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    Published on: February 7, 2012

    by Michael Sansolo

    Earlier this month a big change took place in my home state of Maryland. Police departments abandoned coded messages like 10-4 on their radios. Now they’ll simply say the message is heard and understood. The reason for this change, which is happening throughout the country, is that neighboring departments frequently used different codes for the same crime and that hampered communication. So say 10-4 to history and welcome to plain language.

    Sadly, change to simple solutions doesn’t always work that easily. Usually the opposite is true with the phrase “we’ve always done it that way” winning out more often then it should. Peter Sheahan, a speaker at the FMI Midwinter Executive Conference last week, offered some incredible examples of the opposite: those times when history trumps good thinking. He spoke about Kodak, the film giant now in bankruptcy. Sheahan related the now well-known story of how Kodak actually developed the digital cameras that have destroyed its business, but didn’t capitalize on them because they were wrong business model for a film company.

    Kodak isn’t alone in missing such opportunities. Think of the once dominant Blackberry for communication or the Walkman for personal music. As Sheahan put it, companies get caught in the “gravity of success,” unable to break free from what built their success. Once that happens they miss new opportunities, working instead to maximize what they already do well.

    Many of us wish we had the power to destroy current systems, but the truth is we spend our days trying to make old systems as efficient as possible. In the process we sometimes ignore lessons telling us to go a new way.

    This issue came up recently in a meeting I attended with supply chain professionals from a number of retail chains. The more we all talked about the current state of logistics and the supply chain, the more the realization hit us all: long-discussed changes are far too often nothing less than still-discussed changes. The food industry supply chain is burdened by a range of difficult issues such as empty trucks out on the roads even as fuel oil prices climb and driver shortages grow. Too much information that should be streamlining all elements of the supply chain is not moving properly between trading partners.

    The sad thing is, those same discussions and concerns were around 10 years ago and even 20 years ago.

    That shouldn’t be possible. We live in the world of Facebook and iPads, of instantaneous and substantial information exchange. In this world it seems absurd that distribution professionals and trading partners still struggle to link all their information to use trucks, space and personnel as best as possible. But they are struggling. In fact, even some of the basic elements of modern communication remain ineffective because data is messy and frequently is pigeonholed in proprietary systems that inhibit open communication.

    Think again about the gravity of success. The food industry grew strong through a world-class supply chain, until 20 years ago when the industry realized that new competitors (yes, Walmart was new once) were reinventing the system and performing at a completely different level. Ask yourself if that same gravity of success is now leading the industry to benchmark traditional retailers, while Amazon.com lurks in the background, creating a system unburdened by history and legacy.

    Sheahan made an additional point about the fashion industry, where SKUs number in the hundreds of thousands and products are as perishable as produce. As Sheahan explained, no one makes money with fashion; they do it with supply chain, especially companies like Zara who are reinventing the supply chain in ways that provide the Spanish company a currently unassailable competitive edge.

    Whether or not you work in supply chain activities, you need to ask yourself the same question: are you working to perfect an old system or could you be part of the change to something new and hopefully a lot better. The discussion has to start somewhere; it might as well be with you.

    10-4…or should I say, understood?


    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
    KC's View:

    Published on: February 7, 2012

    The Financial Times reports that Walmart is introducing a labeling initiative called ‘Great For You” that will put a seal with those words on private brand products that “meet nutrition criteria on protein, fibre, fat, sugar and sodium content.” According to the story, Walmart said that “its effort had been devised in consultation with food experts and was informed by the latest nutrition science as well as public sector dietary guidelines.”

    Andrea Thomas, senior vice president of sustainability at Walmart, said in a statement: “Walmart moms are telling us they want to make healthier choices for their families, but need help deciphering all the claims and information already displayed on products.” And Leslie Dach, executive vice president of corporate affairs, said, “We have the opportunity to address an issue many feel is too complicated or too hard to tackle and to demonstrate that it doesn’t have to be.”

    The story says that Walmart’s labeling system “highlights fruit, vegetables, whole grains and lean meats as well as varieties of products such as snack bars, frozen meals and yoghurt that have low levels of fat, sodium and sugar.” It also says that Walmart has pledged to move to national standards if the US Food and Drug Administration (FDA) is able to come up with them.
    KC's View:
    Folks at Walmart told me several years ago that they were looking to come up with a nutritional labeling program that would be along the same lines of Delhaize’s Guiding Stars initiative, and, to a lesser extent, the NuVal nutritional labeling system.

    I’m a big fan of these kinds of programs, but this effort just strikes me as kind of timid ... especially because it only applies to private brands, and also because it seems to have been so many years in the planning.

    Published on: February 7, 2012

    by Kevin Coupe

    Bloomberg reports that American’s two largest drug store chains - Walgreen and CVS - are offering for sale a health care test designed to address an ongoing consumer concern - male fertility.

    According to the story, both companies are selling online, and Walgreen is selling in-store, a test designed to determine “if a man is producing enough sperm to get a woman pregnant.” Or, as Bloomberg so elegantly puts it, “by answering a question few men want to ask: whether or not they’re firing blanks.” (one can only imagine how the directions read...)

    At-home female fertility tests already exist and are sold in retail stores, and the story suggests that the companies selling the tests are “banking on women dropping an extra $40 for the test when they buy ovulation and pregnancy kits for themselves.”

    There seems to be very little belief that men will actually buy the sperm count tests for themselves, especially because statistics show that “only two in 10 men are willing to accompany their female partners on trips to gynecologists when they’re having trouble with pregnancies.” About 7.3 million women in the U.S. have trouble with pregnancies, experts say.

    But the big point is this: that there is a growing market for DIY at-home tests that can be used by people looking for inexpensive alternatives to hospital testing, at least on a short-term basis.

    I don’t know about you, but I continue to be amazed by what companies are able to sell these days. It’s an Eye-Opener.
    KC's View:

    Published on: February 7, 2012

    Reuters reports about rampant speculation that Amazon may open a bricks-and-mortar store in Seattle this summer, on the theory that “Amazon's line of Kindle devices may sell better if consumers have a chance to try them out before buying.”

    The store, if it comes to fruition, would be a test to see if an Amazon Store could have the same kind of impact as the Apple Store has had for that company. If it worked, a national rollout then could be in the cards.

    The story notes that Amazon actually already has one physical store - a Beauty Bar store in Manhasset, New York, that is operated by Quidsi, an online retailer that Amazon acquired last year.
    KC's View:
    I get why Amazon might think that a chain of Kindle stores might be an interesting idea, but I just can’t help but think that somehow it gives away the competitive advantage that Amazon has exploited with such success.

    Published on: February 7, 2012

    Slate.com reports that Coinstar - which owns Redbox - is working with Verizon to challenge Netflix. The two companies will “ offer a streaming service to customers nationwide before the year is over. The new venture will supplement the streaming and download service with hard-copy access to DVDs and Blu-ray discs at the familiar Redbox kiosks found at gas stations, grocery stores, and elsewhere.”

    Pricing and offerings specifics have not been announced.
    KC's View:
    This seems smart because it allows Redbox to expand into the streaming business, and Verizon to expand beyond its Fios TV business. And it takes advantage of the fact that Netflix may have a little weakness at the moment because of the way in which it irritated so many subscribers with a price increase and an aborted attempt to separate its streaming and DVD rental businesses.

    Big lesson: There’s no such thing as an unassailable business model.

    Published on: February 7, 2012

    In the UK, This Is Money reports that a new policy of full disclosure implemented by Amazon has revealed that a company called Oakwood Distribution selling products on Amazon’s website actually is a division of Tesco - and is undercutting Tesco’s own site on price.

    According to the story, “Critics have accused Tesco of using a different company name to masquerade as a small business on Amazon, claiming this allows it to slip under the radar of consumers who actively choose not to buy from Tesco.”

    But Tesco has responded with a statement saying that “it is public knowledge that Oakwood is part of Tesco. Where we have excess stock it is sold competitively through third-party marketplaces. Many customers prefer to shop direct with Tesco for additional benefits.”
    KC's View:
    Oops.

    Published on: February 7, 2012

    • Market research company NPD Group said that it has reached an agreement with Walmart to receive and analyze its point-of-sale information in the U.S. NPD currently receives information from over 900 retailers representing 150,000 retail doors worldwide. The addition of Walmart data will enhance this information and allow NPD to continue to expand its portfolio of solution-oriented products and services. Under the agreement, NPD will receive sales data from Walmart U.S. stores and walmart.com.
    KC's View:

    Published on: February 7, 2012

    HealthDay News reports on a new study from Texas Christian University suggesting that a smaller plate won’t necessarily help people eat less.

    According to the story, “The study included 10 overweight or obese women and 10 normal weight women who were randomly assigned to have lunch using either a small (8.5-inch) or large (10.8-inch) plate. The women were told to serve themselves and eat until they were satisfied. The women did this on two different days, using a different-size plate each time.” But the changes in plate size seemed to have nothing to do with consumption.
    KC's View:
    Not to be sexist here, but...to me, the key word in this story is “women.”

    I think guys are different. I think we are genetically programmed to like big plates of food, and especially if we’ve been raised to clean our plates because there are kids starving in India who would love to have so much food in front of them, we tend to finish what we’ve served.

    Most guys I know would have one question in mind if they were served food on a small plate:

    Can I have seconds?

    Published on: February 7, 2012

    Bloomberg reports that Tesco plans to be “cautious” in its approach to launching new financial services products in the UK, delaying a planned offering of checking account services until next year. The delay comes as Tesco deals with a slow erosion of its UK market share dominance and concerns that it cannot meet profit expectations because of an ongoing price war with its competition.
    KC's View:

    Published on: February 7, 2012

    Crain’s New York Business reports that Joseph Contorinis, an ex-Jefferies Paragon Fund money manager, will pay an $8.3 million fine to settle an inside trading case that involved him getting non-public information about efforts by Cerberus Capital Management to acquire Albertsons. Contorinis already is serving a six year prison term in the case.

    • New York-based Price Chopper Supermarkets has invited colleges and universities throughout its 6-state footprint (CT, MA, NH, NY, PA and VT) to compete in the Fourth Annual “Ultimate Innovation Competition”.  The competition reflects the diversity of skill sets at work in the field of supermarket retailing as it challenges students to develop original and creative solutions and practices in the areas of Retail Store Operations, Supply Chain/Distribution Management (including Warehousing and Transportation),   Merchandising/Marketing (including Advertising or Public Relations) and Human Resources (including Training and Recruiting).

    A total of $30,000 in cash prizes is available for distribution amongst the finalists.

    WineBusiness.com reports that “overall table wine consumption is up in 2011, with over 291 million cases consumed, according to the Wine Market Council’s annual consumer tracking study on the U.S. wine market ... The consumer tracking study also showed that 21 percent of all adult core wine drinkers, drinkers who consume wine daily or several times a week, represent 47 million people; another 34 million people are marginal wine drinkers, totaling at 81 million wine drinkers in the U.S.

    “Only 23 percent of core wine drinkers are high end wine buyers - just under 9 million. But that group accounts for more than 90 percent of all wine purchases over $20. Also, there is a significant male skew to the high end purchaser group.”

    • The Wall Street Journal reports that Starbucks has formed “a joint venture with Ai Ni Group, a regional coffee and agricultural company in Yunnan province in Southwestern China, the latest move by the world's largest coffee chain to expand its presence in China. Under the agreement, Starbucks will purchase and export arabica coffee beans and operate coffee mills in the region. Terms of the agreement weren't provided.”

    • The Naples News reports that the Coalition of Immokalee Workers plans to sponsor a protest that will have a bout a dozen farmworkers who make a living picking tomatoes riding their bicycles 35 miles to picket the first Trader Joe’s to open in Florida, in North Naples.

    According to the story, “the cycling team wants to speak with Trader Joe's vice president Kent Smathers to discuss the importance of signing an agreement to increase farmworkers' pay a penny more per pound of tomatoes picked, as well as only buying from farms that comply with the coalition's Fair Food code of conduct, which is taking effect this season for 90 percent of Florida's tomato fields to better conditions for workers.

    “Trader Joe's officials could not be reached for comment Monday morning.”
    KC's View:

    Published on: February 7, 2012

    • Walmart announced yesterday that it has named Greg Foran, senior vice president for Wal-Mart International, to be president and chief executive of Wal-Mart China.

    Foran succeeds Ed Chan, who resigned from the post last October “for personal reasons” in the wake of accusations by the Chinese government that Walmart had committed food handling and mislabeling violations there. (Walmart said that Chan’s resignation had nothing to do with the scandal.)

    Scott Price, the chief and president of Wal-Mart Asia, has been temporarily handling Chan’s duties while Walmart sought a more permanent replacement.

    KC's View:

    Published on: February 7, 2012

    MNB has been informed of the passing on January 18, 2012, of Larry G. Zettle, a 53-year food industry veteran who held posts at Golub-owned Price Chopper and the Great Atlantic & Pacific Tea Co. (A&P). He was 73.
    KC's View:

    Published on: February 7, 2012

    Regarding ongoing concerns about the presence of the fungicide carbendazim in orange juice brought into the country, one MNB user wrote:

    So 30% of the 66 sample results received are above what I assume are the safe levels established by FDA. Which, if the percentages hold in the remaining 20 samples, means the overall failure rate is also 30% (assuming the number of samples selected is statistically= reliable). I’m no statistics expert so I don’t know if that incidence is ban-worthy but it sure means no OJ for this household.

    From another MNB user wrote:

    We have stopped drinking OJ until we know where it comes from.  Although our household consumption is only 6/64 oz (or whatever it is this week) bottles a week is small, I’m sure other consumer feel the same way.  I remember an expression from one of my high school teachers – figures lie and liars figure.

    So 46 out of 86 were negative or 53%.  I do not think this is a good number.  And 20% were positive,  good grief Charlie Brown, I think this is bad.


    I know I’m going to open a can of worms with this, but doesn’t the current OJ issue simply illustrate why country-of-origin labeling (COOL) is a good idea. If an OJ container said that the juice came from Brazil, for example, people would not buy it. If it said the juice came from the USA, then people might feel better about buying it. Just sayin’....




    Yesterday, MNB took note of a Chicago Tribune report that Dave Carroll, the Canadian folksinger who leapt to fame a few years ago with a YouTube song called “United Breaks Guitars” that criticized the airline’s customer service efforts, is teaming with a venture capitalist and a website designer for a site called Gripevine.com, which aims to be “the first online social media platform for consumer-complaint resolution." One MNB user responded:

    I spoke at length to (now former) leadership at United Airlines about the Dave Carroll event. They admitted to me they were slow in dealing with the event, which they no doubt have learned from. (That’s my take on  the conversation.) However, if UA is to be believed, there is definitely more than one side to the Dave Carroll story, as UA did make a few attempts to make it right, only to be rebuffed by Mr Carroll. There was simply too much PR benefit to be derived by  Mr. Carroll NOT accepting UA’s offer.

    Which brings me to my point: if Dave wants “gripevine.com” to be legit, there will need to be a mechanism for consumers to get both sides of the story so interested readers can draw their own conclusions.  I’m trying to imagine just how that is supposed to happen in today’s cost conscious world, where more & more businesses are eliminating human labor from their cost equation. Finance-led organizations aren’t known for being customer-focused. To me, the second coming of this idea is as “dead on arrival” as the first iteration.

    Just as in any divorce, there are three sides to a dispute: His  side – her side – and the truth. Let’s not think that “gripevine.com” is the panacea for the consumer.


    I’ll challenge several of your comments, with all due respect.

    First of all, if memory serves, while United was willing to cut a check to Dave Carroll, the airline was unwilling to accept responsibility for the breakage ... and that’s what really annoyed him. I agree with him on this ... and I say this as a loyal United customer who has flown more than a million miles on the airline.

    Second, you say “if UA is to be believed.” That’s a big “if.”

    Third, you say that this site can only work if it allows businesses to engage with it, then suggest that many businesses don’t have this capability anymore, which makes “Gripevine.com” likely to be DOA. On the contrary, to me it just means that companies unwilling to engage in being customer focused are going to walk around with targets on their backs. And their fronts.

    Being customer focused is an absolute necessity in today’s world. Consumers have a voice like never before, and the balance of power has shifted. Get used to it.




    Finally, several people wrote in to say that they thought I should have praised both the M&M commercial and the “grandma launches the baby” Doritos ad, in addition to the ones I did applaud. You’re right. I should have. And I also should have mentioned the ad for “The Avengers,” the movie coming out next summer. It made me look forward to its release, and I’m not a comic book movie guy.

    Regarding my criticism of Madonna’s halftime show, one MNB user wrote:

    When did Madonna forget how to dance? Oh that's right last time she had a hit.  I cannot wait for SNL to pan this half time show.  Madonna was helped around on stage by the dancers, lost her balance and looked a tad bit old picking herself up.  No wonder she had to be carried out in a chair.  Madonna was never a great singer, just a good entertainer.  Last night she failed to entertain.  Not only did I hate it, I was mad the opportunity to showcase real talent was lost only to support the narcissistic impulses of a been there done that singer.

    But another wrote:

    We are about the same age, I cannot imagine how anyone of any age did not think Madonna had one heck of a stage production anyway?

    IMHO...it was awful. Over-produced, replacing talent with spectacle.

    And I don’t think she forgot to dance. I just think she’s 53.
    KC's View: