The following commentary is a Supply Chain Matters guest posting contributed by Guy Courtin. Guy is a veteran and student of the supply chain and technology space, having held leadership roles at Progress Software, SmartOps and i2 Technologies.

North American consumers have gotten to know Old Navy as the “less expensive” alternative in the Gap/Banana Republic family. It is a wonderful store to get basics for the entire family at a very reasonable price. Case in point – a pair of basic khaki shorts there last year cost me $12. A very similar pair (probably came off the same assembly line) was priced at over $40 at Banana Republic! Old Navy has done a good job carving out its place in the market and fits well into the Gap universe.

Something else Old Navy does very well – Demand Shaping. While the Gap and Banana Republic do their fair share of promotions and attempts to shape demand, Old Navy has an uncanny ability to drive disproportionate traffic to their stores with what would seems to be minor promotions. Recently, Old Navy offered a one day in-store only, Solid Flip Flops for $1, (Limit 5 per customer).

One whole dollar…100 pennies…4 quarters….10 dimes, okay you get the point. And we are talking about flip flops, basically a pair of rubber with a plastic tube that fits between our toes…The amazing thing; this drives incredible demand for Old Navy. Just go to a store during one of these sales. It is the “lord of the flies.” Just read what some reactions are on the Old Navy Facebook page:

• What time do the stores open?
• is there a limit ??? and what time does it start
• I was going to get them for my wedding favors but it is limit 5.
• When does it start? As soon as the stores open? Or does it start earlier something like a Black Friday sale..?
• Old navy–is there still a 5 flops per transaction policy? Gotta make sure I have enough hands with me!
• I will be there at 5 in day morning again! Yay!

And one of my favorite posts “they are $1 at the Dollar Store year round.” But, that is not the point. Old Navy has struck a nerve with their audience and they have found a way, for $1, to do some serious demand shaping. Even the fans of the Old Navy flip flops state that they know they are not as comfortable as other brands, but for $1, max out with 5 pair and once they are worn, get rid of them!

The beauty of Old Navy is that since they sell a large assortment of basics, there is always something you “need”, a new pair of khaki shorts and a $9 solid polo that looks good, oh it is only $9 with my $1 flip flops. See what I am getting at?

Old Navy will drive greater traffic to stores and cross sell/up-sell once the patrons are there. Time this with the July 4th week, where many will be with family and loved ones heading to barbeques and the beach (I will most likely be working…) and you have the perfect demand shaping opportunity.

Old Navy has found a way to elicit an emotion and behavior with something as banal as a flip flop that as one of the comments on the Old Navy Facebook page pointed out, are always a dollar at the Dollar Store! I am sure their in store sales during this $1 sale are very healthy. A Sale, cannot be over used, otherwise it will lose its appeal. If Old Navy started having these sales all the time – $1 flip flops – the appeal would wane. Timing and strategic use of Sales are right on.

As a business, think about what offerings you could make to illicit this reaction and ability to shape demand. This is not just for the B2C world either. It does not have to be a promotion, but it can be some event (and not simply a user conference type event) that is anticipated and drives attention.

Otherwise, I will see you at Old Navy. I have a $2 bill, 7 quarters, 8 dimes, 2 nickels and 35 pennies lying around. I “need” my flip flops!

Guy Courtin

As this and other blogs noted last week, Bruce Richardson, an icon in the world of industry analysts has joined ERP provider Infor in the role of Chief Strategy Officer.  To state that this announcement is quite significant to the industry analyst world, and to AMR Research and Gartner, would be an understatement.  It is literally the “earthquake that rocked” the industry analyst landscape in 2010.

I have personally known and admired Bruce for many years.  As a veteran in the software and information technology industry, I often looked forward to hearing Bruce’s predictions and summations of industry trends and developments.  His interviews of industry executives always garnered the interest of competitors, and having Bruce write or mention your firm or software application was highly sought after. Bruce’s First Thing Monday was required reading every Monday morning for information technology executives.  AMR’s salespeople could always count on the mention of Bruce as the catalyst to close a research services deal, especially the world of ERP and supply chain technology.

When I joined AMR Research as an industry analyst, I came to enjoy the other side of Bruce, his quirky ability to be the literal rock star of any industry event.  Bruce has many gifts, but the most important in my view was his ability to gain access to all levels of the executive suite, or to literally be able to work any room to garner key information.   Bruce was the essence and fabric of AMR Research, and no AMR or other major vendor conference or event was complete without having his presence. I sincerely wish Bruce all the best in this new chapter of his career. Bruce has already launched into a new View From the Inside Newsletter which is published on the Infor web site.

Now that Bruce has decided to move over to “the dark side”, many technology marketing professionals have asked my opinion on this move. 

Well, here it is. 

Bruce was not going to conform to the culture and mannerisms of a Gartner, and he obviously knew that.  Bruce is a freestyle, he says what he thinks and is often not shy about calling out something for what it is.  Existing AMR Research clients, especially those with supply chain interest, will now have to figure out the implications of this move to their needs in research and advisory services.  Kevin O’Marah seems to be the chosen executive to fill in the void.

Kevin is an able analyst and industry observer. Kevin’s management attention will be torn between insuring a smooth transition as a boutique research arm of Gartner, while trying to fill the void of industry geru and desired speaker.  Just rationalizing and overseeing the AMR Research Top 25 Supply Chains research process is a task unto itself.

Bottom line, AMR Research will not be the same without Bruce Richardson.  Its like the Boston Red Sox losing David Ortiz, “Big Papi“.  Regardless of how he plays or what he does, he fills the seats.

 Bob Ferrari

No sooner had the dust begin to settle on the December blockbuster announcement that Gartner would acquire supply chain industry analyst firm AMR Research, (you can read all about it at this Supply Chain Matters link) the word comes forth that Gartner has also acquired industry analyst firm Burton Group for the tidy sum of $56 million.

As you can note from the Gartner press release, Burton is a well respected research and advisory firm that provided in-depth technical advice to front-line IT professionals.  Somewhat different than the AMR announcement, Gartner has actually completed the acquisition of Burton, and apparently chose not to announce the deal when originally consummated.  I suppose one could speculate that Gartner did not want to take away from the news on the AMR Acquisition.

You can view some interesting perspectives on the Burton acquisition on both Carter Lusher’s Sage Circle and Phil Fersht’s Horses for Sources blogs.   The bottom line consensuses on the implications for these series of announcements are further consolidation of the industry analyst world and limited choices for alternative opinions.  Phil Fersht’s also hits the nail on the head with his statement: “While Big G has picked up some superlative minds from its latest acquisitions, its new challenge is going to be maintaining those edgy opinions, and not having them toned down under the glossy corporate veneer of the billion-dollar brand.”

As for AMR Research, I learned today that Gartner completed the acquisition just before Christmas, ahead of its original schedule.  Gartner is obviously moving rather quickly to solidify the new AMR business model.  Kevin O’Marah, former Chief Strategy Officer will now report directly to Peter Sondergaard, Senior Vice president of Research for Gartner, and direct all AMR research activities under the Gartner umbrella.  Contrary to what was announced in December, Gartner supply chain analysts Dwight Klappich and Tim Payne have moved over to be part of the AMR research team, which in-effect leaves limited supply chain research coverage if you are an existing Gartner supply chain research customer.

From my perspective, Gartner’s strategy and motivation in these moves is to expand its reach and make a major push towards dominating more end-user and practitioner advisory needs.  So far, these efforts indicate coverage for supply chain and IT communities.  Of course, if you seek all of these services, be prepared to pay-up for all three.  No doubt, the Fortune 100 types will have the clout to negotiate their own deals, but not so for others.

As far as I’m concerned, I am more than willing to fill the existing supply chain advisory void and provide a second supply chain voice when needed.  If you are in need of such services, you can check out my consulting website, since we just added advisory services package options.

Bob Ferrari

In my Part One posting, I shared commentary on the changing business model of providing industry analyst services catered to global supply chain process and technology selection needs.  Our Part Two posting focused on various implications for Gartner’s integration plans involving AMR Research and what they may mean for your firm’s needs. This last posting on this topical theme will be directed toward my views on the changing forces for obtaining  industry and supply chain advisory content.

Changing Industry and Supply Chain Functional Advisory Models

In the wake of the announced acquisition by Gartner of AMR Research, it becomes ever more diligent for readers to think more about how they wish to receive industry and supply chain functional advisory opinion and actionable advice. Key decisions have many implications to business, revenue, profitability or long-term career success.  These past years of constant change brought on by globalization, the proliferation of the Web, and the structural impacts of a global-wide recession have changed the dynamics of obtaining each of these services. 

Keep in mind that the needs for supply chain experience and competencies have moved way beyond former functional knowledge bases. Whether you role is in planning, procurement, execution or IT, today’s complexity of global supply chain activity require knowledge awareness to financial, product, quality, sales, marketing and IT implications.  Global supply chains now encompass all of these process parameters.

The broader industry analyst world was founded on the basis of providing information technology advisory services solely to the IT community, and was broadened to provide functional and industry oriented coverage.  Key clients come primarily from IT technology and software providers, and as such, there can be a bias toward certain key clients or report sponsors. Ranking of vendor offerings can sometimes bring conflict between presenting an balanced and objective viewpoint vs. the need to not trigger negative reactions from key technology provider clients if not managed well.

Firms such as AMR were founded on the premise of filling a gap, providing advisory services targeted directly to functional manufacturing and supply chain teams. Research coverage was expanded to umbrella ERP and specific industry needs to accommodate the needs of IT. Analysts, such as myself, were recruited based on the depth of both our functional business process as well as broad supply chain software applications implementation experience.

An important differentiator for AMR is the firm’s high-touch model which includes timely response to a client inquiry or direct access to specific analysts.  Specialty conferences in timely global supply chain themes and peer forums focusing on specific community needs are also a part  That in my view is the secret to AMR’s success in supply chain advisory services.  How Gartner ultimately manages this differentiated service model remains a very open question, along with the future cost that Gartner decides to charge for such services. As I pointed out in an earlier posting, gaining both access and individual attention from a Gartner analyst has not been a core strength of Gartner.  While AMR’s senior executive team may look to enjoying the benefits of cashing out, clients will now have to sort out for themselves what change in benefits will flow from the acquisition.

Professional organizations are also reacting to change. Individual professional groups such as APICS (Association for Operations Management), CSCMP (Council of Supply Management Professionals), ISM (Institute for Supply Management) and others were initially established to support the professional development needs of professionals within a specific functional area. APICS for instance, was originally established to umbrella production planning and operations, CSCMP or Council of Logistics Management, its original name, was established for logistics and transportation, and ISM for sourcing and procurement.  Membership costs were often paid for by employers, since valuable education, skill certification and peer networking were provided.

Two significant trends have impacted these professional organizations. First, the same broad integration trends in global supply chain have also impacted the program needs and offerings of these professional groups.  This has resulted in an overlap of topics and services offered by each of these organizations concerning broader supply chain skill certification or training opportunities. APICS today offers a certification involving cross-functional supply chain skills, and ISM, to a limited extent, does the same.  The Supply Chain Council (SCC) provides corporations and firms with certification programs in the Supply Chain Operations Model (SCOR), a comprehensive process mapping and decision methodology that spans global supply chain process areas.  Second, severe cost pressures and layoffs brought about by the effects of the global recession have forced both individuals and corporations to make tough decisions on continuance of professional or specialty organizational sponsorship.  Individual professional membership is often no longer corporate subsidized.  Corporate memberships have unfortunately been also cutback.  The sum total is that many of the professional and industry organizations have experienced some cutbacks in overall revenues and continue to seek out more innovative and cost effective means to accommodate knowledge needs.

Management consulting firms who were solely focused on either strategy or IT integration, have now recognized the critical importance of supply chain processes in business strategy and have added experienced functional consultants.  This includes the usual premier “big-three”, but India based firms such as Infosys, WiPro or Patni now offer focused supply chain and manufacturing consulting. Infosys is reaching out with its own focused supply chain blog.  Supply chain technology vendors who embrace the new power of the web are also stepping-up availability of timely thought leadership.  The past Kinaxis Supply Chain Expert Blog Series brought together a number of noted experts commenting on various timely global supply chain topics.

A new breed of independent Internet blogs has also emerged. I would like to think that independent blogs, this one in particular, have been filling a void in supply chain advisory coverage. 

Advice for Readers

I’ve often noted on this blog that the upcoming era of the “new normal” will test traditional thinking about supply chain processes.  Consolidation, cut-backs and events involving traditional supply chain advisory sources necessitate a need to also re-think about the outlets for obtaining the supply chain advisory services that you need to navigate in the “new normal.” The context must suit your specific personal or business need, whether strategic, tactical or situational in nature.  While your goal is to seek out knowledge, proven experience and insight, the outlets of delivery are under change, whether consolidation or transformational in nature.  Here’s a way you can think about this:

• Categorize your needs as strategic, tactical, situational or individual in scope.  For instance, your organization may need an infusion of new strategic thinking on a supply chain process or assess how an organization’s tactical capabilities compare with proven innovators in that capability.  A supply chain snafu or interruption is situational in time, requiring immediate knowledge and consul. Individuals need a sounding board as to how other functional and industry peers are dealing with a supply chain trend or problem.
•  Seek out the individual person, professional organization, analyst firm, publication or institution offering the best objective insights related to broader or specialized supply chain process topics.  Determine the best means of cost-effective access, particularly in light of today’s requirement of constant mobility and time pressures.  This could be a timely published publication, individualized consulting, one-one-one meeting, group advisory, peer group association or individual skill certification program.
• Determine the most appropriate means to receive information for each categorized need, particularly in the light of what is occurring in the “new normal” . Professional organizations, academic institutions, management consultants and industry analysts and publications are embracing more reach-out through web-based content, newsletters, podcasts, webanars and blogs. Noted experts and industry analysts are morphing toward individual branding vs. broader firm or organizational branding.  Seek these people out by direct access or personalized services.

Supply Chain Matters will continue to be a means to provide timely commentary and insights in broad strategic, tactical and situational supply chain topics because we recognized the need for an alternative outlet.

 Bob Ferrari

Disclosure: Both Infosys Technologies and Kinaxis Inc. provide degrees of paid sponsorship concerning the Supply Chain Matters blog.  Bob Ferrari is also a former employee of industry analyst firms AMR Research and IDC Manufacturing Insights, and is currently the Managing Director of The Ferrari Consulting and Research Group LLC.

Yesterday’s news of the Gartner acquisition of AMR Research has, as expected, generated lots of commentary across the blogsphere.  I penned my initial comments to this announcement yesterday.

The acquisition of AMR Research has a special significance, since AMR has garnered quite a following in our extended community.  Much of the existing commentary I’ve reviewed thus far has been directed at specific communities.  This includes the industry analyst relations community (AR) who’s primary role is to maintain positive relationships with specific industry analysts that provide coverage for their particular’s company’s technology and/or services, as well as the broader audience of technology providers who utilize industry analyst research or opinion as part of their overall product marketing toolset. Some insightful commentary to the AR community can be found on the IIAR, Lighthouse Analyst Relations and Sage Circle blog sites.

The focus of this series of postings will be on the implications to the recipients of industry analyst research, those functional supply chain professionals who have to make well informed business process, management or technology decisions regarding all facets of supply chain. 

I anticipate three implications that would play out as a result of the AMR acquisition:

1. A changing business model of providing industry analyst services catered to global supply chain process and technology selection needs
2. Gartner’s future plans for incorporating AMR’s research agenda and client services
3. The continued evolution of new industry and global supply chain functional advisory services

In this Part One posting I will share my observations on the changing business model that has led up to the AMR acquisition. Parts two and three will elaborate on the two other implications for our community of supply chain professionals.

A Changing Business Model

It is no secret that the business model for providing industry analyst advisory services has been challenged over the past five or so years.  The global economic recession of late has not helped, since research and advisory services unfortunately tend to be placed on lists for discretionary cuts when tough cost cutting decisions need to be made.

AMR has done a superior job of targeting and garnering broad influence from specific manufacturing and supply chain oriented audiences. The attraction of clients to AMR was grounded in the deep influence and insight the firm had in the specific topics related to global supply chain strategy, which was the core of AMR’s founding   The primary reasons that I was attracted to join AMR as a supply chain industry analyst was the down-to-earth maturity and practical experience of its existing analysts and its unique culture.

Today’s AMR go-to-market business model now includes a very high analyst to sales person ratio, the equivalent of one salesperson for every analyst, which insured a very active sales and business development touch model could be wrapped around core research themes.

The open question is whether a deep supply chain focused advisory model will be able to economically exist from an industry analyst firm from here forward.  In my view, there are two other analyst firms that can attempt to fill the void, IDC Manufacturing Insights or ARC Advisory Services.  Since Manufacturing Insights can draw on the deeper pockets and global presence of IDC, it may have the only shot remaining for having a specialized, high-touch model of manufacturing and supply chain analyst services, but a renewed emphasis on Web 2.0 and media based reachout may be in order. One of the rather attractive reach-out services provided by AMR was its weekly podcasts on the key developments of the week.

That leaves the door open for alternative options for catering to specific customer needs.  As Lighthouse Analyst Relations pointed out in its posting- “Every firm merger leaves buyers looking for a new source of second and third opinions.”  When critical decisions need to be made, there is often a need for a well-informed or specialized third-party objective opinion.  From my experience, sometimes a well informed second or even third opinion also helps teams move quicker toward consensus. 

Today, opinions can come from specialized media, conference events, or other web-oriented outlets.  I’m betting that a new business model will evolve that fills this void with an emphasis on one-on-one advisory services. My consulting services will focus more on this void and I’ll comment more in a later posting.

 Bob Ferrari

The biggest news in the industry analyst community this year came with this morning’s announcement that Gartner has agreed to acquire AMR Research for approximately $64 million in cash, subject to certain closing adjustments.

Many in the supply chain community would agree that AMR Research had assumed the role as the most influential research and advisory firm in many areas of both supply chain business process and information technology.  Being cited in the annual AMR Research Top 25 Supply Chains report was highly sought out by many global firms, and technology providers spent high amounts of executive level efforts in trying to influence AMR’s individual analysts. (Author’s note: I was a former supply chain industry analyst at AMR Research)

 I must candidly admit that I was not totally surprised by an announcement that AMR was acquired, since there have been annual rumors that AMR was “preening itself” for an eventual suitor.  There were only two logical suitor firms, that being Gartner and Forrester, and we obviously now know of the winner of the prize.

No doubt, the biggest winners from this acquisition will be the original founders and current senior management team at AMR.  My personal congratulations go out to Tony Friscia, Bruce Richardson, Kevin O’Marah and Mike DiPetro.

The big open question in terms of the continuation of broad and specialized supply chain industry analyst coverage lies in what plans Gartner has for future research efforts under either the AMR Research or Gartner brands.  The press release specifically notes that Gartner expects to generate substantial synergies by selling AMR Research products to existing Gartner clients and Gartner research products to AMR clients.  While the press release also notes 40 AMR analysts and 45 sales executives will be added to the Gartner team, it also states that the combination of both firms is expected to drive operational efficiencies and cost savings.  More details will certainly be shared in the coming days, and Gartner has scheduled a specific briefing for its clients later this week.

Existing AMR Research clients should stay abreast of the overall timetable of integration as well as any specific changes, if any, to individual analyst coverage areas.  My initial suspicion is that changes will be forthcoming in industry related coverage since there is overlap among both firms.

 Supply Chain Matters readers can check back for additional commentary in the coming days.

 Bob Ferrari

Disclaimer: This author and the Ferrari Consulting and Research Group LLC are not an existing client of either AMR Research or Gartner Inc. and have received no compensation in relationship to the above posting.