The Q-tip Strategy for Supply Chains

Take This Advice And Don't Stick It In Your Ear

11 June 2020 // Leave it to our contrarian investment friends at Chenmark Capital Management to find a lesson for innovators in plain sight on the bathroom counter.

Recently, they republished a post about the Q-tips paradox. It goes like this: In the near century since Leo Gerstenzang invented the ready-to-use cotton swab in 1923, they’ve become one of the most widely used personal care products—and a powerhouse brand. In 2018, the company sold more than $200 million of them. That’s somewhere around 35 billion Q-tips worldwide.

Yet, nearly every one of the world’s Q-tips is used exactly for what the manufacturer warns customers not to do. “Warning: Do not insert inside the ear canal. If used to clean ears, stroke swab gently around the outer surface of the ear only.” 

Though that warning has been on Q-tips packages for more than 50 years, it falls on, well, deaf ears. Nearly all of us ignore the advisory and swab away. That adds up to lots of visits to the otolaryngology doctors by people who are just doing what everyone else does. 

In one recent study, more than half of all those doctors’ patients admitted to habitually sticking cotton swabs in their ears. Henry Ford Health System, which conducted the research, concluded that there’s “a direct association between cotton swab use and ruptured eardrum”—not to mention impacted wax and other problems.

So, what does all this have to do with supply chain (or in Chenmark’s case, investing)? The bloggers write that learning about the history of Q-tips is “a good reminder that seemingly innocuous or mainstream practices can be entirely wrong. Just because someone else is doing it doesn’t mean it’s the right thing to do.” 

Investors who mimic broader market trends and strategies are consigned to average results at best. Being like everyone else is the very definition of average. If you want superior returns, Chenmark argues, you have to think for yourself and come up with different approaches.

That advice may be even more valuable for supply chain practitioners. In an industry where caution is the norm, there’s every temptation just to follow industry “best practices.” That doesn’t merely yield average results; it can also expose you to higher risks for supply chain disruption and continuity in times of crisis like recent months. Just like ears, no two supply chains are alike. So, you need operations that take your specific flows, conditions, products and customers into account.

Truly transformational processes and results only come from fresh and independent thinking. At Morgan, we specialize in transportation network transformation—analyzing operations data and finding new ways to get goods from factory to consumer in the most efficient ways possible. 

 


 

Heard On The Dock

This is a very emotional time. When you’re emotional, you tend to be distracted … by things that would not fool you in more normal times.

--Bob Verret, CIO, Dupre Logistics,
on recent, increased hacking threats for supply chain workers

 


 

While You Were Shipping…

More Recent Stories You May Have Missed That Caught Our Eye

Hacking Is A Symptom. (Commercial Carrier Journal). Malicious hackers have seized their opportunity to attack with so many crises competing for attention and so many workers connecting from home. According to Mimecast, a security firm, the transportation industry has been one of the top three targeted business sectors since the outbreak of COVID-19. “This is a very emotional time,” Dupre Logistics CIO Bob Verret told an online audience at CCJ’s Upshift symposium. “When you’re emotional, you tend to be distracted” and click on things that wouldn’t fool you in more normal times.

BOL Goes Electric? (Journal of Commerce) Stop us if you’ve heard this one before: An industry coalition is trying to create a digital standard for bills of lading (BOLs). This time, it’s the Digital Container Shipping Association, which estimates that a successful transition could save the industry $4 billion annually at a 50 percent adoption rate. It would revolutionize efficiency for title transfers, banking and insurers.

E-BOLs have been a holy grail for years. And while the basics aren’t hard, the devil is in the details. “We have to be humble and say a lot of smart people in this industry have [already] really tried,” said DCSA CEO Thomas Bagge.

And Nikola Gets A Charge from Its Merger IPO. (Wall Street Journal; subscription-based access). To date, the electric trucking company has focused on big-rig and other commercial vehicles. But its stock got the biggest jolt this week, just four days after it began trading, when Nikola Motors CEO Trevor Milton announced reservations and a coming prototype for The Badger, a new consumer pickup. 

The announcement juiced Nikola stock to a market capitalization to more than $30 billion this week, higher than Ford Motor Company’s $28.8 billion and FiatChrysler’s $20.5 billion. “My goal is to take the throne from the Ford F-150,” Milton said. 

Nikola has yet to deliver its first truck of any kind, but it has more than $10 billion in pre-orders for its hydrogen fuel-cell day cab and long-haul commercial vehicles projected to debut in 2023, and its battery-electric powered day cab, which is expected in 2021. The biggest order comes from Anheuser-Busch, which has committed to 800 trucks.

Has Digitization Gone from Useful to Essential? (Wall Street Journal; subscription-based access) For years, industry execs have told analysts that end-to-end, digitized visibility is a top priority. The Wall Street Journal reports that the last several months of supply chain disruptions and unreliability have made that capability necessary for survival. “You’re seeing an acceleration of a lot of that technology,” Gartner Research VP Bart De Muynck told the paper. He said that location and condition monitoring sensors have “become a necessity,” especially for high value products.