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I participated in the Women’s March on Washington last Saturday, January 21, 2017. I met my daughter and granddaughter from West Virginia and my grandniece from New Jersey, in Baltimore, the night before the march. This was an experience of a lifetime for all of us.

I left San Jose early Friday morning in route to Washington/Baltimore with a change of planes at DFW. As I was waiting to board at the gate at DFW, groups of women in pink hats started arriving and the mood and energy level changed. Aboard the plane to BWI, my entire row, the row across and the two rows behind me were people going to the Women’s March. Some women were accompanied by husbands, boyfriends and other men supporting the march. Many people (including men) were in pink knitted hats. Some people were giving out pink yarn bracelets. The excitement was mounting. People were energetic and chatty. Everyone had been to the Women’s March web site for information.

It used to be that demonstrations were spread by word of mouth. Take the Chinese students demonstration in Tiananmen Square in 1989, for example. A friend of mine was studying at Beijing University at the time. He heard from a friend who heard from a friend that students were gathering in the Square. There was no internet, cell phones or newspapers to encourage people to go. It was just people telling people. This is the way it was in the 60s and 70s, too. Just people telling people.

This time, word spread over the internet, on Facebook, Instagram, Snapchat and text messaging. The Women’s March had a web site established to sign up so they could get a head count and capture your information for future communications and donations.

Logos were designed and proliferated on banners, signs and t-shirts selling for upwards of $30 by some Chinese vendors. The buildup in the press and on-line was amazing and powerful.

On the morning of the march, we went to the BWI train station for the first MARC train to DC at 7am. I had purchased tickets the night before and thank goodness, because when we arrived at the train station, a little before 6am, there were already several hundred people waiting to buy tickets. We waited on the crowded platform, chatting with other groups from Florida, Texas, Kentucky and California. At 7am, the train came, but plowed right through the station without stopping. An announcer said that although there were only two stops before us, and there were five extra passenger cars on the train, the train was already full. He said that based on estimates, we would probably not get a train before noon. Disappointed, but not discouraged, we took an Uber into Washington instead, arriving in the city about 9am.

The Women’s March and Rally were supposed to start at 10am. It was quite obvious by 9am, that there were going to be way more people than had been anticipated. The official count was 500,000+ and several unofficial counts said 1.2 million. I’m going with a million – it certainly felt that way. There were people in pink hats everywhere, in every direction, on every street and in every driveway. People were sitting on ledges and leaning against buildings. We tried to move toward a jumbotron or the main platform but could not get anywhere close. We were shoulder to shoulder with no room to move in any direction.

At 10am the rally started, including speeches and performances from America Ferrara, Katie Perry, Madonna, Gloria Steinem, Amy Schumer, Alicia Keys, Michael Moore, Ashley Judd, Patricia Arquette, Gloria Allred, Angela Davis, Kamala Harris, Scarlett Johansson and others. We could hear, but could not see the speakers and performers.

After about two hours of speeches, the organizers announced that there were just too many people to march together and recommended the people in our area march forward down Independence Avenue, which we did. We were encouraged to leave our signs at the Trump Hotel or in front of the White House. It had been many hours since we left the hotel in the early morning, so we also waited in long lines for port-a-potties. We brought granola bars, nuts and water with us, thank goodness, because there was no way to get anywhere near to any restaurants.

We marched a couple of miles down Independence Ave. and toward the Capitol and chanted slogans with thousands of others. My favorite chant was “Show us what democracy looks like,” and the reply: “THIS IS WHAT DEMOCRACY LOOKS LIKE.”

At about 4 pm, we headed to the Metro to try to at least get away from the city. Again, it was jammed and after a few trains passed through the station, we managed to squeeze into a Bethesda train. This reminded me of trains in Japan, where you get pushed together by train officials until they can close the doors. We were all smashed together.

Officials who had organized the marches later reported 673 marches had taken place worldwide, with marches occurring on all seven continents, including Antarctica. In Washington D.C. alone, the protests were reported to be the largest political demonstrations since the anti–Vietnam War protests in the 60’s and 70’s, with both protests drawing similar numbers. The Women’s March crowds were peaceful, and no arrests were made in Washington, D.C. I heard on the news on Saturday night that officials also said this was one of the cleanest events ever. Apparently women tend to clean up after themselves.

This was the kind of event you remember you entire life. I am so glad I could go with my family, especially my 12-year-old granddaughter. There were many lessons to learn about our democracy.

 

 

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I met the most remarkable woman by chance at a holiday party.  Mrs. Zhao is a retired professor and researcher from UCLA. She was friendly and sociable and when I asked her what she did, she started to unravel her story for me.  Realizing that I am familiar with Chinese history and culture, she told me more than would normally be expected in polite conversation.

In the 1960s she was a Professor of Physics at Sun Yat-sen University in Guangdong, China. This was during the Cultural Revolution when Mao Zedong shut down all the universities because they were considered elitist and not revolutionary. When her university was closed, she was sent to a farm to be educated in the ways of working farmers. She plowed fields for three years as she was being “re-educated.” All day long the workers had to shout “long live Chairman Mao” as they plowed.  At night she taught the farmers to read and write.

During these years she never protested or complained, because to do so meant sure retribution including being denied meals, beatings and the infamous “struggle sessions” where people were forced to confess their “crimes” against the revolution. This was a difficult time in China, particularly for the well educated people and those in traditional arts. These people were viewed as proponents of the “old ways” and counterrevolutionaries. She told me that her colleagues were beaten and starved for disagreeing with the communist party bosses.  Many people died in prison or from beatings after struggle sessions, if they did not confess.

When the University reopened, farmers were sent there together with the previous students. No matter their educational level or experience, everyone sat in classrooms together to learn from Mao’s Little Red Book.  No other books were available for any subject because the books had all been burned by the Red Guard.

In 1982, a former colleague invited her to come to America to continue her research in microwave physics. She came to UCLA, where she continued her research and teaching for 25 years.

I know other people who lived through the Cultural Revolution and they will say that the period of struggle and change was worth it for China to emerge as the power house it is today.  They will say that Mao was 70% right and 30% wrong, and that he brought China through a metamorphosis and into its industrial age.  But Mrs. Zhao’s story and the way she told it to me touched a very emotional chord.

While China came out of the Great Famine and Cultural Revolution stronger, the effects are still apparent today. People in China are reluctant to talk about the government and its policies. China’s education system is rigid and structured around a fixed curriculum.  Students are not taught or encouraged to think critically. A back-door culture has developed where things get done behind the scenes or through the “back door” and where priorities are set according to who you know and what influence you have. As a result, creativity and innovation have suffered over the past 30 or 40 years, which has resulted in a copy-cat business environment.  Only now, with talented engineers, scientists and business people being trained in China’s top universities and in America and Europe, the historical and exceptional creativity and inventiveness of the Chinese is being renewed. The Chinese have a long history of invention and now it is blooming again.

There are lessons we must learn from history in China, America and other countries.  We must do all possible to protect our education systems for all Americans at all levels.  We must not allow the elites or political parties in power to dismiss or reduce funding to our schools.  We must defend the objectivity and teaching of the sciences.  We must be vigilant in maintaining high standards for STEM education. We must support and defend teachers and researchers.  These people are building our future through our children and grandchildren.

Hoverboards are very popular holiday gifts this year, but the stories about the boards that explode are all over the news.  Many retailers including Amazon.com and Target stopped selling them, and several commercial airlines banned them aboard their aircraft.

So what happened in the manufacture of these items to make them so dangerous? In the reported incidents, the lithium ion batteries in the hoverboards caught fire while charging or just riding them. The reasons for the combustion process is well-known when a battery is defective. The problems with these batteries were identified in laptops and cell phones a few years ago.  What isn’t so transparent are the sourcing and manufacturing processes for the boards being produced in China.

Hoverboards are new, exciting and popular products and this combination creates a frenzy of manufacturing opportunity for Chinese manufacturers. Because of the popularity and the potential for high volumes and high profits, knock-off brands proliferate very fast in the extremely competitive changed to avoid patent infringement laws. The raw  materials sourcing for knock-offs may come from completely different suppliers. Cheaper knock-off products means cutting corners in the factory to keep production costs low.

US safety standards are not all in place yet for these new products. US Customs may be allowing imports to enter the US based on safety standards for similar products, following the current requirements for imports. Some manufacturers may have obtained UL certificates on certain component parts, but not for the hoverboard as a whole. Raw materials such as the actual batteries may be knock-offs, too. You cannot trust the  well-known top brands either. The high demand is likely to cause sourcing from multiple Chinese factories with limited experience and untested component suppliers. No Chinese agency is overseeing the quality of exports from China.

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Montgomery County Fire and Rescue

It’s common to evaluate potential supplier and supply chain partner’s financial position before placing an order or signing a contract. In fact, most purchasing departments these days, require obtaining supplier key financial data as a standard part of the procurement process. This financial data is then evaluated by the company finance or accounting department and the risk associated with the supplier or supply chain partner is determined. If the supplier is a publically traded US company, that’s easy to do as these companies must comply with SEC rules on financial reporting. But you should be leery of accepting information provided by Chinese suppliers at face value.

China’s largest banks typically only lend to the largest corporations, leaving small and medium sized suppliers to obtain loans from friends and relatives or from a “shadow bank.” Shadow banks are private lending companies that are not regulated by the Chinese government. These shadow banks lend money at a much higher rate of interest, squeezing the small suppliers’ already-thin profit margins. So if you are buying from a Chinese supplier, you should ask and verify where their working capital comes from. You just might find that some suppliers cannot make their loan payments and will simply shut their doors and disappear, leaving you scrambling to find another manufacturer. Finding working capital in China is risky business.

Enter: The Bank of Foxconn. Foxconn, the world’s largest contract manufacturer and maker of iPhones, iPads and many brands of laptops, has ventured into the lending world. To protect its suppliers from the pitfalls of shadow banking in China, Foxconn is now making business loans. That makes Foxconn the banker for the world’s electronics supply chain. And Foxconn isn’t the only company to provide banking services in China. Baidu (the “Google” of China), Alibaba (the “Amazon” of China) and Tencent ( WeChat and mobile games) all have lending banks, too. Lending to small and medium businesses provides higher returns to Foxconn than they can make on their contract manufacturing business. It also provides an opportunity for suppliers to borrow at a lower rate than from shadow banks. Foxconn reportedly has obtained licenses from Chinese local governments to provide loans, factoring, financial guarantees and equipment leasing.Foxconn

When evaluating suppliers, be sure to ask where their funding comes from, and don’t be surprised if the answer is the Bank of Foxconn.

Tora Tora ToraFlipping through the channels in a hotel room over the holidays, I came across the old movie Tora! Tora! Tora! which I have not seen for a very long time. I was again fascinated and drawn in by the story of the Japanese bombing of Pearl Harbor.

We watched this movie in an Executive Management class in graduate school at the University of San Diego. At that time, we studied it and commented on the strategies and clues being delivered to the Americans ahead of the attack. We spent hours discussing this movie and how the management of information, the absolute loyalty demanded by the military and the poor execution of a strategy changed the course of world events.

Over the many years I have spent in management consulting, I have seen all of these things that resulted in disaster for companies. When companies don’t pay attention to information reported by employees and signals generated by competitors in the marketplace, they may lose their way. Take Blackberry and Motorola, for example. Both companies, with prominent positions in the mobile phone market, missed the market and competitive clues as Apple and Samsung developed very successful better products and services.

Demanding loyalty and unquestioningly carrying out orders may be absolutely required by the military, but it can lead to big problems in business. When things go wrong or unethical practices are being executed in the name of the company, executives need to know and hear about it in order to address and correct the issues. Otherwise, the press or the authorities will hear first from defiant whistleblowers or it will end in disaster. Take big apparel brands that use nearly-slave labor in unsafe working conditions as an example. If brand managers at Benetton and JC Penny had reported conditions at Raza Plaza in Bangladesh, perhaps executives would have taken corrective action prior to the building collapse that killed 1100 people.

Most executives spend much of their time developing strategy and plans to execute on it. But if the execution isn’t done well, the result can be disastrous for the company. Take the Ford Edsel for example, which was supposed to be the hope for Ford’s future, but flopped almost immediately.

The Japanese General, at the end of the movie, finds out that the second wave of attack planes were not launched as ordered and the American fleet was not fully destroyed. He was correct when he says that instead of executing the Japanese strategy, they “awakened a sleeping giant.”

Watch this classic film again with new vision about what lessons can be learned from it and applied to business.

2013-01-23 05.43.24I just finished a consulting project for a major international brand that wants to enter the eCommerce market in Russia.  Although not new to eCommerce, my client was looking for a more in depth review of the possibilities and capabilities.

Among the many challenges with logistics in Russia, some are unique requirements that don’t exist in other places.  For example, when customers order fashion items over the Internet or via a call center, they expect overnight delivery to locations in Moscow and St. Petersburg.  But this overnight delivery also includes a specific appointment time and a fashion consultant who delivers the goods to the customer’s door and then waits while the items are tried on.  I suspect they also provide feedback….”That makes you look fat”  etc…

Russian customers are among the most demanding anywhere in the world.  But there are other factors at work here, too.  In order to deal with significant petty theft, packages would never be left on someone’s doorstep. They must be delivered and signed for in person.  Credit cards are not widely used via the Internet or over the phone in Russia, so the majority of transactions are done COD.  Russian Post is often slow and unacceptable for customers of eCommerce. Call centers are expected to follow up with every customer to assure satisfaction with their purchase.

The logistics challenges in the Russian market are significant.  The overall supply chain has to be flexible enough to accommodate creative solutions to inventory stocking levels, security, customs clearance and currency exchange.  Returns are very high because customers will often order multiple sizes and reject the unwanted merchandise which then must be returned to the fulfilment center and restocked expeditiously.

To address these issues in Russia, some eCommerce companies have developed fully integrated end-to-end eCommerce businesses including: web store development, web site and shopping cart management, call centers, fulfillment centers, delivery services and fashion consultants. Necessity is the mother of invention.

eCommerce can be a challenge in any country, particularly the Third World where delivery capabilities are underdeveloped. But there is no stopping the double-digit growth of on-line shopping around the world.  The unique requirements of B2C business are yet another avenue for which Supply Chain professionals must gain competence

St Basil's Church

St Basil’s Church

This week I am in Moscow and overall, I find Moscow to be a bit bleak – miles of low-slung beige and gray block-style buildings reminiscent of the Cold War Soviet government. The exceptions include a small group of new downtown skyscrapers and Red Square.

With my China sourcing consulting business, I have been to Beijing and Tiananmen Square many times but this is the first time I’ve been to Moscow and its famous Red Square.  Both cities are heavily industrialized, the seat of their respective governments, and both have famous Squares.  So how does Red Square compare to Tiananmen Square?

First, they are both enormous.  The Chinese claim that Tiananmen can hold a million people and being there, it seems possible.  While not as big, Red Square is quite impressive, with the attached Kremlin grounds and several churches and museums.  Both have picturesque historical buildings including the Chinese Forbidden City and the Russian St. Basil’s Cathedral with the colorful onion domes. On the sides of both Squares are the seats of government: The Chinese Communist Party and the Kremlin.  Both Squares have remarkable museums with extensive and awesome collections. Both Squares have monuments to workers.  Tiananmen has Mao’s Mausoleum and Red Square has Lenin’s Mausoleum.

But the more important thing is that these two Squares were built as places of powerful governments and a show of might and strength. Both Squares are often used for military parades and other official government business. The message seems to be tops-down with leadership and power at the pinnacle and the people at the bottom.   You can “feel” this in both places to the point where it is a bit intimidating.

Contrast that with American monuments such as the Washington Mall.  The Mall seems to have a totally different feel, more egalitarian, more “Of the People.”  Even the White House is surrounded by an open fence, unlike the high walls of the Forbidden City and the Kremlin.

It serves us well to remember and respect these distinctions when we are dealing with global commerce.  Most nations of the world maintain tight control over capitalist ventures and international commerce.   We need to be aware and sensitive to cultural and governmental differences in our Supply Chain planning and execution.

RESHORINGFor the past 15 years or so, I have been helping companies offshore their manufacturing.  There have been, and continue to be, pretty significant cost savings in low-cost labor markets.  But with the waning US economy, it’s time we wake up and put some Yankee ingenuity into bringing some manufacturing back. We think it is possible to bring 15-20% of offshore manufacturing back to the US.

I am not saying we can or should bring it all back.  There are still global cost advantages to low-cost labor markets.  And China represents the largest single target market in the world to sell goods to.  Companies should continue to  manufacture in China to serve the Chinese market.

The U.S. manufacturing sector has added 430,000 jobs since 2010; a small trickle of what we need to recover, but still a move in the right direction. Companies that are reshoring include some of the nation’s largest manufacturers: Apple, General Electric, Ford, Caterpillar and NCR.  A 2012 study concluded that reshoring could add 2 million to 3 million jobs and an estimated $100 billion in annual output to a range of industries by the year 2015.

But bringing manufacturing back isn’t as easy as you may think.  There are a host of considerations and analyses that companies must do to determine the costs and feasibility of reshoring. Several of the important factors in the original offshoring decisions have dramatically changed. Consider these 5 factors as the initial steps in determining your need to rebalance global manufacturing and reshore some activities back to the US.

1)      Cost Increases, Taxes

2)      Innovation and Automation

3)      Market Access and Localization

4)      Skills

5)      Political Environment and Public Sentiment

We are helping clients evaluate the possibilities now.  For more information go to www.BlueSilkConsulting.com/Reshoring

I am proud to announce the publishing of my 3rd book, 42 Rules for Superior Field Service.

Writing a book is a daunting task.  It may look easy and hundreds of thousands of people try it, but it is tougher than you think. 

First you have to submit a book proposal to a publisher and hope your idea is good enough to be accepted. If your book proposal is accepted, you sign a contract and then your publisher or executive editor will work with you to determine a timeline and milestones for the book-writing process. Then you have to get busy and start researching and writing. If you prefer to outline your book first, this task must be accomplished early on.

 If you are writing non-fiction, there is a lot of research to do.  You must be able to write about a topic, plus back up your writing with facts and evidence, and perhaps some statistics.  You may even conduct interviews with experts and surveys for data. 

Armed with research, you begin the writing process.  If you have a full-time job, this means being disciplined enough to write on some sort of schedule whethe42RulesForSuperiorFieldService_Jacket_X1A_050313r it’s weekends or nights or early mornings.  Unfortunately, I find that after working all day, I am often too tired to write effectively at night.  This means that my writing time stretches out longer than it should.  Chapters that should take days to research and write often take weeks to finish.

Once the main body of writing is done, you must add “front matter” and “back matter” including an introduction, dedication, table of contents, appendices, contributors’ bios and an author’s bio.  You must also obtain endorsements from colleagues or well-known people who can recommend your writing.  Endorsements are printed on the back or inside flap of the book.

But don’t do a happy dance just yet…next comes the editing cycles.  First there is executive editing, where your editor reviews the manuscript and gives feedback regarding the content.  She makes suggestions about the flow and the way you have supported your information.  When she’s done, you have a few re-write cycles that may take many weeks to complete. 

After executive editing comes copy editing.  In this stage, the grammar and style sheet police pick at every period, awkward phrase, tense agreement, capitalization, etc.  The copy editor also checks facts and questions every detail that isn’t footnoted or attributed.  When she’s done you have several more re-write and correction cycles.

Finally comes the lay-out process.  Once again you edit the manuscript after it is laid out in book-form and again there are a few edit cycles.  Once you are satisfied, the book goes to print.  Only then you can do a happy dance!

Of course, once the book is published, the marketing cycles begin…

flag (2)There are some fundamental differences in business practices that you should know when working with Chinese suppliers.

Culture impacts everything

China’s 5000 year history and traditions affect everything.  The dichotomy of modern industrial China, superimposed with traditional values and approaches to doing business, is often a surprise to Westerners.

Guanxi is not networking

Guanxi is someone’s personal network and long-term trusted relationships between parties. It is not simple networking.  It involves a commitment over time. You cannot do business effectively in China until you build this type of trusting relationship.

Validate everything in writing

Even though there are more English speakers in China than any other country in the world, it is often a mixture of Chinese and English that is not understood by either party.  Just because a Chinese business person speaks English, does not mean he understands the nuance of the language.  Every detail of the contract, specifications for production, expectations, etc., should be put in writing, discussed and confirmed several times.

Contracts are viewed differently

In the Western world, contracts represent the culmination of negotiation on price, delivery, specs and other terms.  In China, a contract is viewed as just the beginning.  Just as an American high school student may view graduation as the end, parents view it as commencement or beginning.  A contract in China is a commencement and the start of real negotiations.

Quality fade

Quality fade, the process of quality degradation over time, is the single biggest issue in low cost manufacturing countries. It happens frequently in China where manufacturing processes are immature and competitive pricing drives the profits to extremely low levels.  You have probably noticed quality fade, but didn’t know what to call it, or understand how it happened.  Maybe you noticed a plastic shampoo bottle that seemed too thin.  Maybe that hand-held electronic game you put in your son’s Christmas stocking stopped working after a few days.  Maybe the zipper in your pants broke after a few zips. The initial production may have met all expectations, but over time, there was degradation in production quality.

Outsourcing and subcontractors

China business is typically a combination of primary manufacturers and many sub-contractors that provide parts and services.  Without regular monitoring of the production processes in China, this common practice of sub-contracting and outsourcing gets out of control.  US importers find it harder and harder to control quality over time and sustain delivery schedules from Chinese vendors.

Importers must remember that doing business in China is not at all like doing business in America.  The processes, culture and legal environments are a world apart.