COVID-19 is affecting the global supply chain”, which helps to dig in to some of the specifics with the assistance of Danko Turcic – Professor of Operations and Supply Chain Management at UC Riverside’s School of Business. Fear is creating a significant change to consumer spending, which varies depending on how each are being affected. Many are over-spending on things like toilet paper, hand sanitizer, meat, etc., which is making it challenging for stores to keep shelves stocked and allow other shoppers to get even a “normal” amount that they need. On the other hand, as unemployment continues to sky rocket consumers are trading out their typical luxury items and only purchasing the essentials. We’ve never faced anything like this before so it’s challenging for COO’s to predict what quantities are needed. New information hits us daily, which impacts the flow of operations.

Turcic believes currently that most of the goods Americans are looking to get are still accessible; however, it brings a question of how long this can actually hold up. If we can’t fully open up until we have a cure what if it were to potentially take 4 years like it took for the Mumps? Technology better today, but many believe it could event be 18-24 months. Could the supply chain really hold up that long? Turcic believes that there’s no answer that fits all, but that it’ll depend on the resilience of each businesses supply chain. Having multiple suppliers will minimize it’s risk because it has more partners they can rely on.

How Supply Chains are being affected can be described in 4 buckets – Shortages, Rationing, Prioritization, and Reduction. Shortages and Rationing were briefly discussed earlier. Prioritization is how online retailers are looking to prioritize supplies and deliveries of certain items. This is in reference to things that are more important like household and medical supplies right now. On the other hand, reduction is important as well to make sure they are lowering the product variety currently being offered at stores. Things of less importance are being stocked in less quantity to make sure they are stocking the important items and leaving shelf space for those.

With time and more news, COO’s will be responsible for creating new predictive models to properly calculate what they should expect for sales. Eventually things will start to open, but many think this event will have long term changes even once it is done. The work from home environment will likely become more real. How will businesses adapt to this and what will consumers be looking for with this new way of life? Only time will tell….

Source: https://news.ucr.edu/articles/2020/04/29/how-covid-19-affecting-global-supply-chain

The Importance of Supply Chains for Alcoholic Beverage Companies

The article I found, “Chain Reaction: How Supply Chain Technology Impacts the Alcohol Industry”, by Atal Bansal (Forbes), discusses the importance of having a strong supply chain for alcoholic beverage companies, specifically Guinness.  In past years, St. Patrick’s Day in March has meant a massive increase in alcohol sales across the world.  In particular, Guinness has seen over 800% growth in sales in the weeks leading up to the holiday.  While the company produces close to 1.9 billion pints of beer each year, 13 million of them are consumed on St. Patrick’s Day alone.  The article discusses how meeting this demand would be nearly impossible for Guinness if they did not have such a strong supply chain.

The article attributes Guinness’ ability to meet their March spike in demand to their use of enterprise resource planning (ERP).  As discussed in class, ERPs are software that organize and share supply chain data, helping control the process.  Guinness is able to use their ERP to manage every aspect of their supply chain to ensure that they produce the correct amount of beer and at the correct time.  The article talks about how the ERP doesn’t just manage manufacturing, but also other factors such as transportation and distribution.  Without these complicated systems, it would be nearly impossible to accurately forecast the demand and ramp up production in time for St. Patrick’s Day.  The article mentions the importance of balancing supply and demand by stressing that companies must maintain lean budgets.  Having too much or too few products creates an issue for companies.

The article goes on to discuss the importance of companies finding ERPs that will work for their specific company.  They stress the importance of finding a system that will grow with the company.  One part that made me laugh is when the article says “Remember, the goal of most businesses is to grow!”, because as we learned in The Goal, the real goal is for the company to make money.

One thing that this article fails to mention is the impact that COVID-19 has had on the demand and production of beer.  I would expect that with bars being closed and social gatherings being banned, their demand and production has decreased.  I would be interested to know how Guinness’ use of ERPs has allowed them to adjust their production levels so that they don’t have too much inventory.

To read more on the topic, please find the article from Forbes here

Blockchain technology has the potential to transform the Automotive Supply Chain

Marelli, one of the world’s leading global independent suppliers to the automotive sector, has introduced the use of blockchain technology to enhance the management of automotive supply chains, creating a distributed peer-to-peer network to connect suppliers’ and carmakers’ plants around the world.

This important supply chain process innovation has been implemented in a joint project between Marelli Automotive Lighting and the BMW Group, who together designed and developed ‘PartChain’, an application based on blockchain technology.

Current supply chain difficulties

For most Big companies and organizations supply chain goes through a lot of elements upstream. Due to this, it is increasingly becoming virtually impossible to keep track of each and every hop supplies go through before it reaches the final customer. 

This has become a big problem for multinational corporations. It’s extremely difficult for companies to investigate supply chains when there are illegal or unethical practices in their supply chain. The lack of transparency could become big customer relations issues that can have a severe impact on the brand name and image of the companies.

For automotive suppliers who operate in extremely complex environments, many parts are exchanged between many plants of suppliers and carmakers, simultaneously. Consequently, the tracking of components, and related sourcing and itinerary data, is not an easy task, also because often the companies rely on different IT systems.

What is blockchain and how could it help supply chains?

While the most prominent use of blockchain is in the cryptocurrency, Bitcoin, the reality is that blockchain—essentially a distributed, digital ledger—has many applications and can be used for any exchange, agreements/contracts, tracking and, of course, payment. Since every transaction is recorded on a block and across multiple copies of the ledger that are distributed over many nodes (computers), it is highly transparent. It’s also highly secure since every block links to the one before it and after it. There is no one central authority over the blockchain, and it’s extremely efficient and scalable. Ultimately, blockchain can increase the efficiency and transparency of supply chains and positively impact everything from warehousing to delivery to payment. Chain of command is essential for many things, and blockchain has the chain of command built-in.

 How does PartChain Application solve the supply chain challenges?

 PartChain is a unique shared system between all the supply chain actors involved, which enables a common, distributed ledger and the possibility – assured by the blockchain technology – to have fixed data packages linking directly components and the final product. These factors finally make the traceability much easier and accessible for all the players, with data quickly available for everybody at the same time. Optimization of logistics and production costs is the consequent benefit.

As a result of using blockchain technology, the next step for the ‘PartChain’ application will be to ensure an even higher data authenticity grade, limiting in a decisive way the risk of counterfeit parts in the supply chain. Marelli Automotive Lighting says it plans to extend the use of PartChain along the entire value chain, involving further customers and sub-suppliers.

The ‘Partchain’ application has been adopted, as a first step, for a pilot activity focused on the traceability of headlamps, rear lamps and lighting modules supplied by Marelli Automotive Lighting to a number of BMW Group vehicles. Three Marelli Automotive Lighting plants – located in Jihlava (Czech Republic), Tolmezzo (Italy) and Juarez (Mexico) – and two BMW Group plants – in Spartanburg (US) and Dingolfing (Germany) – were connected through the application. Within this first project, the platform is managing more than 100,000 data directly referred to like parts and vehicles.

With around 62,000 employees worldwide, the Marelli global footprint includes 170 facilities and R&D centers across Asia, the Americas, Europe, and Africa, generating revenues of 14.6 billion euros in 2018.

https://www.forbes.com/sites/bernardmarr/2018/03/23/how-blockchain-will-transform-the-supply-chain-and-logistics-industry/#373d59ff5fec

https://www.autocarpro.in/news-international/renault-rejigs-china-strategy–will-focus-only-on-lcvs-and-evs-56151

Amazon selling cashier-free technology to other retailers

I had this article pinned earlier in the month to talk about prior to the world having to social distance and remain at home. Amazon is launching a new cashier-free technology to other retail stores. This technology would allow customers to walk in the store by scanning their credit card, then they would grocery shop and essentially “Just Walk Out”. With the technology of cameras and sensors their card would be charged and they would be emailed a receipt.

Now more than ever this seems to be a good strategy for grocery stores as this limits the face to face interaction with people. Shoppers can go into the store and pay for what they need without needing to stop and scan, but simply walk out and receive an emailed receipt. From a health standpoint, this is a really great idea.

The article addresses the negative of this product mostly due to the lack of employment needed to operate this type of “Just Walk Out” system for grocery shopping. Now more than ever that is absolutely a concern. However, I think you could argue that almost the same amount of positions could be required as they would probably need some engineers to help update and ensure the system is working properly, more security might be required, additional customer service representatives, and cashier positions could turn into more stocking positions and monitoring levels of inventory to ensure orders are being placed properly to their suppliers. It may not bring a jump to employment but there are still positions that will be required in place of cashiers.

https://nypost.com/2020/03/09/amazon-selling-cashier-free-technology-to-other-retailers/?utm_source=morning_brew

My Thoughts on The Goal

I was pleasantly surprised by this book; while it was by no means a quick read it was definitely interesting.  I think the biggest surprise for me was learning that efficiency is not necessarily a good measure of success.  The idea of maximizing efficiency and ensuring that staff always has something to do was something that I just took as a given, and while in some cases that might be true, this book clearly showed that it is not the case for manufacturing.  I also liked how it first stated a concept, such as dependent processes and bottleneck, and then proceeded to demonstrate it through a non-business example, such as the boy scout hike.  Since I don’t have a business background, these other examples helped me to really understand the concept.

Now that I am more familiar with the concept of throughput, I can see it in action in my organization.  I work for a member association, and we put on a lot of conferences and events, and while we’re structured in functional areas, each conference pulls staff from each functional areas and we work together to ensure that the event goes smoothly.  We begin with a plan of action, which includes all of the things that have to occur.  We then brainstorm about what went right and what didn’t from prior events to see if we have to rearrange components in the event that one component is dependent on another or if one is causing a bottleneck.  I see this process as an assembly line of sorts where we all have specific tasks to do in a specific order to produce the event.  Because we have been planning events for so long, we have a good sense of what could go wrong and where, and we are able to re-sequence things to ensure a consistent flow.

94% of Fortune 1000 Companies Seeing Supply Chain Disruptions

As if the daily news hasn’t already flooded the world with the effects of the coronavirus, here’s another article demonstrating the devastating impact of the virus on the supply chains of the world’s biggest companies.

Of the companies in the Fortune 1000 – the largest 1000 companies in the United States ranked by revenues – 163 of those companies are tier 1 suppliers, meaning that they do direct business with the Wuhan region of China. What’s more, 938 of the 1000 companies are tier 2 suppliers, in which they feed the first tier.

It’s difficult to find a similar event in history to gauge the overall impact. Perhaps the most comparable event was the SARS outbreak in 2003, during which China’s economy was 2% of the world’s GDP. Today, it’s 20%. It’s clear that China’s economy is contributing more to the world’s GDP than ever before, and it is certainly showing it’s presence by the disruptions in companies’ supply chains.

In some cases, a missing part from the source of disruption in the supply chain could prevent an entire product from being shipped out. As a result, it appears that most companies are stuck between a rock and a hard place. When missing a vital part of the overall product, does the company take the loss and invest additional resources to replace that portion? Or do they completely stop production at the risk of losing customers and brand publicity? Regardless, if most companies have optimized their supply chain, they probably don’t have much sitting inventory left to spare. According to Josh Nelson, an expert from a strategic consultancy called The Hackett Group, companies could only have about 30-40 days of excess inventory on hand, which includes the additional inventory stocked from the Lunar New Year holiday. With coronavirus cases only increasing globally, look for companies to make drastic decisions to address these shortages.

While it is important to minimize costs (such as offshoring) through different methods, these events have shown that diversification of the supply chain is important. How the structure of the supply chain is set up can make or break a company. Nobody could have predicted the outbreak of the coronavirus originating in China, or in any place of the world for that matter. Therefore, effective measures must be taken in order to ensure that the supply chain is not dependent on a single variable, especially because not all supply chain disruptions can be foreseen or predicted.

Link to the article:

https://fortune.com/2020/02/21/fortune-1000-coronavirus-china-supply-chain-impact/

Wayfair Copied Amazon to Grow Fast. Now, It Searches for Profits

In nearly two decades, online home-goods seller Wayfair has grown quickly by burning through profits. On Friday Wayfair said it lost $330 million in the quarter ended Dec. 31, more than twice as much as it lost a year earlier. Quarterly sales rose 26% from a year before, but operating expenses jumped 44%. The company’s annual net loss nearly doubled to $985 million.

Wayfair isn’t like traditional furniture chains such as West Elm or IKEA, which stock stores and warehouses with curated inventory. It sells sofas and tables much like Amazon sells books and toys. It has filled its website with millions of listings and promises free shipping on much of it.  It spends heavily on marketing to attract web shoppers. It keeps minimal inventory and often ships directly from suppliers. That has quickly created a company with more than $9 billion in annual sales but also with losses every year since it went public in 2014.

It was a formula that investors mostly embraced until recently. The Boston company’s stock tumbled in October after it reported a steep quarterly loss, and the shares have lost more than 50% of their value over the past 12 months. The stock fell 18% Friday morning, amid a broader market selloff.

Wayfair’s strategy to gain dominance in the online furnishings category has been to deliver large, bulky items better than its competitors through supply-chain investments, said Brian Nagel, an analyst at Oppenheimer & Co.

Wayfair spent $311 million on advertising in the fourth quarter, amounting to about $28 per order. Even excluding all its advertising costs, the company barely broke even in the holiday period, analysts said.

Despite the desire of some investors to see Wayfair focus on profits, the company’s leadership can’t afford to become complacent about competition, with both Amazon and Walmart poised to become more aggressive in the home category, said Colin Sebastian, an analyst at Robert W. Baird & Co.

For more information, read the full article at WSJ.

Chipotle’s 2nd Attempt at Queso

Chipotle’s customers were excited when queso was added to the menu in 2017, however, many customers were not impressed with the recipe. They did not like the taste and described the queso as “gritty.” Now, Chipotle has created a new Queso Blanco recipe and is ready to debut it.

What’s interesting is that Chipotle’s primary focus during the initial recipe design was the freshness of the ingredients, but the freshly aged cheddar caused the consistency of the product to be gritty. If we were to put their queso on a perceptual map, Chipotle was trying to create a product with fresh ingredients and good taste, but they fell short on the taste aspect compared to other restaurants like Qdoba or District Taco.

Chipotle has been redesigning and testing many new recipes for the past 2 years. In thinking about product design, Chipotle may have used a model similar to the House of Quality diagram to develop the recipe. They took into account customer requirements which likely included a smooth and creamy consistency, fresh ingredients, and good taste.

The article states Chipotle tested out the new queso in 52 locations and received positive reviews. The official release is tomorrow so we’ll see if Chipotle suceeded in creating a better queso or not.

Read the full article on CNN!