May 1st, 2009

Atoms or electrons: How does Hasbro make money?

Posted by AMR Research @ 8:45 am

Categories: Intellectual Property, Supply Chain

Tags: Supply Chain, Hasbro Inc., Supply Chain Management (SCM), Enterprise Software, Software, AMR Research

The global supply chain reaches all the way from Rhode Island to China and back.  Tonka trucks, GI Joe action figures and my Little Pony are all real products sold to real kids.  People who obsess about “good manufacturing jobs” fret about how nothing is made in the USA anymore, and toys like these were among the first to move offshore.  The question however, is where does the money get made?  Thousands of Chinese toy factories have closed since the recession started and millions of workers are now cooling their heels back home. 

Meanwhile, Hasbro just announced a deal with Discovery Communications to launch a children’s channel and is prepared to put $425M into the effort.  They also have a film coming out based on GI Joe from Paramount and video game deals with Electronic Arts that have increased sales of Monopoly by 40% in recent years.  Ralph Nader’s lobbying group is whining that the Discovery deal amounts to “nothing more than a scheme to deliver programme-length advertisements over television”.  Imagine how they must hate the GI Joe movie or the sinister addictiveness of online Scrabble!

The thing is, value happens when someone plays.  Whether they do so by watching TV or a movie or by gaming on their iPhone, the outcome is the same - pleasure for the consumer.  Hasbro isn’t just trying to get us to load up on stuff - they are trying to engage our sense of humor, curiosity, or competition.  Credit the creative geniuses of Pawtucket to understand this while also recognizing that technology and the global supply chain means alot more than track-and-trace IT systems.  The digital supply chain, which moves electrons is faster, cheaper, and for some products better, than the physical supply chain built to ship atoms.  AMR’s spring supply chain conference is all about this and its almost sold out.  I guess the supply chain folks see it coming.

April 28th, 2009

China and IP: the piper will get paid

Posted by Kevin O'Marah @ 9:21 am

Categories: Intellectual Property, Supply Chain, Supply Chain Risk

Tags: China, Brand, Industry, IP, Branding, Piracy, Supply Chain Management (SCM), Network Technology, Networking, Marketing

As everyone knows, and as our quarterly supply chain risk data proves, China is a den of thieves as far as IP is concerned.  Today’s New York Times has a lengthy and prominent article on brand piracy in Shenzhen’s cell phone industry.  The practice of making and selling black market phones is so rampant that 20% of all those sold in China are thought to be knockoffs.  The explanation of how this happens is candidly offered by a sales manager at Triquint Semiconductor who makes components for the industry:

“Five years ago there were no counterfeit phones.  You needed a design house.  You needed software guys.  You needed hardware design.  But now a company with five guys can do it.  Within 100 miles of here you can find all your suppliers.”

What has bugged me is the audacity and criminality of the Government who happily looks the other way as expensively developed technologies, industrial designs, and brands are flat out stolen.  One Vassar professor is even quoted in the story spinning this scandal as a virtue:

“Chinese grass-roots companies are actually very innovative.  Its not so much technology as how they form supply chains and how rapidly they react to new trends”.  Charming - reminds me of Napster as seen through the eyes of the music industry, or the go-getters out cutting down teak trees in Malaysia.  There is a reason we call it piracy.

But rest easy, poetic justice is coming to the rescue.  Remember the $1Trillion or so of dollar denominated debt held by the Chinese?  Well, after we print the trillion extra dollars it will take to undo our credit-sparked economic crisis those debts will be alot less expensive (to us) in real terms.  Think of it as a $500 billion bill being stuck on Beijing to pay us back for all the money that should have been made by Microsoft, Apple, Paramount, and Nike for their IP. 

The Piper will be paid.

April 10th, 2009

Next big land rush: believe it or not, is knowledge management

Posted by Kevin O'Marah @ 8:11 am

Categories: ERP, Enterprise Architecture, Intellectual Property, Supply Chain, Supply Chain Applications

Tags: Supply Chain, Collaboration, Knowledge, IP, Entertainment, Supply Chain Management (SCM), Knowledge Management, Strategy, Network Technology, Networking

This sounds silly for anyone who has ever been involved in the typical hapless library exercise of a digital “knowledge management” initiative.  The lasting image for most of these efforts is of a black hole - everything goes in, nothing comes out.  But get ready for a change of tune.

The root of this is an exploding need among all players up and down the global supply chain to harness and leverage their intellectual property without giving up control or worse, having it hijacked and used against them.  An example is the kind of engineering intensive knowledge stored in the heads of thousands of soon-to-retire manufacturing process guys in the chemicals industry.  I talked to ExxonMobil about this and found they’re keen to solve it before the IP ends up sitting on a beach in Florida somewhere.  At the exact opposite end of the spectrum is the issue of managing IP for a company like Hasbro.  They have pure entertainment images that will manifest as profitable toys like Barbie, unless someone raids the files and dumps a load of cheap counterfeit knockoffs onto the market.

How do you capture, catalog, update, distribute, and otherwise collaborate on knowledge (i.e., IP) when it ranges from expertise to trademarks?  It turns out practically every technology vendor category has an answer for you.  Collaboration vendors from little guys like Jive to big guys like OpenText have a story.  B2B and EDI guys like Sterling Commerce, GXS, and Inovis are part of the puzzle.  PLM guys like Dassault, PTC or Siemens are certainly in the mix.  Digital Rights Management vendors have been thought of largely in terms of media and entertainment uses, but players like Adobe, EMC, and even Oracle (with its Stellent property) deserve a look on this front.  Plus the security vendors like Symantec, EMC and RSA need to be considered.  And finally, all the platform guys figure into the equation - IBM, Microsoft, and Oracle all appear across the board with “solutions” in each of these categories.

The net of it all is that manufacturers and retailers across sectors will absolutely need to handle the question of how IP works its way around the global supply chain.  One worry: letting Microsoft Sharepoint creep in as the defacto standard for management of IP in interenterprise collaboration.  Its so easy to set up and start using… it naturally links to your most familiar workspace, namely Excel, PowerPoint, and the rest of MSOffice.  But where is the control and scalability?  I’m not saying Microsoft can’t do it, just that renegade groups of employees doing it on their own will almost definitely end up making a mess, and possibly and expensive one.

Missing from the list of vendors with a solid pitch here is SAP.  The ERP backbone of choice for so many companies may have a stranglehold on transactions, but they lack punch when it comes to interenterprise collaboration, relying on partners like Seeburger and Crossgate.  This may seem a sideshow in Walldorf, but every industry is beginning to see the value of stuff that is presently flying around the digital supply chain, largely unsupervised.

I’d love to hear ideas on how best to map out a strategy for this problem.

March 6th, 2009

Cydia and Apple: Lawsuits will be a sideshow

Posted by Kevin O'Marah @ 7:05 am

Categories: Intellectual Property, Supply Chain Risk

Tags: Supply Chain, Lawsuit, Apple Inc., Cydia, Supply Chain Management (SCM), Enterprise Software, Software, Kevin O'Marah

Today’s Wall Street Journal has a big article about a new renegade competitor that is challenging Apple’s App Store and in the process whetting the appetites of IP lawyers. With all due respect to the legal eagles involved, technology and the global supply chain should make this debate moot. 

The deal is this: Cydia’s founder is an application developer who, like many, doesn’t see himself as an enemy of the cool company of Cupertino. He does, however, want to have other app developers able to get to market and get paid for their IP. Apple, however, stands to lose some pretty serious margin contribution (30% commission on estimated 2009 sales of $800M, according to Piper Jaffray) and, arguably, a degree of control over the cherished User Experience. The legal issue is that Cydia’s apps work only on “jailbroken” iPhones, a process (or crime) that involves installing software written to modify the operation of the device. Cydia’s founder, Jay Freeman, claims 1.7 million iPhones have installed this software to date. Apple, understandably, sees a copyright infringement. Lawyers see an irresistibly interesting case pitting the little, ironically named Freeman, against the sinister controlling monopoly—almost like the famous 1984 Apple Super Bowl ad being shown in reverse. Read the rest of this entry »