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Procurement Reform bill becomes law and Memorial Day

Today is Memorial Day  and it is significant that President Obama and Congress strove to get the Procurement Reform Act ( officially  the Weapon Systems Acquisition Reform Act of 2009 ) passed before Memorial Day.

The defense industry and supply chain is remarkably "production" oriented. The focus is passively on what the Government  wants rather than proactively understanding the changing needs of  combat in different theaters. To quote:

 “By and large the government gets what it wants, when it wants it, for the price it’s wiling to     pay,” said Alan Chvotkin, executive vice president and counsel at the Professional Services  Council, who spoke this week at a panel discussion about the federal acquisition workforce. However, he said the procurement system still has room for improvements.

At the same discussion, Steven Schooner, an associate law professor and co-director of the Government Procurement Law Program at George Washington University, pointed out the Obama administration views contractors as lining their pockets at the taxpayers’ expense. Schooner said the president, Congress and the news media can’t treat contractors as pariahs because the government can’t operate without contractors’ support."

The intense public scrutiny of defense contracting results in contractors being treated as pariahs,as Schooner says. Consequently, mindless and irrelevant projects take a life of their own while combat troops have changing needs on the ground.Choosing and changing projects quickly is a top requirement in today's globalized world.

Let us hope, that efficiency and communication in the supply chain, right to the brave soldier whether in Afghanistan or South Korea,improves with the Procurement Reform Bill.

The Stimulus and Procurement Reform

Ever since the stimulus package was announced I have been asking friends in the supply chain community as to whether the stimulus package will create new jobs in supply chain and procurement. Logically if you are sourcing stuff, you need managers to both buy (supply chain) and sell (B2B).There were two opinions on this - one was that you can always get contractors to do more if you have a rate contract already set-up. The other opinion was that many local governments will ask for fresh bids . In fact, asking for fresh bids  could really cut down supplier quotes by as much as 45% , given the slow economy. This could in turn free up money for additional projects.

Yesterday, President Obama talked about bi-partisan  procurement reform primarily for the Department of Defense. Any reform means more work for supply chain and procurement management professionals and more jobs for for both B2B marketers and supply managers. Good news as far as this blog is concerned !

The Stimulus Package, Recovery and Diffusion of Innovations

Innovation is about change, change in a product, in a service or process. However, no matter how appropriate the innovation is it takes an understanding of innovation diffusion to get the target market to adopt it.

The stimulus package is an innovation to deal with the recession and hopefully most pieces will work. The "diffusion" of each initiative will take time.And every time you get stuck in traffic because of lanes closed due to repair think positive ! Maybe it's the stimulus package making its way to your town or commute....

Local Governments should consider  putting  up signs at construction locations that are funded by the stimulus - so that drivers feel more upbeat as they get through traffic congestion.

Some visible and physical signs will also start reducing the fear that people feel in a recession.

What types of B2B and Supply Chain jobs will the stimulus package create ?

I have been trying to figure out the kind of opportunities that might come up from the stimulus package - particularly in the B2B  and Supply Chain  areas. I think there will be plenty of opportunities in these areas if you start looking at what the stimulus is planning to do. For example, in the procurement space as towns and communities start re-building infrastructure purchasing skills should be in demand. Now the question is whether ongoing contracts will be expanded i.e. existing contractors will be given more work and they would hire or there might be more new contractors entering the infrastructure. A friend in the purchasing community thinks that new bids will have to be prepared, in record time, but there may not be new supply management jobs in the public sector, although some additional hands may be needed to develop and execute the contracting of all this work. If you are a professional looking for work  in these areas checking with the local Government- may be a good idea.

Then there is the construction supply chain ( I was recently reviewing this literature for an academic paper review ) and herein lies an opportunity for all those sub-contractors out there. They should really start gearing up their B2B marketing with both towns and well established contractors so that they are ready to execute projects. There are a whole lot of displaced professionals (IT , finance)  who have taken up temporary work like painting etc. and this is the time to put your name out there and start lining up your work force.

The stimulus funds would probably be spent at the town level and there is some talk of a deadline of spending the money say within one year and this calls for a  speedy effective local project selection ( which school to renovate  ? - probably a separate blog on this ), contractor and subcontractor selection and off course the direct workers on these projects.  Probably discussion will move to execution aspects of the stimulus as we move forward.....

Dubai and Caterpillar- learning from an India business and Chinese New Year of the Ox

It was during my recent India trip that I went in to meet several businesses in software,
infrastructure, engineering,food and chemicals.  What struck me was the enormous number of young people employed and the vibrancy of 7% growth that India is reporting. Lower than the 9%  growth that India was experiencing but not bad.It sure felt different - the secret is that most of the demand is internal to the country and conservative central banking practices have largely insulated India from the financial sector problems. You simply don't get a loan if you don't have the margin money and if you and your neighbor cannot prove that you have a job or viable income to pay back. The stodgy ways of Indian systems seem to have paid off for once.

Indians travel around a lot globally these days and a favorite transit is Dubai and I was shocked to learn that all construction is stopped in Dubai. This topic came up in casual conversation at a major coal supplier's office who had recently been in Dubai. Why was this - I asked and apparently this is because of the global slowdown,decline in oil prices and general slowdown in trade which is Dubai's forte.

Caterpillar , very involved with construction and infrastructure,was at the back of my mind and sure enough it is in the news today reporting a 18% workforce cut in the US. Clearly this recession is global and particularly hard for countries where internal demand is generally at low growth levels. India and China might still save the day and let's hope that the Chinese New Year of the Ox brings better luck in 2009.

US Senate approves India agreement for cooperation on peaceful uses of nuclear energy- a day before Gandhi's Birthday

I guess the bailout approval by the Senate eclipsed a very significant bill that was passed by the US Senate-A bill to approve the United States-India Agreement for Cooperation on Peaceful Uses of Nuclear Energy. Check out the official Senate announcement here - passed 50 minutes before the bailout bill. Interesting, I could not find any major US news report online on this very significant development, with all the other excitement surrounding the bailout and elections. I guess - the mainstream US media just has too many things going on.

In any case, the agreement will end India's 34 year  isolation from accessing the latest nuclear power technology and supplies. This is really special because as the Senators explained, although India is only one of the three countries that has not signed the Comprehensive Test Ban Treaty  the world's largest democracy India(with a great peace record)  and the world's oldest democracy - the USA would be able to make this agreement work.

The  co-operation between US nuclear suppliers and the booming electricity sector in India would provide business to US companies - at least 3 of the 8 initial nuclear reactors. This in turn would create  much needed jobs here - an estimated  250 000 US jobs , according to the US Chamber of Commerce.

A cause to celebrate the Mahatma's birthday today.The world seems to buy the idea that Gandhi 's India will remain peaceful and focussed on "green" nuclear energy development and not proliferate nuclear weapons.

Hurricane Ike and gas prices

Hurricane Ike has caused immense damage and hardship in the Gulf coast. 25% of the US refining capacity is in this area and most of this capacity is shut down and will take weeks if not months to come up. Despite crude oil prices being relatively low at about 100$ a barrel gas prices have jumped all over the US and may be back at 4$ per gallon and even 5$ per gallon. Apparently the wholesalers of gas have increased prices and retailers are doing likewise. In some parts, gas prices changed upwards as folks were in line to fill up. Ike was being predicted for some time and the refineries were shut down Friday. Could better supply chain co-ordination between refiners,wholesalers and retailers reduced this latest price increase? Perhaps...

Green in Beijing 08-08-08

The question of air quality at Beijing has assumed center stage as the Summer Olympics start in less than 10 days. Athletes are worried that the air quality will affect performance. Every fraction of a second counts for athletes at the Olympics and many athletes are planning to arrive hours before their events to avoid performance issues that may arise due to poor air quality. The Chinese authorities, on their part have closed  down air polluting factories and have taken millions of cars off the road and if necessary will take all cars off the road if necessary.

The focus on air pollution at the games will bring attention to air quality issues worldwide and that is a great thing. Some years ago New Delhi's air was unbreathable and then the Delhi Transport Corporation decided to convert all buses to compressed natural gas (CNG) and things improved dramatically. Taxis, auto rickshaws and many cars also moved to natural gas or the more riskier liquid petroleum gas (LPG) partly because of  laws but mainly motivated by significant  lower costs.

I guess cities worldwide will take a cue from the Beijing situation as will industry. This is a good time to examine air pollution issues in whatever organization's buy,produce or sell. Whatever reduction one can do will be good for business and the environment. A Win WIn !

Winning brings us back to Beijing and I am sure this will be a great Olympics as they open at 8.08 pm on 8-8-08 as this blog started counting about a year ago.

India Happy 60th Birthday-why a great global knowledge partner

As I watched Dr. Manmohan Singh, India's Prime Minister first pay traditional tribute at the Raj Ghat, the memorial built for Mahatma Gandhi the father of modern India and then unfurl the Indian flag I was struck with a sense of awe. Awe because India has achieved the seemingly impossible, built a democratic open society with a population of over 1 Billion diverse people with multiple differences in languages,religions and culture. I guess Gandhi figured out the moral path in an absolute brilliant fashion. His model was "Ram Rajya" the Hindu ideal kingdom of Lord Rama where the king and Lord Himself is extremely careful about public opinion and carrying people along with both government and personal actions. By being able to dovetail modern western democratic notions to ancient Indian ones the Mahatma formed the foundation that allowed Dr. Manmohan Singh an Oxford Ph.D. in Economics and a minority Sikh to become Prime Minister and be acceptable to a bunch of sometimes difficult coalition partners. Awe because India's President is a woman Pratibha Patil who replaced Dr. Abdul Kalam a rocket scientist who is  also a muslim. Awed because the President of the ruling Congress Party ( the Mahatma's party) is an Italian catholic Sonia Gandhi who dresses in a saree and had given up the chance to become Prime Minister, thus striking a chord among India's masses because this is exactly what the Mahatma would recommend and Lord Rama would approve!

On the ground however, poverty is still widespread and Dr. Singh emphasized that there was no success without ensuring basic living for all. He talked about healthcare and pensions for the 65 plus who are below the poverty line. Dr. Singh referred to the need for electricity and roads that have become, with drinking water, the top priority for Indian democracy in contrast to the more basic food,clothing shelter theme of  the eighties. Dr. Singh  was silent  about controlling corruption  but then the multiple newspapers and media have a great time  doing "sting" operations to catch politicians and officials  on the wrong foot as does the vibrant Bollywood film industry.

I wonder whether it  is just the sixty years or the ability to dovetail traditional democratic values, that makes democracy work in a relatively poor and populous country. In any event , democracy does work and Dr. Singh announced opening up of many more schools and Universities to thunderous applause. The goal was to eventually provide opportunities for low cost college education to 20%  of the people. Just being able to read and write was not enough according to Dr. Singh, people needed to do better on the knowledge front to be able to contribute to the new global order.

So what has this got to do with India being a great global knowledge partner? Simply this : that an open democratic society allows other global partners to know what is going on with minimal effort.
For example,  a few emails or well placed skype calls might get you a fast "on the ground" view from an Indian partner's friends and enemies! The picture may not be always pretty but at least you get the picture - not something you can say for partners in other countries with more closed political systems.

Minnesota Bridge Collapse and Infrastructure capabilities

The Minnesota Bridge Collapse is a most tragic event. CBS news  made the comment that there are over 80,000 bridges in the US that need repair. The aging steam pipe burst in New York caused a panic just two weeks ago.

Infrastructure is a strange thing. Countries that have less of it are typically "developing" countries like most of Asia,Africa and Latin America. In fact, the defining difference between the developing and developed world is the lack of reliable infrastructure like roads,bridges,power and water. Maintenance, as one of my maintenance manager friends used to tell me, is an unglamorous, unexciting affair. Maintenance is not seen as providing "news" value. Just consider, does it sound more exciting to add a sun-room or simply replace the roof and furnace? Clearly a new sun-room is as exciting as adding anew stadium than simply repairing an old  bridge or pipes.

Apart from the simply good human thing to do,  maintenance of infrastructure helps build the maintenance capabilities of US companies. Better capabilities developed in maintaining infrastructure can only help gaining infrastructure market entry world-wide for US companies.