How big is 40 billion? Well, in a grid, it would be 200 million up one side and 200 million out the other, but that image is a bit tricky to project in your head. If we use dollars as our unit, it could almost approximate the total value of compensation and perks raked in by the CEO of Global Crossing in the past couple of quarters, but that image doesn't lead to productive thoughts. But $40 billion spread out over a year would mean about $110 million every single day, or about $5.5 million per hour, 24 hours a day for 365 days. That has a certain toothiness to it, I think.
Now imagine that your industry (and therefore, in some proportion, your own company) wastes, squanders, burns, loses, and flushes that amount--$40 billion a year--to correct errors created in the manual entry of ordering and shipping and purchasing and receiving millions of products. Wouldn't that trigger a vein-throbbing, spittle-spewing, fire-breathing tirade from the CEO, who'd seem to have good reason to threaten to fire every person in the company--starting with himself--unless fixing the problem became the top priority of the entire organization? What if you could cut that loss by just 1%--that would be a $400 million annual savings industrywide! Surely something can be done, right?
That sort of business-technology solution is only a tiny element in a vast and sweeping series of technological changes that are slowly coming together in the massive retail industry. From CPFR (collaborative planning, forecasting, and replenishment) to VMI (vendor-managed inventory), the retail industry and the hundreds of thousands of manufacturers that sell to it are embracing a comprehensive set of data-synchronization tools that should permanently relegate to the Museum of Business Horror Stories the manual processes and resultant errors that have allowed $5.5 million to be dumped down the drain every hour, every day, every week, every year. So when a company introduces a hot new product, retailers' systems will be able to see it, order it, stock it, and merchandise it immediately, instead of six weeks later, which is now the norm.
The full story, replete with amazing details, anecdotes, and in-depth analysis of the business-technology solutions that should spell the end of this $40 billion sinkhole, will appear in next week's issue, courtesy of senior writer Steve Konicki. In the meantime, the staggering numbers behind this story point to a question that's been around since hides were first swapped for roots: Where in your company are the pockets of seemingly inextractable inefficiencies? How are those preventing you from innovating, getting closer to customers, being a nimble and agile business leader as opposed to a glacial-paced fat-ass follower? What are you doing to root them out? It's not just a matter of doing the same thing more rapidly or less expensively--that's the easy part. The big payoff comes from unlocking information and pushing it inside and outside your company in a forward-looking way to let you spend more time understanding, developing, and selling what current and future customers want and need. It's the promise of truly collaborative business.