• image
  • image
  • image
  • image
  • image
  • image
Tag Archives for " Supply Chain "

What Supply Chain Managers Can Do About Safety Recalls?

If you are in Australia, it is more than likely that you already know this saga. If you are not in Australia, or do not follow the news cycle, take a look at the video below:

This happens all too often. Once every few months, in some part of the world, a crisis of similar nature emerges.

Several years ago it was this:

I could keep finding a lot of similar videos about products and places – but you get the point. And, it is a not a new problem either. Take a look at this story from over 3 decades ago:

The point is that the lack of supply chain security hurts the company, the industry and the economy significantly.

Some band-aid solutions are rolled out – mostly to restore public confidence and get the demand up again. However, a comprehensive supply chain security regime is never put in place.

Having done large scale supply chain transformation projects for companies as sensitive as explosives, chemicals, fertilizers, food stuff, soft commodities, bakeries, meat, dairy, livestocks, and many others, we have seen both – the vulnerabilities and some really cutting edge supply chain security in practice.

Unfortunately, supply chain security, in conceptualisation and training, has not kept paced. There is no university course that covers this topic sufficiently. Conferences skirt this topic. Books cover it sketchily. Regulatory framework is patchy and officious.

And after complying with the regulatory burden most people relax in the belief that they have done enough.

In fact they have no basis to go beyond regulatory requirements, lest they are accused of being paranoid or overzealous about security.

Yet, dozens of incidents have demonstrated that regulatory framework is never enough. Each company has to develop its own supply chain security framework, based on its own particular circumstances. Even compliance with insurance requirements is not enough. Reputation damage to your business is a non-insurable loss in most cases.

How do you develop your own supply chain security framework?

Complying with regulatory and insurance requirements is a good start. You also need a more robust, holistic and comprehensive supply chain security framework that provides the guidelines for your own company’s supply chain security model.

Our report titled  SUPPLY CHAIN SECURITY – A COMPREHENSIVE, HOLISTIC FRAMEWORK provides the information to get you started.

Better still – run a one day workshop based on the content of the report. It will be the best 20K your company ever spent.

 

CFOs’ Guide To Supply Chain

It is ironic that though the CFOs are at the absolute center of the universe within their organisations, when it comes to succession into CEOs role, boards are as almost as likely to overlook the CFOs candidature, as they are likely to give them the nod.

At a first sight it looks like a puzzle.

But, when you think about this a bit more your realize that most CFOs are so good at their job, that moving them to a bigger and better role would be a huge loss to the organisation.

If you are a CFO (or in a position close to being a CFO), in this blog post I am not going to show you how to get worse at your job so that you can fill bigger shoes.

Instead, I am going to unpack this phenomenon (some of the observations and stories come from my book UNCHAIN YOUR CORPORATION), so that you can move into bigger roles with an equal ease.

A Real Life Story

Let us start with a real life story (critical details are disguised a bit to make sure we protect the identities of the people involved).

When I flew into the big city with the continental HQ for our client, it was middle of winters. As it so happened, the next day was scheduled for the monthly senior management meeting. The business had been under-performing for  last three years, and everyone was looking for a turnaround, or a scapegoat.

The CEO, and all the regional heads, were strongly sales oriented individuals. They were all cut from the same cloth – strong personalities, heavily market focused and not very analytical.

Other two people in the room were the head of finance, and the head of supply chain. As they all saw it – one of them was charged with making the deliveries, and the other was charged with doing the numbers. A very simple arrangement in their scheme of the world.

global supply chain

No wonder the company was losing money hands over fist in almost all markets.

Almost all negotiations with the customers were based on seat-of-the-pants calculations made from half baked numbers.

Bluster was  common, and in face of threats to use of competitive products, significant price discounts were made available to the large customers who formed bulk of the revenue base.

Not only that, nimbler supply chain partners, well aware of the analytical deficiencies, were milking away the system.

Only Two Problems

The monthly management meeting was an appalling show of solidarity between the regional heads and the CEO who blamed the heads of supply chain and finance (again) for the monthly under-performance. Almost all problems were attributed to one of two things:

  1. Delivery related problems – attributed to the head of supply chain
  2. Transactional compliance, budgeting and analytics related problems – attributed to the CFO

The facts that sales staff were making promises that could not be kept even by supermen at prices that would never make any profits, and that the operations field staff were regularly circumventing the workflow to reduce their work load, and many other similar happenings, were conveniently overlooked.

Someone’s Gotta Go

In this meeting, in my presence, the CEO ended with an ominous warning that one of the two heads who carried the blame would lose their job if the business did not turn around in the next 3 months and came within an acceptable variance to the budget.

On the supply chain side, we worked very hard for verifiable turn around of the supply chain (and demonstrate that bulk of the problems originated from the lack of sales discipline). A number of projects were conceptualised, planned and executed in a short time frame to get supply chain out of the jail house.

On the finance side, I do not know what kind of number massaging was expected from the CFO, but I was unhappy to learn that after a few months he did indeed move on from the organisation.

There are more details which I am not including so that I can focus on the key points of this story.

Why did I recount this story?

Because I believe if he had done something similar to what we did on the supply chain side of the business, he would have clearly demonstrated that the problems did not originate in the finance department – in the way financial discipline, budgeting and variance calculation was structured and executed.

Unfortunately, all the way through he restricted his thinking to accounting data, and its analysis without getting into the nitty-gritty of the business side of the equation too much. Even when he attempted to get into business side of the discussion he was thwarted.

That got me thinking

That incident got me thinking quite a bit. I suddenly realised how your history could easily anchor you. Consider the following figure:

You start into a role in finance or accounting at the bottom of the pyramid, and as you get more experience and capability you rise towards the top. Only those individuals who are exceptionally good at almost all functions in this pyramid will rise to the very top, to get the crown of CFO.

The problem is that what brought you here, will not be enough to keep you here. And, most certainly, it will not take you any further.

 All that competence, all the hard work – burning mid-night hours during audits,  millions of zega-bytes of number crunching using the most sophisticated investment banking models, budgetary cycles – all that dedication was great. It brought you up to here.

To go further, it will not be enough.

So what kind of thinking is required?

New thinking in finance is required because supply chain and finance are now so closely inter-linked that you need mastery in both.

This new thinking will extend:

  1. BEYOND Compliance  – Added layers of auditing and compliance gives more control, but rarely results in higher returns. It gives the right to play, but does not tell you how to play well.
  2. Beyond traditional Working Capital Management – Excessive squeeze on the creditors is now counter-productive, and cost of capital is likely to be volatile.
  3. BEYOND Dupont Formula and other financial tools – These work very well retrospectively, for post-hoc explanations. As tools for future value creation, their application is limited.

Today, boards expect deeper control over the heart of supply chain finance.

Why?

Because, more than ever before, today, one of the most pressing concerns of every board of directors is CEO and executive succession. Clearly, the boards want C-LEVEL executives who can step into a CEO’s shoes at a moments notice, if necessary.

So, what distinguishes a C-LEVEL functional expert from a near C-LEVEL?

It is their ability to see the BIG PICTURE. This is not a cliche.

BUSINESS TRANSFORMATION AND LEADERSHIP SUCCESS COMES FROM CROSS FUNCTIONAL INTEGRATION ABILITY.

In other words:

  1. Ability to get their functional team to play well with the rest of the functional teams.

  2. Ability to take leadership and integrate cross-functional teams.

  3. Ability to understand how one function affects another – in depth.

Here is one simple example of a financial tool for business transformation. No school will teach this:

 

There are many such tools, but most importantly, you will need to design and create your own tools. They all ask (and answer) some common questions.

  • Financial Engineering – view the entire spectrum of Balance Sheet Management, some of which are known to only a few experts. Small differences in these can make a significant impact on shareholder return and outcomes.
  • Strategic Reversal – in the fast moving digital age – why assets might become your biggest liabilities, and liabilities might be your biggest assets – and what companies are doing to create extra-ordinary shareholder value?
  • Profit Optimisation – what lies beyond Cost-to-Serve, and how to leverage big data to optimise margin for every transaction using latest technology (think about UBER and airBNB)?
  • Process Innovation – why process innovation is even more important than product innovation, and what finance tools are available to regularly access process innovation in your situation?
  • Real Strategy – why today’s digitally vocal customers demand REAL supply chain segmentation, not just fake marketing segmentation. How to use this move strategically for financial value creation?

Clearly, it is not easy to do all this. But, neither was it easy to come up the pyramid to the top. Here is a tool which will make it easier – but, in the end, as usual only your own effort will get you there.

If you want more examples such as the smile curve above, I got my assistant to make a 104 page document with sanitized selections from our past projects executed over the last 18 years. It may give you more ideas for similar tools for your business. Contact me on v.sood@globalscgroup.com for the document (available selectively).

Why Almost Everybody is Missing the Most Important Point in Their Solution to Amazon’s Threat to Australian Retailers

Yesterday (on 2nd November 2017) I happened to briefly glance at the Australian Financial Review – the key finance newspaper in this country while I was waiting in the lobby for a meeting. No more do I  subscribe to this newspaper,  because it appears to be growing more and more out of touch with business reality, and becoming more a shill for vendors with deep advertising budgets, and small brains.  Its content  in terns of financial and economic news is excellent, but somehow the journalists seems to miss the major shift in the business models to B2B Networks.

Taking a Sword to Fight a Nuclear Missile

Yesterday’s newspaper seemed to be predominantly dedicated to a conference on e-commerce related subjects. I do not remember the specific topic of the conference, and it does not even matter because the entire debate was centered around Amazon’s entry into Australian market place, and the threat it poses to the Australian retailers and businesses.

Indeed, the organisers, and the newspaper, had identified the burning issue of the day for Australian businesses. Looking at the issues, I almost thought of subscribing to the newspaper again.

But a little more unpacking of the pages revealed that almost all the solutions on offer were marketing and sales related, or new age technology related.

Nothing beats a carefully crafted supply chain strategy, executed with precision and flexibility - especially for business transformations in dire circumstances. This point cannot be emphasised enough.

What people forget is that Amazon’s success is even more dependent on its incredible supply chain.

Fighting this successful behemoth without an equally effective supply chain is akin to deciding to fight against nuclear missiles with swords.

Are Australian Retailers Being Led Down A Rosy Path in Their Response to Amazon's Entry?

Most people still do not even know what supply chain really means. If you doubt me – just watch the short (1.5 minutes) video below, and conduct the experiment with 10 people you know:

 

 

Lest I leave you with a wrong conclusion, I am not deriding marketing and technology solutions, because they do have a place in the overall campaign.  But, if you get an impression from the newspaper (or the conference that seemed to dominate yesterday’s paper) that somehow you are going to outmarket Amazon just using such solutions – you better think again.

Nothing beats a carefully crafted supply chain strategy, executed with precision and flexibility – especially for business transformations in dire circumstances. This point cannot be emphasised enough.

I have written extensively in many other blog posts on how to do just that – all you have to do is explore a bit in the categories and tags on the right of this page. Some of the titles from over the year are in the image on top of this page.

For real leaders, who want to make substantial and deep positive impact – I do recommend my book The 5-STAR Business Networks.

If you have the budget, it is also worthwhile asking for a workshop based on the same material – but we only have limited slots, and already have a big backlog for that.

High Demand for Real Supply Chain Experts

Good solid supply chain thinkers are in high demand and low supply.

I would know, I run this company called Global Supply Chain Group for the last 17 years.

It appears that it was not too long ago (when we formed this company) – most business people were struggling to understand what is supply chain and what does it do. We have come a long way since then.

Every politicians speech today is laced with references to global supply chains and business networks that run the commerce on earth today. Companies that are seen as supply chain trend setters are leaving everyone else (even in adjoining industries) biting the dust.

Take a look at the chart below:

But Amazon.com is not the only one.

Current trend is becoming clear- companies such as Apple, Zara, Uber, AirBNB have one thing in common – Supply Chain Leaders as CEOs. Integrators are in high demand. Optimisers rule the roost.

Every era has its own heralds and the mantle changes every few decades.

Every politicians speech today is laced with references to global supply chains and business networks that run the commerce on earth today. Companies that are seen as supply chain trend setters are leaving everyone else (even in adjoining industries) biting the dust.

As as example, it only one or two decades ago that strategists coming from McKinsey or 3Bs (BCG, Bain, Booz) were the prime candidates for the role of the CEOs. What made this necessary was the need for strategic thinking that was missing at the highest level before that. But clearly the mantle has passed on the the integrators / real supply chain leaders now. Here are the previous trends:

  • 1900 – 1925: Inventors, Creators
  • 1925 – 1955: Makers, Builders
  • 1955 – 1970: Promoters, Marketers
  • 1970 – 1980: Accountants, Finance
  • 1980 – 1990: Human Resources
  • 1990 – 2000: Strategists
  • 2000 – Current: Integrators, SCM Leaders

I know, you are asking where is the proof. Take a look at the picture below:

It will take a long time to explain the picture above, if you don’t get it by seeing it. It is also perhaps unnecessary in that case. Suffice it to say that two skills are becoming critical for business leadership:

Integration – of various parts of the 5-STAR Business network, internal and external resources, into a complete unit that delivers the customer experience

Optimisation – that enables sound profitability while delivering the customer experience

I have many other pretty pictures to expound these points, but I would rather focus on the outcomes.

So, what would you expect if above two skills were available in abundance? For sure, you would expect good business outcomes. These could take the form of any of the 5 possible themes:

This is the topic I cover in great deal of detail in my book THE 5-STAR BUSINESS NETWORK – so I will not talk about it in this post. Rather I want to focus on the reason I wrote this blog:

Now, if you have read it this far, there is a good chance that you know someone who will benefit from this information. Earn yourself some brownie points by letting them know – by sharing directly, or via groups. It only take 15 seconds.

Point to Remember - Two Keys to Success:

Integration – of various parts of the 5-STAR Business network, internal and external resources, into a complete unit that delivers the customer experience.

Optimisation – that enables sound profitability while delivering the customer experience

 

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:

 

Finally, An Innovation from Apple That is Worthy of Steve Jobs’ Name

The Apple watch left me underwhelmed as did the plethora of me-too tablets and phones which are barely struggling to keep up with the ever more nimble competition. I wrote a blog about the Apple Watch here wondering whether the company had lost its mojo.

When I found out about Apple SIM, having written a book on The 5-STAR Business Networks, I suddenly realized the true potential of this great leap forward by Apple. Obviously, there are more than several ways to skin the cat. While everyone was looking for the next innovative product, that Apple has produced every few years in the past, what slipped our attention was the innovative service which will make Apple tablets so much easier to use – especially by its target, high end market.

If you do not know much about Apple SIM – you are not alone. In fact there was not a tweak about it in the usual Apple staged events where the Apple Watch and other new gizmos were introduced. The service (product) was launched quietly as one of the embedded features in the new generation Apple tablets. So what is Apple SIM? As per Apple:

The new Apple SIM is preinstalled on iPad Air 2 with Wi-Fi + Cellular models. The Apple SIM gives you the flexibility to choose from a variety of short-term plans from select carriers in the U.S. and UK right on your iPad. So whenever you need it, you can choose the plan that works best for you — with no long-term commitments. And when you travel, you may also be able to choose a data plan from a local carrier for the duration of your trip.

Clearly, if you are a frequent business traveler, this service will fulfil your CFO’s dream. The international roaming charges are so high that in most cases you have to mostly restrict your time on line to when a WiFi network is in reach. Is this a big deal? Steve_Jobs_with_the_Apple_iPadFrom the customer’s point of view, their ability to be online wherever they are is necessary for using all cloud based applications including emails and messaging systems.

If it costs an arm and a leg, as it currently does, customers will grudgingly put up and restrict usage to a bare minimum – while trying to find work-arounds. Some companies, such as Vodafone or Globalgig do provide similar services so this is not a new offering.

Yet, I would characterize the state of the play as akin to the digital music players market before the original, cute looking iPods came along and made all the rest look like clunky dinosaurs. I must admit, I have not used the Apple SIM yet, because of its current limited ability.

Nonetheless, I have used many of its competitors’ and I can attest to the fact that their services work with a lot of clumsiness. Thus, therein lies the opportunity, and challenge, for Apple.

If Apple can make the service as user-friendly and seamless as the rest of its offerings, it will win big in the next tablet war. Well, at least till Samsung and Google figure out a way to beat Apple in this new business network game.

What Makes the Business Networks Great?

What Makes Business Networks Great?

Extract from the book The 5-Star Business Network, written by Vivek Sood 02-300x206In 2012, when Facebook’s IPO was being discussed in the media, a range of valuations was put forward by the experts between approximately $50 and more than $100 Billion. Most people in traditional businesses were stunned and asked how could a company with no products, no factories, no customers and no suppliers, be valued more than Siemens, Nokia, US Steel, or even a combination of these traditional, well respected companies. The pundits declared the basis of valuation as the Network Effect and left it at that – leaving people to decipher what exactly the Network Effect is and exactly how does it lead to a valuation of tens of billions of dollars. Networks, of course, can be homogeneous groups of similar people, such as net-savvy, with spare time and willingness to share their lives’ details with others on Facebook (or similar social websites), or they can be heterogeneous networks of a multitude of suppliers around the world that provide a vast range of components and parts, such as those that go into manufacturing the Airbus A380. Networks can even be a combination of homogeneous entities and heterogeneous groups, or vice versa. This point should emphasise in the readers’ minds that there is not one single kind of network, and hence the characteristics will vary accordingly.

The Network Effect

Needless to say, there is no point spending time on a social network website if you are the only person who ever visits it. In fact, if most of your friends are members of a rival social networking site, you would eventually find yourself there, or find yourself a web outcast. This leads to a catch-22. Most nightclub and restaurant owners are long familiar with the predicament – the more popular your establishment becomes, the more people want to get into it. However, the key predicament is always – how to start off the process. An excellent book “The Tipping Point”, by Malcolm Gladwell, discusses this phenomenon in great detail and attributes it to the three rules – getting the first movers (law of the few – the mavens, the connectors and the salesmen), the stickiness factor (simple ways to make things memorable) and the power of context (small factors in the environment and the relationships that create and sustain impetus). If you have not yet read the book , I highly recommend it. It is neither advisable, nor possible, to paraphrase the excellent content, and Gladwell’s writing style is extraordinarily eloquent. So, with every new addition to a network, it becomes a little bit more valuable. This continues to happen until the network reaches a tipping point, a point at which it suddenly becomes a lot more valuable. After this point, the network will generally race past all its rivals and become a de facto standard in its realm. Whether it is a question of which social network website to frequent, or which type of keyboard to use as a standard (the more popular QWERTY or the more efficient Dvorak style), or which type of cooling systems to use in the nuclear power plants (light water, heavy water or gas cooled) – the decision almost always rests on the network effect.

ball-419199_640-300x211

Conclusion

Networks thrive on trust: they succeed where trust building mechanisms are strong and well adhered to. Well functioning business networks incorporate a secret source – the power that goes beyond the synergy, the multiplier effect, into the realms of synchronicity. Besides, business networks allow businesses to be simultaneously strong in their core strengths and live with their own weaknesses – the other members of their business networks make up for their weaknesses. As businesses move from traditional structure to business networks, the essential co-operation building mechanism moves from control to co-ordinate to co-create.Continue reading

Why Every Start-up Always Has a Supply Chain Problem?

There is a common assumption that every company’s supply chain should be similar, if not the same. Even learned professors at august institutions write highly prescriptive articles in highly regarded magazines such as Harvard Business Review saying these things. For example see this article by a Stanford professor, on which I had a running correspondence through Harvard Business Review. My rebuttal of the article was published in the next issue of the same magazine.

The reality, encountered in the rough and tumble of the real business world is very different. Especially in the world of start-up companies – even the unicorns – the supply chain looks very different.

Supply Chain Maturity differs at each stage

In fact, our supply-chain maturity model shown in figure describes four  stages of supply-chain, where each stage of product life-cycle is paralleled by a maturity stage of supply chain. As figure below shows, there are four relevant zones of operations determined by two key factors on product maturity and supply chain maturity. Zone 1 is the foundation zone in which both the product and the supply chain are quite immature. As the name implies, in this zone the foundation for the future business is being laid. The next zone on the top left quarter of the matrix – the Innovation zone – implies a relatively mature supply chain, but a developing product. As the name suggests, this is the zone where both product and process innovations are rapidly taking place. The profitability zone on the top right quadrant is where both the product and the supply chains are relatively mature and while incremental innovation might be still possible. This zone is primarily focused on enhanced profitability. Finally, the twilight zone on the bottom right corner is when the product is reaching the end of its profitable life cycle and the supply chain becomes brittle.

Profitability Zone and Innovation Zone are the two most productive zones

Needless to say the more time spent in the profitability zone the more a company can reap rewards of its efforts. However, to maintain fresh product lines, to constantly stay on cutting edge and to retain long term leadership, companies will have to also spend some time in the innovation zone. Intuitively, companies want to spend time in the top two quadrants and minimize their time in the bottom two quadrants. In fact, overlapped on the four zones is a typical supply chain maturity cycle we observe. We will discuss this conundrum in more detail in Chapter 11 where we observe the Advanced Product Phasing strategies of the 5-STAR Network businesses.

 

 

Improvised Supply Chain

Initially, in the introductory stage of the product life-cycle, the supply chain is still very basic. In this improvisational stage of supply-chain, the key focus of supply-chain team is to really just gather enough material somehow, from somewhere, to make the product or to keep the research and development team supplied with raw material. They are not doing any advanced planning at this stage. They are not even aware of all the raw materials or all the parts, which will be required for making this product. Bill of Materials may not exist or, if it does, it is incomplete. There is no supply-chain planning mechanism besides this Bill of Material. There is no supply-chain control mechanism either. Even a budget does not yet exist, or it might be just a very rudimentary budget. At this stage of supply-chain maturity, the companies are not worried about its efficiency at all. There is no supply-chain collaboration with its partners for this simple reason: we don’t even know who they will be.

 

 

To read more get the book on http://5starbusinessnetwork.com/ or download 3 free chapters.

What Does It Take To Go From Good to Great in Supply Chain?

It is only natural that  many companies today want to go from good to great in Supply Chain.

It takes a lot of effort to go from good to great in any field of endeavour. It takes even more discipline and technique, than the effort.

But, there is another missing ingredient which does not occur to most people, right until it is too late. I will come to this important point soon.

Recently, while watching the film “The Legend Of Bagger Vance” with my sons, I was struck with how important the caddies are for the competitors.

As anyone who has watched a golf match knows, every shot counts.

Smallest putts count as a full stroke, and can easily turn a potential multi-million dollar prize winner into a near miss.

Here, without going too much into the respective careers of these billion-dollar golfers (all the reasons for their change of fortunes), I would like to state one simple fact – that caddies play a significant role in golfers’ fortunes, probably much more than most people, including golfers themselves realize.

If you have been following the fortunes of the world’s top golfers, you might have noticed the difference that a change of caddy made to the careers of Adam Scott and Tiger Woods.

In case you have not seen the movie yet, below is a five minute YouTube clip to give you an idea:

 

Great caddies will go to great lengths to collect all the relevant information on distances, slopes and other relevant facts to enable the golfer to make the right decisions and execute them with confidence.

So, what is the difference between a great caddie, and a merely good caddie?

They all walk the course and measure distances from all plausible spots to the pin. They all know the slope of the greens by heart, but the great caddies will sometimes roll hundreds of balls just to understand how the ball actually rolls on the green.

That tactile feeling allows them to read the putts much better than other caddies.

Sure, it is hard work; and, in these days of modern technology, perhaps a bit redundant.

However, their devotion to their craft makes them want to leave no stone unturned in collecting as much relevant information as possible to assist the golfer.

Another YouTube clip from the same movie might make it more real for those who want to invest 3.5 minutes to see this:

Now, you may wonder why am I talking about caddies and golfer?

Because late last year, one of our consultants asked me why we wanted to manually plot over 1,400 locations and over 250,000 monthly movements on a map.

His point was very valid. Supply chain software, Excel and other computer aids make it unnecessary to do so.

In our company itself, we have already amassed supply chain models created over the last 15 years of our existence that can grab a dataset like this and spit out answers in minutes.

It is far too easy to pump out Excel charts by the dozen without fully comprehending the significance of the story that the data is trying to tell.

To fully understand this story, one must spend time listening to the data.

For this reason, on nearly every project, we take care to manually plot the data at least till the entire project team has a very good appreciation of the operations being analyzed.

Yes, it makes us work well into the night in many case.

And, yes it is arduous work.

But, this dedication to our craft begins with getting a tactile feel for the operation in its entirety – which is best achieved through such an exercise.

We want to make sure we have studied each and every avenue of change, tested every lever of transformation, and carefully selected only the most impactful few, so that we can assist the CEOs and executives who rely on us to guide them towards success.

After all, this attention to detail makes all the difference between a good strategy and a bad one.

Difference between a successful business transformation saving our clients millions (or sometimes hundreds of millions) of dollars, and unsuccessful ones (that one reads about in the press) that do more damage than good.

Luckily, for the last 14 and half years, so far each one of our project has been a success, and we plan to keep that track record.

 

Supply Chain is the New Electricity – You Cannot Run Business Without It

Recently I did a small but quite interesting thought experiment with one of my sons.

We were discussing the invention of electricity and he asked me: “Dad, what would happen if there was no electricity?”

Since I actually had such an experience, I recounted to him my life in a remote village in Himalayas when my mother had taken a one-year assignment to teach economics to children in a school nearby.

I told my son that there was no internet, no computers, no telephones, no television, no radio and no light bulbs. Even more so, there was no electricity in that village at all. As a result, the whole village would get up at sunrise, go through their daily routines and were go to bed just after the sunset. People used kerosene lamps to light up for an hour or so after dark and only in case of necessity.

My son is only 8 years old, and grew up in Australia. Hence, obviously enough he found this life almost completely incomprehensible.

On my part, this conversation inspired me to think about life without supply chain management.

I have been lucky enough to have the opportunity of working closely with Dr. Wolfgang Partsch –  who is one of the co-inventors of supply chain management (SCM) in the early 80s. I have had a number of discussions with him about how the business life has changed compared to the life before SCM was invented.

No doubt, the division of labour was one of the biggest and most popular concepts which came out of the industrial revolution. The principle is that every job is divided into its constituent parts to the lowest possible level, so that each person can specialise in what he does best, this would increase the productivity of the overall system immensely. By the late 70s, the division of labour had totally taken over the business as well as governmental work.

Unfortunately, bureaucratic complications combined with the division of labour had created a world in which every department within any company was running as a small fiefdom.

Imagine that a purchasing clerk would issue a purchase order. Then he would let his boss know that he has issued the purchase order as per the boss’s instruction. Then his boss will countersign the purchase order and would inform his boss that such and such item has been purchased, who would then inform his boss, who would most likely be the head of purchasing.

The department head of purchasing would inform the head of manufacturing, who would inform his subordinate, assistant head of manufacturing, who would inform his subordinate, the factory manager, who would inform the manufacturing planner that the purchasing order had been issued.

There were 6 to 8 different links in this communication chain running from the purchasing clerk to the manufacturing planner or production planner. Each message would go up the chain in a department, right up to the department head, and then across to another department head who would filter the message down all the way to a person who would act on it. In such a world with these eight or more different links in the chain, the time difference by itself was enough for the message to lose its effectiveness.

Combine that timing issue with the possibility of a message getting garbled in a long chain of communication, due to the differences of intentions and possibility of misinterpretations of messages, suddenly you realize what a nightmare it would cause.

Not only that, the departmental heads were almost always the biggest bottlenecks in such a communication scheme where nothing would go up, down or sideways without a departmental head’s approval. Obviously, their capacity to process information was only limited by how much time they had.

Problems of the organization without supply chain management

Now before you think of this as a ludicrous, and imaginary situation – let me add that I encountered exactly this situation in an Island airlines where I had the opportunity to participate in a business transformation exercise a few years ago.

Many other organisations I have had the opportunity to serve exhibit at least some symptoms of the same malaise.

So, what would be the typical complications you could encounter if there was no SCM?

You would notice that some easy five-minute jobs could quite possibly take days to accomplish, for a simple reason of the lengthy communication chain required to get the cooperation. You would also see a lot of confusion, because of the possibility of the message getting misrepresented. You would see some coordination, but not a lot of it because of the nature and length of the communication chain.

You would see a lot of bureaucratic nonsense with people hoarding information and only giving it to their bosses or their subordinates in a very selective manner. In many cases, this information hoarding would be pointless and even harmful. The rationale behind the behaviour might simply be a cultural norm or an expectation in such a hierarchical organization.

You would also see too much command and control in this type of organization, for the simple reason that when everything has to pass through a departmental head, he becomes an ultimate arbiter of what information filters through and what does not.

You would also see that the departmental head would have to make all the decisions. Even the smallest scheduling decisions, or planning decisions, or execution decisions, which could have easily be made by people several layers lower than him/her, would need to be made by the departmental heads themselves, again for the same reasons.

You would also see such systems as very rigid with no adaptive capabilities to changing needs of the market place. If you notice any of these symptoms within your company, then there is bound to be a problem with how the supply chain functions in your company.

No matter whether you have somebody with a title of supply chain director or vice-president, your company does not act as an organization with an effective supply chain which cuts across the departmental silos.

As this is a very important subject, in another article I will talk about how supply chain helps to alleviate the silos mentality and integrate departments to act as one company.

Related articles
1 2 3 7
>