View Full Version : The $40 Billion Question


kmguru
06-25-02, 04:47 PM
** Business Technology: The $40 Billion Question
(excerpt from informationweek.com)

How big is 40 billion? Well, in a grid, it would be 200 million
up one side and 200 million out the other, but that image is a
bit tricky to project in your head. If we use dollars as our
unit, it could almost approximate the total value of compensation
and perks raked in by the CEO of Global Crossing in the past
couple of quarters, but that image doesn't lead to productive
thoughts. But $40 billion spread out over a year would mean about
$110 million every single day, or about $5.5 million per hour, 24
hours a day for 365 days. That has a certain toothiness to it, I
think.

Now imagine that your industry (and therefore, in some
proportion, your own company) wastes, squanders, burns, loses,
and flushes that amount--$40 billion a year--to correct errors
created in the manual entry of ordering and shipping and
purchasing and receiving millions of products. Wouldn't that
trigger a vein-throbbing, spittle-spewing, fire-breathing tirade
from the CEO, who'd seem to have good reason to threaten to fire
every person in the company--starting with himself--unless fixing
the problem became the top priority of the entire organization?
What if you could cut that loss by just 1%--that would be a $400
million annual savings industrywide! Surely something can be
done, right?

Well, yes and no. We seem to be at that fuzzy point where elegant
and seamless theory meets the messy and sometimes almost
intractable world of reality. The scenario outlined above is all
too true and describes the jumbled world of the retail industry
and the millions of products created by manufacturers and ordered
by stores--and misnumbered by manufacturers or stores or both.
Where 30% of the information in catalogs used by retailers and
manufacturers for replenishment of stock is incorrect, and each
error costs around $70 to fix. One $500 million retail chain had
to send out 100,000 purchase orders manually each year, and in
turn could match only 53% of those to supplier invoices, kicking
open the door for some manufacturers to employ the time-honored
practice of padding the bill by tacking on items that weren't
ordered. The good news is that with an automated system now
coming up to speed, 93% of purchase orders and supplier invoices
can be matched, which will let the company cut out not only the
extra expense caused by suppliers padding the bill, but also the
unethical companies that have used such practices.

more next week...

ndrs
06-26-02, 07:53 PM
I have experienced similar things when I was working for a local Uni Catering department. We had some rubbish stock control system, that was hard to use.. Then the whole database crashed and became unusable.. :) Then I left.. :)
At first though, I was appaled - quite a few catering companies don't even have e-mail. Although I was working as an office assistant I tried to change some things.. Eventually the old and grumpy "colleagues" started complaining that I was looking too much how to improve the system. My manager had an interview in which he raised "looking for ways to improve things" as a personal flaw........

Anyway that was a small company. I work for Powergen (it's in FTSE100) now, that has (will on 1st July) been bought by E.ON. Although I work as a data processor (ground level) and I'm an agency worker, I get to improve systems, sometimes even I design databases for improving the current work. The atmosphere is relaxed, friendly, and certainly better than I ever had yet. I learned my lessons - medium sized companys should be left alone (very small sized companies also have their advantages).
My question is: Is it a common thing for large corporations to take care of their staff, while smaller companies don't really care at all?

kmguru
06-26-02, 09:24 PM
My question is: Is it a common thing for large corporations to take care of their staff, while smaller companies don't really care at all?

Not necessarily true. Company culture has a lot to do with it. Culture comes from the top people. If they are cheap and status quo, they it would look like they are not going anywhere - because everybody else is moving ahead.

Same with a large number of big corporations. Look at what happened at Polaroid. Everybody outside the company saw the handwritings on the wall - except the company executives. Their activities were/are like 80's. Like a government they moved at snails pace or not at all. I had the opportunity to provide some highend consulting to them. The CIO said: everything is under control. We do not need any help. Go figure.

I was involved with another company called JC Bradford. They had good reputation as a investment brokerage house. As others gradually improved themselves, they did not. Knowing they were going down, they hired a few managers based on nepotism. I dealt with one of them. She dressed up very professional but did not know anything about analytics. So, she went out and bought a book on it. It is like teaching a drowning man by giving him a video on swimming lessons. Instead of listening to us professionals, she did whatever she damn well pleased. In the mean time, I talked to a senior VP who asked me to read "who moved my cheese" book. When I asked to review their performance vs. industry performance data, the controller said, it is top secret. Later on I found out, he did not want the information to be disclosed to the senior VP. I could go on and on. In the end it was sold (fire sale) to another company.

Stupidity is at all levels. Do you know that the computer system that Wal-Mart uses was first offered to K-Mart. They declined. Rest is history. Another famous internet company hired only idiots at key positions because they cost less (salary) and local. So that company still bleeding money.

In one company, they needed help. When I showed up - they told me that they will take my advice because they are paying through the nose and trust me to make the right decision. So the project went flawless. While the project manager successfully implemented the project, I had to write a project close report where I said that while the project is successfull - they should go to Phase II to get a higher benefit. The company declined and resulted in loss of the President, VP of Marketing etc.

The bottom line is people dont see the big picture even though they can have a better atmosphere in daily routines. Not all companies are bad. Some get lucky to have good leadership that motivates people to do their best. I worked as an Interim Executive in one company where the senior VP met me in a hotel where I was staying in another state and offered me a job. He was/is so smart - I met my match there. And every week we had lunch just to brainstorm. Such a pleasure to work with him. Those people are rare and not commodity items. He left the company for personal reasons. Then all hell broke loose. The guy who took over did not like me - so I left and that division died after a few months.