Lessons Learned from E-Commerce

December 28, 2020.  We ordered the food but couldn’t find the riders to deliver them. 

Our family of cousins, uncles, and aunts couldn’t be together for New Year’s Eve.  Reunions and parties were not allowed in lieu of ongoing restrictions brought on by the CoVID-19 pandemic.  Instead, we ordered food from a food shop and was counting on available motorcycle riders to deliver them hot and fresh to our relatives on December 31, New Year’s Eve.

But starting December 23, we noticed available riders were getting fewer and fewer.  By the 30th of December, there were practically no riders available.  I ended up driving to the food shop to get the food packs and deliver them to my cousins’ residences on New Year’s Eve. 

We used to sit at a restaurant, order via a menu, wait as the restaurant’s kitchen prepared our meals, and enjoyed our food as waiters brought them to the table. 

No more.

Because of the pandemic, we had to opt via the e-commerce way, which was sit at home, order via mobile phone or tablet, wait for the food shop (a former caterer) to confirm that our meals were prepared, and then book a 3rd party rider service (motorcycle delivery courier) to bring our ordered food to our home. 

The success of e-commerce relied on a seamless process of order taking, preparation, and delivery.  Most of the time, there were no problems.  As long as the internet stayed fast and continuous, the food shops had the capacities, and there was an abundance of available delivery riders, we made our orders and had gotten them when we wanted them.

The December 2020 holidays, however, reminded us that e-commerce did have its limits. And the first place it manifested itself was in the riders.  We had no clue that riders will be rare a week before New Year’s Eve. 

We always assume there’s enough capacity throughout the e-commerce process. 

But we can never tell how many riders there’d be today or tomorrow.

Availability of riders is not only due to factors such as absenteeism and driver population but also very much in lockstep with the number of pending deliveries.

Since it was the holiday season, riders weren’t only tired and taking leave but pending deliveries were at their peak. 

As food shops were managing through the high demand and the Internet remained steady and speedy for customers who ordered, the bottleneck in the e-commerce supply chain was in the available riders to deliver the orders. 

There were several companies in the rider business, at least three (3) major ones in our city, Manila, to count on. 

If one couldn’t take the orders, we would resort to another. 

This worked most of the time but the holiday season of 2020 crimped the capacities of just about everyone.  

In the end, I (and probably a significant number of families) just had to pick up our orders ourselves.

I don’t know if this is going to be the new normal of the food e-commerce business in which I’d have to pick up my own orders when there are no riders available.  But there are lessons coming out that I’m learning.

Lesson #1:  E-commerce is Different.

E-commerce does not follow the same process as what we are familiar with order fulfilments.  For food shops, it’s click, prepare, and deliver.  It’s no more the sit-in-restaurant, order by menu, cook by kitchen, and meals placed on a table.  We pay online not in person.  It’s a total change from the traditional face-to-face transaction.

Lesson #2:  The Customer Experience Has Become Mutual

The e-commerce experience is a sea change from in-person interaction.  With e-commerce, it’s about ordering products by ourselves and getting our order in the right quality and quantity by ourselves.   The onus of ordering and the method for delivery has passed more to the customer from that of the enterprise.  The experience has become more dependent on a mutually beneficial collaboration between customer and enterprise. 

Lesson #3:  Customers Can Be Choosier but Can’t Get All of What They Want

Customers can be choosier as e-commerce opens the door to a multitude of enterprises into the market.  There are more food varieties, for instance, to choose from as restaurants, caterers, and want-to-be-chefs advertise themselves side-by-side on the worldwide web.   At the same time, customers can’t dictate how orders would be fulfilled or delivered as it’s what-you-see-is-what-you-get when it comes to transacting online. 

Lesson #4:  Management Has to Learn to Change

It’s not just enterprise executives have to change how they manage their operations but also that they have to learn to manage in an actively-changing environment.  No longer can enterprises expect a daily steady crowd of customers or expect to have the same capabilities in production and delivery.  E-commerce allows more competition and innovation as it expands the marketplace and connects more enterprises and customers.  Both enterprise owners and customers would need to be ready to adapt and change quickly as new products and services are introduced frequently

Lesson #5:  E-Commerce is Not IT; It’s Supply Chain Management

Last but not least, if we don’t already know, e-commerce is a supply chain thing.  It’s not an information technology (IT) thing.  A lot of entrepreneurs are spending a great deal of time on development and programming of applications but not much on engineering and managing operations.  E-commerce is one-side IT (clicking on an app and paying online) and one-side physical work (product preparation & delivery logistics).  It is therefore elementary that entrepreneurs learn how to optimally serve their products as much as to have  user-friendly efficient web applications. 

These are just some of the lessons.  There probably will be more as e-commerce gets off the ground. 

Meanwhile, I’ll just make sure my car is ready to pick up my family dinners in case no riders are available again. 

About Overtimers Anonymous

A Letter to the IE: More than Ever, We Need to Lead the World to Productivity

:

Dear Industrial Engineer*          

The year 2020 ended without a happy ending.  The SARS-CoV-2 virus had not gone away.  It continues to be a global threat going into 2021. 

Political and enterprise leaders have done all they can to defeat the virus. 

There was hope. 

Thanks to record-breaking world-class collaboration efforts, vaccines have become realities and are on their way to inoculate millions.  We are grateful to the scientists, engineers, health-care professionals, executives, and numerous support personnel who have done so much and continue to do so.

But there was frustration. 

The pandemic, however, had spread to every continent, including remote Antarctica.  It continues to infect and force governments to restrict movement and distance.

We have become more lonesome and insecure.  Some of us had pushed back but to no avail.  The virus retaliates without discrimination.  More had gone sick.  More tragically had passed away. 

Throughout the war against CoVID-19, we industrial engineers have been conspicuously left out.  We don’t really know if it’s because leaders are ignorant of what we can offer or if it’s because many executives think they have enough expertise.   Whatever the reason, we could have done more. 

Most of us industrial engineers are hard at work in different careers and jobs around the world.  Many of us have made big differences to the enterprises and organisations where we are employed or engaged. 

But for whatever we have done, whatever we continue to do, it hasn’t been enough. 

Long before the pandemic, productivity growth has been on a decline.  The gap in productivity year-to-year between advanced economies and developing nations has widened.  Disruptions ranging from natural disasters to socio-political upheavals had taken a toll on enterprises.  Growth has been curtailed.  Many enterprises, notably small businesses, have lost ground in competitiveness. 

The 2020 pandemic hit global productivity when it was already down.  It’s the culmination of its decline.  And we have felt the impact like a hammer driving down on the nail. 

We need to do better.  We need to make our world more productive.

Productivity is a misunderstood measure.  Unlike financials like profit, sales, costs, and cash-flow, it is not easy to describe productivity in one metric.  Economists try to do that by defining productivity as the output of a person; but doing so makes it incomplete and inaccurate. 

Productivity is delivery versus consumption; how much one delivers correctly to customers against how much resources and time are consumed in doing so.  Productivity requires direction.  What are we delivering, how many or how much, how close to what customers want, and when?  What are we going to use to make and deliver, how long it should take, how it will be conveyed, and with how much support?   It’s not efficiency which measures how fast we’re going; it’s more like velocity which measures how much nearer we are to our objectives given the resources we spent.

Productivity drives value.  It connects to the priorities of the enterprise.  It’s what gives us industrial engineers purpose because we’re in the best position to understand it and improve on it.  Productivity is our watchword. 

In an age where supply chains and operations are in the midst of crisis,

we find ourselves in an unprecedented position to make a significant difference. 

I don’t suggest a political campaign or a public relations drive.  We just need to demonstrate.  We don’t need to debate our proficiencies; we have the skills.  We know what we have and what we can contribute

How we can show what we got can be summarised in four approaches:

First, Point Out Problems and Volunteer to Fix Them

We shouldn’t wait to be assigned.  We should point about problems, make visible opportunities, and offer ideas and solutions.  In short, we should be proactive, i.e., act on our own without waiting for someone to tell us about problems.  We know more than a lot of people when there’s a problem. 

Second, Drive the PDCA Cycle

We should drive the Plan-Do-Check-Act (PDCA) cycle, the basic process of carrying out solutions.  What many people don’t realise is that it’s a cycle, not a model for a one-time project.  We don’t stop after implementing a solution; we seek opportunity for something even better.  It’s why we also call it continuous improvement.  PDCA is a wheel that we keep spinning to keep productivity moving and growing. 

Third, Stand Up and Be Heard on Strategy

Keeping the PDCA cycle spinning requires leadership.  We are those leaders.  Our superiors are our audience.  Feedback, justification, and assertion are therefore essential.  We should have a say on strategy because productivity depends on direction.  It doesn’t just ensure the PDCA cycle keeps spinning but  that we spin the right cycles; we address the problems that are most important. 

Fourth, Promote Productivity

As industrial engineers, we promote productivity.  No one else will.  Not the economists, not the post-graduate business administration executive, not other engineers.   It’s us because our education and experience have us focused on productivity more than anyone else. 

Productivity has become a forgotten term in the decade of 2010 to 2020.  Its growth has fallen by the wayside.  It is on us to remind everyone about it, show how important it is to the viabilities of enterprises and competitiveness of organisations, and reveal its potential in the fight against disruptions, especially versus seemingly insurmountable ones like the pandemic. 

The anchor of our IE vocation is productivity.  It’s our unwavering principle we base our accomplishments on.  It is the flag we wave amid disruptions and difficulties. 

Let’s get going. 

About Overtimers Anonymous

*I had suggested we change our titles to supply chain engineers.  😊

Acknowledgment:

Alistair Dieppe. 2020. Global Productivity: Trends, Drivers,
and Policies. Advance Edition. Washington, DC: World Bank. License: Creative Commons Attribution CC BY 3.0 IGO.

A Letter to All Industrial Engineers: Time to Rise Up

Dear Industrial Engineer:

          I come to you as a fellow Industrial Engineer (IE) with a message.

          It’s time for us to rise up.

          For years, or should I say decades, Industrial Engineering (IE) has been an un-recognized engineering discipline. 

          Many engineers—e.g. civil, mechanical, chemical, electrical—look at us as fakes. 

          Industrial Engineers (IEs) aren’t recognized as technically proficient builders or problem solvers at par with other engineering disciplines.  Even if many of us have professional licenses issued from places like the United States and Europe, we are not respected in many parts of the world.

          Most enterprises and organisations see us as more of management professionals than engineers.  They perceive the specialized courses we take, such as time & motion studies, operations research (OR), facilities planning and inventory systems modelling, as management subjects than technical specializations.  This is despite the fact that we are educated in advanced mathematics and sciences such as calculus, chemistry, and physics, and in engineering courses such as statics & dynamics, materials science, and electrical systems. 

          We are competent in reading and drafting engineering drawings and many of us know how to operate equipment like lathes, drills, presses, and milling machines.  We specialize in advanced statistical models such as linear/non-linear programming, queuing theory, and transportation algorithms. 

          Despite our engineering prowess, very few understand what IEs do.  We ourselves don’t have a clear picture of what Industrial Engineering is.  We’re always finding ourselves struggling to explain what IE is to our peers, co-workers, friends, and fellow family members. 

          The problem is with the title itself.  What does the “Industrial” in Industrial Engineer mean anyway? 

          People know what a civil, chemical, mechanical, or electrical engineer is just by the titles.  But with Industrial Engineer, we have to explain it and most, if not we, still wouldn’t get it. 

          True, many of us IEs, thanks to our training and experience, have successful careers.  Many of us have become top-notch executives and well-off entrepreneurs. 

          It would be nice, however, if we could just have a little more recognition and apply what we know as IEs.  And this is exactly what this letter is all about. 

          We are in the midst of the worst crisis to hit the globe since World War II.  The COVID-19 disease has ravaged communities and brought economies to a standstill.  Enterprises and individuals have lost earnings and incomes as people get sick or are forced to stay home.  Many products are in short supply as manufacturing and logistics facilities have become undermanned or short of materials.  Border closings have delayed or stopped deliveries altogether. 

COVID-19 is the latest and the worst in a series of adversities that has befallen supply chains.  It isn’t the first and it will not be the last.

          Year after year, adversities ranging from natural disasters, cyber-data malware, and trade tariffs have made life difficult for supply chains.  From the September 11, 2001 terror attacks to the climate change crisis, adversities have been buffeting businesses and societies.  They come small but frequently (as in daily traffic jams) or big and infrequently (such as typhoons).   They can come in the form of interruptions (e.g. power failure) or as a man-made business trend (e.g. a new mobile app that makes obsolete traditional package deliveries). 

          As supply chains have become global and more sophisticated, they have become more and more sensitive to adversities.  The challenge to supply chain productivity, and to enterprise survival, is very real. 

          We as IEs are in the best position to deal with adversities.  We have the expertise, the talent, and the tools. 

          For example, amid the crisis of COVID-19, we as IEs can help hospitals reduce wait times for patients via our knowledge of Operations Research (OR).  We can set up forecasting and inventory models to assist hospitals to avoid out-of-stock incidences for medical equipment and supplies.  We can help in improving schedules and reducing wastage in medicines and supplies. 

          When it comes to supply chains, we have the capabilities to analyse and improve the flow processes of materials and merchandise.  We are the experts in optimizing methods and in boosting the productivity of supply chain operations. 

          Before anything else, however, we need to upgrade our identity.  We should stop calling ourselves Industrial Engineers.  It’s too vague. 

          We should instead start calling ourselves Supply Chain Engineers.  Just as with other engineering titles, we need to be recognized quickly for what we do by what we call ourselves.   

          Because supply chains are at the core of global business, it’s time we see ourselves as Supply Chain Engineers.  We can build them, we can improve on them, and we can make them risk-averse and world class. 

          We have evolved and we should continue to do so.  Industrial Engineer as a title belongs to a time when manufacturing was prominent.  Today in the 21st century, supply chains are prominent.  Whether it be in products or services, there will be supply chains.  And we have the means, the skills, and the talent that earns us the title as Supply Chain Engineers. 

          The COVID-19 pandemic has demonstrated the vulnerability of supply chains.  It also has demonstrated the potential value of our vocation as Supply Chain Engineers. 

          We have the ability to change the world for the better.   We are Supply Chain Engineers.   We can make supply chains resistant to present and future adversities and deliver world-class productivity to the enterprise. 

          We have the power and we have the responsibility to demonstrate that power.

          Let’s show them what we got.    

About Overtimers Anonymous

The World Needs Supply Chain Engineers

Not leaders.  Not managers.  Not business executives.  We have plenty of leaders, both real and wannabes.  Managers and executives too; we have enough. 

We need supply chain engineers. 

The global supply chain is a present-day 21st-century reality.  We get much of our goods from all over the world.  We buy shoes from Europe to sell in America.  We ship rice to Australia and import minerals in return.  We travel to trade and we negotiate with our tablets and mobile phones. 

E-commerce has expanded the reach of supply chains.  We order and pay via the Internet.  More and more enterprises deliver door-to-door, business-to-business, person-to-person.  Transportation’s new normal is multi-modal: airplane-to-van, van-to-vessel, vessel-to-truck, truck-to-motorcycle.  Ordinary people ferry food and merchandise to homes as much as courier companies deliver packages to businesses. 

There is so much room for improvement that supply chain management has become a high-profile career choice.  But this is not a promotional message for supply chain management; this is a call for action.  Supply chains are facing challenging adversities and supply chain management, as is, is no longer capable to deal with them. 

Supply chain engineering is the “application of scientific and mathematical principles” for the design and synchronization of highly complex supply chain operations.  It is a field the world needs to synchronize supply chain operations and networks.    

It’s not only because supply chains have so much room for improvement.  It’s also because adversities have become too significant to ignore.  The adversities, which some may classify as supply chain risks, are real. 

Adversities in recent years have caused plenty of pain to supply chains.  They’ve disrupted transport, caused shortages of critical raw materials, and brought widespread inefficiencies.  As much as they’ve been manageable, the adversities are not getting any fewer.  In fact, they’re getting more disruptive and threatening.  To an extent, they can shut down supply chains and cause not only economic failure but also society chaos.  The most prominent example of this is the COVID19 virus pandemic. 

Just as we need doctors to deal with disease, we need engineers to deal with supply chain disruption.  Management as a profession and talent is no longer enough because management is only about planning, organising, directing, and controlling.  We need engineering, that is, we need to have people with skills to design and install systems, networks, and methods to synchronize and integrate the various supply chain operations and make them adversity-resistant. 

We need problem solvers that can define problems before they happen.  Anticipating adversity and mitigating it, if not overcoming it, are the key tasks of the supply chain engineer. 

Where can we find supply chain engineers? 

They’re closer than you think

Where are the Supply Chain Experts?

Supply chain managers are noticeably invisible amid the COVID-19 crisis.

There have been no supply chain executives standing beside national leaders as they made speeches and announcements.

There have been rarely any interviews with supply chain experts about how to deal with shortages of food and difficulties in transportation.  If there were, much of whatever was said had been largely ignored.  

A lot of people have viewed the coronavirus disease, COVID-19, as a medical problem requiring a medical solution, i.e., hospitalization, quarantine, finding a cure.  As much as it is a medical issue, it is more of a problem that needs a social solution. Such a solution needs four (4) things:

  1. convincing everyone to re-align their lifestyles to that of good hygiene, sanitation, avoidance of unnecessary travel & physical contact, and healthy living;
  2. rapid segregation and isolation of suspected infected individuals;
  3. boosting capacities of facilities and mobilization of medical personnel;
  4. synchronising supply chains to stockpile and deliver inventories of essential items such as medical equipment, parts, supplies, food, water, fuel, and other essential goods.

Many countries did the first two, (a) & (b), many are scrambling with difficulty to do (c), and as for (d), it has been a nightmare of shortages and desperation. 

Supply chains are overwhelmed amid the COVID-19 pandemic.  Business firms and organisations are fending for themselves.  There is no united front, no coalitions formed.  There is no high-profile leadership to rally the logistics and manufacturing industries.  Countries aren’t cooperating with each other; how could one therefore expect enterprises to do the same? 

Despite the strides in bringing supply chain talent to corporate board rooms, many executives both in business and government have not engaged the supply chain professionals in the fight versus COVID-19.  Instead, the supply chain experts are relegated to the side-lines, sweating away somewhere untying bottlenecks and moving merchandise as fast as they can to where they are needed the most.   

Many enterprises only see supply chains as networks working within the boundaries of their respective businesses and not as continuous lines of flow of materials and merchandise that cross from one enterprise to another as they accumulate in value from one point to the next: from mines & farms, to factories & warehouses, to stores & e-commerce cross-docks, and finally to users & consumers. 

As much as executives may justify confining supply chain management within imaginary boundaries as a means to foster their respective enterprises’ competitive advantages, there is great potential in designing supply chain systems and networks that synchronise the streams of products, information, and capital from the sources to customer’s shelves. 

This is made more apparent with supply chains becoming more vulnerable to adversities such as COVID-19. 

Adversities are those that disrupt the routines and flows of operations, particularly supply chains.  Adversities come in different forms, degrees, shapes, and sizes.  They are never the same from one to the next (similar, maybe, like with typhoons but different in that typhoons never follow the exact same path with the exact same intensity of wind & rain).

Because supply chains have stretched themselves to the four corners of the world, they have become more susceptible to varying adversities.  Global supply chains are spread thin; their links ever more sensitive to disruption and change.

As supply chains have become global, supply chain management, however, has remained local.  As mentioned, enterprise owners are reluctant to collaborate and link with vendors and customers for fear of compromising their competitive positions.  Hence, there’s no overall organized effort to synchronize because there’s no strategy or structure for such in the first place. 

The COVID-19 pandemic has shown that supply chains can’t function productively without synchronisation.  And it has also shown that societies suffer when supply chains become adversely unproductive. 

How do we synchronise supply chains to make them if not keep them productive? 

The answer is not in management.  It’s in engineering

We Need a Playbook and It’s the Last Thing We Need

Many enterprises and countries around the world have playbooks to deal with pandemics such as COVID-19.  These range from ISO standards and those based on the United States’ Occupational Safety & Health Administration (OSHA), Center of Disease Control & Prevention, and even the US Army Medical Research Institute of Infectious Diseases (USARMIID).   

But as much as present-day playbooks may have protocols for pandemics, they don’t have any for supply chains.  Enterprises and governments may have response plans such as quarantines and allocations of resources for medical facilities & personnel; there wouldn’t be any, however, for cross-border supply chains.

Why is that?  Because global supply chains have become prominent only in recent years.  Governments and many enterprises still manage supply chains as if they exist only within their borders and factories. 

Global supply chain relationships are mostly in the form of contracts with vendors and 3rd party providers.  Most of the links, from the sources, to the transportation, to the storage & deliveries are siloed, that is, they’re autonomous and overseen separately.  Collaborations and interactions are mostly done between individual representatives such as between sales agents and purchasing personnel. 

With no real connection, there is no protocol, and therefore no synchronisation that can overcome widespread disruptions from adversities such as what has happened from COVID-19.  Every link on the supply chain is actually vulnerable to whatever form of adversity, more so a global pandemic.

If enterprises can synchronise (some people call it integrate) their supply chains, then there would be a united front versus any adversities.  Enterprises would be able to adapt together.  Goods would keep moving.  People will get their products.  Economies would remain stable.    

Playbook protocols and procedures, however, are the last thing supply chains need.  Synchronising supply chains requires several things first: 

  1. Management commitment;
  2. Establishing comprehensive policies and strategies;
  3. Setting objectives and performance measures;
  4. Designing structures and systems to support the strategy;

Many enterprises have embraced (1), (2), and (3).  Many have not been fully successful with (4).  This is because many enterprises have trouble finding the talent to do (4). 

Doing (4) is an engineering effort.  It requires talent that will be sought for because before enterprises can sync their supply chains, they’ll need to engineer their networks to establish the links. 

Only then can enterprises rewrite their playbooks and prepare for the next pandemic and whatever adversity that comes their way. 

Why Weren’t We Ready for COVID-19 and How Should We Have Been?

The COVID-19 disease is the latest adversity to hit our world and it’s the worst yet.  It also should be the last in how we deal with adversity because how we’ve been dealing with adversity has just been outright awful.   

COVID-19 started late December 2019 in China and had spread around the world three (3) months later.  People got sick, nations closed borders, supply chains stopped moving, and businesses slowed if not closed shut. 

Many organisations had no playbook, protocol. or contingency plan, to deal with COVID-19.  Many measures taken were akin to knee-jerk reactions.  We just weren’t ready.  And we should have been. 

Adversities are part and parcel of enterprises and society.  We encounter them all the time.  From natural disasters to daily traffic, adversities come in all scales, shapes and sizes.  And they always differ one day to the next. 

Organisations develop risk management strategies to combat adversities.  Risk management just has not been effective, however, as many organisations don’t treat risks as high-profile priorities, that is, risks are considered important only when they turn into threats or problems. 

For instance, a company would invest in fire safety equipment and delegate a safety officer to monitor compliance to prevent fires.  But executives would prioritize reports and presentations on issues such as sales, costs, and customer service.  Managers wouldn’t ask about fire safety reports unless there was a fire. 

Risk management also has traditionally been limited in scope such as to security, safety, and secrecy.  It wouldn’t include adversities such as unexpected price increases in commodities, sudden imposition of tariffs, the surprise inability to collect from a customer, and diseases—these would be the responsibilities of respectively different departments and they wouldn’t even be called risks. 

The COVID-19 pandemic offers us the lesson that what we’ve been doing in terms of adversity mitigation has simply just not been enough.  We need to change how we anticipate and mitigate adversity.  We should start by saying that it is not risk management but adversity management, that is, we treat adversity with wider ranging scope and priority. 

It requires a change in mindset.  Adversity is not risk.  It’s a whole different category that encompasses risk.  We need to realize we have become more vulnerable to it.  How we’ve dealt with it in the past and with COVID-19 hasn’t been the right way; we need to formulate a new right way. 

If we didn’t get sick from COVID-19, we should at least be sick and tired of how we responded to it and to all the adversities beforehand.  We need a new approach, because not only can we will be able to save lives, we will be able to save our livelihoods.