In his recent EBN Weekly Editor’s Blog, Brian Fuller posed the question, “Have we lost control?” which has me wondering if we ever had control. Clearly, everything seems to have shifted, but then again, change, not stability, is the norm.
The West has only dominated the world in the last few hundred years, and America only rose to its position of power after the two great wars annihilated our competition. So to see things shifting a bit is not surprising. No nation has a monopoly on cunning or brains.
We see foreign students and the children of recent immigrants graduating at the top of their classes while resident-born students have wildly mixed performance. This shouldn’t be unexpected as other countries are sending their best and brightest for education. Immigrants, the reason we have been successful for generations, have always been hard working and motivated individuals pushing their children into a better life. If our children underperform, it’s our fault; others are proving great educations can be had here. But that’s not it either — what have we lost control of?
in the gap between the speculative world and the real world.
What’s the problem?
We seem to have lost the ability to control our destiny. You work hard but fall farther behind. You can’t count on much to be “as expected” in the future.
I believe that many of our practices, long-held beliefs, and tools are failing us. Perhaps everything has always been as unpredictable as the weather, but now it seems worse.
One example of a tool failure is the stock market. It seems to have morphed significantly from its original purpose. I believed, maybe naively, that its purpose was to help companies raise capital for their business operations. Now it seems to be a platform for speculation where most of the money raised goes to traders and speculators rather than the company.
How does the largest IPO in history — Facebook, hyped at $100 billion — only put about 6 percent of this hype as cash on its balance sheet; where did the other 94 percent go? How can a company like Microsoft grow revenues by 8 times over the past 10 years and have its stock price stay flat at $30 over the entire period unless speculation dominates performance?
When private companies go public, it seems to be primarily about making the investors and founders richer, not to fund the company. It’s interesting that Dell is looking at private equity rather than staying public; it must be because the market is driving behaviors that are not in the best interest of building a strong company.
So what?
In an earlier blog post, I wrote about the real world economy and the speculation economy. (See: An Inevitable Clash.) The tool failure above points to the speculation economy whereas our souls are in the real world. Our feeling of loss of control has roots in dichotomies like this. What about failures in beliefs and practices?
Supply chains have changed considerably in the past 15 years, increasing in both depth and complexity, but our hierarchical tools and “tried and true” practices have not accommodated these fundamental shifts. Many supply chains have had an extra layer of depth added in the manufacturer, distributor, on-and off-shore EMS and OEM stack while, at the same time, having internal support resources reduced. Within these stacks, roles have changed.
Distribution, originally conceived as a means of accommodating small to medium-sized OEM access to materials, has higher inventory turns than manufacturers. Their performance is under attack (by speculators), forcing them to diversify service offerings in an attempt to stay relevant as their margins fall. The privately-owned distributors seem to be staying true to their original purpose and appear to be doing quite well, at least to real world metrics like customer satisfaction and service performance.
With increasing depth and complexity, many OEMs have lost visibility into materials cost. Inventory revaluation and reconciliation with an EMS is a nightmarish process. Today, most OEMs’ data are in poor shape with duplications, errors, and omissions. To me, these are process and practice failings.
My company provides Freebenchmarking.com and, with the support of UBM Tech, Component Cost Estimator. These are supply chain analytic tools that compensate for these real world deficiencies by empowering supply chain professionals with information. Our customers have a stronger feeling of control as they take advantage of our pricing, quotation, and benchmarking analytics.
We need to rethink how and why we do things in the real world. We need solid performance, not speculation. It is time for some solid, introspective noodling.
By Ken Bradley – Lytica Inc. Founder/Chairman/CTO
