Monday, 30 December 2013

Offshore outsourcing can and should be a source of innovation.

I think some people have an ill-informed view of what offshore outsourcing can do to help any business and perhaps are jaded by a poorly executed call centre experience. 

The days of only outsourcing the menial tasks are gone. The fact is that increasingly high end activities are being successfully offshored. Apart from helping you stay globally competitive it can be source of fresh thinking to gain an edge.

Offshoring R&D and innovation can have some amazing upside and some big companies such as Apple and Procter and Gamble are embracing it. Not only is it more cost effective but frequently there is greater opportunity to create and innovate from outside your company than from within it. The people on the outside are not necessarily bound by the thinking of long held ideas and dogmas of products, services, clients and markets. Furthermore different education systems and cultures create different approaches to problem solving which can lead to some major breakthroughs. The perspectives from offshore are very different and therein lies the ability to differentiate yourself from competitors.

From an internal management perspective any offshore team must be respected and treated 100% as equals to the team you have at home. They must have the same latitude to create, experiment, fail and develop ideas in a collaborative manner with the rest of the team no matter where they may be in the world. This little thing called the "Internet" makes this entirely possible.

The other aspect is that a failure of a concept developed offshore will cost you way less than the cost of a similar failure at home meaning you can afford to experiment and fail more and therefore learn more than your competitors can too!

At Depth Offshore we have some clients executing this aspect of their strategy well with a hybrid approach of team members both offshore and at home focusing and collaborating on new ideas. Currently most still keep their head of R&D at home and support this person with great people offshore but I can really see this changing as companies take a more global view of how they need to compete. For most industries you simply MUST MUST be thinking globally or pretty soon you will not be in the race.

I firmly believe that being open to external innovation is one of the keys to building a high performance business in this ever more competitive "us too" global economy.

Innovate, differentiate, get noticed or die!

All the best for a healthy, happy and prosperous 2014 and thanks for following, sharing and commenting on my blog.

+Brad Skelton 

Thursday, 19 December 2013

Investment is flowing back into shipping with confidence reaching a 3 year high.

A November survey of ship owners has found their market confidence is the highest it has been since August 2010. Most owners are again optimistic and forecasting improving markets. The World Trade Organisation predicts growth in shipping volumes of 4.5% in 2014. The Baltic Index has pushed past 2000 for the first time since 2011 after bottoming in December 2008 at 663 points. All good news and these factors combined have most industry players feeling like we are in the early stages of a global shipping recovery.

Despite this positive sentiment many European banks are currently selling their shipping loan books to investment funds as the banks see them as problem areas of their portfolio. Admittedly some sectors of the shipping industry remain under extraordinary pressure and some loans are not performing.

Consequently private equity funds are buying loan books at discounts between 15 and 20% off their nominal value and are punting that recovery is finally underway and they can ride the market up and enjoy good returns.

Banks that have sold loan books to strengthen their own balance sheets include; Royal Bank of Scotland, Lloyds Banking Group, Commerzbank and HSH. US based private equity firms are the main buyers.

So what does this mean for shipping?

As confidence and demand returns ship values will rise again and so will freight rates. There are already reports that bulk carriers currently being built have changed hands at up to 25% gains.

On the other hand, if a recovery falters, then ship owners will have a different type of creditor to deal with in an investment fund rather than a bank. Fund managers are typically far less patient to get their returns than the banks have been if payments fall into arrears.

I think the bottom line is that improved confidence and financial returns in shipping is bringing investment back for the first time in about 5 years. That is a really positive thing for everyone in the industry and I think this investment trend is gaining momentum.

All for now,

+Brad Skelton 

Monday, 2 December 2013

Drone delivery of your goods in less than 30 minutes via Amazon Prime Air

Here is another really cool example of how technology will continue to radically change business and our economy.

Amazon are working on delivery of their customers orders within 30 minutes via drone octocopters right from their warehouse to your door.

Check out this 1.19min YouTube clip demonstrating the concept.



This delivery method, assuming it gets aviation authority approval, will impact the road courier logistics industry massively. This will become the superior delivery method without doubt. Cheaper, faster, no driver, no traffic..no traffic jams....and more environmentally friendly too. If Depth Logistics were in the parcel courier field of logistics then I would scrambling to get my own fleet of octocopters ready to serve my clients before my client start buying their own. Maybe we should.....??

Think about the other potential applications of this delivery method to numerous industries. What about pizza delivery? Then again, would the downdraft from the rotors mean cold pizza on arrival? I'm kidding but the possibilities are incredible and exciting for any lightweight parcel needing delivery across town that is time sensitive. The medical and pharmaceutical industry is one.

I congratulate Amazon for the vision they have for their customers and the logistics service they hope to provide. This will be a definite game changer for another sector of the logistics industry.

All for now,