For those of you still locked in Windows operating systems, you should do an experiment - go to www.distrowatch.org and take a look at the number of open source operating systems available. If you’re willing to experiment, try out any distributions that offer a “live-CD”. Downloading and burning one of these files to a CD will allow you to try out the software using your CD as an effective “hard drive” (the live-CDs do not install to your hard drive so you can remove the CD when you’re done and reboot back to your old system). Some people have disabled booting from the CD in their computer, so you may need to make that change (press F2, Del, F10 key depending on computer manufacturer during initial boot and change drive seek/boot order). Do keep in mind you will notice some performance lags running from the CD that you wouldn’t have from a regular Hard Drive installation.

If you select a version of Linux that offers Open Office, you can compare the open source productivity suite to Microsoft Office. You can read and save in “.doc”, “.ppt”, and “.xls” formats so you can share your documents with co-workers. I would suggest trying out “Kubuntu” as a starting point (some distributions can be too finely targeted for a general user), www.kubuntu.org. If you use a re-writeable CD you can try out several different varieties and avoid the “coaster” problem if you don’t like a particular flavor.

What does this mean for business productivity? A lot! Small startup firms can get underway with very little capital. I’ve tested a small installation that allows a mini call-center (or marketing, finance, or shipping group) to run on ten year old “scrounged from friends” 486 and Pentium I’s. Recently, I came close to starting up a small manufacturing company myself and would have run the entire plant for the cost of some ethernet cables, a couple of inexpensive network hubs, and a shipping label printer. Larger companies can retrofit their workforce with similar systems instead of “upgrading every three years”. One study I looked at, buying new equipment for traditional vs open source options like the above installation (and rather than starting with re-using existing assets), cut the Information Technology (IT) hardware and software expenditures by 70% - something to make any CFO or CEO or investor take notice.

Is open source coming to your neighborhood? Check out the chart on this link: (Firefox)
Most of these users are running Firefox under Windows (baby-steps are ok), but you can see the market cross-over point has been passed. If your company is on the medium to large size, you are probably already running open source operating systems on the “backroom” IT tasks like email servers, routers, file storage servers, and so on - and most non-IT employees don’t even realize it (except for the fabulous up time those devices and users enjoy under open source Linux).

Drop me a line if you’re interested in more details on open source - or have had your own success with an open source installation (click on the link in the “about” section at the top right of this page). In case you’re interested: my consulting web site, this Blog & updates, and all my daily computing needs are met running open source software. I switched after getting really tired of daily Windows lock-up events and the “blue screen of death” (including losing work since my last file save). Then when re-booting, Windows thumbs its nose at me and says I should be more careful and properly exit when I shut down my computer!

Microsoft will certainly improve its software offerings, and will need to with the growing Linux community and especially now that Apple computer is building with Intel CPUs. We’ll see how they do.

Cheers!

Don’t be too quick to run to China. Normal economic forces are at work in the massive country (China decline). Leading ‘canaries’ are the textile companies cited in the article. Computer and related technology companies will make the move to be followed shortly by the automotive and other heavy industries.

Taking a break with some Mexican white collar employees at a Mexico City automotive parts supplier in the late 1990’s revealed how concerned they were with India. This was an interesting conversation since, at that time, the noise in the US was still on Mexico taking US jobs (China was on the horizon but not really leveraged like it is today). The common mythical valuation by workers was that moving US jobs to Mexico was 1/10th the cost while these workers believed India was 1/10th the cost of doing equivalent activities in Mexico (they also pointed out that India had nearly the same climate they had). India also has the advantage of speaking “The Queen’s English”, encouraging the fascination for putting call centers there (Dell computer corporation made a recent announcement to expand their call centers there, again). Then, the last time I checked out the US Census Bureau statistics, India was projected to surpass China in total population by 2015. A few forward thinking companies have mostly bypassed the China market and have headed toward India - but that should be a separate post.

Chasing the lowest labor cost around the world involves significant investments (management travel, factory construction, equipment sourcing and setup/debug, infrastructure surprises, and so on). Setting up new shipping routes. Training everyone. Sleepless nights worrying if the far-flung colonies are working smoothly and won’t revolt (with a “Boston Tea Party”). Then in less than ten years to “pull up the tent stakes” and move to another country - and later repeat. Sure, you recognize the risks and expense in following the herd, but can you compete any other way?

What if you stay here (in the US)? It’s not as glamorous as spending weeks away from your family, nor taking twelve to eighteen hour flights and living in taxi cabs, but there are benefits.

European corporations have realized the US can be a cheap labor pool. Toyota has realized the US can be an inexpensive labor pool - they are continuing to build US assembly plants, and have a technical center in Ann Arbor, Michigan and a design studio in California. Granted it’s easier and lower cost to assemble parts shipped in bulk from off-shore in tightly bundled packages compared to “shipping air” in finished automobiles. And while there may be some political advantage of higher “value added” actions in assembling in the US, a significant portion of Toyota’s end sales do happen here.

The US is frequently the final destination for a lot of consumer products. Rather than having a 45 to 90 day inventory risk (what’s the cost of a defect found at the store when 90 days of product sit between the store and the manufacturing plant that then corrects the problem?). If the plant were in the US there might only be a few semi-trailers of material that needs to be quickly rerouted and replaced.

There is generally an educated workforce, that if rightly motivated, can produce astounding savings. Costs can be removed from any process and effort can be reduced on current products to enable the existing workforce to increase sales productive capacity. How fast do your profits go up if you can spread existing fixed costs over 50% more sales? Once you subtract raw material expenses there will be a good amount dropping to the bottom line.

A quick example: An oil baron in the late 1800s took a tour through his oil packaging plant. There was a station that soldered the lid onto the oil can with something like 5 drops of solder. He stopped to watch the worker and the machine for several minutes. He then suggested to the worker to back off on the number of drops until the can leaked. After some iterations (some unsuccessful) the change resulted in a 40% reduction in solder usage.

Another example: An automotive bumper assembly (brackets, fascia, support structures) had around thirty fasteners. Five workers were needed to place parts and operate the screw guns to build this sub-assembly. Moving this work to Mexico/China/etc seemed to make good sense; until an enterprising engineering team figured out how to reduce component count to the point where there were less than six fasteners. Now one worker could do the activities of five (and with less effort than any of the individual five were expending before). Excited, the engineers thought they might even have a few concepts to make further improvements. The other four workers helped back-fill a couple of retirements and ease bottlenecks elsewhere in the plant - allowing the plant to produce more vehicles and support more sales, which is the only real way toward long term job security.

A final, and reverse, example that you may have experiencee at home - especially if you have recently had children under the age of five: Many plastic toys shipped in “from China”, or other low-labor countries, have several dozen wire ties wrapped around them and twisted up tight to the packaging. Excited kids can’t play with their new gift until a handy adult finds a pair of pliers to unwind the spidery mess (and what is the choking hazard from these wires and the plastic blocks used with them?). Are the toys wired in the boxes to prevent theft at the store, to prevent the contents from shifting during transit, or for some other dastardly evil conspiracy? A lot of labor goes into that tie-down wiring project – excessive costs for the manufacturer and lost time and nerves for the parents. I expect the main reason is to ensure the toys do not migrate during shipping, but there are better “fastener” options. Maybe a reader knows the root cause and can share some background here.

Cheers!

Over at Fast Company they discussed a store that publicly destroys products that they were unable to sell in an attempt at maintaining brand exclusivity (Terminal Discounting). There are some serious flaws with their public display of destruction and I offered some better alternatives to the retail operators in the comments section of the article.

Many stores suffer from the same problem. The (unnamed) national store in the article should really investigate Six-Sigma techniques (otherwise known as a data driven root cause and decision process) in determining the product offering mis-cues that resulted in the need to discard merchandise. Insufficient pre-testing of new fashions (“we think the color this year is Yellow…Oops, it’s Green and we have a warehouse full of Yellow”) or mis-allocation (cowboy hats in Maine and snowblowers in Texas) or a supply-chain that is so long and convoluted it takes months for store signals (“we need Green”) to reach the manufacturing supplier (“ok we changed colors in the spray booth”) and then to clear out the in-process inventory scattered across the world in ships, warehouses, and retail stores.

Many retail stores find themselves in the awful quandary of shortages/stock-outs of key goods and stockpiles of unwanted merchandise. Which is, of course, the typical symptom of an ailing delivery system that can be improved with Lean/Agile production concepts. The simple solution is what one general from the ancient world told his lieutenants to “get ground truth”. Go to the individual stores and see what the customers are actually buying and demanding, then build a “production” process from raw materials through retail to the customer to deliver those products as fast as possible with minimal inventory along the way. Simple to say, complex in concept, but very possible to implement.

And it doesn’t matter if you’re selling cars, computers, clothes, or housewares. You’re providing a service in transforming raw materials into finished end-products that a consumer can take home and improve their lives. Do some serious thinking and avoid smashing the glassware.

Cheers!

The computer hardware industry is frothy with speculation on mergers and acquisitions these days. This usually happens when growth rates are slowing (otherwise known as a maturing industry) and keeps everyone entertained and excited about prospects. A few years ago there was the big Compaq/HP linkup - nearly catastrophic – the distraction of reorganizing and merging these two companies gave others, notably Dell, plenty of marketing opportunity (very similar to the DaimlerChrysler merger for those auto aficionados – an advantage Toyota, GM, and Ford were quick to squeeze). IBM exited the desktop hardware business gracefully by selling off their lines to Lenovo Group Ltd in China. Apple struggled with processors and ended up latching onto Intel for their next round. Gateway has changed CEO’s, marketing strategies, and headquarter locations as fast as a cow can change its spots as it tries to keep its top tier position. An article in “The Deal” (X) urges Gateway to herd in the blunders since they are being squeezed from Dell, the improving HP organization, and offshore competitors. They suggest Gateway should put itself up for sale. But there may be another, and better, route.

Despite the stickers slapped on the cases, most of the largest computer OEMs are sourcing components from the same supply base. As an example, I have two and used to have four computers in my garage with the exact same motherboard and processor produced by the different OEMs (straddling the automotive business, that’s like having the same engine and transmission in a GM, Ford, Honda, and Toyota “appliance”) – they each had different cases and boot splash screens embedded in the BIOS, add a few “no consumer serviceable components” stickers and no one seems to look inside. It’s evidence the computer manufacturers have done a much better job branding their products than the automotive manufacturers have done. However, the computer branding world is shifting.

For many good reasons, the principle owner of VoodooPC (X) has come up with the theory that Dell should purchase Alienware (X) since Dell desperately needs to shore up it’s high end branding (X). Dell has done very well with the high volume low and middle markets, but profits have eluded them (worrying to Wall Streeters) and so they started their pursuit of things eXtreme. However, there is probably another company that more needs the link than Dell, would be able to integrate the partnership faster, and would actually get more mileage out of it than Dell. And that’s Gateway.

The reason is Dell has more invested in their XPS gamer lines (I get a catalog practically twice a month) that their brand managers will be resistant to change (otherwise known as “worried about keeping a job”). Dell has taken the path of brand extensioning their name onto everything they do (big flat-screen TVs, portable music players, etc) and will more likely continue that pattern. They also seem to be wavering on their Intel processor alignment and are probably busy huddling to really figure out a possible AMD migration plan.

Gateway already has set out different divisions to keep their brands focused on different markets (eMachines for the value equation, standard Gateway for the middle market, and a brand hole at the upper end…). Alienware would provide the capability of servicing that high end market, offer the cache, and more volume capacity than other boutique high-end assemblers. Gateway does have some cash and, while currently low, stock with a good upside if they were to add a customer Gateway to those Alien environs.

Cheers!