Category Archives: Commentary

LP Magazine 10 Year Anniversay

I recently had the pleasure of attending the annual Editorial Advisory Board meeting for LP Magazine and helping them celebrate ten years of success.  Jack, Jim, and the entire staff at the magazine have done a wonderful job with this publication and our industry has been much improved by it.

As part of the celebration, my video team put together a special tribute to the magazine’s success that can viewed below.

Guest Blog: Eric White on The New Face of Risk

Businesses of every kind face risks.  But for many, risks are thought of as the catastrophic-type events that – as completely devastating as they would be – don’t necessarily represent the most pressing threats to the day-to-day business.  The face of risk is changing.  It’s not just about the traditional, obvious risk events like earthquakes, tornadoes, or active shooters.  Increasingly risks are those things that can slowly eat away at your business and profitability.  These threats can come from inside or outside the organization and have the potential, not only to harm people and property, but also to disrupt normal business operations.

Businesses of all kinds have a responsibility to incorporate risk management and mitigation into the core of their business, as a regular, daily activity.  Here are some tips for doing so:

Redefine risk – In today’s world, risk is not just the major, catastrophic events, but includes activities, people and events that can disrupt the business in more subtle and slower, but just as damaging ways.  Issues like employee sabotage, terrorist threats, malfunctioning equipment, failed operational processes, inadequate training, and safety hazards can all present risk to the business.  Smart businesses consider risks those things that have the potential to damage people or property, disrupt the business, render legal consequences, or even decrease efficiency.  They can be people-driven, technology-driven, or process-driven.

Understanding that risk management is essential to business – Previously seen as the sole responsibility of security, attorneys or executive row, today risk mitigation is everyone’s business.  Risks can come in the form of poorly trained employees, inadvertently causing loss each time they come to work, or a process that fails to identify safety hazards before they trigger losses.  For this reason, everyone across the organization should make it their business to identify and address these threats to the business.

Leverage technology to mitigate risk – Video surveillance, access control, mobile phones, the Internet and other tools facilitate the flow of information and provide managers and employees with the data they need to understand what is going on across their organization.  These tools provide visibility – like never before, managers at one location can truly gain a good understanding of what is happening at another location.  Well-implemented and used, technology is invaluable to risk mitigation efforts.

Assess your risk performance with quantitative scale – Organizations that are most effective at reducing their risks are those that measure and track it over time.  By assessing risk on a quantitative scale, it’s easier for organizations to track progress on an ongoing basis.  The Risk Performance Index is a method for quantifying your overall level of risk, by plotting different threats on a chart with two axes: likelihood of occurrence and the potential severity of occurrence should the problem occur.  Not only does this tool allow you to identify which risks are most critical, but it also allows you to track progress over time.  Download a sample Risk Performance Index for a school environment.

Use audits to monitor – Audits are a great way for organizations to both identify risks and ensure that mitigation efforts are being implemented consistently across all locations.  Audits test where processes and people fail, helping organizations pinpoint exactly where attention should be directed.

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We are pleased to feature this guest blog by Eric White from Wren Solutions.  Eric has over 20 years of experience in our industry and currently serves director of retail strategy for Wren.  White maintains his regular blog at http://www.wrensolutions.com/LPXtra_blog/ and can be reached via email at eric.white@wrensolutions.com.

IBM Pays $10 Million to Settle FCPA Case

IBM has agreed to pay a settlement of $10 million to settle civil charges that it bribed Chinese and South Korean government officials to obtain computer equipment contracts.  The The Wall Street Journal that the SEC is suing the company over cash bribes that violate provisions of the Foreign Corrupt Practices Act (FCPA).  IBM did not admit to wrongdoing, but did say it has higher ethical standards for its employees and had taken “appropriate remedial action,” according to the WSJ report.

The SEC’s suit accuses employees in the South Korea offices of the tech giant of paying government officials $207,000 and providing travel, entertainment, and gifts of cameras and laptops in exchange for a contract to supply PCs and mainframes to the government.  The SEC complaint also alleges that more than 100 employees and two top officials of IBM in China paid for the vacations of Chinese government representatives, through slush funds established at travel agencies.

This case raises the issue of how difficult it is to make your corporate ethics statement a reality around the world.  It is almost certain that IBM maintained a code of ethics that would prevent this type of behavior but this did not prevent “widespread” bribery involving over 100 employees.  PCG Global now offers FCPA/Ethics training targeted directly to front-line employees who have to make decisions about bribes, ethics, and corruption in their normal course of work without direct supervision.  Contact us to find out how we can customize and deliver this training to your organization in your most critical areas of operation.

How Leaders Create and Use Networks

“Networking” is a term that gets abused, misused, and is often misunderstood.  But, networking, when done right and with purpose, can be a key business skill.  “How Leaders Create and Use Networks” is a good piece on this from Harvard Business Review.  In this article, three types of networking are identified – Operational, Personal, and Strategic.  There were a couple of lines in there that I really liked…first, in regards to personal networking:

“We observed that once aspring leaders..awaken to the dangers of of an excessively internal focus, they begin to seek kindred spirits outside their organizations.  Simultaneously, they become aware of the limitations of their social skills, such as a lack of knowledge about professional domains beyond their own, which makes it difficult for them to find common ground with people outside their usual circles.”

“Many of the managers we study question why they should spend precious time on an activity so indirectly related to the work at hand.  Why widen one’s circle of casual acquantances when there isn’t time even for urgent tasks?  The answer is that these contacts provide important referrals, information, and, often, development support such as coaching and mentoring.”

Second, in regards to the mindset of many managers:

“..we often hear, ‘That’s all well and good, but I already have a day job.’  Others..consider working through networks a way to rely on ‘whom you know’ rather than ‘what you know’ – a hypocritical, even unethical way to get things done.  Whatever the reason, when aspiring leaders do not believe that networking is one of the most important requirements of their new jobs, they will not allocate enough time and effort to see it pay off.”

How do you view networking?  Is it a “dirty word” or an essential business skill?

Guest Blog: Eric White on Supply Chain Security

Supply Chain Security: Vulnerabilities and Loss-Combating Measures Retailers Can Take

The retail supply chain is subject to great vulnerability when it comes to potential losses.  The risks are obvious: goods being transported across and even between countries, changing hands several times.  Due to the large volume of goods, it is simply impossible to check every container and pallet of goods.  Over long periods of time, items are loaded and unloaded at several different locations, increasing the likelihood of damage.  All of these conditions increase the risk of loss to the retailer. 

To complicate matters more, there is no single supply chain configuration across retail.  Large retailers may have regional warehouses, distribution centers and corporate-owned truck fleets, whereas small retailers may rely exclusively on direct store deliveries (DSD) by vendors.  The risks in each of these situations are different and require targeted solutions.  Top concerns include physical security – as forklifts and high stacks of heavy inventory can cause accidents –  the security and integrity of merchandise during transport, proper receipt and verification of the right kind and amount of product at the store, and the oversight of vendor visits to prevent theft and/or administrative errors.

Retailers must take decisive steps to prevent potentially crippling losses that occur before the merchandise even reaches the store shelves.  The following are some strategic ways that retailers can help prevent supply chain losses.

Create processes

Building processes that impose consistent verification and corrective action is one of the most effective ways to battle losses occurring in the supply chain.  By narrowing the window of opportunity for purposeful or inadvertent losses to occur, retailers successfully reduce their risk and identify “red flags” before significant losses result.  For example, by having a merchandise receiving process by which particular employees are assigned and trained to manage the receipt of deliveries and compare item or pallet counts with invoices, there is a greatly reduced opportunity for losses associated with incorrect amounts or types of goods received. 

Verify those processes

It’s not enough to just put processes in place, but critical to continually monitor them for consistent implementation and proper execution.  A combination of regular and unannounced audits is a great way for retailers to determine with certainty whether or not recommended processes are being implemented properly throughout all locations.  Audits should be designed, not only to verify proper implementation, but to help pinpoint the root causes of problems in the supply chain.  When audits indicate a process failure, retailers can take action by assigning immediate follow-up tasks and notifying key players within the organization about problems that require further investigation.  Taking immediate action based on audit results is important to inciting change. 

Video surveillance provides another great way to verify that employees are properly trained and following-through with recommended procedures.  Without constant verification, processes may be little more than symbolic gestures on paper.

Control what you can

Another good strategy is for retailers to determine if there are parts of the supply chain management process that can or should be brought in-house or outsourced to prevent losses.  For example, by centralizing shipments to a warehouse, stores can receive complete loads, avoiding confusion that frequently occurs with the unloading of trucks that contain shipments for multiple destinations.  By ordering larger shipments to supply more stores, retailers benefit from larger volume orders, bigger discounts and less hassle.  In addition, if they use their own trucks to deliver items from the warehouse to the stores, they can potentially reduce risk of loss due to theft. 

Hiring a separate LP team to manage supply chain risk and losses could also be a good move.  Since the problems associated with supply chains are somewhat unique, they require dedicated solutions and resources to ensure product integrity until it reaches its place on the store shelf. The real key is to provide visibility into the problems.

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We are pleased to feature this guest blog by Eric White from Wren Solutions.  Eric has over 20 years of experience in our industry and currently serves director of retail strategy for Wren.  White maintains his regular blog at http://www.wrensolutions.com/LPXtra_blog/ and can be reached via email at eric.white@wrensolutions.com.