An update on Transreality

I have written from time to time about transreality on the Internet. This is where real life and virtual products mix and match. Where virtual products become real products and real products become virtual products.  Industry week has an interesting article about the next wave of user-generated content. This is user-generated, community-driven manufacturing. As the 3-D development tools become better and better, they lower the barriers to entry for the creation of virtual models of real products. The article focuses on 3-D development tools and how user communities are emerging to design and rapidly create real world items using these tools.  You can check out Motorola’s rapid prototyping process to see one way this is being done.

 

Techcrunch has an article that goes into more detail  “Forget Crowd-Sourced T-shirts: Print Objects In 3D”. They cover this emerging user generated content very well.

 

Some of the companies in this emerging trend are:

http://www.shapeways.com/login

Netherlands-based Shapeways is a community for consumers where they can “print” 3D objects n plastic or metal and share the items.

 

http://www.ponoko.com/

Ponoko is a marketplace for product plans. Creators and consumers use these plans to share, buy, sell and make individualized goods.

 

 

http://www.emachineshop.com/

Where you can create real metal and plastic objects in a virtual machine shop!

 

It would seem that Transreality is now here and that the wave is just now forming for the newest user communities based on a producing real products from virtual 3-D designs.

Another part that makes this possible is that information is being shared around the world. For example material from a MIT course “Toy Product Design” is now available to anyone. Not only the 3-D tools are getting better, information on how to design is improving and readily available. The barriers to entry are coming down rapidly. Transreality is now can take place almost anywhere in the world. I have already watched 3-D design community’s form in Second Life. I am now watching new 3-D collaboration communities emerge around lines of products like jewelry. The world of user-generated content is just beginning in the 3-D world. The creation of both virtual products and real world products has just begun.

Did you toss an egg instead of a bird?

This is the last of my planned blogs about Inoneweekend. Some people asked if this event was successful. Due to the nature of some of my postings they could not tell. So to set the record straight, in my opinion it was successful on many different levels. This blog is about one of those successes I wish to share with the people I write my blog for. There is a saying about ideas failing because they were not developed enough before they were tried. The saying goes, “you tossed and egg because you did not allow time to for the chick to hatch and grow enough to fly”. I have watched what happened on several of the efforts to create an Internet startup in a weekend. There seems to be a rush to announce the company and the details as soon as the weekend is over if not during the weekend.  When you look at the sites posted you generally do not see things like trade marks, copyrights, and other forms of intellectual property protection.  Lifespoke.com was not released until the Friday following the event. The website had both trade marks and copyrights. Articles and blogs about the company talked about patents and other non-disclosed intellectual property protection. It makes one wonder if these other efforts lost important assets in their rush to announce to the world what they accomplished. In the corporate world there is little forgiveness for ideas that are floated to early. With the Internet, there seems to be a rush to get something into BETA as quickly as possible. Taking the time to identify critical intellectual property and protecting it seems to be critical to a startup of any kind. After all, many times success depends on the intellectual property that a startup has. It leads back to my first question of “did you toss an egg instead of a bird”. Something to think about when you are planning a startup.

It was a lessons learned moment.

 

DAVID HOLTHAUS had an interesting observation in an article he wrote about the Inoneweekend event July 12^th. “There was dissension: As the group prepared to vote on the company name, one member disputed the voting method. After an admonition to offer solutions rather than problems, the vote took place as planned.”I remember this event very well. It concerned the process used to vote on items. Each idea was written on a separate piece of paper. All of the papers were taped to the wall resulting in a series of papers along one wall. We were given colored sticky notes and were to place our sticky note on the paper that contained the item we liked best.  A pretty simple process, to obtain quick results. It was noted by one person that the first time this process was used it resulted in some people waiting to see how the voting went before they used their vote. It was a correct observation; in fact I wanted to wait for the crowd to clear some myself. When I finally got up to the wall I really did not focus much on items that have not received any votes. Much of my focus was on the items that had the highest votes. In fact my votes went to the three items that had received the most votes at the time I was at the wall.

When the vote for the company name came up one person made this observation. Was it dissension or was it a lessons learn moment. First, the person who made the observation made a statement based on fact. Secondly, it concerned the process that was being used. Because time was critical only something that was important and urgent could really justify changing the process that had been selected to be used for voting during the weekend. The process being used to vote was good enough to meet current needs so the observation was not urgent. There was not enough time to examine the current process so the observation was not important to the success of the weekend event. So was admonition to offer solutions rather than problems needed. Or was it rather a case where the group as a whole needed to focus on the execution of the task and the examination of the task itself really needed to take place at a later date when time could be devoted to truly understanding the observation? There is a concept in project management call lessons learned. It is all about taking factual observations throughout the life of a project. Some observations will be acted upon immediately. Many others will simply be documented for after the project when the processes used to accomplish the project can be examined and improved for the next project.

There is an old saying “When you are up to your ass in alligators, who has time to drain the swamp”. It is not uncommon when one is in the execution stage of an event to focus on just the issues that are relevant to the execution. However, if the event is going to be a repeatable event, then it might be a good idea to collect information that could allow you to DRAIN the swam the next time. This is where collecting lessons learned becomes so very important. After all one definition of insanity is to do the same thing over and over again and expect different results. The opposite of this is an iterative process where learning takes place and is acted upon before the next iteration.

So I never saw dissension. I saw a person make an astute observation that should have been saved as a lesson learned so it could be examined at a later point in time. Such treatment encourages people to come forward with their insights and observations. While at the same time, allowing the focus to remain on the execution of the task at hand. 

Did cutting inventory impact same store sales for wal-mart?

It has been a while since I have added anything to this blog. So here is a observation I would like to put forward.

 

A while back Wal-Mart was taking heat for its performance and same store sales. A lot of focus was put on the opening of new stores. There is no doubt that the rate of new store openings had an impact. However, there was another area that could have had impact and seemed to receive little attention. Inventory Deload and  Project Remix Initiatives were efforts to reduce the total cost of inventory. Did these efforts impact same store sales during this time period?

 

If you surf you Internet then you can find articles such as, July 21, 2006 “Spectrum Brands Latest to Blame Retailer Inventory Cutbacks on Sales Shortfall”. These articles seem to suggest that suppliers were selling fewer products to Wal-Mart during this time period and that it was related to Wal-Mart tighten up on inventory.

 

Reducing out-of-stock and maintaining lean inventory are conflicting constraints on any supply chain. How much inventory must be maintained in the system at any given time for the customer to get the products they want when they want them.

 

From “There’s Power in POS Data” Supply Chain Leader / October 2007

Wal-Mart had a 98 percent fill rate. The shelf fill rates were measured each Friday, revealing a weekly average across all locations. They pointed out, “if stock levels fall below 98.5 percent on Saturdays or Sundays, proportionally more sales are lost”.

The article does a good job showing how the true out-of-stock could be masked by using averages that do not take into account volume of sales related to a daily out-of-stock rate.

 

Another factor for a supplier is the turn over rate in a induvidual store. A product may be sold to Wal-Mart by a manufacturer. However, what the manufacture may really have is A,B,and C stores. There may be cases where 80 of sales come from 20 percent of the stores serviced by a single distrubution center. If a 10% cut is made across the board the impact to the 20 percent of the stores accounting for 80% of sales will be significant. While at the same time the impact to the 80 percent of stores accounting for 20 percent of sales will have a small impact.

 

 

Another interesting factor that can also impact out-of-stock and inventory levels is that a given distribution center services a number of stores. Some products may have different turnover rates in different stores. For a store with a higher turnover for a given product a warehouse scratch can have a higher impact. The solution is generally to maintain more inventories on the self or back room. However, if inventory levels are to be reduced then inventory on the self or in the backroom may be reduced as a result. If the distribution center is processing orders then the scratch for the high-turnover store will result in greater lost sales then in the stores with lower turnover. If orders are processed for a given store in a set order then there is no means to force the warehouse scratches to the stores with the lowest turnover over. In fact it is possible for patterns to develop where some stores can have a higher probability of getting a warehouse scratch based on the order the warehouse processes that stores order.

 

Were these factors in Wal-Mart performance? Since I am not related to Wal-Mart I can only speculate. In my opinion there is enough circumstantial evidence to suggest that it cannot be ruled out as a factor. If it was a factor then it is something that other retailers should take into consideration when they look into cutting inventory levels.

Are you a competent follower?

It has been a while since I have had time to post anything. I have been doing some research into best practises. So I though I would share with you something I have observed over a couple of decades.

 

The first best practices were linked to perceived cause and effect. Holy men developed rituals for harvest based on the positions of the stars and sun. The positions were consistent with times of year that were ideal for planting the first crops. Other practices such as a rain dance also developed based on a perceived cause and effect relationship.

These best practices both real and perceived gained critical mass as they spread from one group of humans to another. In time they became generally accepted as sacred cows that were fact and could not be challenged. To challenge them was to challenge the holy men and the very Gods themselves.

Well, it’s 2008 and things really have not chanced much. In the world of business we have best practices. These are generally practices that are linked to a real or perceived cause and effect. It is a hypothesis to state that such and such is the best practice. This is because there are always a number of variables that are linked to one of several choices being “The best practice”. Unfortunately, this is forgotten and best practices evolve into “sacred cows”. They are not longer a hypothesis that must constantly prove itself. They are unalterable truths that must not be challenged.

When it comes to best practices there should be no sacred cows in business, there is “what is working” and “what isn’t working” at any given point in time. To forget this is to invite extinction. Change is a constant and businesses must adapt to changes in their environment if they wish to continue in business. The best practices a business is using must prove themselves by proving the best solutions every day. The day they no longer prove the best solution then other practices should be considered as candidates for best practice.

There will always be industry leader breaking new ground. Some will be establish while others will be start-ups. These leaders will put in place business practices that will give them an advantage over what is the current best practice today. When this event happens a point will be reached where the competent followers will recognize that a game-changing event has happened and they must adapt to this change. Failure to understand this need many times comes from best practices that have become sacred cows. Competent followers have no sacred cows. They are filling to face reality and abandon what is not working for what is working.

Since most companies will never be the industry leader in all areas of their business, the ability to become a competent follower is critical. This means that there can be no sacred cows when it comes to best practices. Each best practice must be able to standup to examination. Management must be willing to look beyond what they currently are comfortable with and be willing to adapt when faces with facts that current best practice may no longer be working. The problem is many companies become successful by doing things a certain way. When that way not longer works they are not willing to change. If we just stick with this best practice it will work out.

The other side of being a competent follower knows when a best practice is based on cause and effect or perceived cause and effect. Is the best practice really responsible for the results that people are claiming it is responsible for? Sometimes best practices take on a cult following. The right people get behind an idea and the idea reaches critical mass and spreads like wild fire. If you have been in business for any length of time then you have seen these fades come and go. Well a competent follower is willing to treat a best practice as just a hypothesis that is only valid until someone disproves it. They are willing to view it in the context of their unique business. If it is tested and fails they do not blame the test or question the results, they are willing to question the hypothesis itself. If it does not work for their situation then they are willing to accept that and look for alternatives.

So is you company a competent follower? The answer may determine if you are around in a decade or so.

What to expect in the coming year from business?

Business week has a nice article on the 10 big mistakes businesses make in a recession. With the housing market in a mess and energy prices rising I expect some businesses are beginning to talk about such actions.  The one that really got me was firing talent. I have seen that take place several time in my life during times of a poor economy. What made it even worse was the best were the ones most likely to find another job quickly.  Many of the rest stayed because they knew they could not get another job the paid as much. One only has to look at how Circuit City’s job cuts backfired to see a prime example of this. It takes good people to get gold. However, gold may not always get you good people. I wonder if these same executive would have sold off their most productive divisions and kept their poorest performing units?