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Archive for the ‘Supply Chain’ Category


Future Australian Transportation (click the hyper link) – “By 2050, Australia’s population will have nearly doubled, aged considerably, and still be largely urban-based,” he says. “The traditional modes of transport – road, rail, air and sea – will not be able to cope with that change. They are neither environmentally friendly enough to support large urban populations, nor terribly practical due to their massive reliance on infrastructure investment.”

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Any business will have number of objectives, each describing a desired future condition toward which efforts are directed. An objective is a statement that clearly explains actions to be taken or tasks to be achieved by an organisation. If the objectives are accomplished, then the business should be a success.

The purposes of objective setting are, to establish a standard for evaluating the success of the business and set priorities for its management and staff. Objectives help keep management and staff focused on achieving set targets and keep them away from distractive activities that drain business resources.

The business objectives are always derived from the mission statement of the organisation and the business objectives explain “what” and “how”.  The objective of the Business Objective should be task-oriented.  It should clearly explain what to be achieved and how it should be achieve.  There should not be any room for ambiguity.  The effective objectives will always have verbs such as execute; reduce; increase; establish; implement etc.  Words such as facilitate and analyse should be avoided in business objective statement.

The life span of the business objectives could be short term as well as long term.  However, short term objectives should always lead towards the long term objectives. The objectives should always be flexible and can change as business progresses.  This is mainly because of uncertainties in the market place.  What is good for the business today may inappropriate for tomorrow.  One should not be afraid to re-define the objectives based on factual situation.

The objectives should be reasonable and achievable.  The success of the objective always depends upon ability align organisational resources.  We come across ambitious missions statements and objectives and the organisation may not be geared up to accomplish those objectives. The end result is tragedy. The objective should be simple and easy to understand by every one.

The objectives should be task oriented.  It should encourage and challenge all concerned in the organisation to attempt and achieve the targets.  This enables the organisation to measure its capabilities at the end of any specific time frame.  What we measure is what we get.

Some people want to achieve what they do not know but they are very firm that they want to achieve what they don’t know, they lack clarity but they are determined to achieve what they are not clear.  We often hear from the bosses that the task executed by the subordinate was not satisfactory.  However, we do not get to know why it is not satisfactory and how it can be improvised.  The purpose of the business objectives is to eliminate that anomaly.

Objectives

Cartoon Source: CARTOONSTOCK.COM

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Graphic Credit: Tristan Louis

We are in an e-commerce world right from food to everyday needs come to our doorstep by ordering online. The total global retail sales in 2016 was estimated to touch US 22.049 trillion and that is 6% up from the previous year. It is estimated by “Worldwide Retail Ecommerce Sales: The eMarketer forecast for 2016” that by 2020 the e-sales will touch US 27 Trillion. With this background, I am exploring the option of why people go to the store to buy things. In my opinion, the reason known in psychological terms as Retail Therapy.

What is Retail Therapy

We all know what is retail therapy, but to provide authenticity to our thought process, I have quoted from Wikipedia.

“Retail Therapy is shopping with the primary purpose of improving the buyer’s mood or disposition. Often seen in people during periods of depression or stress, it is normally a short-lived habit. Items purchased during periods of retail therapy are sometimes referred to as “comfort buys” (compare comfort food).” – Source: Wikipedia

Over indulgence is quite common during the periods of emotional lows people would like to indulge in an activity that would give them some relief from the stress related depression through so-called retail therapy. Sometimes human get immense relief by indulging in activities (over spending, over eating, binge drinking etc.) that are not frugal. We often see advertisements such as “try your local”, this is to igniting regional or localized passion in the buyers to go to the local store and encourage the shoppers with gift vouchers, discounts, loyalty points and much more attractions.

If we review the statistics, it gives us totally different perspective. 1,425 U.S. consumers via Google Surveys revealed the reasons why they choose to shop in stores over online. The reasons are compelling. 62% of the participants mentioned that “To see, touch, feel and try out items”. The second biggest reason given by them was, one can take home immediately, the consumer would like to put to use the product without the wait. The third reasons given was, to return easily, this is a fair enough point. Online purchases mean one has to go to make an effort to return the product. What I like the most is an in-store experience which is closely aligned to the retail therapy theory. When one steps out of the home and mingle with people positive energy is infused, which works like a medication during periods of stress induced depression. The last but not least is to know more about information first hand by asking questions; I enjoy this part. Source of Statistics: Retail Dive.

If we distinguish between men and women preferences, there is no prize for guessing, women prefer to buy a product only by touching and feeling and if clothes by trying it out. When it comes to taking the product home immediately, men beat women. Men prefer to take the home immediately and use it if possible. The other two factors which relate to retail therapy and easy returns, both women and men behave the same way. When it comes to seeking additional information of the product, men are found to be more inquisitive compared to women who seems to rely on their gut feeling.

When we examine same parameters by age group without differentiating the sex of the survey respondents. The age group of 28-34 and 65+ prefer to see, touch, feel and make a decision. It is natural that the age group of 18-24 would like to take it home and use it immediately because younger generation prefers instant outcomes. The age group of 18-24 prefer to enjoy the in-store experience, agreed it is because they could do many things by going to a store or shopping mall such as meeting friends, networking, window shopping, etc. Again the same age group enjoy the in-store experience; it aligns with the above-mentioned point. When it comes to asking questions, again the age group of 18-24 tend to ask more questions to know about the product.

Last but not least is the Rural vs. Urban preferences. The results are obvious 71 percent in the rural area prefer to buy the goods in the store. A Harvard business report quoting Nielsen estimates revealed that rural areas are growing at 1.5 times the rate in urban areas. It is needless to add that all other parameters, rural consumers beat out urban consumers. When it comes to asking questions about the product, it is the urban consumer who is more probing in nature. Rural consumers trust the local stores and go by the store recommendations. Rural customers visiting a store is a necessity, and whereas for the urban customer it is a hobby, it is a sort of entertainment, it is a networking opportunity, it is an opportunity to explore the what is on offer.

In summary, in the world of e-commerce world, it is necessary to encourage customer to visit the store, loyalty points linked to airline mileage points, this was confirmed by Forbes, “Christopher Barnard, President and Co-Founder of Points a company dedicated to making loyalty programs more valuable and engaging believes that offering points or rewards are a key in attracting repeat business”. The second recommendation is the layout, give more space in the aisles to give customers to spend more time and make them comfortable, train the staff periodically, they are your ambassadors. Periodically, go for mark-downs and particularly in winters to encourage your consumers to visit the store apart from festive time. Last but not least, be visible online not as an e-commerce company but as a store to educate the consumer about the store offerings.

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Change or Perish


Today’s world is evolving, everyday is a new day and new scenario in market place. The change has become certainty. The business dynamics are rapidly changing and creating severe competition and Economic Volatility. The powerful way to sustain in the global competition was not visible to many companies till 1980s. Top executives of the corporation tried many tricks to make it happen and survive and the business solutions were restructuring, and decluttering and also included the centralizing the authority and distribution with the fear of failure. Come 1990s, market conditions, the world has become one global village, globalization impacted the way we do business, and the technology dominated the way the we reach our customers and satisfy their needs. The later half of the 20th century the, the industrial revolution marked the beginning of the information age. The executives were put and tremendous pressure to cope up with the new development.

C.K. Prahalad is the professor of Corporate Strategy and International Business at the University of Michigan and Gary Hamel, lecturer in London School of Business policy and management have come up with an brilliant concept called as Core Competency Strategy. It can be defined as, “a harmonized combination of multiple resources and skills that distinguish a firm in the marketplace”.

It delivers three critical benefits to the organisation and they include:

1.     Access to the global markets through identifying core competencies and de-focusing on non-core activities, thus the capital deployment is on core business.

2.     Delivers significant impact on Customer Perceived satisfaction which develops customer loyalty and establishes the Brand Equity.

3.     Competitive differentiation which enables the business to negate the risk of imitation. The best example is Apple Technology, iPhone, DELL Distribution Model and many more.

This initiative gave birth to outsourcing and 3PLs and 4PLs. The new thinking started taking shape, manufacturers started managing network upstream and downstream firms supply chain. Supply Chain has become a source of competitive advantage. It is no longer competition between organisations, it is between supply chains. Supply Chain management has acquired battlefield techniques to combat and dominate the competition to deliver competitive advantage to the organisation. The competitive advantage comes in the form Cost leadership and Product differentiation and creating buyer value.

A cost leadership is all about developing cost effective product for the market place, it takes into account economies of scale, and the sourcing strategies without compromising the quality of the product. Product differentiation is about delivering unique product and creating the value for the buyer. Value creation delivers customer loyalty and improve brand equity. The best example being Apple Technology, those who use apple technology, do not mind cost but are specific about the product. To substantiate the statement, let us review the financial performance, apple announced 2016 financial results, and the quarterly revenue and the unique feature of the announcement is that, “we are pleased to have generated $16.1 billion in operating cash flow, a new record for the September quarter,” said Luca Maestri, Apple’s CFO. “We also returned $9.3 billion to investors through dividends and share repurchases during the quarter and have now completed over $186 billion of our capital return program.”

Competitive advantage or core strengths not only apply to corporate, it can be implemented by the individuals in delivering unique value addition and core competency skills to deliver competitive advantage. Like business the employment canvas has undergone vast change undisputed professions such as accountants, machinists, supply chain managers, software developers are being displaced due to lack of value creation and unique contribution to the organisation.

Before sign off, let me summaries, core competency is here to stay whether we like it or not, competitive advantage is going to dominate the world, and finally competitive differentiation and cost competitiveness are two mantras for success. Adopt to the situation or perish into the history!.

change

Cartoon Source: GLASBERGEN.

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By Niklas Goeke

One of your team members is organizing a workshop on Friday. On Thursday, she calls in sick and asks you to fill in. Plot twist: The materials she sends you are clearly unfinished. Being an awesome co-worker, you rearrange your entire schedule and stay late to make sure everything is impeccable.

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An effective and agile supply chain should deliver four benefits to the organization and they are sales revenue increase, profitability enhancement, improved customer satisfaction and customer retention. In a globalized economy, the role of Supply Chain has never been as critical as it is today. Supply Chain speed and flexibility have become two key levers for competitive differentiation and increased profitability.  The objective of supply chain management is to “lower the total amount of resources required to provide the necessary level of customer service to a specific segment” (Source: Houlihan 1993)

The key to success of any benchmarking activity lies in establishing performance measure that are competitive and at the same time attainable. Performance measures are the mile stones in a road map. If you are travelling from a location A to location B and the distance between location A and B is 100 KM. the first mile stone at 10 KM point indicates that 1/10 of the journey is completed and it give us an opportunity to measure our speed and understand whether we are on target or not and also indicates the task on hand that is 90 KM. to travel. Performance measures will not only allow us to measure the performance but also presents us an opportunity to reinforce and align the resources to achieve the business objectives.   These performance measures or key performance indicators are based on five factors and they are; Financial, Productivity, Utilization, Quality, and finally the Cycle time.

 

Stock market reactions on days when supply chain glitches are reported

  • Delays in product development:

     by -10%

  • Ramp-up/rollout problems:

     by -11%

  • Production problems:

    by -10%

  • Quality problems:

     by -9%

  • Parts shortage in manufacturing:

    by –7.5%

Profitability impacts in the year after the disruption

Profitability

Source: Prof. Vinod Singhal, DuPree College of Management, Georgia Institute of Technology

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In the last article, it was identified and established that Supply Chain is the key enabler for business growth. It is time now to understand what measures within supply chain drives supply chain excellence. As shown in the below figure, five elements contribute towards supply chain excellence. It starts with People, Quality, Velocity, Cost, and finally Agility to react to the dynamic business environment.

SC Excellence 1

In this article let me share my experience about how people can effectively contribute to the success of the business.

People:

Bill Gates once said, “Success is a lousy teacher. It seduces smart people into thinking they can’t lose.” Success is not a permanent partner, success is a visitor in some cases, and hence, people may have to pursue the path of continuous improvement to sustain in this challenging environment. “Success consists of going from failure to failure without loss of enthusiasm”. If one critically examines the only difference between successful people and the rest is nothing but lack of will to succeed.

In order to be successful in business we need a leader who can articulate the vision and goals of the organisation and along with him we need group of people whom we can call them as cohesive team. In order to be a successful team we need few critical attributes and they are:

Engagement – It is a challenge to any organisation to create an environment where employees who are part of the cohesive team understand the organisational goals and commit to the organizational vision created by the leader. Job engagement and organisational engagement leads to employee engagement. Happy employee is a productive employee. Hence, it is a key measure.

Leadership – It is an old school of thought that there is only one leader in the organisation. Yes, there is one leader at the top and he/she needs leadership support from many functional silos. It is essential that these emerging leaders should be trained in the areas of Communication; Motivating teams; Team building; Risk taking; Vision and goal setting. Last but not least is to recognize and reward the team’s performance. Say at least thanks for their contributions.

Think outside the box – Today’s business is dynamic, volatile and challenging, and the ability to improve continuously is very critical to the success of the organisation. The core driver to make your team to think outside the box is to deliver competitive differentiation in the market place. Due to product proliferation, there is no dearth of choices to the consumers, the product has to be unique and deliver total customer experience. This process is not static and it is continuously evolving. Unless one develops ideas and transforms them into reality that meets tomorrow’s customer needs, it would be highly challenging to survive in the market. Thinking is unlimited, there is myth that humans use only around 10% of their ability to think. It is not thinking that matters, Lateral thinking is the need of the hour!

Team Work – Success of any team depends upon the team work and team’s collective strength and wisdom. The best teamwork comes from group of individuals who collectively agree to work independently and together towards one identified organisational goal in unison. Let us not forget ““The strength of the team is each individual member. The strength of each member is the team.” In short WE = Power of Success!

Change Management – “Change is the law of life. And those who look only to the past or present are certain to miss the future” John F. Kennedy. The world is changing in other words, it is evolving and if you live in the past and deliver a product belonging to yesterday for tomorrow’s world, the outcome would be disastrous. Obviously change is driven by a vision, get your vision right, build a team that could deliver your vision, empower the team, celebrate short term successes, and most importantly communicate and deliver the change message periodically. Change ushers exciting opportunity and at the same time could deliver loss, disruption or threat to some organisations. How such change process is managed can be the difference between surviving and thriving in a work or business environment. Change management should be developed as an inherent characteristic of any organisation who would like to survive and thrive in this world.

Perseverance – As mentioned earlier success is a visitor if you fail to pursue it consistently, it will desert you. In my opinion one may face many defeats in our journey in search of excellence, but you should never get defeated. The defeat teaches the critical lessons to how to succeed. Whereas success only makes you complacent. In order to manage sustainable success, it is absolutely necessary to be persuasive. Abraham Lincoln once said, “I am a slow walker, but I never walk back.”

Continuous Improvement – “Excellent firms don’t believe in excellence – only in constant improvement and constant change” Tom Peters. We can write tons of information how we can achieve continuous and sustainable improvement through the leadership vision and team work. Let us examine a case study which delivers invaluable information how continuous improvement in supply chain delivers competitive advantage in the market place.

Supply Chain Excellence2
Note: Please double click the image to see it large.

The human being is yet to invent an automated system that could foster sustainable continuous improvement in any field. It is all driven by the committed teams all around the world. Team of individuals is not a system, it is the group of people with commitment to make tomorrow a bright one and with emotions to win with persistent efforts and with a faith to turn hopeless failure into glorious success.

Any business organisation must have a clearly identified unique core objectives which differentiates the organisation with competitors. The so called differentiation comes through innovation of the people in the form of enhanced technology, improved quality, cost competitiveness, total customer experience. All these factors are articulated by a leader and implemented by the group of people whom we called an integrated and cohesive team.

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