You Have to Adapt to Your Conditions

January 21st, 2019

We recently experienced our first real winter storm this season.  I was driving my son, who recently turned thirteen and now officially knows everything, to one of his friend’s houses.  The roads were slick.  I was driving below the speed limit.  Of course, he had to question me for going slow.  I explained to him that the roads were slippery and the speed limit did not matter; I had to be safe.  He sighed and rolled his eyes.  As if on cue, a car coming the other way was going fast and was going to attempt a right turn.  I said, “Look at that idiot.  He’s going to go off the road.”  Sure enough, he skidded off the road.  Luckily, he did not hit anything.

I tried to use this example as a Ward Cleaver-esque moment.  I emphasized how a car is not a toy and a driver has to understand the condition of the road.  I think all he heard was, “Blah, blah, blah.”  Hopefully, I can get my message through to him before he actually drives.  He is counting the days and insists he already knows how to drive.  Every parent faces similar challenges…

After dropping him off, I thought about what I had said.  Most drivers do adapt to road conditions but, as I witnessed, it only takes one person who is not adjusting properly to potentially create a huge problem.  Is everyone on your team adapting to the changing business conditions?  Are you all on the same page for tactical and strategic adjustments?  If not, it might be time to sit down, discuss the current environment and what you see for the future.

 

The Government Shutdown: A Proposed Solution and is it Trump’s Waterloo?

January 15th, 2019

As I write, the longest government shutdown in history continues while the President and Congressional Democrats trade blame in the media.  Instead of focusing on issues and negotiating, both sides appear dug in trying to gain a political advantage.  I have a simple solution for ending the shutdown:  Let’s pass a law that any time there is a shutdown, all elected and appointed officials forego their salaries and benefits for the length of the shutdown.  Congress, the president, and cabinet officials should not get paid if they do not fund the government.  That might bring them to the table a little faster.

The shutdown is beginning to impact the economy.  The fact that hundreds of thousands of government workers is regularly mentioned in the media.  The other economic impacts of the shutdown are just beginning to get attention.  Cargo ships are unable to deliver to US ports because paperwork is not being processed.  Airline travel is starting to be disrupted because of a lack of TSA workers.  New products launches are being delayed because the FDA is not fully staffed.

The President has touted the strong economy as evidence his policies are working.  A prolonged shutdown will have a negative impact on an economy that is already showing signs of slowing.  Even if Trump wins the proverbial battle and gets funding for the wall, he might lose the war by inflicting harm on the economy.  Border security is important but as Bill Clinton famously quipped, “It’s the economy, stupid.”  If the Trump and the Republicans do not figure that out soon, 2020 will not work out too well for them.

Are You Ready for 2019?

January 8th, 2019

Just writing the year “2019” scares me.  It seems like only yesterday we were in 1999, preparing for the new millennium.  (I know our IT department can’t wait to correct me.  Technically, the new millennium began in 2000.)   I got really scared and felt really old when I learned Prince released the album “1999” in 1982.  Time marches on whether we like it or not.

I’ll start with a recap of my 2018 trends which were posted January 3, 2018, and conclude with 2019 predictions.

  1. The return of inflation. Yes, I’ve thought this would happen for a while.  It took six years for label prices to go up.  I don’t know if there will be more increases this year but the overall trend for commodity prices is up.  Pay attention to oil.  If the Russians and OPEC are finally convinced that fracking is here to stay, they will restrict output and let prices rise.  While US producers will fill some of the gap, they will like the higher prices as well.  Don’t discount politics either.  We have a president that loves debt.  Debtors benefit in times of inflation. 2019 Comment: Not bad. Missed on oil but got inflation right.
  2. More consolidation in every industry. Technology and customer demands create advantages for those that scale.  That will continue to accelerate in 2018 and beyond.  I say this every year and it’s the one thing that I’ve been consistently right about! 2019 comment: I didn’t go out on a limb for this one.  The consolidation trend will continue. 
  3. Environmental concerns start to impact the packaging industry, especially in the U.S. The dramatic growth in internet retail has led to an explosion in packaging consumption.  If I were a bricks and mortar retailer, I’d be screaming about how environmentally unfriendly this trend is.  Prior to the recession, environmentally friendly packaging was a hot topic.  Once the recession hit, companies wanted to be environmentally friendly as long as it did not cost more money.  Smart companies will figure out how to make being environmentally friendly a strategic advantage.  Expect Amazon to announce a major environmental initiative. 2019 comment:  Do straws count?  The environment will remain a hot topic.  If your neighborhood is anything like mine, you saw the amount of packaging associated with e-commerce at the curb after Christmas.  https://www.nationalgeographic.com/environment/2018/07/news-plastic-drinking-straw-history-ban/

 2019 trends/predictions

  1. To state the obvious, after a relatively calm period, volatility returned to the financial markets in the last several weeks. It will continue and impact the economy.  Banks will begin to tighten credit standards.  Economic growth will surprise on the downside at some point during the year.  Overall, the US economy will grow but the growth rate will slow.  (This is a prediction I would love to be wrong about.)
  2. Expect volatility in your supply chain as shortages in raw material components (real or perceived) are possible. Top concerns are thermal transfer ribbons, release liners, and certain adhesive components.  As I’ve written in the past, price does not matter when you cannot get something.  Be prepared for longer lead times.
  3. The death of bricks and mortar retail continues to be greatly exaggerated. For environmental and cost reasons, direct to consumer shipping slows.  Merchants will encourage (translation: monetarily reward) consumers to pick up items ordered online at centralized locations.

The New Year is a great opportunity to reflect on what went right, what went wrong, and what you can do to change your future.  I hope you create the 2019 of your dreams.

 

 

 

What is Your Life’s Mission?

December 18th, 2018

 

My grandfather was a prolific writer. In addition to writing professional (insurance and sales related) and history (World War II) books, he kept a journal most of his life. One of my never ending projects is transcribing all of those writings for our family.

He was a religious person and often wrote about his faith. I recently came across something he wrote December 24, 1985, at 10 AM. (He documented everything!) An excerpt is below:

“We live comfortably – no question about it. Yet the greater and deeper satisfaction comes with non-material aspects of living. Perhaps there is a certain power of thought that permeates Christian humanity because so very many people have Christ in mind more profoundly at this time. Or, it may be because the air we breathe is filled with God-given reminders of what our mission in life truly is – to love God and serve others. Peace!”

During this holiday season that turns more secular every year, may you find what your mission in life truly is. Merry Christmas. Peace!

We’re All Human

December 10th, 2018

I was out with some friends last week.  The conversation turned to the funeral of George H.W. Bush.  One person seated at the table said, “I’m not a political person but for some reason, I’ve been drawn into watching everything.  From the dog laying at his casket to the family entering the Capitol Rotunda, I’m watching all of it.  And it’s emotional.”

Our group engaged in a lively discussion about why most of the country was glued to their television sets.  Many reasons were given.  “He is among the last of the Greatest Generation.”  “He oversaw the collapse of the Soviet Union.”  “He had a great relationship with his wife.”  “He represented a more bipartisan time.”  “He reminded me of my grandfather.”  All of those are valid and contributed to the admiration GHWB deserved and received.

I thought about our conversation as I drove home.  What really struck me was the humanity displayed by the Bush family.  We saw a former president and a former governor, along with their other siblings, grieving publicly.  No matter how successful, wealthy, or privileged a family might be, life events still happen to them.  Not all of those life events are fun.

In the hyper-partisan political environment we live in, my wish is the Bush family’s demonstration of humanity during a challenging time gets us all to think a little bit more.  Think about the human aspect of the person with whom you disagree.  Think about what is going on in that person’s life.  Think about what you have in common.  As the Bush family demonstrated, we all share similar life experiences.

GM, Amazon, and Crony Capitalism: Will We Ever Learn?

December 4th, 2018

Last week, General Motors announced it was closing plants and laying off a significant number of both white and blue collar workers.  GM said it is taking these actions from a “position of strength” and to prepare for the future.  Less than 10 years ago, the US government effectively bailed General Motors out, costing tax payers over $11 billion.

In mid-November, Amazon announced it was building its “HQ2” in New York and Northern Virginia.  It also is building a major operation Nashville.  The estimated total tax breaks (subsidies) Amazon will receive are $2.2 billion.  In New York, the subsidy amounts to approximately $48,000 per job.  In case anyone misunderstands, that $48,000 is being taken from New York’s tax payers and being given to Amazon.  Andrew Cuomo, the Democratic governor of New York, said, “This is the largest economic infusion the state has ever seen…These are great jobs.”  I find it funny that the same political party that ridicules supply side economics supports tax breaks for Amazon.  Politics certainly makes strange bedfellows.

When politicians decide what is and what is not a “great job,” I get concerned.  Aren’t all (legal) jobs important?  We continue down a path where the government gets to pick winners and losers despite evidence that this strategy does not work.  Crony capitalism is a losing strategy for tax payers.  For capitalism to work optimally, the playing field should be level for all participants.

Articles cited/Further reading

https://www.thebalance.com/auto-industry-bailout-gm-ford-chrysler-3305670

https://www.askheritage.org/the-auto-bailout-who-was-actually-bailed-out/

https://www.nbcnews.com/business/autos/oops-gm-bailout-cost-taxpayers-almost-1b-more-estimated-n93816

https://www.cnbc.com/2018/11/13/amazon-tax-incentives-in-new-york-city-virginia-and-nashville.html

https://nypost.com/2018/11/15/cuomo-calls-amazon-deal-a-home-run-while-defending-massive-tax-breaks/

Why Do We Accept Failure in Our Food Supply Chain?

November 26th, 2018

On November 20th, the Centers for Disease Control (CDC) issued a food safety alert regarding romaine lettuce due to E. coli concerns.  Several people in several states got sick.  At the time of the warning, no regulatory agency knew where the bad lettuce came from, so we were told to not eat any romaine lettuce.   On November 23rd, the Food and Drug Administration (FDA) announced the likely source of the bacteria was in California.  Even with this new information, the FDA was clear to state:  “No one distributor or source has been identified, so the FDA is warning consumers to avoid all types and brands of romaine lettuce.” https://fox6now.com/2018/11/25/fda-says-romaine-lettuce-recall-likely-california-based/

Why can a distributor or source not be identified?  It’s 2018!  Technology exists that can track our food back to its source.

I make labels for a living.  They usually do not involve getting people sick.  If we have a quality issue with a product, we can go back to our suppliers who can, in turn,  go back to their suppliers.  They can identify when the paper, film, adhesive, or silicone was made.  I half seriously say that they could tell us when the trees were cut down!  Yet we accept not knowing where our food comes from.  Does that make any sense?  Are we that cost conscious that we accept illness instead of paying a few cents more for a bag of lettuce?

If our politicians are too afraid to legislate better food traceability, maybe it is time for consumers to stand up and refuse to buy products that cannot be traced to their sources.  The “farm to table” movement needs a new chapter.

Be Grateful for Your Relationships

November 19th, 2018

As I ran holiday errands this past weekend, it finally hit me.  This will be my first Thanksgiving without either of my parents.  My father passed away almost nine years ago and I lost my mother last December.  As a kid, and even into adulthood, the holidays, especially Thanksgiving, were always a big deal.  It is certainly going to be different without either of them around.

A certain website plays on our emotions and tells us how many “friends” we have.  To the best of my knowledge, no website has an algorithm that can accurately measure the value of our relationships.  Knowing what your college roommate had for dinner last night is fun but understanding his struggles with his teenage daughter is meaningful.  Aren’t our close relationships all we really have?

The holidays offer an opportunity to reflect on your relationships.  Enjoy time with the important people in your life.  Happy Thanksgiving.

If You Are Going to Charge for Something, You Better Perform

November 13th, 2018

I recently attended a customer conference at a posh resort.  During my stay there, I had to call housekeeping two of the three days to have my room made up.  Upon checkout, I noticed an itemized charge for “Contracted Housekeeping Services.”  In additional to the room rate, I was charged for room cleaning.  Apparently hotels are taking a page out of the airlines’ playbook: itemize every charge.

The fee was nominal, especially in relation to the room rate.  Among my many personality quirks that endear me to my wife is that I despise being “nickeled and dimed” for items or services I purchase.  I cringe when I see itemized bills that break out small charges.  Instead of breaking out charges to increase my price, just raise the price!  I would not have thought twice about the poor housekeeping service had the bill not had a charge listing it separately.  Instead, I ended up with a bad taste in my mouth regarding my experience at the hotel.

As any frequent traveler knows, the airlines have figured out how to charge for services that used to be included with the purchase of a ticket.  Be prepared for hotels to follow the same trend.  Our industry, like a lot of B-to-B industries, does it with surcharges.  Just remember, if you choose to break out charges for everything you do, you better do all those things well or you will have disgruntled customers.

Thankfully, Most Businesses Do Not Operate Like Our Healthcare System

November 6th, 2018

I recently had an online doctor appointment for my son with a “world class” health institution (hint: Cleveland is in its name).  The online appointment was convenient and a real time saver.  It went well.  The doctor prescribed a medication and said she would send the prescription to our pharmacy.  From there, the process broke down.

I never received an email nor a follow up message in the appointment app, which was a little concerning.  I called the pharmacy and the pharmacy said no prescription was received.  After searching, I found an 800 number to call on the app.  I called that number and was told that I called a technical support line.  They gave me another number to call.  48 minutes, 4 transfers, and a lot of frustration later, I finally got to someone who said she could help.  As you can imagine, I was quite frustrated by that time.  I explained the situation yet again.  She responded, “I will message the doctor.  Why don’t you wait a few hours and call the pharmacy to see if she sent in the prescription?”  I said, perhaps not in my calmest voice, “Really?  I should just wait.  You didn’t wait to charge my credit card for the appointment and you’ve already filed the insurance claim.  And now I should wait to see if you performed the service you said you would?  How about you call me after you confirm the prescription is being filled?”  I was told, “That is not my responsibility.”  Needless to say, I did not handle that statement in a very professional way.

Our business is far from perfect.  In the competitive world in which we operate, if we do not demonstrate that we care about our customers, we will no longer have customers.  As a result, we would no longer have a business.  Our quasi-competitive healthcare industry continues to disappoint on service.  Either make healthcare a truly competitive industry or have the government completely takeover.  This hybrid model adds significant costs and creates no incentive for service.