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Posts Tagged ‘human resources’


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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Warehousing Management is part of a logistics management business process, which is itself is a facet of supply chain management. The general perception of the Warehouse is simply a place to store finished goods; semi-finished goods and raw material, inbound functions that prepare items for storage and feed manufacturing line and outbound functions that consolidate, pack and ship orders in order to provide important economic and service benefits to both the business and its customers. In my opinion Warehouse Management (WM) is not given required attention with the advent of Supply Chain.   Warehouse Management is considered as back-end job.  In my opinion, the WM is fundamental to supply chain success.  The flow of material is very critical to supply chain and the flow is seamlessly managed by the Warehouse.  WM is a science and an inefficient Warehouse or a process could cause disasters to the business.  This is a rudimentary attempt to familiarise the WH functions and its intricacies.  Hope you enjoy the same and I sincerely appreciate your feedback.

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Dwindling global economy is a big cause of concern for 3PL industry.  I remember a saying, “When the going gets tough, tough get going.”  How relevant it is for today’s situation?  Well, what I am trying to say is that we need effective human resources to tackle complex issues resulting due to melting global economy.  Unfortunately, Supply Chaintalent shortage is almost threatening  the existence of Logistics Industry.  We did hear about Inventory shortages, it is strange to learn about Supply Chain talent shortage.  My objective of this article is to review 3PL business trends, impact of global economy and how Supply Chain Talent shortage will have impact on Industry.

The global markets for 3PL (Third Party Logistics) services registered a growth rate of 6.8% in 2010 compared to 2009, according to Armstrong Associates. Asia Pacific region is only second to Europe in the areas of supply chain outsourcing 3PL revenues.  The below pie graph indicates that Asia Pacific region contributes 29% of the global revenue.  Asia Pacific registered a growth rate of 15% compared to 2009.

Logistics Spend:

On an average the logistics spend as percentage to sales revenue is estimated to be 12%.  Whereas US, Europe and Asia Pacific are at 11%, Latin America stands at 14%.  This only indicates that Asia Pacific market is mature in offering 3PL services to their clients while Latin America is still emerging as a 3PL market.  The general perception is that only Transportation activities are outsourced.  To certain extent that is true.  In Asia Pacific Region, 61% of the total logistics spend is directed towards transportation and 42% is incurred on Warehouse and other value added services.  The global average stands at 56% on transportation and 39% towards warehousing and other activities.

It would be interesting to note that only 42% of the logistics spend is outsourced globally and in Asia Pacific it stands at 47% which is highest compared to US and Europe.  This indicates that Asia Pacific can be considered as matured 3PL market.

Factors Fuelling the Growth:

  1. Pressure on Corporates to cut costs;
  2. Low Cost Country Sourcing;
  3. Off-Shoring and outsourced manufacturing arrangements;
  4. Focus on Core Competencies;
  5. Ability to expand rapidly and establish business in local markets;
  6. Complex global supply chains.

Global Volatile Economic Trend impacting SC Outsourcing:

According to one report global growth is likely to slow down and is expected to be approximately 3% per year on an average.  Interestingly this slowdown is attributed to emerging markets slowdown and any recovery in advanced economies will be offset by the emerging markets sluggish growth.  The projected negative growth of emerging markets in 2012 could be mainly due to slowing global trade.  This is not going to be a good sign for Asia Pacific markets and in particular for 3PL industry.  It is anticipated that the emerging economies will grow around 3.3% during 2017-2025 which is greater than 50% reduction compared to 2011 growth recorded by these economies.

What are the activities outsourced today?

According to CAPGEMINI 2012 Survey, the below are the variety of services outsourced to 3PL Service providers globally.

Domestic Transportation 83%; Warehousing 81%; International Transportation 70%; Inventory Management 66%; Order Management and Fulfilment 65%; Customer Service 64%; Transportation Planning and Management 63%; Cross-Docking 62%; Product Labelling, Packaging, Assembly, Kitting 62%; Freight Forwarding 58%; Customs Brokerage 50%; Reverse Logistics (Defective, Repair, Return) 56%; Information Technology (IT) Services 51%; Supply Chain Consultancy Services Provided by 3PLs 51%; LLP (Lead Logistics Provider)/4PL Services 42%; Service Parts Logistics 38%; Freight Bill Auditing and Payment 34%; Sustainability/Green Supply Chain-Related Services 31%; Fleet Management 26%.

What is disheartening to note is that 24% of the respondents to the survey floated by CAPGEMINI indicated that they would be insourcing the logistics activity.  Some of the reasons given for insourcing include cost reductions not realized, some believe that logistics is a very important function and their core competency and not willing to outsource.  Diminishing service levels also could encourage the outsourcing community to think towards insourcing.

What is bothering Logistics Industry?

Logistics industry includes the Corporations (known as shippers) and also 3PL Service Providers.  Generally, we hear about product shortages in the market place due to improper planning, gaps in business process, due to long lead times and raw material shortages.  We are experiencing the TALENT shortage recently.

“ARE YOU PREPARED FOR THE SUPPLY CHAIN TALENT CRISIS?”  This is not the title for my next blog article, this is the white paper published by Massachusetts Institute of Technology, US.  This article identifies the key skills that are missing in Supply Chain talent today.

It is believed that Supply Chain practitioners need a combination of “hard” and “soft” skills to effectively manage in an unpredictable commercial environment. The above article reveals that “Supply chain analytical skills are necessary and important but not sufficient; sufficiency comes with these other skills.” The “other” skills he refers to fall into the “soft” category, which includes thinking creatively and appreciating the big picture.  “Not getting bogged down in the numbers,” is how another supply chain leader describes the blend of skills he looks for. Managers must be able to use not only the analytical tools at their disposal, but also the qualitative output, he explains. This is an important observation in a profession that relies heavily on quantitative analysis.

I strongly believe that in today’s challenging supply chain world, the talent should also focus on managing situations and shortages.  Inventory Shortages in today’s world is a certainty and every Corporation in the world goes through the phase of material shortages at some point of time.  Supply Chain Managers are expected to manage the situations and fulfil empty promise, and that could be reason 64% of the Garner research survey respondents indicated that problem solving skill as the most important.  This applies to 3PL as well.  The shippers (outsourcing companies) expect the 3PLs to solve their problems and problems are resolved by humans and that talent seems to be in short supply.

CAPGEMINI 2012 survey indicated that organization success largely depends upon, “ability to Execute and Drive Operational Efficiency and Improvements” as the third most important driver for organizational success.  This was agreed by both Shippers and 3PL operators equally.  Factors that could affect retaining the talented staff include:

  1. Talent Development;
  2. Succession Planning;
  3. Effective Retention Strategy;
  4. Team Environment (Office Politics plays a vital role in people leaving jobs);
  5. Effective talent review process;
  6. Performance linked rewards.

The above survey reveals that the right people and leadership in place is the number one driver of their companies’ success in the next five years. But the supply chain industry is experiencing supply chain talent shortages.

Even though many shippers and 3PLs share the same concern of talent management and retention is their biggest worry, nothing is being done to save the precious asset of the organization.  According to Australian Human resources institute only 37% of Organizations have plans to attack the employee retention problems whereas the rest have no plan in place and press panic buttons when key employees gives the notice.   Organizations may have to embrace the activities of the talent cycle (source: CAPGEMINI 2012 Survey) have the ability to ensure a continuous supply of experienced, well-rounded logistics talent.

Source: CAPGEMINI 2012 3PL Study.

3PL industry needs talented people to manage today’s crisis world and deliver seamless solutions to the complex supply chain problems.  The outsourcing activity will see tremendous growth when out of the box solutions are offered to the Corporations who are looking for help and solutions in managing their supply chains.

 

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