Tuesday, February 26, 2008

A weird Industry (Adoption Relief Part 2)

1. I stumbled upon a niche industry. Lets be clear, it is an industry. There is a LOT of money exchanging hands for a product AND a service.

2. It is slightly untypical because in the industry, the "manufacturers" are typically inconsistent (they dont start producing and continue) in production capacity, vary dramatically in product configuration, and have hyper-dynamic and hyper-critical cycles of production (they will deliver product within x amount of time, and all have different specific needs within a greater set of typical requirements).

3. It is complicated, because the legal issues involved dont permit direct connection between the "buyer" (or "end user") and the mfg. In fact, there is a set of "distributors" and/or "dealers" that represent the mfg, and you can only truly accomplish what you want by using them.

4. These "dealers" have a vested interest in you not understanding or knowing how to navigate the process. They are in fact "agencies", and in almost all cases are the holders of the keys. It is possible to go outside the agencies, but the agencies will share with you horror stories of what can happen to you if you dont use them.

5. The nature of the "transaction" has an inherent emotional context that renders both sides of the transaction extremely vulnerable.

6. The reality of product preference is very strong. The demand side wants a typical profile of product, and yet the mfg have basically no ability to influence the product.

7. Therefore, the market itself creates a dramatic price premium on certain product. It is so similar to a futures market it is surprising. It is very unregulated except for the distributors. I even heard a "dealer" claim they "discount" specific product, however I dont believe it. If they can do business for a discounted rate, and still stay in business, then by definition, it is still profitable. Therefore, they are actually either ABLE to charge more for one product than another, or at best use the discounted product as a "loss leader".

8. The main issue the dealers have is they understand all the processes, represent the mfg by having what seems to be an "exclusive contract" on the product, and have the unique right to administer the exchange process.

9. To my understanding, this makes the whole market a dealer (3rd party) managed, supply side driven market. The "consumer" has very little ability to influence the market, and very little ability to direct the transaction except for to set a price/budget, and follow directions.

The fact this industry is dealing with a moral issue is what brings this whole thing into perspective. It is not right to claim that the people involved are evil, or morally off. In fact, most people probably get involved for many good reasons. But the reality is, this industry seems to be very flawed, very complex, and very "proprietary"for the most part. In fact, at its best, it is a really messed up, labor intensive, cost intensive thing that brings great joy to people, and at worst, seems to emulate the very industry it stand in direct opposition to.

I have come to the conclusion that the infrastructure is overly bloated, complex, and totally incapable of handling the current load of product, the supply chain is grossly mismanaged, the delivery mechanisms are inefficient, and the ability of the sales channel to effectively serve the market is to convoluted to work well long term.

There has to be a market revolution.

It has to change from a supply side, dealer managed process to an efficient, demand driven, demand managed, dealer transparent model where the marketplace can initiate the process, self educate, automate all data processing, and eliminate as much of the overhead as possible. This will allow the demand to outstrip the supply.

The "dealers" in the marketplace will simply become mechanical agents able to process hundreds (if not thousands) or transactions a month. The margins will be razor thin, and highly competitive, because the "tribal knowledge" aspect will be eliminated. The process will become self evident, and normal. I picture it as very similar to the real estate market. The transaction itself is fairly common, the choice of the agent in more of convenience and service than actual difference in transaction control. Or similar to the many online brokerages that allow you to trade yourself, supervised by rules and regulations that are automated.

The "mfg" will find themselves in a situation where it is so easy to find a qualified buyers en masse (in fact, they find a huge void of product, and overwhelming demand), that they can easily solve their production problem within hours or days and have the same confidence level that many other high intensity, high emotion transactions currently do (i.e. selling a house, selling a car etc...).


The "buyers" will find themselves able to conduct the transactions far more easily than ever before. Technology is a huge part of this, as well as a "Wal Mart" approach to the process. Large scale, high volume transaction is only possible with solid technology on both sides,a nd agressive management and attention to demand. Just as Wal-Mart is able to know constantly the state of affairs in any store, on any product, and feed that data back to its supply chain, this industry has to automate most of the data transactions to the point of ubiquity, and invisibility. The buyer will be aware of very little, and yet confident in the consistency and integrity of the transaction.

As well, the ability for a buyer to go find this transaction should be as easy and close and typical as a local store. It shouldnt be arduous or require special effort to accomplish.

this is all still very rough in my mind, but I will tell you this, Im ready to do something about it. Even in a little way. I might be grandiose in my concepts, but this will get very practical, very soon. If the profit motive can be removed in this, to the point where this "industry" crumbles, and the ability for more and more people to commit themselves to this process faster, easier, cheaper, while improving the integrity and respect the mfg deserves, Im happy.

I would burn this mother down if I could.

Until then, I will make an attempt to invade it, change it, rail against it, and rally for it all at the same confusing time. It is time to take practical, pragmatic steps to help people adopt children. To level the playing field, and bring babies into their destiny. Its time for Adoption Relief.

3 comments:

Anonymous said...

Demand driven it must be! We need to somehow invade the matrix and get the babies in to homes without feeding greedy pockets.

You are referring to US adoptins specifically, right? I don't know the first thing about the adoption bureaucracy, aside from the fact that it exists and what you've just outlined. I am taking a wild guess that it's Uncle Sam who controls the adoption industry? Do they get the lions share of the profits? If that's the reality, then it seems to me that it's definitely a Goliath that must be challenged.

P said...

Im not sure, but I dont think the government makes any significant anything on adoptions. The middle men (the agencies) charge a fee, and broker the transaction.

They put fees on the costs for administrative stuff, as well as their overhead, and profit.

The factor for me is the profit. No one is in business without it, but the question is how much? The convoluted admin process and paperwork adds tot he cost, and the profit margins add on to that. I hope to leanr more as I get opportunity to work with an agency.

Anonymous said...

If it's just agencies and they don't have legitimate costs of doing business to justify the astronomic figures that exist, then what you are talking about doing sounds much more plausible to me because it is just a matter of doing it and doing it efficiently, as you well said.