It's Time to be Part of the Solution

One of the toughest calls to make in the consulting business is when to transition from providing data and insights to recommending specific solutions.

The challenge is that insiders usually understand the subtleties and nuances of their company better than a consultant and therefore are better positioned to estimate how effective any particular solution might prove to be within their specific enterprise. Like the football coach deciding to punt the ball on 4th down and short yardage, even though every fan in the stadium is screaming for him to go-for-it -- it's an unpopular decision, but one based on a knowledgeable insider's assessment of the team's abilities and the overall game-plan.

But what if the offensive coordinator in football (or a consultant in business) sees an alternative the coach has missed? Should they rush to the sideline with some hastily sketched-out play -- a last minute idea the team will have minimal time to implement but could potentially save the game?

Sounds enticing, yet most of the time it is the wrong thing to do. Until an option can be fully evaluated it's impossible to know if its probable advantage outweighs its potential risk. In other words, the time for developing and testing new ideas is on the practice field not the playing field.

A way around testing is a process called benchmarking. This is a process often employed in the area of supply chain solutions, as approaches with proven track-records are heavily favored in this element of the business. This mindset is almost completely opposite to that practiced in R&D, as in most engineering departments the already proven is thought of as only marginally interesting while the unproven idea or approach is considered absolutely fascinating. Perhaps this is one of the reasons technological innovation has consistently outpaced business innovation in the electronics industry.

Along this line, in last month's Thought Leadership article, The Top Five Factors Electronics Executives Should Consider in 2006, Eric Miscoll PhD, TFI's Chief Operating Officer wrote,

"The challenge is to be open to the possibilities and skeptical of the status-quo. Remember, a competitive strategy based around industry benchmarking versus innovation might bring you to market parity, but it will never accelerate you into the lead."

To this writer, Dr. Miscoll's advice seems particularly poignant when considering the relationships and business practices of the Electronic Manufacturing Services industry. In that, outsourcing is one of the most benchmarked activities in the electronics industry yet there remains an unprecedented and escalating level of dissatisfaction between the parties.

Doubt this? If so, I'd refer the reader to a Quarterly Forum report by Matt Chanoff, a Senior Consultant with TFI, titled The EMS Model; Changes, Risk, And Implications (Second Quarter 2005).

Matt presents the highly charged, often divergent points of view of the parties from an even-handed perspective. A considerable accomplishment given comments like:

From an EMS, "There is no way in the world this industry can exist on the margins we're delivering today."

From an OEM when asked if they're concerned about the long-term viability of the EMS industry, "No we are not concerned about it. We are concerned that there is erosion in what we are able to get in terms of cost reduction."

Are the parties quoted above operating from the perspective of "knowledgeable insiders, assessing their team's abilities and the overall game-plan", on the question of whether or not to kick the ball, or has the situation digressed to the players just kicking each other?

If so, is it one of those rare times when it would be appropriate for the offensive coordinator (or in this case the industry consultant) to step-in and stop the game? It certainly looks like someone needs to come-up with some new plays for these folks, if for no other reason than to prevent them from getting penalized for unnecessary roughness.

For sake of argument, let's assume it is time. A new play is exactly what the game needs! Hmm… what kind of play?

Something that addresses root-cause issues, as pushing the boundaries of the status-quo by an inch or two isn't going to win the game. Yet, it can't be an approach that escalates the level of roughness (or disparity) in the game like dynamic-bidding, or what some people call reverse-auctions. (A process, with a cool sounding name, that just automates the awarding of business to the lowest-bidder at any cost.) No, what's needed is something that addresses the core problem plaguing the industry – the hopelessly ineffective forecast demand business model.

History proves daily it's impossible to accurately forecast demand, in a market as unpredictable and complex as the global electronics industry, yet we stubbornly cling to a forecast demand based approach to outsourcing. Is it time to take a little risk? Perhaps examine some fresh but unproven alternatives?

What do you think?

You're the ones out on the field getting kicked and/or being told to do the kicking. In either case it's an unpleasant way of spending one's career.

If you're a player, or a coach with an open mind, meet me at Technology Forecasters' next Quarterly Forum for Electronics Manufacturing Outsourcing and Supply Chain on March the 2nd, 2006 in Denver, Colorado (or drop me an email at cbarnhart@techforecasters.com) and let's start the dialog and begin exploring potential solutions together.

It's time to take action!

Not a member of TFI's Quarterly Forum? You should be! For more information, go to: http://www.emsnow.com/spps2/sitepage2.cfm?catid=49