Cost Savings Roundtable with Canada’s Leading Supply Chain MM&D Magazine

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Scott Deutsch- Honeywell- Voice SolutionsI had the pleasure last week participating in a 90-minute roundtable discussion lead by Editor-in-Chief Emily Atkins, Materials Management & Distribution magazine (www.mmdonline.com) on the subject of  cost saving. Any time for a conversation around talking how to save costs in a warehouse is a good time for me, since it is a cornerstone to the Vocollect Voice value proposition.

MM&D did an excellent job at bringing together diverse perspectives on how businesses could save with various approaches. What I found to be unique about this discussion was that we had point of views ranging from real estate (Colliers International) to automation (Dematic) to floor design (3D Storage Solutions). We also had a leading Canadian 3PL (Direct Distribution Centres, a division of Canada Cartage System) at the roundtable representing the customer view. These various areas of expertise made for an excellent roundtable engagement with lots of opinions.

Emily Atkins- MM&D Magazine Editor at a PanelWhile different in our perspectives, a common set of themes seem to resonate with the group. The core themes we discussed  were about:

  1. Business flexibility- We discussed this subject in terms of real estate and facilities, as well as having flexibility within the four walls to support a changing future driven by the growth of omni-channel and ecommerce. The group also discussed the need for shorter (and less costly) investments that had paybacks greater than 24 months. It was especially noted that the lack of modern facility inventory with 36’ clearance was also forcing businesses to think about investment options.

Scalability– The warehouse of the future is driven by customer change and no one has 100% confidence in knowing what exactly the future holds. The growth in the “world of eaches” has forced businesses to think differently about how they organize their facilities. No longer could businesses view their ecommerce order fulfillment as a stepchild. So “hiding it” in the corner of the facility was no longer going to be viable option. Ecommerce is here to stay and will only grow as a percentage of overall business, for most. We discussed the need for a business to be able to scale up and down to meet changing customer needs as well being able to cost effectively support the demands of business seasonality.  You would be correct to the linkage of flexibility and scalability going hand and hand. As a group, we did agree that inflexible infrastructure investments would have fewer business opportunities.

Workflow process optimization– We spent the largest amount of time talking about how outdated processes are a barrier to lower operational costs. Changing the status quo is never easy, but necessary in order to challenge the business to perform operationally more efficient…. now. One of the points I raised was that sometimes it is a matter of perspective. If we could show how we could improve their “as-is” state from an audit of operational processes (often capturing video of their actual processes) and compared it to a possible “future state”, how can a business say no? The use of re-engineered and optimized processes with technology such as voice has gained wide market acceptance (and growing rapidly) because we are able to show a true and quantifiable ROI breakeven in less than a year. An interesting point was made that very few businesses in Canada have the business scale to justify large-scale projects with a multi-year payback. I do not think this perspective is limited to the Canadian market.

Measure for success– It was resoundingly agreed that measuring activities was vital in order to ensure that key KPI’s were achieved and the business was able to focus on key areas of success. The ability to properly measure with engineered labor standards was viewed as a good operating procedure to help a business reduce costs and ensure their worker output was maximized. One of the beauties of voice is that we measure and track very detailed task results. This data is extremely useful to help the business better understand their facility layout and organization.  One of the benefits of voice is that it helps provide great feedback to help annually reslotting activities to help reduce wasted travel time.

Safety and Worker Performance– While everyone was in favor of cost savings, it had to properly balanced against potential safety risks. This has always been a core strength of the Vocollect Voice solution (www.vocollectvoice.com) value proposition. The heads-up and hands-free nature of a voice solution helps keep a worker focused on their task and helps reduce their distractions. This also positively influences damaged inventory as well as worker safety.

As you can probably tell, I enjoyed myself. It was group of very knowledgeable industry professionals and I am glad to have had the opportunity to spend quality time to meet and discuss a subject that I am passionate about. Thank you to Materials Management & Distribution (MM&D) for having Honeywell at this industry thought leaders roundtable.

The Advancement of Vertically Integrated Solutions vs. “end-to-end” Solutions

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A topic that fascinates me is the vertically-optimized integration vs. the horizontal (end-to-end) integration approach a company’s strategy may take.  I think this subject is on management radar screens as we watch the escalating battle in smart phones between Apple and Samsung.
Let me first begin by describing vertically-optimized solutions vs. end-to-end solutions.  Vertically optimized solutions examples could be Apple and now Samsung with smart phone development. This is an approach where all the components of a solution are optimized for a specific use case. To succeed in this approach, the business must be focused on a clear use case and often it requires a significant capital investment in order to effectively compete. That’s because many of the components end up being manufactured directly by the vertically-integrated provider. Horizontally-focused solutions, often referred to as “end-to-end,” cobble together solution pieces from various providers in order to offer a “whole solution.” Some, so-called, “end-to-end” solutions rarely provide solutions that expand a market space or drive market innovation.
Apple and Samsung are showing the world that they able to provide a superior user experience when they are able to offer a purpose-designed solution for a specific use case vs. having to leverage a common multi-use case platform. These organizations are fixated on understanding the user experience and ensuring that their “solution experience” is optimized to drive their market position and greater market share. The warehouse and distribution center space has been a strong participant in technology solutions around the vertically-integrated concept for many years with its strong and growing adoption of voice solutions that are purpose-designed for an optimized user experience.
The iPhone’s greatest innovation was changing the rules of a market. Before the iPhone, the standard “smart phone” offered little change to the user experience and minimal value versus the previous phone experience. The iPhone changed how the user interacted with the technology. This change in user interaction also occurred in the voice market with the introduction of vertically-integrated solutions that changed the user experience. 
These voice solutions challenged the status quo, just like the iPhone challenged the status quo of smart phones. The status quo challenge for the voice market was to change the design concept from being a “Swiss Army knife” to one that optimized the solution for the specific user task. Once the design team focused on the user for a specific use case, they were able to create a user experience that changed the way people work. One must question the real value today provided by a screen and keyboard to visually and manually confirm a workflow task completion, when you can instead speak the same information and keep both hands free. One must question the need for a worker to carry a large device for 95 percent of a worker’s tasks that voice and scanning together could accomplish. Have those devices really changed their ergonomic design in 20 years? Luggable is still luggable. Apple and Samsung are two organizations that offered superior user experiences with their own visions that in their own way challenged the need for screens and keyboards, just like voice-centric devices have in the warehouse market.
The next major change that Apple and Samsung undertook was to optimize the component design of their solution. Whereas others in the smart phone space needed to provide similar components for a solution, Apple and Samsung took their design approach to the next level and began managing the manufacturing process to a much greater level of involvement than anyone else. Both organizations have successfully managed the design and manufacturing process throughout to ensure a superior user experience and to ensure that the solution is not compromised by others’ product time schedules and competing manufacturing commitments.
Vocollect has also been a participant in this vertically-integrated thinking, just like Apple and Samsung have been for the smart phone space. There are components in a voice solution that many take for granted, since one can purchase many of the elements from various suppliers.  Let’s look at user headsets, for example. For years, Vocollect sourced headsets from various suppliers to meet its needs, but always struggled with a vendor’s ability to optimize its solution for Vocollect Voice software. Their headsets may have met all the specification needs in general, but they were unwilling or unable to support thought-leading design requirements for the industrial warehouse worker. By being able to design and manufacture its own headsets, Vocollect has been able to harmonize the headset, the voice software and the worker experience seamlessly; just like Apple and Samsung do for smartphones. Optimizing the user experience and a specific use case helps provide design clarity and simplicity. Vocollect’s SoundSense is an example of innovation that’s possible with a vertically integrated solution and virtually impossible with an “end-to-end” solution, without a dedicated design team working together on the headset and voice software. SoundSense seamlessly helps block unwanted facility noises on the worker’s headset to optimize his or her performance.
While end-to-end capabilities will always enable certain market participants to compete by cobbling together the pieces they need for a solution, it prevents them from leading the innovation of the user experience. It will always prevent them from challenging the status quo and being able to provide their customers with solutions to help them maximize the potential applications of their offerings. Apple and Samsung are examples of organizations that focused on customer value and thus have ensured a superior user experience. We can certainly learn from thought-leading organizations willing to challenge the status quo. It’s fun to see how they are able to leverage their vertically oriented market advantage versus competitors that cobble together solutions without significant design influence.

I love quality research, but I hate faulty research conclusions

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I love to read about our industry. It’s really an exciting place to be as more people place greater value upon their warehouse logistics. The one thing I hate though is faulty research all in the name of marketing. I see too many organizations who have their marketing or PR team make unfounded claims that they think that by cloaking the claims under the premise of “research” that the industry will believe their findings are credible. 

 So what set me off today, enough to write this … I read some “industry” research today that I consider dead wrong in its conclusion. The headline for the research in question stated “…Research Indicates That Most Online Purchases are Returned Due to Retailer Error”.  They go onto state “The research results prove that the clear majority – 65% – of respondents answered that most often the reason they return items bought online or by phone is because the item received is incorrect”.  Their second finding was that “84% of respondents stated that the return process is extremely or very important to their future intentions to shop with a retailer”. With this being the week of NRF in New York, it’s amazing that any retailer would find any credibility in these “research” assertions.

I started to think about my own life to quickly invalidate what I believe to be wrong research conclusions.  The headline states that returns are “due to retailer error”. Wrong! Most retailers have quite accurate order fulfillment systems in place. Many retailers are now achieving order accuracy over 99%. The top reasons why people return items bought online is because the item does not fit or it is not the color that thought or it’s just not a flattering fashion fit. The consumer returns the item not due to an error by the retailer, but because the item is “not right for them”… but, no error was committed by the retailer in their order fulfillment process which is the main faulty assertion in the research findings.  As an example from my own life, my lovely wife buys shoes from Zappo’s and clothes from J.Crew more than you might think. I’m treading carefully here…  The items she orders show up on time and are correct virtually every time.  Remember, retailers are now achieving order accuracy over 99% and our household can confirm these accuracy levels. But, once the shoes or clothes are tried on…it turns out that they are not what she expected and hoped for… and probably 35% of her orders are returned smoothly without effort.  Over the years, she has become educated to know what designers are not a good for her. She knows for example that with a narrow foot, only certain manufacturers offer “narrow” sizes that properly fit her foot. None of the “incorrect” orders is the fault of the retailer.

Present Like You are Giving a Show

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I read a great post today from Chris Brogan (www.chrisbrogan.com) about presentation skills… I know, I know…. but, after you get hit over the head with another one of those 1,000 word PPT slides… you just want to say something.

Legendary advertiser David Ogilvy said, “The consumer is not a moron, she is your wife.” He wanted us to treat the recipients of advertisements as important people, and I implore you to do the same to your audience. Here’s what I mean when I say that:

  • Your audience knows more than you’re giving them credit for. Every time.
  • They have come to learn something from you that they can use themselves. Give takeaways.
  • They have sacrificed time. Value their every minute as best you can. Trim your presentation.
  • Your audience wants something new. Stay fresh. They might have seen you last month or on the web.
  • Give them something to DO. Give actionable next steps, such that your presentation leaves them wanting to rush out of the room and do what you recommended. If you can, make it as specific to the audience as possible.
  • Never ever ever ever feel like you have to read your slides to me.
You ARE an Entertainer

If you’re going to command the stage (or a room, or whatever format your presentation takes), own the stage. Be as polished, as precise, as eloquent, as helpful as you can be. Here are some tips that I’ve tried to boil down tightly:

  • Think visually. Slides are not Word documents.
  • Make sure your slides aren’t more interesting than you.
  • Speak louder and slower than you think you should.
  • Dress for attention. If you’re going to own that stage, be vibrant (but tasteful).
  • Speak WITH not TO your audience. Get them “in on it.”
  • More than 7 key points is wasted.
  • Be as passionate as you can be about the topic. If you’re not, why will they care?

I take great pride and care in trying to entertain when I present. How about you?

The Future of the Social Web: In Five Eras

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Jeremiah Owyang’s recent report “The Future of the Social Web: In Five Eras” is getting a lot of traction . It should – and marketers must take notice of his findings. Jeremiah is spot on in his interview with CRM Magazine regarding the power shift from the brand to the consumer:

“The community will take charge, and that’s going to happen whether or not marketers or brands participate.”

Jeremiah goes on to outline the 5 eras of the social web – overlapping across the past, present, and future. His insight is predicated on substantial qualitative research with 24 of the top technology brands, enablers, and publishers that are leading in the social space. The overlapping eras are as follows:

1. The era of social relationships

2. The era of social functionality

3. The era of social colonization

4. The era of social context

5. The era of social commerce

I can appreciate this statement specifically:

“…focus is on community and the advocates within each community. Doing so will be the only way a brand can scale.”

Those companies that understand the power these communities represent in terms of advocacy for their brand, will be light years ahead of those that don’t.

Integrating social media into a traditional business is challenging

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Integrating social media into a traditional business is challenging. More than you’d think. I’ve been a part of helping sheppard forward a new online community at a conservative market leading company and it’s been fun and tricky to advance the ball forward. Some of the issues we’ve been confronted with should come as no surprise of any of you in marketing… we’re busy and we’d already got a day job. The interesting thing is that everyone in their hearts knows that getting to a two-way online world is paramount in a strategy to grow closer to your partners and customers. This is what is driving each and every marketer to the table… customer intimacy.

The term “customer intimacy” may be an overused term, but it’s a key attribute that has gained wider support in a slower economy. Companies today need to pick their partners wisely. They need to focus their limited resources on the partners that they trust and that they know can drive revenue. At a minimum, your partners of today have to have a value to help differentiate your value proposition and drive the business forward.

I’ve been fortunate to work with some pretty high class partners over the years and appreciate their value in helping drive customer intimacy for your brand and with your brand. Social media is playing an ever increasing role in supporting the timely communication with partners and between partners.

It’s time we as marketers challenge the traditions of control and engage our partners and end-user customers with social media.

The Strong only Get Stronger in 2009

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Scott_deutsch_Photo If you are one the market leaders in your space, 2009 will be a year of opportunity. If you are a market “chimp”, the year ahead promises to be a painful experience. I think that all the recent negative employment news from some of the biggest and best run companies is a clear indication that management teams are seizing on the opportunity to get lean and review their organizations. The present conditions have enabled virtually every company to cut whatever costs they may have been thinking about for a while. The key advantage a larger company has is that they still have “mass” and are able to continue to invest in the business, just not at the previous levels of investment.

Now if you were one of the market followers, or Chimps as some may call the smaller market players, these are times that have forced you to cut to the bone. Operationally, these organizations will really struggle to succeed and advance their position in the market. The differentiation between the gorilla players and chimps will create situations where the market gorilla’s actually become stronger and actually gain market share these next two years.

Take a look at the social media space and you can see for yourself the changes already happening. I bet that 40% of the more than 100 players in the space that Forrester has identified will no longer be in business by the end of 2009. And most of the remaining players will have been greatly harmed in their race to greater functionality. I bet you will actually see a price increase in social media solutions this year and not a decrease. Companies can not afford the “land grab” mentality this year. They all have more limited staffs and have to be careful to ensure that each customer is profitable. They also are burning lots of cash to keep the doors open and the lights on.

So if you are one of the dominant players in your market, 2009 although painful, will in the long run, be a year where you can gain market share with the smallest level of investment in probably two decades. Go make it happen.

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