Archive for April, 2010

Lean, Green and Risk-Free

April 27th, 2010 admin No comments

There’s an interesting article in this morning’s French economic newspaper “Les Echos”. Basically, the author is asking the question on whether last week’s air traffic standstill due to the Icelandic volcano eruption is a sign that the transport boom is over, in the same way as the property, internet and financial good time have all come to an end at some time in the recent past.

He points out that the increased accessibility and reduced cost of transport over the years, from both a business and leisure viewpoint, has increased our dependance so much that we now cannot live without it. Companies have gone overseas to find cheap alternative sources of supply, the benefits outweighing the increased cost of the supply chain. And the increased demand has generated economies of scale, which have made the services that more accessible, etc… One big vicious circle.

‘Lean Management’ gets a mention, rare for this paper, in the context that an obsession with reducing the non value-adding costs of these extended supply chain has resulted in decreased stock levels. In some cases, the only stocks can be those currently being shipped in the transport system. And when the transport system in question breaks down, there is potentially chaos.

So have we gone too far? I can’t say that I heard too many complaints from businesses faced with production lines shutting down due to the non-availability of parts. Most of the anguish came from individuals and holidaymakers. Maybe the downtime of five or six days was not sufficient to make an impact. However, would it be the same outcome if, as has happened in the past, the French lorry drivers block all roads for a couple of weeks, or a worldwide fuel crisis nails the planes to the ground?

Food for thought indeed, especially for those pushing for more insourcing and home-grown products. Being Lean is a great objective – being Lean, Green and Risk-Free, even we pay a little more, is maybe a better compromise.

Categories: It's Happening in France Tags:

It had to be expected.

April 15th, 2010 admin No comments

I’d say that this is the first of many. It seems that the suppliers of the telecoms operators are having difficulty keeping up with the demand of their customers at the moment. 2009 was spent reducing headcount and taking defensive actions against falling sales. But since the beginning of the year, with the explosion of the Iphone and other mobile devices requiring investments in new networks, France Telecom, SFR and Bouygues etc are placing increased demands on the Ciscos and Alcatel-Lucents of  this world.

A ’spokesman’ for the supplier claims that this situation is quite normal. It appears that lead-times are around six months, given the number of component suppliers in the supply chain, each with their own second-tier suppliers.

It looks pretty obvious that communication is not of the highest quality in this type of supply chain. If the operators and their suppliers had spent a little more time around a table agreeing on what would be and what would not be possible, and where strategic stocks should be held, and that this had been communicated through and agreed by the sales divisions, the current situation may be a little different. Instead it seems that the operators are ‘exercing pressure’ (we can probably guess in what sort of climate) on the suppliers to limit the damage.

In the case of Alcatel-Lucent, the consequences have been and could be even more dramatic. Worldwide sales figures have been reviewed downwards with a similar impact on the forecasted share price, and the Operations Director left the company on Friday possibly because he’d reduced stocks so much in the context of a cost-cutting initiative that it is going to take months to recover. You can be sure that he probably got a big bonus a few months ago for doing so, so we shouldn’t worry for him too much.

Interestingly enough, it seems that the Chinese operators are not facing the same issues. Either they have vertically integrated, have very flexible local suppliers… or didn’t notice the dip in the economic cycle.

I just wonder who is going to be next.

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A month is a long time in politics

April 11th, 2010 admin No comments

How politics can be fickle. A few months ago, in the midst of the spate of suicides at France Telecom, the government came up with a applaudable scheme where all major companies were obliged to negociate agreements with the workers representatives to guard against stress in the workplace. These agreements were to cover areas such as internal communication and the counselling of affected workers, for example , and basically could include just about anything, each company being relatively different.

This was the brainchild of a minister called Xavier Darcos who, as a result of the poor showing of the majority at the recent regional elections, became the sacrificial lamb, and got moved on (possibly to a job as the boss at the Chateau de Versailles, which seems to me to be a altogether more attractive proposition than Works Minister).

Poor old Xavier had created a fuss back in February by publishing ‘name and shame’ league tables of companies who had concluded negociations, those who were in the process… and the naughty boys who hadn’t yet done anything. Obviously those at the bottom of the class, many with a privileged route into the President’s ears, weren’t too happy, and one could suppose that this had at least a minor influence on the organisational change that ensued.

Bring in Eric Woerth, the previous Minister for the Budget, famous for proposing effiencies without once mentioning Lean.

That’s right you’ve guessed it. Since he arrived, the league tables in question have not been updated (despite a commitment to a weekly update). And ‘friends’ of the new minister told reporters that he doesn’t wish to carry on with the campaign (a way of testing opinion?) without anything yet being official.

I wonder how the minister is going to react to the news at the end of the week that an official judicial enquiry is to be opened into the eventuality of ‘moral harassment’ on the part of the France Telecom directors which may have led to some of the 35 suicides in the last two years. Initiated by the trade unions, there are claims of a deliberate campaign to destabilise workers so that they would leave the company. And that the suicides are the tip of the iceberg hiding ‘thousands’ of cases of depression in the workforce.

It seems pretty clear that the tension is going to last for some time in the future. Unless the new Works Minister has something up his sleeve.

Categories: It's Happening in France Tags:
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