• image
  • image
  • image
  • image
  • image
  • image
Category Archives for "Supply Chain Execution"

What is the Most Effective Strategy to Massively Slash Shipping Freight Costs?

Freight costs reduction is almost always the last frontier in the cost reduction landscape. At the board level, most companies do not pay much attention to their external freight costs. These costs never get the attention they deserve because they are scattered all over the place, and generally out of sight.

What if I told you this simple strategy can reduce the overall freight costs by over 75%. It will be hard to believe – right? Well, by the end of this article you will see an actual case study analysis proving this to be the case.

If you study that case example seriously enough, you can replicate the strategy in your own company, and see for yourself the enormous benefits it creates.

But, this magnitude of cost reduction needs strategic thinking. I call it a strategic because it is not a tactical (and, certainly not a trick). A trick is something which is impermanent, a sleigh of hand.

For example, I know a trick that can instantly cut your freight bill to zero. But, why would I even talk about this sleigh-of-hand. A trick rarely enriches you – it merely has some entertainment value, and perhaps, ocassionally, a short term monetary value.

For my clients, I focus on things of lasting and real value.

Strategies for minimising freight costs need fresh thinking

This strategy is so obvious to me that I am constantly surprised that very few companies are doing it. In fact, this is the first thing I look for when I visit a new company.

And, invariably, in every company, I find room for improvement. “Why is it not equally obvious to everyone else?” – that is a constant surprise to me. But then, that is the very definition of “the curse of knowledge.”

Consider the following scenario and see if sounds familiar: you join a new role (in the same company, or in a new company), and suddenly you are now in charge of the freight and shipping costs.

You look at the numbers, and they seem high. But as yet you have no means of saying they are high, so you dig out some benchmarks on google (or from your past experience, or reports) and while nothing definitive can be said because benchmarks never compare apples with apples, your gut feeling is confirmed. The freight costs for your company is in fact higher than the norm.

Freight costs can be reduced by these common tactics:

Even when you can conclusively prove that the freight costs are higher than the norm – what is your next step?

  • Do you go to all your shipping and freight vendors and start pressing them for discounts?
  • Do you wait till their contracts are up for renewal, and then initiate a rigorous and objective RFP process, with the full intention of negotiating as hard as you can?
  • Do you openly break the existing freight contracts and go out to the market straight away?
  • Do you surreptitiously call in alternate vendors and do some trial shipments?
  • Do you initiate a freight audit to ensure that the invoices for the past shipping activities actually match the contractual rates, and the actually delivered shipping activity?
  • Do you physically shadow a shipment to find times and places where the vendors were inefficient so that you can go back to vendors and press them to be more efficient and pass on the savings to you?
  • … … …

Take control of your freight costs by starting here

I could go on with another 20 points of activities that could be potentially done to reduce the freight and shipping costs. Each of them would be a legitimate alternative – though not the first thing to be looked at.

At different points in time, during my projects, I have seen all of them being done. Indeed, I have done many of these same things, but only at the right time. As in the rest of life, here too, timing is everything.

We have to do the first things first. And, for that very reason, you should not start with doing any of these things listed above.

Why?

Because if you do any of these things before doing the first thing first – your vendors, and even staff, will identify you either as a novice, or as non-serious player. And, they will calibrate their response accordingly.

So, what is the first thing that players will expect you to do?

Let me illustrate with three examples each one getting more and more complex, and see if you can guess the answer.

1. A mid-size business wasting money on freight costs due to careless shipping practices

I and my business partner were standing in the warehouse of a mid-size global player in a nice margin business. On the shipping docks were sitting a number of pallets – each half or more full of goods. I asked about the paperwork for one of the pallets and was surprised to be handed a thick sheaf of papers. Right on that single pallet sat more than 50 shipments, all going from one large city to another. Each was accompanied by a consignment note (and a Con. note fee of $35 each). So I asked why they were not being shipping in a single shipment, and distributed by a local courier? Or alternatively, by a inter-city courier covering the entire shipment. “We have always done the things this way” was the answer. I calculated that – just those 4 pallets were wasting at least $3000 in additional freight costs. That was over $100K a month – the practice was changed and the hole plugged straight away.

2. Another mid-size business had high freight costs due to wrong inventory, in the wrong places

After a very thorough and detailed analysis of the inventory holdings, and movements within this company, we created a chart similar to the one shown below:

Freight Cost Reduction 1

Because there was no scientific approach to inventory targeting (besides what was built into the ERP system), and because even that was very sloppily implemented, the company suffered from having excess stocks for items that were not required, and shortage of items that customers wanted. Almost every location suffered from this problem.

Even a very generous inventory allowance revealed that over 70% of the inventory was wrongly located.

As a result, the staff were all the time trying to track things in their system and ship the items from where they were located to where they were required.

3. A large business in multiple wrong locations suffered from very high freight costs

This third example is a much larger business. It had a global supply chain network, though we were only analysing the national network. Almost all the locations were decided based on factors other than efficiency or effectiveness. Some were just historical decisions, left to continue on without any thought. Others were made because the regional manager preferred to be located there (even though the customers for that region were located somewhere else).

A very thorough analysis of all the locations, and all the movements revealed that current network was the worst possible configuration for cost and customer service. Only the freight vendors benefited with this configuration (which had evolved gradually over several years). Take a took at the figure below:

Freight Cost Reduction 2

Reduce the number of transportation movements to minimum

Your own situation will not be exactly same as any of the three situations above. It would rather be same, same – but different. That is the reason I will not go too much into any of the examples above.

I am also skipping a lot of details about how the above analysis was done, and the changes were implemented.

In reality, it took weeks to conduct the analysis, and months to implement the recomendations. But the resulting benefits ran into millions of dollars in last two cases, and were worthwhile in each of the case. In each case the results prevented another round of dibilitating lay-offs, perhaps even saving the company in the long run. The cost of analysis, and implementation was mere fraction of the savings in every single case.

You need experienced eyes to look at freight costs with a fresh mindset

You will have to think about how to reduce the transportation movements in your business. But if the above businesses had the room to reduce the transportation movements by up to 83%, then your business might have at least some room to reduce transportation movements. You do not need to negotiate with the vendors to do this. You just need to organise your supply chain better.

And, once you do this properly, your vendors will take your business a lot more seriously. I have seen the change.

A word of caution is advisable at this juncture. The results above – over 70% erroneous inventory holdings, over 80% redundant movements due to supply chain misconfiguration, over 50 shipments that could be consolidated into a single shipment – are anything but typical.

In fact, in my over 25 years of hundreds of projects, they stick in memory full of similar cases, only because these cases were so far out on the limb. That is why it was easy to dig out the data for them, and share the facts of the cases (in a disguised form).

Does that mean you will not have these opportunities?

Quite the contrary, you will have these three, and nearly a dozen more, different types of opportunities to minimise the number, size and volume of shipments.

In conclusion, keep minimising the number of unnecessary freight movements all the time.

There will be a multitude of different types of unnecessary freight movements. These three were just the most obvious examples that occurred to me as I was writing this article. If I leaf through our past projects folder, I could detect at least a dozen more types of unnecessary freight movements.

But each company is different, and will have its own example of this practice. The trick is to have enough experience to recognise an unnecessary freight movement when you see it. And, then to call it as such you need fortitude and backing.

Finally, you need to come up with a comprehensive model that will replace the current logistics model. And, you need to be able to sell it to all the stakeholders.

And, you have not even started talking to your logistics vendors yet. The truth is that there are so many different ways of reducing freight costs that any blog will not do full justice to it. There are a couple of reports that we have issued covering the matter. Look for them in the footer on our website, or contact me.

How Organizational Silos Can Ruin Your Supply Chain

Organizational silos are based on the division of labor, on organizing the labor in such a way that each individual specialized in what he/she knows best, so that it can all be integrated in such a manner that a cohesive whole which is created in the result is much better in quality and much cheaper in price. This gift of the industrial age to humanity allows to make a production must better in quality and must cheaper in price. Indeed, because of the period of time, the person will become very good at his production and work at a much faster rate, even if the technology is the same. Each employee will make his work much faster, and he would make it much better quality than if he was making the whole product.

By the 70’s, the division had been carried too far, in fact, so far that each person would pretend that as if he has nothing to do with the other employees. To give you an example, I was working in a business transformation project in a mid-sized airlines and I was sitting in the office of the person in charge of maintenance planning of the aircrafts. At one point in the conversation he dug out and e-mail exchanged with his colleagues from across the room and this e-mail exchange had been carried on over a period of 18 months. This trivial matter could have been solved by just walking across the room in an authentic spirit of give-and-take and collaborating across the silos. People in both silos have entrenched themselves into such a position where no action could be taken, the decision-making was extremely slow and people were pointing fingers at each other.

In fact, every organization we have seen, to some extent or other, suffers from this silos mentality. The bureaucratic organization of supply chain 0.0 leads each department to become a pyramid. Any information which needs to be passed from one department to another would have communicated with the head office of one department to another. Imagine the time wasted and the problem of information distortion in the process. By killing the spirit of collaboration, it hampers efficiency and effectiveness.

No wonder this kind of organizations find it very hard to compete against even rudimentary supply chains, such as supply chain 1.0. Many companies struggle with one business transformation after another without addressing the root cause of information holding and silos in supply chain 0.0. If the company stays stuck in organizational silos, no appreciable improvement will be seen: Information holding will become rife and selective information sharing, the norm. Blame will be the name of the game in such a situation.

Below are 20 questions that every executive should ask about the supply chain in their business:

 

From NASA space suit to Lego Toys – Why crowdsourcing should be part of every supply chain strategy

Supply Chain Strategy Gets a Boost from Crowdsourcing

We are starting to hear about the need for innovation in supply chain strategy.

Crowdsourcing is proving its value in boosting innovation. The magic of this idea is that it ties new product launches with customer wants and needs.

NASA recently turned to the public for the design of its latest space suit, allowing people to choose among three prototypes.

The Z-2 space suit is an update of the Z-1, which was named one of Time Magazine’s Best Inventions in 2012.

“After the positive response to the Z-1 suit’s visual design we received, we wanted to take the opportunity to provide this new suit with an equally memorable appearance,” NASA says on its website.

Legos Ghostbusters-inspired toys will hit shelves in the US this June at US$49.99. The set is also a product of crowdsourcing. 

Lego Cuusoo – the crowdsourcing platform run by its Japanese partner – has helped the company with product ideas since 2008. Lego reviews product ideas that receive at least 10,000 votes and the winner gets 1% of net revenue from the toy.

“While swallowing smaller companies and their readily available technology is one way big corporations refresh their innovation strategies, some decide to turbocharge consumer involvement early through crowdsourcing. Although the late Steve Jobs may disagree by saying customers do not know what they want, crowdsourcing has its place in many supply chains. With in-house curating, involving customers more intimately in the supply chain can be a powerful combination,” says Vivek Sood – CEO of Global Supply Chain Group.

Recently, Hasbro, the maker of globally popular game Monopoly, ran a crowdsourcing campaign to choose new “House Rules”. The new “House Rules” set, to be released later this year, is an attempt to refresh the game after nearly 80 years.

Just over 10 days of the crowdsourcing initiative on Facebook, several thousand people have given their comments.

“There are a lot of Monopoly purists who want to play by the classic rules and don’t want to change it, but we love the idea of there being some optional rules in there that can mix up the game a little bit,” says Jonathan Berkowitz, vice president of marketing.

A lot of companies have successfully adopted crowdsourcing, such as Samsung’s Open Innovation Program, Dell’s IdeaStorm, and Phillips’s Simplyinnovate.

Crowdsourcing can range from simply asking for consumer opinions about existing options, to allowing people to come up with workable ideas.

“In a way, crowdsourcing represents the Fire-Aim-Ready (FAR) model of innovation, as it lets companies test new ideas and then continually fine-tune them, while choosing the right partners to realise consumer wishes in a profitable manner,” says Sood – author of the book “The 5-Star Business Network“.

Traditionally supply chain has never been considered as part of the innovation drive, but the FAR innovation concept flips that model on its head – dramatically reducing the time to market, and effectiveness of innovation.

Crowdsourcing is one way to do this.

What Causes Supply Chain Confusion

My last post Supply Chain Confusion could kill your business generated several great comments from highly qualified professionals around the world, and in this post I want to explore the reasons for the confusion. Obviously, the confusion is debilitating, and unprofitable. I am sure readers will have their own experiences with the confusion in supply chain world, and can add to the discussion by commenting below.

1. Supply Chain Confusion created by service providers:

In my previous article I mentioned the examples of trucking companies (or warehousing companies) who have painted over their old trucks from XYZ Trucking/Transport to XYZ Logistics to XYZ Supply Chain Solutions without any material change in their capabilities or service offerings. While this kind of ‘branding’ exercise seems harmless enough, and most customers are not ‘fooled’ by such over-representation of the capabilities – it does have several deleterious effects. To give you an example – I was recently asked to answer a question on quora.com by a recent entrant into one of these companies who had entered the ‘field of supply chain’ to make a glamorous career. S/he was disappointed when s/he found that most of the work was rather mundane execution level work in transportation and warehousing. To exacerbate the situation they did not see any prospects of getting even remotely involved in the ‘sexier stuff’ such as supply chain modelling or business transformation. Evidently, then, this type is hurting careers, reputations and perhaps even the entire industry when these companies represent that what they do is all there is to SCM!

2. Supply Chain Confusion created by those who mistake the a small part for the whole (of supply chain)

No doubt strategic sourcing, logistics, warehousing, production planning, inventory management, demand forecasting all are parts of good supply chain management. Yet almost all of them are quite capable of representing that they constitute the entirety of supply chain management. Look at the way that a number of professional bodies have renamed themselves and pretend to represent the entirety of ‘supply chain’ professionals. Their antics remind of the ancient Hindu tale of 6 blind men which was so well captured by the American John Godfrey Saxe in the The Blind Men and the Elephant (Source: Wikipedia):

i. It was six men of Indostan To learning much inclined, Who went to see the Elephant (Though all of them were blind), That each by observation Might satisfy his mind.
ii. The First approached the Elephant, And happening to fall Against his broad and sturdy side, At once began to bawl: “God bless me!—but the Elephant Is very like a wall!”
iii. The Second, feeling of the tusk, Cried:”Ho!—what have we here So very round and smooth and sharp? To me ‘t is mighty clear This wonder of an Elephant Is very like a spear!”
iv. The Third approached the animal, And happening to take The squirming trunk within his hands, Thus boldly up and spake: “I see,” quoth he, “the Elephant Is very like a snake!”
v. The Fourth reached out his eager hand, And felt about the knee. “What most this wondrous beast is like Is mighty plain,” quoth he; “‘T is clear enough the Elephant Is very like a tree!”
vi. The Fifth, who chanced to touch the ear, Said: “E’en the blindest man Can tell what this resembles most; Deny the fact who can, This marvel of an Elephant Is very like a fan!”
vii. The Sixth no sooner had begun About the beast to grope, Than, seizing on the swinging tail That fell within his scope, “I see,” quoth he, “the Elephant Is very like a rope!”
viii. And so these men of Indostan Disputed loud and long, Each in his own opinion Exceeding stiff and strong, Though each was partly in the right, And all were in the wrong!
moral

So, oft in theological wars The disputants, I ween, Rail on in utter ignorance Of what each other mean, And prate about an Elephant Not one of them has seen!

Amusingly, the confusion in supply chain management also involves 6 different streams of thoughts.

There Are No Natives in This Land

Supply chain is a relatively new field. Especially at a higher level, there are no people who ‘grew up in supply chain management’.

Traditionally, supply chain professionals have come from one of the three or four streams in businesses.

  1. Logistics – 3PL service providers,warehouse staff, or internal logistics staff – also include people who confuse ‘logistics’ with supply chain’
  2. Procurement – or Sourcing, or strategic sourcing – also includes people who easily confuse ‘supply’ with ‘supply chain’3
  3. Production Planning – or Scheduling – also includes people who easily confuse ‘production planning’ or ‘sales and operations planning’ with ‘supply chain planning’
  4. Inventory Management – also includes people who confuse ‘inventory planning’ or ‘sales and operations planning’ with ‘supply chain planning’
  5. Materials Management or Materials Handling – also includes people who confuse ‘materials management’ with supply chain management
  6. Demand Forecasting – also includes people who confuse demand forecasting with demand management with supply chain management

I have worked closely with all 6 type of pedigree – and each of them have distinct foibles, strengths, weaknesses and biases.

One bias they all have in common is that they tend to have a soft corner for their own pedigree. For example, I spent my own formative years in shipping, logistics and transportation, and for some reason I am still a shipping person at heart. As they say once you spend time at sea – the salt water starts running through your veins.

However, all 6 type of pedigrees also have a great majority of people who are happy to represent their own specialisation as the entirety of supply chain management. That is what causes the confusion.

I could probably write an entire chapter of each of these 6 type of people, and their biases – including the impact of the confusion they cause to damage the profitability and ‘brand supply chain management’. But if you are from within the folds of supply chain management – you will easily recognise most of what I have to say here.

And, if you are not from with the folds of supply chain management then more explaination is no use to you – because you are better off reading my other articles on use of supply chain management for business transformation –  just search for those keywords in the search bar next to the tool bar on top.

I will cover the rest of the cause of confusions in my next post. These are rather esoteric models and we will raise the level of conceptual thinking a few notches in that article.

Related Reading:

  1. https://globalscgroup.com/supply-chain-confusion/
  2. https://globalscgroup.com/how/
  3. https://globalscgroup.com/the-single-biggest-mistake-in-business-transformations/
  4. https://globalscgroup.com/the-second-biggest-mistake-in-business-transformations/

Learning – A Company Case Study

By – Stuart Emmett

Executive Summary

A questionnaire was used to explore feelings and experiences of students undertaking a company management development qualification programme. The questionnaire examined four areas

  • Why Learn?
  • Learning experiences
  • Reflections on learning
  • Learning styles

The questionnaire results are detailed in this report (shown as the strengths and weaknesses) The message for companies is they must:

  • Build on the strengths found by individuals
  • Recognise the reality of the weaknesses and proactively manage them into strengths

Companies must recognise the conditions for effective learning and building these into all leadership, management, learning and development practices and programmes.

The Learning Programme

This was a company learning programme for management development; this involved students working to achieve a nationally recognised professional qualification at the current equivalent of a NQF level six in Supply Chain Management.

The Questionnaire

In order to examine the learning processes used, a questionnaire was designed to explore a range of questions about the feelings and experiences of students. This questionnaire examined the following four areas: –

  1. Questions on the reasons why students wanted to study for the qualification.
  2. Questions on students experiences whilst they were completing their studies.
  3. Questions on reflection about their studies
  4. Questions on students learning styles

(1) Results-Why learn?

The results showed various reasons why they wanted to learn. Many different responses were given, (this, however, maybe in part due to the open nature, of the questionnaire). It was very clear however, that the main reason for wanting to learn was to increase knowledge and understanding. Other reasons given were to make life more interesting, to meet other people etc. Similarly, the question about the students intended outcome had also mixed responses, but the majority however; indicated the prize was the gaining of a qualification. Other responses indicated were, to make progress, to be able to apply and use the qualification.

(2) Results-Learning Experiences

Whilst undertaking studies most students reported that they were able to use their existing experience and knowledge during the programme. Half of the students felt they had learnt a lot, whilst the other half felt they had learnt something. 25 per cent of students felt they were given no guidance at all, on how to learn. 87 per cent of students reported receiving feedback during the programme. 75 per cent of students were very clear that no formal support had been given at work, despite, a formal mentoring programme being set up at the start by the company using senior and line managers. Clearly this had not been effective. When asked further about their support network, around half of the students had received informal help/support at work. They also had a support network from other people; indeed all students said they were helped in this later way. Finally, all students felt they had opportunity whilst learning, to think and reflect, and make conclusions about their learning. 75 per cent of students also felt they had opportunity, to use what they had learnt.

(3) Results-“Reflections”

In thinking back about the learning experience, the main problem students identified was finding the time. This is also reflected by a few students reporting the main time problem for them, was working shifts. In answering the question about how students had overcome their study problems, students were, generally and remarkably, non-committal. Some of the ways however reported on overcoming problems were; for example, making time, having perseverance, and using holiday time. When asked why some people might choose to drop out of the learning, mixed responses were found, but the responses made were mainly about lack of motivation, no support, no time, and finally, getting behind and then getting depressed. The main reasons reported for keeping going were not to let down colleagues and others in the group. Clearly, a group-training format had also supported the individuals questioned. Learning was felt to be important to students and their responses were: “develops” me, gives me a challenge, expanded the mind, allows me to see the bigger picture, and, keeps the mind fresh. Students had clear views about what they needed to do to be better learners and responses mainly included having a more disciplined approach plus, concentrating more on the planning of study time and to listening without prejudice.

(4) Results-Learning Style

On learning styles students were equally divided with their self-perceptions and fell between equally between being visual / seeing learners, and being experiencing / doing learners. Furthermore, the majority felt that they were activists and would try anything once.

Results-Summary

In putting together the strengths and weaknesses from the questionnaire results, the following is a summary: Strengths were as follows

  • Students have clear reasons for doing the programme.
  • Programme builds on existing knowledge.
  • Provides feedback.
  • Good informal support network.
  • Able to use what has been the learnt.
  • Group peer pressure/support.

Weaknesses

were as follows:

  • Lacking guidance on how to learn
  • No formal support network at work
  • Finding time to complete the assessments
  • Lack of clarity on how to overcome the learning problems
  • Many reasons for dropping out
  • Undisciplined learning approach

Messages for companies

It will be seen that individual students were motivated, had informal learning support and were able to use what they learnt; all these are good strengths for companies to build on. Companies can however recognise the weaknesses reported by students and be pro-active to manage these. Learning lessons here are for the provision of:

  • Formal guidance on learning
  • Formal support networks
  • Time for assessments
  • Encouraging a disciplined learning approach.

Support and guidance (both formal and informal) is critical in learning. The students above clearly had informal support, but no formal support. How therefore support is accounted for, planned for, and actually undertaken is a “must” to be considered by all companies who sponsor learning.

Effective Learning Conditions

For learning to be effective, the following learning conditions are needed:

  • Gaining attention and motivating.
  • Giving the expected outcome.
  • Stimulating recall by using past knowledge.
  • Developing new opportunities.
  • Getting learners responses.
  • Giving learning guidance.
  • Giving feedback.
  • Appraising performance.
  • Providing for transferability.
  • Ensuring retention and encourage practice.

There is much above that shows the importance of giving support and guidance to individuals who are practicing learning. The following are some examples of how to do this:

  • Motivating = encourage and support, continually
  • Develop new opportunities = ask “how can I help”
  • Learning guidance = provide how to learn courses/discussions/self help groups/ study buddies etc
  • Feedback = say “well done”
  • Appraising =ask “how can I help you to develop”
  • Transferability = create opportunities to use and apply the learning

It should not be difficult to help and support employees learn. When doing this, a company demonstrates that it believes that learning really matters.

This report is based on:

“Improving Learning & for Individuals & Companies,” 2002, ISBN 1-90429-831-1

“How to Mentor and Support Learning,” 2003, ISBN 1-90429-865-6

“The Learning Toolkit” 2008, ISBN 978-1-852525-620 “The Developing People Toolkit”, 2008, ISBN 978-1-852525-651

All written by Stuart Emmett, after spending over 30 years in commercial private sector service industries, working in the UK and in Nigeria, I then moved into Training. This was associated with the, then, Institute of Logistics and Distribution Management (now the Chartered Institute of Logistics and Transport). After being a Director of Training for nine years, I then chose to become a freelance independant mentor/coach, trainer, and consultant. This built on my past operational and strategic experience and my particular interest in the “people issues” of management processes. Link for the blog: http://www.learnandchange.com/freestuff_23.html  

Note:  Stuart Emmett co-operated with our very own Vivek Sood to co-write the book GREEN SUPPLY CHAINS – AN ACTION MANIFESTO. This book was one of the first books in the world on the topic of Green Supply Chains, and as such is used in Universities around the world for executive training and research purposes.

How to Prepare Simple, Effective Cost Management Reports (part 1)

hudgeon12By Doug Hudgeon

The Cost Reduction Tip

Effective management accounts are critical to a cost reduction initiative. Without it, your stakeholders can’t see that their pain is justified. It’s like the difference between running on a treadmill (without a watch or odometer) and running through the countryside. If you have a destination and can track your progress, your motivation will be higher.

Good management accounts are different from good financial accounting in that management accounts in a cost reduction initiative are concerned with real money out the door right now whereas financial accounts are often reporting on expenditure decisions made years ago (depreciation). I’ve prepared a sample data set that I’ll use for the upcoming series of posts.

The management accounts are from the fictional company ABC Services who provide software and consulting in the facilities management sector. They have one office in Sydney and another in Melbourne and the bulk of their revenue comes from the sale of asset management software but have an active consulting arm. They kicked off a cost management initiative in November 2010.

The management accounts tracks their expenses and revenue over the 12 months from July 2010 to June 2011. 1-296x300You can see from the orange line above that revenue has consistently increased throughout the year and from January 2011 their cost reduction program has made some headway.

Now let’s take a look at the impact of this on their profit: 2-300x255As you can see from the above chart, moderate to strong revenue growth combined with a high impact cost reduction initiative can create some stellar results.

In the next post, we’ll look at the data elements underlying the above charts and slice and dice the monthly data by location, division, expense type and headcount to see what areas of the company contributed most to this turnaround and which areas require further work.

Note that I’ll be changing the underlying data throughout the series of posts to highlight the importance of certain elements of the data set so don’t look for consistency across these posts. I’ll do a wrap up post at the end.

Doug Hudgeon who is lawyer and vendor management professional who has branched into finance and accounting shared services management.

Use Monte Carlo Simulations to Quickly Model Costs and Influence Stakeholders

hudgeon12By Doug Hudgeon

The Cost Reduction Tip

Taking your business down to its lowest possible operating cost typically involves changing (usually simplifying) processes. When preparing a business case for changing your current processes, it is usually easy to nail down system costs but people costs are almost always problematic. Even if you believe you can calculate them accurately, your stakeholders will each have their own views on the assumptions underlying your cost model and this can result in an impasse.

I like to use a Monte Carlo simulation to model people costs. It enables you to quickly calculate a range of costs for activities that can encompass the conflicting views of your stakeholders.

Here’s how I do it:

I’ve prepared a sample Monte Carlo simulation in Google Spreadsheets that you can review online and download as an Excel file.* Because the values in this file may change as I run different scenarios, I have taken a screenshot of the current settings and labelled the components of the spreadsheet. Please click on the thumbnail image to follow the discussion below but refer to the Monte Carlo Simulation Google spreadsheet to explore how it works in detail.

Note that I have prepared a subsequent post that takes you through the spreadsheet in some detail and, for those who are fire walled from Google Docs, please click this link for an Excel version of the Cost Analysis Monte Carlo Spreadsheet

Monte Carlo Simulations The first column (1.) shows each of the activities that will be modelled. In this case, I have set out seven steps involved in manually processing a PO and paying the resulting invoice. The next three columns (labelled 2, 3, and 4 in the thumbnail image) allow you to enter assumptions against the time taken to perform each activity

(2.), the fully loaded cost of the resource performing the work

(3.), and the number of transactions per month

(4.).In the above screenshot, you can see that Activity “1. Create requisition” takes between 1 and 3 minutes to complete and the fully loaded cost of the resource creating the requisition is $90K to $110K (assuming some pretty significant overheads for this resource!). Each month, the organisation prepares 10K to 20K purchase orders.Running a Monte Carlo simulation over these variables (FTE utilisation: 130 hours per month) results in this activity costing somewhere between $12,382.44 and $35,681.69 with a 90% confidence level

(5.).The last 5 words of that sentence are pretty important. When you are setting your variables for activity time, resource cost and number of transactions per month, you want to set the minimum number so that 95% of the values will be above that number and the maximum so that 95% of the values will be below that number. For example, in activity 1 when I said that the activity takes between 1 and 3 minutes what I mean is that 90% of the transactions I observed take between 1 and 3 minutes i.e. 95% of the transactions took 1 minute or more and 95% of the transactions took 3 minutes or less. If I am confident that this is correct for each of the values in the yellow highlighted area of the spreadsheet then I can expect that 90% of the time, my conclusions will be correct.**

Now, back to our stakeholder question: When you are speaking with your stakeholders with your Monte Carlo simulation in hand, you can explicitly discuss each assumption and, where the stakeholder has better information than you, immediately incorporate their information into the model and see the impact on the business case. If your business case still stacks up after this process then you can proceed confidently knowing that your stakeholders understand the numbers and have had their input incorporated.

* A Monte Carlo Simulation is an approach whereby you nominate an upper and lower limit for each activity and generate random results (in this case normally distributed)

** You’ll note that the Totals (6.) do not equal the sum of the 5th percentile or the 95th percentile. This is because simply taking the sum of all of the 5th percentile activities does not give you the 5th percentile overall – it gives you lowest cost for activity 1 plus the lowest cost for activity 2 etc. The value displayed in the spreadsheet is the 5th percentile of all 7 activities combined into a single transaction.

Doug Hudgeon who is lawyer and vendor management professional who has branched into finance and accounting shared services management.

Supply Chain Relationships- Partnerships or Partnershaft?

By Stuart Emmett

Business & Relationships Business and supply chain management maybe technically simple, but it is usually managerially difficult. In supply chains for example, there are many technically simple solutions which give better business performance. There are also many “hard” technical systems approaches such as, MRP and SAP, which are most useful and can have a vital impact on efficiency. However to be totally effective, it is usually the things like teamwork, and motivation, which need the closer attention of management. Improving the people relationships is the main key for more effective supply chain management.

Do you for example know of any relationship, (business or otherwise), that cannot be improved? The financial lead view and hard side of business becomes an increasing difficult one to predict in fast changing global economies. Business can however, always look to improve. One way to out perform the competition is to improve people and the way people relate to each other. There are riches to be harvested here that will enhance and improve business and the quality of life.

A view that a company is able to do something by itself is a dangerous myth that obscures the reality that a company only ever does anything as a result of its people doing something. Too many people, usually unconsciously, ignore the plain fact that it is the people who are the key element in all companies. Surely, we can only ever do the core of business through dealing with people relationships? Looking at what has happened when company performance fails dramatically through receivership shows the importance of people relationships. Officially appointed receivers have identified the following three causes of failure:

  • Lack of information, meaning for example, a limited view of options
  • Lack of top team balance, meaning there is little “challenge” and there is negative compliance as boards are too similar and do not have the depth or breadth.
  • Lack of others opinions, for example an autocratic C.E.O. who goes only for say, growth. A one-man rule with non-participating boards is found.

It seems here that wider views from open debate were missing. Autocratic management has prevented any positive conflict of ideas. Company performance and profitability have failed and can be directly linked to the lack of open debate and considering wider viewpoints. If relationships had been improved, then the companies may have survived. Supply Chain Relationships Supply Chain Management has as its key principle, individual businesses coming together to integrate, co-ordinate and control, their supplier/customer activities of buying, making, moving and selling. Relationship handling with all the supply-chain players is fundamental to the overall supply chains effectiveness.

With people relationships however, how many times is the partnership word used only for “spin” and “public relationship” purposes? Traditionally, there is often found an adversary them/us tussle in the supplier/customer activities. Power is not distributed evenly; a major barrier to a full partnerships approach. Even however when there is a more partnership approach, (token or otherwise), this can result in a response from some involved, that the German word for partnership is partnershaft.

This is a reflection of the “you will”, “I win/you loose” viewpoints from this adversary point of view. However, some supply chains do demonstrate a share to gain approach. Here as a basic philosophy, they will recognise that “none of us, are as strong as all of us” and adopts a “win/win” approach. The use of power by the strongest does not dominate in these supply chains. The message can be a need for change from old to new ways. This message for supply chain management shows that the following changes in Figure 1 Supply Chain Changes, (a too brief overview), are needed:

From more Traditional Ways To more Supply Chain Ways
Independent of the next link Each link is dependant on the next one
Links are protective End to end visibility
Uncertainty in demand visibility More certainty
Unresponsive to change Quicker response to change
High cost and low service levels High service with lower costs
transactional partnership
Fragmented internal structures “joined up” structures of extended enterprises
Hierarchical management Collaborative management

The core of these changes, involves changing the way people respond and relate to each other. It is not only hard technical improvements that are needed and companies who see this as the only way forward are scheduled to face real difficulties and future failure in their expectations. Unless of course they are dominantly powerful so “opposition” does not matter. Developing effective people relationships will however, beyond doubt, bring benefit. It is the only eventual way forward to achieve better supply chain management.

Effective Relationships

Effective relationships fundamentally require a total open and trusting environment, with shared beliefs, values and a common identity and purpose. Mechanisms are needed to allow people the right to “agree to disagree” in a supportive and trusting way. The Supply Chain principle of “sharing to gain”, also needs to include differing people’s viewpoints with active listening and the encouragement of open debate. Developing such relationships is certainly not going to be a soft option.

Getting to the “inside” is not easy and can be time consuming and personally difficult to those who are “schooled” in old ways adversary and power based models of relationship handling. Indeed this “soft stuff” so often becomes the hard staff- especially for those who prefer a partnershaft view of supply chain management. Maybe however this is actually “saying it like it is” and is a better reflection of what actually is happening? Hopefully for those who have this partnershaft view, they do not really believe that people relationships in the supply chain is just more “people crap and has no part to play at all”, (comments from a former colleague).

Win the home games first

Effective relationship building needs to start internally. In my experience, the partnershaft view always reflects poor internal relationships. Here the best “knockers” of a company, and its “worst” ambassadors” are its own employees. Companies must “win the home games first”. A business must win on the inside before it can go outside.

Why so many companies appear not to realise this is a surprise.

An efficient and relationship mature internal team of purchasing, production, distribution, marketing, finance is often not found. However such mental preparation is a recognised pre-requisite for sports people, before their outside external and public performance. The battle here is frequently “won on the inside first” and without this internal alignment, going forward to develop external relationships can be fraught with difficulties.

What many internally focussed companies also do not often realise is that their internal divisions will certainly be reflected and be visible externally. External people will be then most rightly uneasy about the effectiveness of any so-called partnership. Where a company sets out as policy to not listen or involve its “partners”, internal or external, then clearly the partnership word should not be used. Using it in these circumstances is dis-honest.

The critical thing to be done before developing external supply chain partnership relationships is to “win the home games first” and to engage the hearts and minds of the employed and contracted; individuals, groups and teams, inside the company.

Can We Agree To Disagree?

To be able to win the home games first, many organisations need to fully recognise that they actually do have people at all levels in the organisation, which do actually go along with events, which they actually disagree with. This is, maybe because they do not want to rock the boat. They have discovered it is safer to keep their head down. Indeed, as noted by the management guru, Peter Drucker, the biggest single hidden aspect in most companies is fear.

When there is such a “going along with syndrome,” then this is really negative for an organisation, as well as for the individuals concerned. The following case study, Figure 2, The ABC Ltd Problem, explores this issue.

Figure 2 The ABC Ltd Problem

  • F (the C.E.O. of ABC Ltd) takes pride in the company mission statement about the positive open communication with everyone pulling together to create new opportunities for the benefit of the customer.
  • G (a senior manager) sees his job is all about exploring new opportunities and that problem are “negative” barriers to this end.
  • H (a middle manager) is keeping quiet about a staff problem, as G never wants to hear about problems and has said before in similar situations to H, that he is a troublemaker who is rocking the boat and needs to stop being negative.
  • I to K (all clerks) have all just left ABC Ltd. They resigned as they felt they could no longer work for a company that will not listen to their concerns and problems and which stopped them from providing service to customers.
  • XYZ Ltd. (a major customer) confirms they are placing orders elsewhere, as they cannot get answers about delayed orders since I to K have left.

What would be your answer to the “problem”?

The simple answer is to say it’s a communication problem. Well for sure, it is a “communication problem” and one answer is to have the C.E.O. to get everyone to talk to each other. But it is deeper than this. Staff has left and an important customer has gone elsewhere, so something more “radical” needs to happen! Discussions-a core element in organisations Discussions and interactions between people are the core component in most organisations. These discussions take place take place at many levels, both internally, between employees/ employers, and externally, between suppliers/ customers.

If such discussions are stifling, restricting, and limiting; then this can result in stagnation, a refusal to learn and change and a refusal to do things differently. To overcome any such difficulties in any people business process, then it must be understood that conflicts, challenges, and compliance are all related interactions. These are important aspects to be efficiently managed and understood.

Challenge and Conflict

As perception is reality, then the words and style used in discussions and interactions, may mean that any “challenges” can be perceived by the giver, as being constructive; however, the receiver may perceive “challenge” as causing conflict. (By conflict, I am meaning the conflict of ideas and not conflict between people, conflict here is meant to be an open disagreement on ideas-I am not in any way taking about any conflict of verbal or other types of, violence!) The following case study, figure 3 Research Findings, will help to clarify my view.

Figure 3 Research Findings

When talking with employees in different companies, researchers noticed that some employees said they avoided conflict whenever possible in discussions, while others seemed to thrive on conflict in much the same circumstances. To confuse the researchers even further, those who seemed “positive” about conflict seemed to perform better in many respects in their jobs (and in overall organisational performance) than those who discussed conflict “negatively”.

Probing further, the researchers found that different people (and organisations) used the term conflict in very different ways. For some, those whom perceived conflict as negative, conflict was personalised and represented destructive personal tensions. For others, those who viewed conflict as positive, conflict was simply an intellectual disagreement to be resolved and had no relation at all with their feelings about the other party. The first approach can be called conflict among people (or destructive conflict) and the latter, conflict of ideas (or constructive conflict). Many people however, will still not like the word conflict, as it will be associated with aggravation and unease between people.

But this is just one possible side, as conflict has positive and negative sides, one which can be both creative and constructive or one side that is, feared and destructive. When conflict is creative, it explores differences and is not a concentration on only one position. Creative constructive criticism can take and build up from a newly discovered “third” position. Here both parties may concede to win or to loose. There will be a common cause, perhaps with tough trust and where “truth” comes from debate and discussion amongst equal friends. When conflict is feared it is so often because it has become personal. This will often happen when partners are treated as being unequal.

Unresolved differences can go onto create stand off’s, which can continue with destructive outcomes, and perhaps even end with “taking the ball and bat” home! (Whoever said that grown ups are children in disguise, was surely right). People can “withdraw” and “curl up into their shell”. They may well comply and “go along” with things. However, this is not really very helpful over the medium term, as it works like an internal cancer, attacking company mission statements about developing positive relationships between people.

Challenge and Compliance

When two people discuss and “face each other”, then without any challenge, there will only ever be an outcome of compliance. Now such compliance may be fine if it is genuine and agreed by both parties, and it may also be fine, if it is has followed from a useful dialogue of constructive criticism. But, positive challenge is needed and is definitely helpful, if there is to be any learning. “Blind”, forced, or negative compliance is really no use at all to anyone wanting to develop and to grow.

When there is only negative compliance around, then there is little learning, as there can be no real change from the current position. With negative compliance, for example, people will learn to keep quiet and cover up anything that will expose them when they put their head over the parapet. Mistakes will be hidden, as this is no place to be where you can learn from mistakes. Furthermore, negative compliance can be covert with “unspoken disagreement”. It can exist amongst unequal partners where, one of the parties does not “want to rock the boat”. The following, figure 4 SCM Ltd., views this further:

Figure 4 SCM Ltd

The managing director of a successful component manufacturer (SCM Limited) has a very simple human resources policy: hire winners and fire losers. In practice being seen as a loser by the MD means demotion, or at worst, termination. Unfortunately, this MD is on a rather short fuse and any employee seen making a mistake will always be a loser. Consequently, the clever employees learnt many astute ways of covering up failures, even when they were genuine ones.

As a result, problems tend to appear too late, when nothing can be done about them. The MD then has to step in, fix them as he can, and look for a scapegoat. He keeps complaining that he spends his time fire fighting rather than dealing with fundamental strategic issues. Effective challenge and conflict is needed to open up differences, as differences can be essential to learning. (The MD, above, for example, needs a good mentor or coach so that the differences can be positively explored). Here each party will be encouraged and supported to arrive at a place and position where there is a mutual awareness of differences.

This then leads to debate and onto a greater level of understanding, finishing perhaps with a compromise where both parties may have conceded, so that they both can win. When this type of challenging approach is used, then it prevents any compliance of false agreement. Here one side thinks it has “won”, or the other side has concluded, “why should I bother, they always want to do it their way?” With negative compliance, each remains with its own position. The others viewpoint is not listened to – there are no seeing the third position. Without any positive compliance, there will be no long term developing and no growth, no learning and no changing.

Yet, some people will foster negative compliance. The employees in the last mentioned case study above are for example, fostering compliance, (although they probably do not see this). This is possibly happening because they do not like the personal conflict, which they see as destructive. Also, the MD is fostering compliance through his personal style and approach, (although he probably does not realise this). Furthermore, some will like negative compliance, as they want to remain where they are, as they do not want to change. Some will also continue to steadfastly not “give up” their position as they cannot “loose face”.

What can be done?

There is clearly a need to expose, with challenge and conflict, the compliance issue. All the people involved, (internally and then externally), need to be clear and agree on the following definitions:

  • Positive conflict

Is constructive as it enables new learning through an open disagreement and discussion on ideas between people. The outcome is either a full agreement about the others position, or, finding a new “third” position. All those involved believe they have gained something from the conflict process.

  • Negative conflict

Is destructive as it inhibits new learning through creating personal tensions among people. The outcome is on “one” position only. Those involved are usually divided, as whilst one side may feel they have gained, the other side feels they have lost something.

  • Positive Compliance

Encourages challenge and conflicts and recognises these are needed for effective learning and changing. People are actively involved in shaping the outcome from a mutual awareness and understanding of the differences. They can change their position in the process.

  • Negative compliance

Encourages blind or forced agreement which hinders effective learning and changing as open challenge and conflict on any differences from the “status quo” are not encouraged. One party remains uninvolved and keeps quiet with “unspoken disagreement”. This gives a “false” agreement, which can encourage mistakes to be repeated, and little change brought to the “status quo”. People will internally remain with their own position, even thought this will unlikely be externally expressed in their false agreement. After understanding the above definitions, then people need encouraging to use and adopt such practices in internal business relationships.

New learning (and changing) is needed. However without any changing, then it will be no surprise that challenge, conflict and compliance issues are often going to be dealt with in a negative way-as the case studies have shown. Effective supply chain management will clearly be a myth for some of the partners and players. There is quite a challenge here, I believe, for most companies, organisations, and many of the people involved. However, in promoting efficient and effective supply chain relationships and going for the “prizes” available, then the challenge has to be faced and overcome – with positive conflict, of course!

Perception is reality

A problem can however still remain. Simply that I believe in dealing with “managerially difficult people”, or by using “partnershaft people management techniques”, that too many managers are just too content to gloss over developing longer term effective people relationships. The “macho kick ass manager” is still around and thriving in short term heavily task oriented business. The contrast between “old “and “new” managing is distinctive, see figure 5.

Figure 5 Old and New Managing “Old” managing represents: – keeping control – holding onto people – being judgmental – “telling” – seeing though a “pinhole” – being directive and more autocratic – using a “push” approach – Mechanistic view of people, they are only a resource.

“New” managing, (some call it leading, coaching, or empowering), represents more of the following: – letting people try – given people a “self release” – being non judgmental – “selling” – seeing the wider view – being supportive and more charismatic – using a “pull” approach – Collaborative view of people, they are what bring innovation and improvement. It is important for a business to have its manager’s face up to viewing these differences and to recognising the ensuing problems and opportunities that occur from the application of the different models. It is critical for individual managers to see just how they look at things, and then to be prepared to change their view.

This can be a most difficult from of learning for many managers. When we view people, we have our “fixed” perception, which can, in effect, block our view. Therefore, if we are able to see differently, we need to change our perception. Remember that perception is reality. The way we see, leads to what we do and what we do, leads to the results we get. So to change the results, we really do need to change the way we see! To help view our own reality of how we manage people, it is useful to take a polarised view, so that we can focus on two “opposites”. After such a “black and white” view, we can then search for the “grey” if we want to. Let me, therefore, put forward another such a polarised stereotype of people that says people run on emotion but justify things by calculation. In other words:

  • The emotion view is seeing people as more “heart”/feelings based. It’s all that “soft stuff’ that is “gut feel” and subjective. It’s “touchy/feely” and not at all, what a “macho manager” or partnershaft supply chain manager likes to deal with.
  • The calculation view is, however, a more “head”/logic based view. It’s the “hard stuff’ that can be proved/quantified and is, therefore, more objective. It’s all those who say, “The numbers speak for themselves”.

I would accept this looks just too “black and white”. I know in the real world we are often more in the “shades of grey” zone. But we have to start somewhere and I am suggesting we should try and start with a polarised view and spend some time looking at the “soft stuff”. I believe it is all this soft stuff that is really the hard stuff. It is not the “technically simple” that causes us major problems in supply chain management, it is that which is more “managerially difficult”. But to get into this, we need to have a view of “where we are at”. We need to be able to have the confidence to view which side we lean towards. Is it the “Emotion Soft Stuff’ or the “Calculative Hard Stuff’?

Are we, ruled by the heart or by the head? It is my belief that these stereotypes view is sound. For me, business heavily involves emotions, (usually though covertly as, after all, it’s not macho and not British for us to show emotions). The calculative “bottom line” is, however, usually more overt. But the “bottom line” is only ever going to an outcome of all the other activities, which for example, involve people showing each other “touchy/feely” mutual respect and trust in their business relationships. So emotions, feelings, behaviour and thinking are all related.

After all, as a person thinks, so they are! Business is, therefore, at its roots, an emotional experience. Trying to pretend people’s emotions don’t exist in business relationships is dangerous. It ignores the way forward to develop better and more effective supply chains for all the partners and the players. To make supply chain management with partnerships a reality for all the partners and players, then we must fully consider how the people relationships are to be handled. To ignore such relationships is folly and frankly plain “daft”. Unless of course, the ending point is not for partnership at all, but for old style supply chain partnershaft.

All written by Stuart Emmett, after spending over 30 years in commercial private sector service industries, working in the UK and in Nigeria, I then moved into Training. This was associated with the, then, Institute of Logistics and Distribution Management (now the Chartered Institute of Logistics and Transport). After being a Director of Training for nine years, I then chose to become a freelance independant mentor/coach, trainer, and consultant. This built on my past operational and strategic experience and my particular interest in the “people issues” of management processes. Link for the blog: http://www.learnandchange.com/freestuff_23.html

E- Learning; a philosophy not a manifesto

Stuart Emmett  takes a look at E-learning

Wherever we turn these days all kinds of “e” are quickly growing and developing around us. Now as my surname begins with an “e”, then I better be careful what I say. But this does mean that I do appreciate that “e” is only the fifth letter in the alphabet. Therefore, to use our full and diverse vocabulary, then many other letters are available to be used. “E” is only one part of many other parts, whether it is “e” commerce, “e” shopping, or “e” learning. The whole has to be looked at and with “e” learning, it seems to me that this whole, has at least five main aspects:

  • It suits some types of learning better than other types
  • It is a means to an end and not an end in itself
  • Some people like the “e” screen and environment, some do not, and some like a mixture of “old” and “e”.
  • It has already, replaced some methods of learning
  • It is, another valuable option in the tool-bag of learning

Please, read on for a brief consideration of each of these five main aspects.

1.0. It suits some types of learning better than it suits some others. In looking at “e” learning, then we need to consider which of the two general types of learning we are involved with – “puzzle solving” learning or “making possibilities” learning. These are fundamentally different, and require different learning methods 1.1. “Puzzle solving learning” uses programmed knowledge, which is applied to solve a current puzzle. Puzzles are those things that have a “best” solution and often a “right” answer.

  • There is a familiar, known, accepted answer.
  • Knowledge and facts are acquired and are used to bring about the required solution.
  • The knowledge acquiring will be often be more directive led, for example by say teachers/trainers.
  • The method used is basically, “if you do this, then…”
  • The individual is taught “how to” do something basically the same as everyone else.
  • It is usually about getting better at what is already done.
  • It is looking for efficiency by getting people to do things right.
  • It enables efficient performance control.
  • It has an outcome of basic “doing”. It is traditional education and learning.

1.2. “Making possibilities” learning involves more insight, critical reflection and thought being applied to solve a problem, which maybe more future orientated in its outcome.

  • It deals with situations, which have outcomes that are more uncertain.
  • It deals with complexity as paradox is usually, found.
  • It is not so much a case of finding the right answer, but more a case of, asking the right question.
  • In exploring situations, (when acquiring knowledge and solving puzzles maybe a part of the process), there is a requirement to go beyond this into innovation and creativity. This needs a deeper level of understanding.
  • More challenging questioning is used, for example, about what is needed and for example, by asking why?
  • Following this questioning, reflecting and thinking is used; this is then followed by experimentation and testing.
  • This leads, eventually, towards finding an acceptable outcome.
  • It is promoting effectiveness and doing the right things.
  • The individual will often learn from someone who assist’s, helps and guides by asking questions such as “what if” and “why”.
  • The individual learns how to “see it wider” to “critically evaluate”, and to “think it through for themselves”.

Clearly these two levels of learning are fundamentally different and preventing confusion is critical. The following may help to bring this clarity when having to decide upon an appropriate learning methodology: Is learning required:

  • For individuals to apply knowledge to do something to “standard,” and in accordance with current thinking and with relatively certain outcomes?
  • For individuals to apply knowledge, to develop new problem solving skills and then move towards handling more future related problems with uncertain outcomes?
  • For individuals to become more, of what they want/aspire to be?
  • For teams and groups to learn together to get things done?
  • To impact upon the development of the company?

“E” learning would seem to be much better for individual based, programmed puzzle solving learning, and also for, the more technical “hard” stuff. Both of these have more black and white answers with clear outcomes and expected standards. The learner needs to find “the right answer”. But “e” learning is perhaps of less use for the “touchy/feely” soft stuff and also less use for, the non pre-programmed, making possibilities learning. This type of learning needs more reflection, more innovation and challenge and finding out “just what is the question/problem!” It can involve team/group learning situations, where it can include those many types of interaction that are lost on the keyboard/screen.

2.0. It is a means to an end and not an end in itself For some people, technology becomes an end in itself. These people get a “technology fix” that becomes the “answer” to all known problems. As with all good sales pitches, “E” learning is often sold as a “Need” rather than a “Want”. Here, “E” learning is seen as having all the answers and that anything new will be automatically better. Tony Harris (Training Consultant) says “we must always retain control of the process and whilst change is a constant, we must not be constantly changing”. This is true, but how often are things changed because of “flavours of the month”, “everyone is going to be doing it”, and it is “new and nice to have”.

So often, what is really happening here is change for the sake of change and for technology “fixing”. But different learning methods are often about supporting the learner better. Certainly here, technology can be a useful means as a part of the learning process and “E” has some positive benefits to offer here. The Open University is actively embracing e-mail support to students, as does David Granville’s Scilnet “e” learning system. As David comments, “students now tell us that it is the most friendly and personal way to learn of any method they have experienced. We now have 85% of students on or ahead of schedule compared with less than 20% on the traditional methods. It proves that e- learning is not just about content, it is very much still about support”.

3.0 Some people prefer the “e” screen and environment however some people do not-and some people, like a mixture of “old” and “e”. When considering “e” learning, then we should never forget the user, the client, and the learner. Are not trainers, especially, all about making it easier for learners to learn-by whatever method? If “e” does this, then fine. If it does not, then let us use the learning method that will assist learning better. The “horses for courses” viewpoint must prevail.

“Some people are best suited to traditional classrooms; some people are best suited to competency based programms whilst a growing number are turning to the virtual classroom” (Tony Harris- Training Consultant). We should always be looking to improve the way people can learn better. Whilst some say, “if it is not broken, then why fix it”, the answer to this saying should always be, “but can we can improve it?” With any “e” learning, then any change or any improvement must be customer, user, client, learner focussed. If there are other gains to be had then good-but customer focus first please.

4.0. It has already, replaced some types of learning “E” learning methods have already replaced some former types of learning and in so doing, has replaced trainers. I know this personally though having some training work replaced by “e” learning. Changes pushed by technology have happened to everyone, and trainers should not think they are in an immune and unique position here. But then, are not problems, opportunities? The material still needs to be developed. The content is the critical part of “e” learning, the “bells and whistles” are useful but they will not sustain a poor content. After all-rubbish in, then rubbish out and recycling on poor existing material will not work.

Great opportunities exist with “e” to use more attractive and moving visuals, and checklist feedback questioning including sounds. Simulations, interactions can all add to make a more interesting, challenging and useful learning experience. The Internet is not after all a replacement of Teletext- the Internet is different and presents new communication opportunities .For example; a new market can be developed. This maybe on a potential world wide basis with the availability of 24/7 learning experiences that are instant, on demand and satisfy those who “want it now”.

5.0. It is, a valuable option in the tool-bag of learning Learning for me, is, any method and process which uses, personal-power, knowledge and experience to: a) Makes sense of things, (by thinking), b) Make things happen, (by doing), c) Bring about change, (by moving from one position to another). The method and process can be classroom, simulation, activity, seminars, workbooks, conferences, exams, projects, assignments, one to one coaching etc. as well as “e” learning.

“E” is not the only answer but it is one part- a growing, and therefore important, part- of the tool-bag. A strategic question to us all is “what new inventions and developments are around, that will take us into the next three years”. “E” learning is one of these new developments. It will be ignored at peril, but needs to be looked at with maturity-a maturity that uses it, where and when it is feasible and is capable of being used to its best extent. No “technology fixes” and ends in themselves please! As Tony Harris notes well “e-learning has its own life cycle, it is up to each individual to decide when to climb aboard and start peddling”

Acknowledgements With especial thanks for “skeleton fleshing out” via “e” mail, face to face/telephone chats, and Internet discussion groups, to the following people:

  • Tony Harris, Training Consultant, an “e” trainer/assessor, (amongst other things)
  • David Granville, C.E.O., an early adopter, and developer of “e” learning, (look at www.scilnet.com.)
  • Mark Williams, a UKHRD network contributor, (look at www.celemi.com)
  • John Kelly, a UKHRD contributor and CBT developer, (look at www.PressTech.co.uk)

This article is the full version of a shorter version published in Open Learning Today, BAOL, January 2001 with title “A growing part of the trainers tool-bag”

All written by Stuart Emmett, after spending over 30 years in commercial private sector service industries, working in the UK and in Nigeria, I then moved into Training. This was associated with the, then, Institute of Logistics and Distribution Management (now the Chartered Institute of Logistics and Transport). After being a Director of Training for nine years, I then chose to become a freelance independent mentor/coach, trainer, and consultant. This built on my past operational and strategic experience and my particular interest in the “people issues” of management processes. Link for the blog: http://www.learnandchange.com/freestuff_23.html

What are the perspectives for the future Supply Chain?

According to a KPMG study, the priority for firms towards their suppliers remains costs, but there are also new priorities which appear such as shares of knowledge, skills and resources.

In the near future, most firms claim that they want a more integrated supply chain with more responsibilities for suppliers concerning stocks. Firms are looking for safe partnerships with their suppliers and they use financial audits to be sure of their partners. Moreover, there are more and more concerns about intellectual property. Furthermore, we can notice a strong wish of firms to control more and more supply chain. For instance, in 2008, Carlos Ghosn, CEO of Renault-Nissan said: “We are not anymore in a world where logistics follow”.

The future Supply Chain has to be flexible. To reach this purpose, supply chain managers must have safe suppliers and integrate actors of the supply chain. This shows that Supply Chain’s evolution is at the heart of concerns for the near future. Supply Chain of the future would be flexible, safe and with a strong partnership between different actors of the chain.

>