What LCC Manufacturers Want Most

In my last blog post here, I speak about the challenge in working with a LCC. Today I'm going to talk about the challenge in running a business in LCC and a golden opportunity for coaching and education.

For those that are familiar with running a factory in China, you've probably noticed the sharp increase in cost of resources (energy, material, labor) in the past 4 years especially around the cities near the Pacific Ocean: Shanghai, Guangzhou, Chaozhou, Shantou, etc. Government's mandate on increase in labor cost, inflation, and many other reasons add to the fact that more and more companies can't survive where they are today when the cost of production had tripled while the consumers are still paying the same prices. The phenomenon we are seeing today is that more and more companies (large or small) are moving inland where cost of resources are still low enough to run a profitable operation. Some companies have even packed up and moved to other LCC where the situation was more desirable.

There is still an advantage in staying near the ocean; the ease of access to exporting services and seaports helps them get their products to the customers faster, it's easier for your customers to visit you (don't have to take multiple bus rides, fly in a should-have-been-retired turbo-prop, etc), amongst other great reasons. The question becomes how does a company effectively reduce cost of production, enough to gain an advantage over its competition without having to move?

HereTryThis: For those of you that are knowledgeable about lean manufacturing, 5S, and Six Sigma approach to problem solving, this is your golden opportunity to take what you know and teach it to those who really need it. In my own experience, factories in China are rarely setup with a good foundation of Design for Six Sigma. Waste (in the form of T.I.M.W.O.O.D.) can be picked up in all aspects of the operation. The problem solving technique often used to speed up production is to throw more people at it; with the last labor rates it made sense but not with today's labor standards.

To start off, put together a team of experts (willing to travelling and residing in LCC) and hire a group of educated young intellectuals from the LCC to 1) help locate companies that need this service, 2) translate the material, and 3) become the liaison to negotiate contract. As this matures, automate this process and become a service that offers training that certifies local experts that can be contracted out to many different cities to work with more clients.

Low Cost Country - First Thoughts

One of my function at work is being the suggestion box (or the punching bag) for those people who would like to vent about something, anything. Something I hear over and over again, not only in my current position but in all of my previous occupations including the experience of operating an international trading business is the rumor that outsourcing to Low Cost Countries (LCC) do not work well.

LCC makes a whole lot of sense for its "obviously" lower cost in labor, the time difference so work can get done in LCC while people are sleeping here, and companies can concentrate on developing and keeping its core competencies in-house. The pool of talent isn't terrible at the LCC either: there are plenty of people with an American education (Masters and/or PhD). I truly believe that (majority) people don't goto work each day thinking of how to sabotage the companies they work at, so why does LCC earn such a bad name?

The complaint I hear often from people are: "yes they're cheaper, but they take twice as long to do the work," or "they did the work wrong the first time, the second time, and they still didn't get it right the third time," or "I can't talk to them, they don't understand what I want." These complaints almost always has to do with the break down in communication or an expectation not satisfied (a gap), and not the fact that the work is being done outside of the company. This is not so different from the "just throw it over the wall" mentality existing inside a company. Ever point to an engineer and say "this design is all wrong" and have him reply in return "you're just not building it right." Ever point to a buyer and say "you bought the wrong parts" and have him reply in return "then you must have given me bad info."

 To me, improving the working relationship with LCC's is a golden opportunity because if you're able to figure out how to work with LCC's efficiently, you'll be ahead of your competition. Another way of saying it is, if your competition figures out how to provide an end product faster and cheaper to the customer than you, you're going to be in deep trouble.

HereTryThis: The next time you hear a complaint about working with a LCC, first understand if the complaint is objective or subjective. There is nothing you can do about subjective feedback. Objectively if a gap does actually exist, use your favorite problem solving techniques (Six Sigma DMAIC or 8-Step Practical Problem Solving) to find the rootcause and put together a plan to eliminate the gap.

Trust: The Key to Customer Satisfaction

People often ask me, "why isn't my marketing campaign working? I've spent lots of money creating advertisement material and hiring people to get the word out there, but my returns are not great." My first response to them is: "are you conducting an advertisement campaign or marketing campaign? Because it sounds more like advertising you're trying to do." What's the difference?

Seasoned marketing managers would tell you that that advertisement is an element of a successful marketing campaign, amongst other elements such as marketing feedback, research and development, consumer outreach. Traditionally, most companies (especially small businesses) would focus most of the marketing budget on advertisement via flyers, direct mailing, cold calling, door to door sales, etc. The communication only goes one-way, where content is pushed to the consumers without any means for consumer to provide feedback. It's almost like saying "I know what's best for you, just buy it." This bypasses a critical element of marketing which is consumer engagement.

People give credit to the uprising of "Web 2.0" and social networking websites/apps for bringing focus to consumer/user engagement where feedback adds valuable content to the web experience for other consumers/users (think yelp, youtube, tirerack, FB). I would argue that  the emergence of these websites and apps only helps make accessing (communicating) users or potential consumers easier.

I believe firmly that the purpose of any marketing campaign (no matter how large or small, product or services) is to gain trust from your targeted consumers. Through trust comes customer loyalty, engagement, and in the end satisfaction. The basic way of gaining trust, although it may not be intuitive for most people, is to start by listening. 

Ever get in an heating discussion with a sibling or family member where you know you're right and only care about getting what you want to say 'out?' Does this help you gain trust from the other party? It sounds very much like what I stated about traditional marketing campaign above where: "The communication only goes one-way, where content is pushed to the consumers without any means for consumer to provide feedback." 

HereTryThis: The next time you're planning for a successful marketing campaign, start by asking the question "how do I gain trust from my targeted customer?" Whether you choose to marketing yourself on the internet or not, the internet and its available tools enables you to reach out to and interact with thousands of people in a short amount of time. Good luck.

Converting the desire to spend to fuel for innovation

There are so many materialistic things in the world I would like to have; nice cars, theater style home entertainment center, the latest technology and gadgets in my hands, and the desire to have them can sometimes be overwhelming. Ever spend countless hours searching online for things that you know you shouldn't buy but really really want to? Ever hear that two contradictory voices in your head going back and forth, one telling you "yes buy it you only live once," and the other saying "no, don't waste your money." It probably doesn't help much when your friends are nodding their heads saying "do it!"

I've learned that every time I get stuck in this situation, I would always ask myself these following questions:

• "Do I really need it or do I just want it?"
• "Can I comfortably afford this under my current budget or am I eating into other funds (food, mortgage, bills)?"

Now if it's something I can justify meaning I actually need it (ex: a replacement computer for my aging machine) and that I have enough money in the banks to afford it (note: not credit cards), I would buy it; no heart burns. On the flip side it's different.

Let's just say you really want to be able to own a Ferrari F430 (MSRP $190K). If you're an average person in the US, there is no chance you would be able to afford it with your current income situation; so what do you do? Simple: take that desire for the F430 and turn it into fuel for rising above being an average person. 

HereTryThis: The next time you find yourself beginning to surf on the internet to look for things that you wish you could have, spend that time instead on coming up with innovative ways to become able to afford them. The next time you find yourself starting a conversation with your friends on how you would "love to have one of those," instead spend the time thinking of how to turn that dream into reality.

The paranoid parents with sleeping babies - First Thoughts

Have you ever been to someone's house and were asked to be very quiet because a baby is sleeping? You don't understand why it's such a big deal; the baby is in a room behind closed doors; how much noise is too much noise? You end up awkwardly in a room full of people staring at each other paranoid that you would be accused for waking the baby up.

The truth is there's nothing more desirable for a parent than when a child has a good nap/sleep. Without enough sleep, babies are cranky, fussy (not fuzzy), and throws tantrum fits. Baby nap time is also a time when parents can relax. How do parents relax when they can't make noise in the house themselves? How do parents host others in this situation?

HereTryThis: Sound "loudness" can be picked up by a common device called a decibel (DB) meter. It's typically known to be used by traffic police to measure noise of illegal automotive exhaust systems. Imagine having sensors placed inside a baby's room and a remote reader/indicator that parents can carry with them (or displayed on the screens of their smart phone, laptop, Apple products, or computer). When babies are woken up by loudness of noise, the program can record the point of occurrence or the DB level that lead up to the baby's awakening. Once that threshold is set, the reader/indicator will warn people when their DB level is reaching the levels that may "potentially" wake up the sleeping babies.

Go ahead and watch your favorite TV show, listen to that music, or chat away with your friends. Just keep an eye on that meter to not go over your DB limit!

The passion of sharing and mentoring

I get up each and every morning, motivated by the fact that today I have another opportunity to share with others the lessons I've learned throughout my life experiences. My current goal in life is to be the catalyst to help those with great ideas blossom and achieve their own personal goals.

Having taught a college class on "how to start your own small business," I've had the pleasure of interacting with many young and bright individuals that just can't wait to tell the rest of the world their "master plan." I can see the passion in the eyes and hear in their speech of those who really want to make a difference. I truly believed that every one of my students could be successful in achieving their set goals, but without proper guidance and mentoring, it is easy to get lost or even worse give up.

The key in being successful in anything, I've always advocated, is to understand and continually evaluate the driving force behind your desire to achieving your end goal. Many times people confuse the driver with the end goal. An example of such would be "I want to be famous and rich." That is an example of an end goal, but is not the true driving factor behind what you do. People, especially young individuals, focus on the big money, becoming the next google or facebook buy-out,  and they forget the true reason behind what they do. Unknowingly the carriage gets put in front of the horse, and all of a sudden everything comes to a halt. This is not saying people should not think backwards, rather once a going forward plan is established, the motivation for keeping the wheels turning is the "why" behind what you do. The planning can and will always change (this is called life), but the driving factor shall not change.

When friends, family, peers, past students, and acquaintances would approach me with "great ideas" they want to discuss with me privately, I've always entertained every request and have kept my promise for confidentiality. We would do a simple exercise on how to evaluate your ideas first to screen out any low potentials followed by asking the individual "why do you want to do this?" Responses that are derivatives of "benefit-to-self" or worse yet lack of response typically means trouble down the road.

People should constantly remind themselves of "why" they do what they do, and sometimes it takes an outsiders or mentors to do the actual reminding.

Here Try This: Help a friend who may be stuck or struggling with achieving his/her goal by asking the question "what is the driving factor behind what you want to achieve?" Do not probe, agree, or disagree with the responses; simply listen. A simple question like this one can help rejuvenate the individual and help him/her refocus on the motive behind the action.

Backwards Thinking or Thinking Backwards

Ever get stuck on how to figure out something? Ever feel lost in mid-pursuit? Whether you're thinking of the next big business idea, planning an event, or trying to find new ways to grow your career, try thinking backwards.

Here Try This: Feelings of aimlessness or lost typically comes from not having a well defined goal. Let's take a lesson from "Alice's Adventures in Wonderland" by Dodgson:



Alice: Would you tell me, please, which way I ought to go from here?
The Cheshire Cat: That depends a good deal on where you want to get to
Alice: I don't much care where.
The Cheshire Cat: Then it doesn't much matter which way you go.


Everything starts with knowing where you want to be or what you want to achieve in the end. If you're stuck on something, ask yourself "what is the ideal end result of what I'm doing?" You would then follow-up with repeatedly asking yourself "in order to get to my ideal end result, what do I have to do to achieve it?"

Let's say, for example, you have your heart set on becoming a concert pianist. The next question would be, in order to become a concert pianist, what do I have to do to achieve it? Your response may be "I'll need to understand how to book my own concert, I'll need to be competent in public performance, etc." Then you'll ask, in order to book my own concert, "I'll need to find an agent who understands availability of venues and can get a big crowd to attend," and to perform competently in public "I'll need to find out how much time other concert pianist commit to practicing each day and with what aids (tutors, mentors, equipments)." Your repeated questioning will eventually leave you with a shopping list of things which can be represented by a tree-diagram.

Laying out your thoughts backwards from the end goal allows you to have a sturdy going-forward plan to walk on. It may be overwhelming to realize there's actually a lot of things you now have to do that you didn't think you had before. Next comes prioritization, organization, and execution; topics for another day.