I find one reality TV show interesting because it actually represents reality. …At least, it’s the reality that I see through the supply chain and procurement lens of Freebenchmarking.com and Component Cost Estimator as it mirrors typical purchasing negotiations.
The show is Pawn Stars, about a family-owned pawn shop in Las Vegas. In this show, there are buyers and sellers; the family buys. Where the show deviates from true reality is that this family is actually very well informed and, when they don’t have the knowledge they need on an item, they seek out experts to provide them with the knowledge needed to determine a fair market price. They transact quickly, right on the spot.
If only corporate reality could be like reality TV!
I don’t know where or when it was that I parted ways with many of my contemporaries on supply chain thinking. If we are aligned on philosophy, it certainly appears that we are not on urgency.
Here are some of my views:
Companies are in an increasingly competitive environment. Survival demands differentiation, customer appreciated value creation, and cost effectiveness. Too many Western companies are struggling.
Small companies act quickly because they have to. They must have an efficient cash-to-cash cycle and, with each cycle, they must learn and improve. Large companies have relatively huge cash reserves, which takes the urgency out of performance improvement. They can take years to do what small companies can accomplish in weeks.
Inaction is often justified by pseudo-intellectual arguments that just don’t stand up under close scrutiny, using real data.
Some decision makers in large companies have lost sight of the value of a dollar; not when it comes to their personal money, but with the company’s. I don’t know how many times I have seen huge cost reductions delayed for no good reason. Saving $100,000 is equivalent to saving a job, maybe two. Even if $100,000 is within the rounding of a financial statement, it’s still $100,000 — and many of these add up!
Compare what you see on Pawn Stars to what happens within your company. How does your company behave? How do you behave?
Oh yeah, one final point: The family members in Pawn Stars appear to be decent, friendly guys. No arrogance or supplier abuse. Pawn Stars is actually a pretty good role model for business.
By Ken Bradley – Lytica Inc. Founder/Chairman/CTO