Friday, February 5, 2010

Supply chains and the death of America.

At one time, companies like Standard Oil, Ford Motor and US Steel ruled the world. They exemplified vertical integration. For instance, they found the oil, built the derrick with wood grown in their forests, shipped the oil in barrels made with their wood by their coopers, and refined and distributed their product through their exclusive wholly-owned companies.

Along the way, some bright MBA came up with the notion that risk and responsibility could be amortized if suppliers or vendors did the work you used to do yourself. And supply chains were born.

A product like a Ford was now made with parts and pieces from hundreds of suppliers. The trick to profits was managing your supply chain and getting component parts efficiently and cheaply. The more cheaply Toyota, say, could get gas pedal assemblies, the more money Toyota could make.

Naturally since our industry is now run by MBAs called holding companies, advertisers have adopted a similar approach. When advertising is lame creatively, strategically or from a production point of view, clients can no longer pick up the phone and call David Ogilvy or some other eponym. If they call the head of an agency, that head will call another department head, who will likely call the group head, who will likely call someone else to find out why something sucked.

There is no throat to choke.

There is a lot of talk in agencies about different departments synergizing. About everyone having a seat at the table. About creativity coming from everywhere.

I'm sure there was conversation at Toyota, too, along the same lines.

But whose throat gets choked when brake pedals stick?


Tore Claesson said...

Commodities....a lot of stuff that is not exactly commodities are now treated a such. And we turned ourselves into a commodity by accepting the "pitch for every idea" model. That is how stupid our best paid talent, the guy who rose to the top of ad agency organizations were, and actually still are. Now we all suffer because of it. David Ogilvy once said: "If you pay peanuts you get monkeys. "How true. Only problem is that overpaid monkeys are now running our industry.

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