Nokia and the failed smartphone story

Today, let us take a look at the future direction of Nokia – the largest cell-phone manufacturer in the world. With a lot of companies biting at its heels in the smartphone business this past year, I was extremely surprised when Nokia posted Q4 sales of $11.25 Billion. They went ahead and proved my prediction completely wrong – and I’m glad they did. We wouldn’t w ant to see the erstwile emperor of the cell-phone industry go down without a fight now, would we?

 

I had based my prediction that theirs was a “Strategy of Doom” based on the fact that they were actually slowing down production of smartphones, especially considering the fact that smartphones were the fastest growing cell-phone segment in 2009. Initially, in 2009, it looked like Nokia had lost 10% market share in this segment while the smartphone market itself had grown by 4%. But now, Nokia boss Olli-Pekka Kallasvuo has been saying that their share in the smartphone segment rose from 35% to 40% after it moved to shake up its product portfolio.

 

I’M BIGGER It looks like a war of words now with Apple CEO Steve Jobs proudly proclaiming that Apple was in fact the largest “mobile devices company” in the w orld in terms of revenue for what seems to be a quite ‘custom defined’ category. Nokia’s Kallasvuo dismissed these claims saying that it was too broad a definition of mobile equipment. To his credit, Jobs had included laptops and iPods in the mix too. I’ll leave them to fight about who has the lion’s share in the market and take a look instead, at what Nokia has been doing in terms of strategy to help their cause.

THE NOKIA STRATEGY There are certainly a lot of takers in the smartphone arena – most notable of which are the top three – Nokia, RIM and Apple in that order. But let’s not forget the nifty little Android Operating System which is Google’s baby in the field. They’ve the fastest growing app store in the market compared to app-store size. They’ve been releasing newer phones at a quicker rate than most other players. Rounding out the list with Palm and Windows Phone 7 series (a ridiculosly long name), the smartphone war is only going to get bigger. But Nokia is taking measured yet big steps to keep its position solid in this area.

Nokia has been buying up companies that fit in to their overall strategy. I need to thank Fast Company for helping me out on this one. The list includes Navteq for maps, Loudeye Corp. for music, Twango Inc. for photo sharing and Cellity AG for contact management. If you think that’s quite a list by itself, I’ve another interesting piece of news. They have a deal in place with Intel to create apps!! Now, apart from this, there is one fact that is clear. Their new phones have bombed – atleast in the US.

MEEGO The ray of hope, is now a new platform. I’d told you in my previous article that Nokia was betting its hopes on an inhouse successor to Symbian – their  operating system of choice for years – called Maemo. This platform has now been merged with Intel’s Moblin platform to create MEEGO. This is going to be a

“software platform that will support multiple hardware architectures across the broadest range of device segments, including pocketable mobile computers, netbooks, tablets, mediaphones, connected TVs and in-vehicle infotainment systems.”

The reason this is big is it covers a lot – and I mean a LOT of consumer markets.

THE SUPPLY CHAIN PIECE As is true with any successful company, Nokia has a world-class supply chain that gets product out to customer in a jiffy. An important point to note is the level of penetration Nokia has in the developing markets of India, China and Africa is going to fuel the rise of the smartphone business in these countries. The way I look at it, Nokia is far more well-positioned to make use of its network in the developing world and Europe than it is in the US. And with the iPhone bombing in China, I have a tingly feeling that when the time is ripe for smartphone invasion in the developing world, Nokia is going to be in a good position to squeeze the maximum out of it.

For this to happen, they are going to need a proven platform which is what they are hoping Meego will be. The failed smartphone story in the mid-2009s that I was talking about was a necessity for Nokia to innovate. I have a strong feeling that the resurgence has begun. Expect exciting smartphones with compelling software, set to take advantage of Nokia’s top class supply chain.

Do you think Nokia will reemerge in the smartphone space? Do you disagree with my analysis of the situation? Let me know.

Making sense of the ISM "Report on Business" - Feb 2010

Often, there are very few valid sources that one can trust to act as key indicators for the state of the economy as a whole. The ISM Report on Business is one such report published by the Institute for Supply Management on a monthly basis. I believe this is one of the few reports that gives a holistic viewpoint of how the market is acting at any given time of the year. I look to this report for pointers every so often, like my review of the ISM ROB in December. I’m going to try and break down the February report.

 

ANALYSIS:  In a nutshell, the economy is continuing on its path of recovery, as predicted – but it is taking its time. I could spot a couple of positives as soon as I saw the manufacturing report.

• Employment is growing faster (2.8% growth in Feb) and the trend has been continuing for 3 months now. Its obvious why this is a good thing.
• Inventories did increase from Jan to Feb but the change was minute. Also, the general direction of inventories is ‘contracting’. This is good too because it signifies that companies are not taking things for granted and stocking up – at least not yet.

Also, as you can see from the screen grab, out of the top 6 categories in the manufacturing report, five categories (with the exception of employment) have been seeing a continuing trend for over 6 months with inventories topping out at 46 months.

 

New orders have dropped significantly from Jan to Feb – but this is probably an isolated dip rather than a  trend in itself. The new orders should rise again in March when the budgets are out and spending begins. This is one reason why I feel the 6 months from April to October of 2010 are going to be extremely important from a holistic perspective as the optimism in the economy in these months is going to directly affect sales in the 2010 holiday season.

 

The Non-Manufacturing index has registered 2.5 percentage points higher than last month at 53%. Generally, growth in Manufacturing is a leading indicator for growth in the Non-Manufacturing sector. I believe we’re going to see stronger numbers in the NMI in the coming few months fueled by spending on SaaS services with the goal of reducing costs and increasing overall value to the organization. Consumer spending is going to be they key to overall economic recovery. It does make up a sizeable percentage of the US GDP.

 

NOTE: As a side note, I’d like to add a few lines about the importance of the role supply chains are going to play in the economic recovery. The article is from an article about a Toronto Conference.

In five to fifteen years, the rise of India and China, an aging demographic within the industrial world, and integrative trade and global value chains will be additional factors to deal with.

 

Supply chain management becomes ‘critical to success’, said Hodgson, who noted that firms having an international strategy “built around integrative trade will be in better shape.”

 

“The whole fundamental model for doing business today has changed. Canadian structural challenges include fiscal deficits and debt, an upward shift in the loonie, NAFTA ‘drifting’ with North American trade stalling as the US focuses on security, the dominance of global value chains, and energy and climate change policy.”

You can read the whole article here. I would like to thank Douglas Bachelor for the source. Food for thought anyone?? Shoot a comment and let me know what you think.

The Apple that ate the child...

Sometimes an Apple to apple comparison is just not possible. Especially when you’re comparing the outsourced component of your manufacturing. I mean, how many companies have you heard admit to have discovered child workers in their supply chains? I’m talking about the shocking new discovery about child workers in some of Apple’s factories. This is an especially disturbing discovery in the light of the fallacies of Apple’s supply chain that have been discovered in the recent weeks. First it was the Foxconn employee who committed suicide. Next it was the Reuters reporter who was manhandled for taking pictures of a Foxconn manufacturing plant. Now, Apple has admitted in a 24 page report that three of its manufacturing plants used 15-year old children in countries where the minimum age for employment is 16. Does this come as a surprise to you? Are you shocked that the Mac that you could have been reading this article on was built by a child who was probably better off getting an education? Maybe you are. But will you do something about it? Probably not. After all, Apple is a company that brings out award-winning products year after year. And who knows what standards the other manufacturing companies have? Perhaps you’re right. Perhaps you’re not. Check out the image below. Its a grab from Apple’s Supplier Code of Conduct, the way it read few days back. Update: They seem to have subsequently changed this to read “Suppliers may employ juveniles who are older than the applicable legal minimum age for employment but are younger  than 18 years of age.”

 

Let us get a few perspectives on this issue. What have people been saying? (The sources link to the articles. Eg., ‘Businessweek’ links to the article from which the quote is taken)

 

BUSINESSWEEK

Apple didn’t name its suppliers and manufacturers. The company visited sites in China, Taiwan, Thailand, Malaysia, Singapore, South Korea, the Czech Republic, Philippines and the U.S. Apple also found three cases where suppliers “falsified records” to conceal underage hiring, more than 60 facilities where employees were overworked, 24 partners that paid less than the minimum wage and 57 who didn’t offer all required benefits.

 

REUTERS

Apple, a famously secretive company, has come under some criticism over the years for the labor practices of its suppliers, particularly in China.

 

ASSOCIATED PRESS

Apple said it found 17 "core" violations, the most serious type.

 

GIZMODO

February has not been a good month for the Apple supply chain. After the assault, the arson, and the poisonings, now Apple's annual supplier report reveals that this year 11 minors were found working in factories that manufacture their products.

 

SPEND MATTERS

I'm typing this post on a state-of-the-art Macbook Pro. It's silver (unpainted aluminum, to be specific) but depending on your CSR vantage point, it may as well be red. As in blood red. Just as it's impossible to tell conflict diamonds sourced from war torn regions in Africa versus those untainted by suffering, it's also impossible to know if my Macbooks -- and iPhones for that matter -- came from a factory employing child labor (or a facility that trampled on the free speech rights of journalists researching a story).

 

This compelling piece of news has raised a lot of pertinent questions in my mind from a business perspective. How exactly can you determine the level of authenticity of your suppliers? How can you make sure they’re doing what they promise? And most importantly, what do you do when you realize that they aren’t? I can easily think of three broad areas under which companies can analyze their supply chains from a PR perspective. The goal is to have simple take-aways that will help put you on the right thought process when time comes for you to initiate action at your company.

 

The Green Promise

Companies have been promising us lean and green supply chains for years now. But is the Green supply chain fact or fiction? It certainly makes sense from a PR perspective to let the world know that your supply chain is Carbon Neutral. But the fact of the matter is that no supply chain in the world can even dream of being carbon neutral in the next few years. Wal-Mart announced just last week that they were starting a new Green Initiative that involved their suppliers. Even for Apple, green was one of the hot topics discussed in the recent shareholders meeting.

 

Take-away: Does your company have an environment policy? If not, now is a good time to create one. If they do, is it holistic? Check for the following:

• Does it involve your suppliers?
• Do you report your GHG emission numbers or at least include them in a public report?
• Do you monitor your suppliers with visits? If you monitor your suppliers online, there is a good chance the ground realities are extremely different from what you think they are.

Check out the 5 things you can do today to reduce your Carbon Footprint.

Ethics and Morals

Often included on paper and frequently neglected in reality. That’s the one line I would use to describe the way many companies handle their ethical policy especially when it comes to their suppliers. The article you’re reading right now is a great example of this. Most companies include it because it is mandated. But many times, the ground realities are vastly different.

Take-away: Think about the following

• Is your company loyal towards its ethical policy?
• Does it involve how your suppliers treat their employees?
• Does it include the effect of hazardous materials and steps taken to mitigate this risk? 

Supplier Scorecards

Many times, letting your customers know about your supply chain in more detail is necessary to maintain the integrity of your practice and also to let your suppliers know of the stringency of your company policy. Supplier scorecards are a great way to do this.

 

Take-away: Think about the kinds of manufacturing your companies’ suppliers help carry out.

• Are your suppliers being rated on a set of categories? How many of those can you make public?
• Can you set a reward for suppliers who meet certain pre-specified standards?
• Do your consumers really care about your suppliers’ performance and their integrity? (Surveys are a good way to find out)

These are basic steps written in the hope of starting a thought-process that you can go an implement at your organization. Let me know what you think. Does your company have a supplier policy that is as strong as the big organizations with thousands of suppliers? What do you think will be the effect on your supply chain if you implement these steps? And most important of all – Will you buy a Mac in the future?

 

Update: I just found another article that covers supplier risk management in the same light. Thanks Pete!

5 Steps to reduce your Carbon Footprint today [Green]

Let my voice be heard. Let my impact be felt. Let me do something that can make a difference today.

A few days back, I wrote a post which introduced the concept of “Supply to Zero”. Although seemingly impossible at this point in time, the idea (inspired by Bill Gates’ recent talk at TED), is about how we can reduce the amount of CO₂ that is produced as a result of the various activities that make up Supply Chain Management.

The Carbon Footprint is a much talked about metric in today’s world. After Copenhagen and Doha, I’ve been seeing that a lot has been written about this term. It seems more companies are interested in adopting this metric sometime in the near future and use it for reporting purposes – especially with the risk that a similar metric is going to become mandatory in the near future. There is a “State of Green Business” forum going on as I write this blog post. The world is finally waking up to the fact that we need to get “Green” into the picture and make sure that we have a reporting mechanism in place to measure improvement. I have a video below, which highlights this exact idea. This video takes a look at individual, collective and corporate levels of responsibility we need to take up for our environmental challenges.

This video accompanies a presentation entitled: "Being Honest With Ourselves: Putting Numbers Behind Green Business”. You can download a copy of the presentation here.

But the real question that arises from all this is “Can you really measure your Carbon Footprint?”  The average footprint for a person in North America is 20 Tons of CO₂ every year. The average for the entire world is about 4 Tons of CO₂ every year (Imagine the amount by which the rest of the world offsets the footprint of North America). Just look at the graph here to get an idea.

So back to the question we were trying to answer. Can you end up reducing it or eliminating it completely? Turns out you can. I’ll give you five ways you can reduce your Carbon Footprint today. If climate change is really a concern for you and you want to do your bit, you’ll do it today. Something like turning water off when not in use goes a long way.

1. Turn down the water heating setting to 130 F along with turning down the central heating slightly (try just 3 degrees reduces 1100 pounds annually).
2. Check the central heating timer setting - remember there is no point heating the house after you have left for work.
3. Turn off lights when not in use. Replace 75 watt bulbs with Compact Fluorescent lamps.
4. Inflate your car tires regularly (can save 400-700 pounds of CO₂ annually).
5. Install CFC free air conditioners. (Energy Star Products are certified to have low CO₂ emissions). Get cavity wall installation done. Savings are up to $350 per month. Cost can be recovered in 5 years. Turn off the air conditioner when you’re out.
   It’s as simple as this. Five small steps today are a potential starting point. Also, I’ve listed a few resources below. Most of these sources will help you calculate your personal Carbon Footprint and tell you how you can reduce it immediately with just minor changes to your lifestyle.
   

   Let my voice be heard. Let my impact be felt. Let me do something that can make a difference today.

   Resources:
   
   • http://en.wikipedia.org/wiki/Carbon_footprint
   • http://www.carbonfootprint.com
   • http://www.recyclingsupermarket.com/featured/carbon-footprint-a-beginners-guide
   • http://www.carbonfootprint.com/calculator.aspx
   • http://footprintnetwork.org/

What do you think? Is the Carbon Footprint something you’re worried about? Will you follow these steps? Write to me in the comments section and let me know.

Twitter Stream: Supply Chain Forecast 2010 and the Zero Rupee bill

It is time for another small baby step. I've noticed of late that a lot of interesting articles that I'm reading on a daily basis are coming from my Twitter Stream. I've begun to follow a lot of interesting people. I've also created a list of people related to Supply Chain. You're welcome to check it out and follow them - it might save you some hard work. Right now it has about 55 people in it but I keep adding more everyday. You might also want to follow me on twitter and make use of the links I share.

So I've decided that I'll share tweets every once in a while that show up in my Twitter Stream and that I find useful. I sure hope you find it useful too. The tweets themselves are property of the respective publishers whose profiles are linked from here. It is just one of the many ideas that I have for this blog. Tell me what you think.
Twitter Stream #01

@SupplyChainBlog: New Harvard Study: 30 Key Findings on How The CEO Engages With Social Media http://bit.ly/706jPQ #facebook #linkedin
@SupplyChainBlog: Supply Chain Guru Predictions for 2010: http://www.scdigest.com/assets/FirstThoughts/10-01-28.php about 2 hours ago via web
@subrigavar: Wal-Mart's efforts on grocery-including local growers in produce mix http://bit.ly/db6Hwk #WalMart#csr ? via @benkummer #supplychain 
@procurement: Zero Rupee Notes ... Not Just for India Anymore? http://bit.ly/dbbdWj #sourcinginnovation
@SCLBlog: Wal-Mart aims for greener supply chain - UPI.com http://bit.ly/9vfbIW
Do you like this idea of posting links that you might find useful? Let me know. Comments/Feedback are always welcome.