Lots of interesting and curious tales this week in the business world …
A great story about Kroger's came out that speaks to the excellence only possible from vertical integration. They've got a gang of people sitting in an office watching the weather all across the country, conjuring up coordinated inventory, logistics, production and store employee scheduling plans aimed at making sure they are ready for the inevitable run on basic items that occurs whenever snow is predicted, at the same time looking to optimize employee availability and safety. This is good stuff that can only be done when a company controls their own sales, distribution, logistics and much of their production. As you read the article think about how this would play out in most big retailers who have outsourced trucking to the lowest bidder, run their DC's through a third party logistics provider, get their product from China or Mexico, and would most certainly outsource weather tracking if the thought ever occurred to them to do it.
In Washington, our commander in chief issued an Executive Order directing the various agencies to give their rules and regulations a thorough going-over to make sure they aren't just plain stupid. The often quoted example is the FDA ruling that saccharin is OK to dispense in the company vending machines … while the EPA has designated it a hazardous substance. It doesn't get to the root cause, so real change is not forthcoming. If Mr Obama were to take the lean approach of asking 'why?' five times he would come to the inevitable conclusion that the inane rules exist because the agencies exist, and the solution is to get rid of the agencies and cut taxes … a place he most certainly does not want to go.
Some day the big brains in Washington will figure out that "the economy" is not synonymous with "Wall Street". A little known fact – an unknown fact in Washington, apparently – is that of all the folks working in the USA, a fourth of them work for the government in some fashion or another, 25-30% work for publicly traded companies, and the remaining 50% work for privately held firms. The US employment figures for the publicly traded firms are shrinking, and the growth is coming from the privately held ones. The publicly traded ones, by and large, are the great beneficiaries of China's sleazy trade shenanigans, so who does Obama line up to discuss the issues with China? GE, Motorola, Boeing, Citibank … a who's who of multi-national outsourcers and not a privately held outfit in the bunch. And these guys wonder why American jobs aren't coming back.
Another interesting tidbit on the 'grow the economy and jobs' front – Facebook – the darling of the innovation-will-cure-everything crowd is going public with an IPO valued at $1.5 billion. Pretty good for a company that began in a Harvard dorm room just a few years back. Seems US investors can't get in on the deal, however. Foreigners only need apply … and Facebook has a whopping 1,700 employees. With 14.5 million unemployed folks in the US, we only need 8,500 more Facebook innovations and we will all be sittin' fat – with all the profits going to foreigners, but at least we will all be working.
We shouldn't be too harsh on the companies running to China, however. In many cases it is like Professor Harold Hill from the Music Man who has to get out of town before the locals figure out he's been running a scam. This article from CNN points out that US Companies Dump Billions Into China. The two companies cited – GM and Yum Brands – are going to China mostly because they have worn out their welcomes here. In spite of all the ballyhoo about the resurgence of GM, this chart from city-data.com pretty well explains why they are going to China. The jig is up in the US - the locals are on to them – time to take the show on the road.
Same with YUM Brands – owners of Pizza Hut, Taco Bell, KFC and a bunch of others. Sales in the US are sliding steadily down the slope. Time to pack it in and find a new and unsuspecting group of suckers.Can't blame them for doing what they need to do to survive, and investing in the US is not really in the cards.
To end on a positive note, lean is creeping into everything, and this article from a quite unlikely source – American Libraries, The Magazine of the American Library Association – is outstanding. Seems that outsourcing libraries is in vogue. The Library Association responded to the trend by moaning and complaining long and loud. The guy who wrote the article (to crudely paraphrase) tells them to quit whining and get lean. The formula for leaning up libraries is pretty much the same as leaning up anything else, and John Huber does a great job of laying it out.
And a tip of the proverbial hat to a couple of great American manufacturing companies well down the lean path who made the news this week: Viking Range where Fred Carl is absolutely and equally committed to excellence, his employees and his neighbors in Mississippi; and Snap-On – the tool folks – who are going to need to invest in more shelf space to hold their manufacturing excellence awards.