Saturday, December 29, 2007

Best Practices in Architecture

Cover of Eero Saarinen, by Jayne Merkel

If architectural design is an apt metaphor for enterprise architecture, then perhaps the approaches of leading building architects also apply to enterprise design. In her authoritative review of the work of 20th century genius Eero Saarinen, architectural critic Jayne Merkel describes his studio's method:

1. Definition of the "functional program" with considerable research
2. "Expression of the program" in the concept
3. Selection of appropriate "structure"
4. "Design"
The client was involved in each phase, participating in the research to define and prioritize requirements, reviewing architectural concepts for resolving their specific conflicts and approving structural approaches, materials and budgets prior to beginning detailed design.

His were unusual, ambitious, challenging buildings. The variety in the work, the "style for the job" philosophy, as it was called, was really the result of the way he worked and the fact he believed architectural form should derive from function in the broadest possible sense.

He was singularly collaborative in his approach, using the resources of his clients, among them "the technical innovators of his period (General Motors, MIT, IBM, Bell Labs)" to automate design, adapt new materials, and refine his craft.

Eero could meet each client on his own terms. He respected his clients and what they wanted to do (something that many architects with their own objectives fail to do) because, though he believed architecture should aspire to be art, he saw it as one grounded in use.
Consultants, as enterprise architects, are well advised to adopt not only his approach but his collaborative style to designing business structures, processes, systems and offerings.
  1. Today's design teams can deploy wiki technology to engage all the client's resources in developing a thorough, shared, context-rich understanding of requirements, objectives and alternative solution concepts.
  2. Rapid visualization techniques and virtual meetings allow broad and early participation of users, influencers and decision-makers throughout the design process.
  3. Collaborative content management systems can capture design elements in secure vaults and maintain version control as reviewers make modifications or add detail.
  4. With appropriate controls, the key constituencies throughout the enterprise, including suppliers, can access relevant information and contribute to designs as they develop.

See Eero Saarinen by Jayne Merkel, (Phaidon Press, London, 2005), pp. 230-3
See also our previous post, Mastering Innovation Management, which contrasts the styles of Eero Saarinen and Frank Lloyd Wright

See our approach to
Retail Lifecycle Management™ (RLM) for a discussion of the application of PLM techniques to managing the process of store design and its related information. Click on the RLM topic in the Index of Content on This Site on the sidebar to the right of this blog.

To learn more about our work in consulting, read about our Practice or check out our Case Studies

Wednesday, December 12, 2007

Tracking Promotions with RFID

As in most logistics practices, the net benefit of RFID coding depends entirely upon how the circumstances. In negotiating trading practices today, manufacturers and retailers should consider RFID as a viable technology that may provide mutual benefit if expectations, technologies and responsibilities are properly aligned.

In the heat of the Wal-Mart pilots, I suggested one such approach in an article published in Consumer Goods Technology.

Manufacturers often lament that the trade funds given to retailers to support product promotions are not fully passed on to consumers. Retailers buy more than they can sell during the consumer promotion period to hold down their overall cost of goods, and many divert "excess" product to other wholesalers or merchants. Regardless of why they over-buy, the impact on manufacturers is the same; their effective average prices fall below intended levels.

One remedy is for manufacturers to require retailers to provide proof that product purchased at discount for promotion are stocked in their stores during the promotion period. In this case, the manufacturer would ship RFID-labeled product cases to the retailer, noting which would be offered at discount. The retailer would then scan the cases as they entered each store and provide that information back to the manufacturer. The manufacturer would then remit a discount for each promoted case that crossed store thresholds during the promotion period. By tying distribution of trade funds directly to retailers' store-stocking activities, manufacturers can manage down diversion and gain immediate feedback on where and how well products are selling in relation to promotion terms
. - "Keeping Track of Promotional Progress," Jim Farrell and Ralf Saykiewicz, Consumer Goods Technology, October, 2005, p. 10

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Saturday, December 1, 2007

The Smart Kitchen

A vintage fast food kitchen

The kitchen of a quick service restaurant is the operator's most valuable asset, typically representing an investment of $400,000-$1,000,000. If poorly designed or maintained, this factory behind the service counter can put a wrench in the works of a restaurant's profitability, by wasting energy or food ingredients, inhibiting efficient use of labor or failing to reach expected yields of healthy, attractive product. By applying the kinds of monitoring and control technologies that have become standard in regulating the efficiency of other factories, restaurant operators can boost profitability substantially.

McDonald's, which operates or influences the design of some 31,000 kitchens around the world, has announced plans to move in this direction, selecting Echelon Corp., a San Jose, Calif.-based networking company, to layer its system on McDonald's sites, networking the controls on kitchen appliances and environmental systems, including such items as grills, fryers, coolers, icemakers, and HVAC (heating, ventilation and air conditioning) systems to create "smart kitchen" environments.

Equipment can be scheduled to enter energy-saving standby levels when no use is detected, thus saving energy and appliance wear and tear...Other features monitor usage by product type to determine optimum filtering periods based on what's cooked, thus extending oil life, and monitor appliance performance, alerting the operator to contact a service technician if equipment is outside its ideal operating characteristics. (See "NRN" below)
By centrally monitoring the data collected from these store environments, the operator of a chain of restaurants can identify emerging maintenance requirements, fine-tune preventive maintenance schedules and detect opportunities for adjusting operating procedures or restaurant designs. The impacts of overnight power outages on refrigerator temperatures, for example, can be determined system-wide, preventing potential calamity.

The franchising model complicates decisions to invest in such technologies, since investments made in the technology by corporate staff may not be embraced by the independent operators that must ultimately share data to take full advantage of the capability. As recently as 2005, indicating the corporation's reticence about taking on the Big Brother role, McDonald's CEO Jim Skinner said, "If you are looking for a command center with one push button that operates our restaurants in every corner of the world, you won't find it.” Big Mac's Makeover

Now, with food safety, energy efficiency and green design moving to the forefront of every operator's agenda, such ventures into system-wide collaboration are becoming more acceptable.

"NRN" FindArticles - Self-aware equipment: smart kitchen in reach Nation's Restaurant News, Oct 8, 2007

“Big Mac’s Makeover: McDonald’s Turned Around”, The Economist, Oct. 14, 2004

To learn more about our work in consulting, read about our Practice or check out our Case Studies

Thursday, November 29, 2007

What is the Outlook for Business Investment in 2008?

Photo ©Linda & Colin McKie
International Trade

Central bank action to ease interest rates will mitigate the repercussions in the financial markets, but the economy needs to adjust to the new reality that the supply of credit has fallen sharply in real terms. Lenders have fewer reserves with which to cover existing loans. Moreover, their management and investors are less willing to extend what credit they have to finance risky ventures.

Don't expect good news from U.S. retailers in December with regard to holiday sales activity. Cash-strapped consumers are feeling the effects of high energy costs, inflated costs of imports, high credit balances, and reduced borrowing power.

Other sectors are no less troubling. Foreign investors are already showing reluctance to continue funding U.S. trade deficits, reducing the supply of capital available to U.S. business.

State and local governments that had enjoyed expanding tax bases during years of high employment and highly valued housing property are looking for ways to increase taxes, raise user fees and even sell off infrastructure. Aging workforces are a particular problem for state and municipal governments with generous health and pension benefits.

The one bright spot may be business investment. U.S.-based multinationals have earned impressive profits in recent years, helped by the declining dollar and spurred by high demand in developing countries. Suppliers of equipment to build infrastructure and develop raw materials (e.g., Caterpillar, Ingersoll-Rand and Illinois Tool Works) have done especially well, as have branded consumer goods marketers that have developed overseas channels.

It will be interesting to see how big business chooses to invest in 2008. With the continuing drop in the value of the U.S. dollar and rising employment in India, U.S. outsourcing of back office processes to low cost countries has lost some of its appeal. Investment in ERP systems remains steady, but its character is changing. Most major corporations have already installed ERP systems and are now trying to simplify their maintenance of their applications and improve the management of their underlying data. Consulting firms are betting that Service Oriented Architectures (SOA) will begin to supplant development within existing ERP platforms. However, business cases for that kind of development will prove difficult in a business climate focused on maintaining profitability in the face of weak demand.

U.S.-based businesses would do well to continue their investment in capacity to serve foreign markets. Manufacturers benefit both from the low-cost U.S. dollar as well as excess outbound shipping capacity from the U.S. Companies that can open new channels for sales to Canada, Europe, and Asia have the opportunity to add scale to their manufacturing operations.

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Management Owns the Enterprise Architecture

Great management pays particular attention to the way they structure relationships and organize resources to provide offerings. If market-facing strategy is the essence of business, enterprise architecture is its being.

Enterprise Architecture is the description of the current and/or future structure and behavior of an organization's processes, information systems, personnel and organizational sub-units, aligned with the organization's core goals and strategic direction. Although often associated strictly with information technology, it relates more broadly to the practice of business optimization in that it addresses business architecture, performance management, organizational structure and process architecture as well. - Wikipedia
The world economy is in a turbulent period, adjusting to major shifts in resource prices and extreme uncertainty with regard to the geopolitical forces that underlie them.

This is a particularly critical time for management to rethink the structures of its trading channels, supply chains, back office services, and information infrastructures. There are opportunities for the nimble. Others are in for a rough ride.

To learn more about our work in consulting, read about our Practice or check out our Case Studies

Sunday, November 11, 2007

Managing the Consultants

This is an excerp
t from a letter to a client.

If I could suggest a course of action for managing your consulting engagements, it would be this:
  • Put all truly corporate initiatives under a common executive committee so that scopes can be managed and trade-offs can be more easily assessed
  • Combine and prune initiatives as a means of simplifying the messages and focusing the efforts on key strategic objectives
  • Grade initiatives for their ability to impact the critical corporate standards

Then you might consider side-railing any initiative that does not yield 50% or more of its benefit within 12 months and does not turn cash flow positive within 15 months.

If the light is not visible at the end of the tunnel, you may not be in a tunnel at all.

Our approach to management consulting can be found here.

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A Management Consultant @ Large

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