Amazon, Flipkart and E-commerce bringing a change in people's lives ..

 Ever since the country went for a lock down in mid march, I have not visited any major store for shopping. It has been provision stores, vegetable stores and milk booths, no where else, that too rarely. And who is able to manage most of my shopping for me ? It has been Amazon for the past seven months, and of late Flipkart has also been added.

It is because of the social distancing and less willingness to experiment and try with new operators. We have been looking at safe methods of shopping and Amazon and Big Basket fitted the bill perfectly. As our dependence on both of these sites increased , I was worried whether their performance would fail. I was proved wrong again. Not only have they met my expectations of great customer service, they have in most cases exceeded it.

One area where I found both Amazon and Big Basket giving their best performance has been in the area of ON-TIME DELIVERY.  If they promise a time and date, delivery will inevitably happen on that day and time.

This timely delivery helped the customers in many ways - 

• This enabled customers to plan for other activities in their work life. 
• The timeliness in delivery actually eased the customer's life (variability in the delivery process was low)
  
• reduced tensions because of  late or no arrival. 
• for vegetables and home provisions one could do deep planning for the next two weeks on what to purchase, when and in what quantities
• accordingly money kept as stock at home for emergencies, got reduced or was released for other functions, as emergencies or shocks were less. In other words, as variability of the ordering and delivery process reduced, it led to better inventory storage policy, inventory accuracy and less wastage.

Amazon has been offering products at great discount to market prices resulting in direct benefits to the customer, this was another reason for customer satisfaction. 

Amazon and Flipkart continue to surprise us with their wide variety of offerings.

As customers shops we have not visited during the past six months may never find us in their premises, because Amazon has disrupted the system very much. It has disrupted the shopping behaviour of customers in ways that have changed our lives for ever. 

The cost benefits of low petrol consumption, no driving vehicle, no waiting, no traffic, no vehicle damage in case of an accident, in the process reducing chances of Covid infecton, avoiding waste of time and additionally cost benefits from Amazon has made shopping more comfortable and attractive for us through Amazon and Flipkart.

E-commerce is here to stay as is online teaching and on-line meetings .. ..

George..

The Six Forces Theory of Competition

All of us have been conditioned to the Five Forces Theory of Competition proposed by Prof. Micheal Porter from Harvard Business School in 1979 through HBR. (click here)

 

Two generations over the past 41 years have been made to believe that this theory is sacrosanct and cannot be challenged. Being a global strategy expert  and a product of Harvard Business School, his words remained unchallenged over the past many years. 

After 41 years, is the same model still valid ?

While Porter only speaks of the supplier, the end customer and their bargaining power, he has conveniently forgotten to mention the impact of Supply Chain partners in improving the profitability of the product or service and thus making it competitive.

 

The SC partners have a major role to play in influencing the final costs by as much as 15 - 20%. 

 

The recent growth of China in the global scene as a cheap factory of the world raised many a doubt. It is now common knowledge how the Chinese government saw to the shipping of the product from anywhere inside China to the nearest sea port free of cost, which resulted in reduced landing costs of the product in any other port of the world. The reduced costs at foreign ports saw the growth of Chinese exports throughout the world. 

 

Click here for an interesting paper that reveals that supply chain costs do provide a competitive edge for products and producers.

 

Porter's Five Forces model of Competition

Similar is the case in all industries. Supply chain costs are an important cost component in any competitive industry. One of the major reasons for outsourcing to India, China and Far east, besides high cost of labour has been the high supply chain costs in developed countries.

 

Only Marketing Professors have been looking at the competitive forces all this while. Now that Operations Professors also have started looking at the forces that finally shape competition, it is an inevitable fact that supply chain costs do constitute an important part of the costs of the product and hence the competitive positioning of the product. 

This is my humble submission and hope Prof. Porter considers this major force and cost important in his analysis and suitably modifies his 41 year old theory.

George 

Helping prevent job losses during Covid time ..

Covid time brings many stresses in personal and family life as for many income flow is strained.

As many as 41 lakh youth in the country lost jobs due to the COVID-19 pandemic while construction and farm sector workers account for the majority of job losses, according to a joints report by the International Labour Organization (ILO) and the Asian Development Bank (ADB). Economic Times, Aug 18, 2020

Due to poor customer arrivals at seller premises, less patients in hospitals , students in educational institutions etc., and the resultant loss of revenue,  organisations are forced to cut on the number of employees in the organisation.

I am aware of organisations in Bangalore giving employees half pay as customer orders are not being fulfilled, supplier replenishments are not coming. Even though entrepreneurs would want to keep their employees employed and busy, due to the Covid situation and resultant processes to isolate employees to their homes, for fear of spread of the virus, organisations remain closed for want of workforce. We find the whole supply chains for many products and processes have been disturbed.

What is a solution to this ? While going through the October '20 issue of HBR, (click here) I came upon an article that spoke of an innovative way to keep employees engaged and employed by asking healthy employees in hospitals to visit the areas of demand, ie. customer premises of patients, to help keep the hospital business up and running.

Even though this is just a suggestion, it is worth emulating to see how it works. Maybe, educational institutions can ask their healthy faculty members to move across the country to cities that have large concentrations of their students, rent premises in those cities, stay in those cities and engage classes, till the end of the Covid crisis. This way the students need not travel far and expose themselves, while more responsible faculty members can keep the students engaged.

Being an innovative suggestion, Universities and educational institutions around the world should explore the possibility of this idea at least till the end of the Covid crisis. This will make the customers feel that the organisation is really customer friendly.

Not only hospitals and educational institutions, other service oriented organisations should try this option. Government officers could visit the houses of the public, understand their concerns and address them.

This will also be a training at how organizations can be more customer responsive in case more severe  lock downs do happen in future. 

george.

Quantum Computing - what it means to the modern world ?

 While referring through some interesting articles, I decided that I shall write some thing on Quantum Computing in the next few days.

Quantum computing is the use of quantum phenomena such as superposition and entanglement to perform computation. Computers that perform quantum computations are known as quantum computers.- wikipedia

Here is the first link from MIT Technology Quarterly (click here)

Are you ready for Quantum Computing , HBR link (click here)

Here is what IBM has to say on Quantum Computing (click here)

This is what New Scientist has to say (click here)

I shall be writing shortly on how Quantum Computing is going to influence the business world in the coming decades.

How is Disruptive Innovation different from Break-through Innovation ? The 4 types ..

Innovation is the watchword for all management gurus the world over.  Gary Hamel in his famous HBR article of 2006, The Why, What and How of Management Innovation, spoke of the different aspects of innovation that was very path breaking. (click here)

Gary Hamel say that Management Innovation creates long lasting advantage when it meets the following three conditions

• 
  the innovation is based on a management principle that challenges management orthodoxy
• it is systematic encompassing a range of processes and methods and
• it is part of an ongoing program of Innovation where progress is compounded over time
  

Greg Satel in 2017 by his paper in June 2017 HBR (click here) tries to illustrate the major types of innovation based on two dimensions, how much one knows of a problem and of the skills domain

Disruptive innovation at first disrupts in a small way, often offering a very low quality alternative. But over time it improves and finally overtakes the original product in quality and captures the whole market.

Examples are many (click here..)

Steel mini mills, smartphone cameras, video streaming services etc are examples of disruptive innovation.

Disruption describes a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses - Christensen, Raynor, McDonald, HBR Dec., 2015 (click here).

Disruptive Innovation we find thus happens when the problem is not well defined but we have enough awareness of the domain. It is placed at the bottom right in Greg Satel's Innovation matrix. It starts in undeveloped markets initially and matures to disrupt the market leaders and finally dislodges them. 

Nobody thought the video streaming services would disrupt the CD industry as such, but slowly by delivering sustained better service over years, the video streaming industry dislodged the CD industry. Similar push we see in the area of smartphones, now phablets (phone+tablet), they have already displaced the desktops, slowly are into displacing the laptops too. 

Referring to Greg Satel's Innovation matrix, we find Basic Research happens when we have low knowledge both of the problem and the skills in the domain needed to solve it.  Basic Research is thus left to academic research labs and for research grants to look into. There may be promising results but more often than not, the final picture is not all that rosy and promising.

Breakthrough Innovation happens when the problem is well defined but the domain has not, thus the problem is hard to solve. It helps expose the problem to diverse skills domains.

Sustaining Innovation on the other hand happens when the ecosystem is very open and clear, the problem is well defined and the domain is also well defined. Traditional labs fall in this domain.  Design Thinking exercises can be extremely successful if both the problem and the domain are well defined. (Click here for some excellent Design Thinking exercises we have done in the class in Alliance University in Bangalore, India with students)

The awareness of the different types of innovation happening around helps us to have a deeper understanding of the Innovation landscape and what contributes to each type under what conditions. 

Disruptive Innovation is more like a snake in the grass strategy. The snakes waits in the grass unnoticed till it gets the right opportunity to hit at it's prey. Disruptive Innovation idea is like a snake in the grass. It waits for the opportune moment and strikes at the leader dislodging him from the position and in fact, toppling an entire industry even. 

An awareness of these types of Innovation thus helps us to observe an organisation to understand at what stage it's Innovation process is and what needs to be done to get it on track, to help put it on track to problem and domain definition maturity, sustaining long term innovation. This feeds the next set of innovations.

Why Product Life Cycles are important ?

When I was in College, I used to work with 5.25" and 3.5" floppies for storing data. These days those floppies are not to be found, instead we have CDs or the pendrive and more recently everything is going to the all pervasive CLOUD .. The earlier typewriters, VCR, analog cameras etc have all disappeared -  they have gone past their life cycles. Products have their life cycles.

The product life cycle (PLC) is the period of time over which an item is developed, brought to market and eventually removed from the market. It is an important tool for analysis and planning of the marketing mix activity - ijert.org

Click here to understand the different stages in the Product Life Cycle ..

How can we prolong the life of a product ? What are the benefits that acrue to the organisation producing it ? What are the bad impacts of not allowing things to die out a natural death ?

What is the role of innovation in shortening the PLC ? What role can Operations play in the PLC ? Is prolonging of the PLC beneficial ? Does customers have an important role to play in deciding the PLCs ?

I was surprised to read the other day that the PLC of an electronic consumer gadget is just 7 months. ie. right from the start of the design, to development, useful life and withdrawal stage, it is just 7 months. The manufacturer thus has to plan to plan for an effective 4 months effective product usage period in the market which yields the greatest returns. 

PLC analysis thus needs to be carried out to ensure better returns.

George  

How can digital twins benefit modern industry ?

We hear of the term digital twins quite frequently these days. These days it means high capability simulation models with extremely powerful visualisation capabilities. Digital twins are used for monitoring the real world virtually.

A digital twin is a digital replica of a living or non-living physical entity. Digital twin refers to a digital replica of potential and actual physical assets (physical twin), processes, people, places, systems and devices that can be used for various purposes. - wikipedia 

Digital twins are usually considered for highly safe and secure processes like an aircraft engine in flight. Rolls Royce from UK deploys a “digital twin” – a complete, life-size virtual copy of a physical Rolls-Royce engine, at its labs in Derby. A Trent aircraft engine has a digital twin on which what if analysis is carried out to identify and eliminate possible threats and risks from parts failure. This digital twin of the actual engine which is in flight, takes into account and visualises the stress, strain on body parts by clocking the hours of flight and highlights possible failure of parts, early enough warranting replacement or service, avoiding major accidents.  ..

Just thirty years back, computer simulation was a very fancy word, done only for expensive parts, buildings etc. The hardware and software for such experiments were very costly for the average industry and common man.  When I did higher studies in Industrial Engineering back in mid 80s, the digital computer simulation exercises, besides the analog computing exercises that we had to do, were done on PC/XT, PC/AT and Intel Pentium 33 MHz machines. Gone are the days now, we have very powerful phones that work on faster processors at speeds thousand times faster than those days, just thirty years back.

The Samsung M30S phablet (phone and tablet) gives me the comfort of a smartphone and at the same time, the richness of experience of Internet browsing on a very optimised screen area (screen ratio > 91%) with high resolution text and image reproduction. Working on the Exynos 9611 (4 core/2.3 GHz and 4 core/1.7 Ghz processor) with upto 16 GHz max processing speed. (click here..) It will be a treat to play high end graphics games on these phablets, as they give both speed and the concenience of a large screen for the players to manipulate their actions.

 The tools of today can be used to do large volume 3D modeling and high quality graphics visualisation using the present tools with the common man. What this tells us is that the coming days we can expect great many areas being pervaded by the digital twin concept to effect in performance and efficiency improvement, also in improving safety and identifying and reducing wastes.

Graphical simulation and visualisation tools have been extensively used in Operations Planning and design, Process Improvement, Design and Manufacturing collaboration, training and communications and marketing exercises. Click here for an HBR doc from Oct '20, explaining how computer simulations these days are getting better and affordable.

Digital twins are here to stay for improving safety, predicting and reducing failure, thus saving lives and reducing costs.

George.