Feeds:
Posts
Comments

Posts Tagged ‘success’


Today’s customer-driven markets environment is becoming increasingly complex, unpredictable and uncertain for companies that operate in highly globalised markets. The grown pressure to create competitive advantages is driving shorter product life cycles combined with faster technological leaps. This situation results in the effect that a continuously growing number of entities faces an ambivalent challenge of trying to cut costs further while being more responsive and flexible towards changing customer requirements. A survey executed by McKinsey in 2011 (The challenges ahead for supply chains) revealed the biggest challenges nowadays that companies in cyclic industries have to cope with are uncertainty and market demand volatility.

A static supply chain fails to flex as customer needs change and will be known as the “one-size-fits-all” approach of the organisation and the supply chain remains insensitive to customer ever-changing needs and demands.

Flexibility

“The measure of intelligence is the ability to change.” ― Albert Einstein

According to SCOR (supply chain operations reference) supply chain flexibility is divided into two segments. The first segment deals with Customer-facing metrics and the second segment deals with Internal-facing metrics. The success of flexibility is to satisfy both metrics within any organisation that intends to be flexible. Let us test this with an example.

Supplier One – Carries red, blue, black and white cars of the same model in order to meet the customer needs instantaneously. Based on customer-facing supply chain metrics, supplier one scores high marks because they are flexible and meet customer needs. Whereas by carrying all above-mentioned colours, the supplier inventory carrying costs are high and scores low marks when assessed based on internal facing metrics.

Supplier Two – Carries one popular colour per model in the showroom. And based on customer’s requirements sources different colour car from the dealership network across the country with an assured delivery date. Customers are willing to wait in case of capital investments. This supplier will score high both on customer-facing metrics and internal facing metrics.

The global and dynamic markets demand better quality, more product variances and extended services including higher reliability and faster deliveries. Each of those requirements can be a crucial differentiator that decide whether a company sustains on the market or not. Besides that, customized products with short lead times characterize the current situation in various industries. Flexibility is not all about customer-centric objectives and ending up with financial losses. It is all about being flexible to meet customer needs by able influencing customer requirements.

Collaboration and flexibility

Collaboration increases flexibility and makes it easier for organisations to meet customer needs. The stakeholders (both internal and external) within the supply chain start embracing change rather than fearing it and learn to turn a potentially challenging situation into an opportunity. In fact, this type of teamwork and collaboration are the very foundations of agile work methodologies, which allow teams to be more flexible and thus, responsive.

Change Drivers

In any flexible supply chain change is the way of life. The drivers will be there in every organisation exerting force for a change that’s not recognised within the organisation. Some companies will be slow in recognising the drivers that initiates flexibility and collaboration through the change process and that ultimately leads to customer satisfaction. But the need for coming to grips with change is inevitable. Flexibility with a collaborative approach and willingness to change is the ultimate mantra for business success.


Source:Alamy stock photo

Read Full Post »


Supply Chain superiority determines organizational competitiveness.  Some believe that supply chain superiority or excellence is achieved with the help of three elements; process, people and technology.  Another group would advocate continuous improvement, benchmarking and KPIs, and innovative thinking would lead to supply chain excellence.  Do you think these factors drive the excellence?  My answer would be, yes and no.  Yes because these are fundamental requirements of any supply chain but beyond these elements something else works behind the scene to improve your supply chain effectiveness.

In order to make all above mentioned factors to work effectively three factors are critical.  The first and foremost is Collaborative Relationships.  The other two factors are Trust and Commitment.  In my opinion supply chain is all about managing relationships, demonstrating trust in relationships and committing to the core objectives. Let me explain how my theory works.  The below given graphic would explain various supply chain relationships:

As you can see from the above graphic supply chain manages internal and external relationships with various agencies.  Supply Chain relationship with Sales and Marketing, Manufacturing, Logistics, and various Vendors will ensure that the right product is made available at the right time and place at the right cost.  Sales team relationships with agents, distributors, retailers and consumers will make organizations grow and become competitive.

People make things happen, technology give us the ability to establish supply chain visibility and the process drives the activities.  However, all these factors could function in a silo apporach and make supply chains fail.  What is required is an integrated approach and integration is possible by establishing trusting relationships.  Effective relationship management can provide a positive contribution to sustainable supply chain superiority and also help to satisfy stakeholder interests.

Many organizations end up with huge inventories and wrong product on shelf and mounting supply chain costs.  The main reason for this catastrophe is lack of trusting relationships among supply chain partners.  In my opinion all above are supply chain partners.  The partners could include internal members as well as external members.  What is evident is that supply chain fails if the partners working for individual benefits without a common goal.  Someone said, we all stumble, that’s why it’s a comfort to go hand in hand.

Mutual trust was defined as “a shared belief that you can depend on each other to achieve a common purpose”.  Trust plays a crucial role in strengthening relationships and organisational changes and it is a critical component in building a collaborative relationship among supply chain partners. Trust creates an increase in openness among partners involved and it is perceived as a result of effective collaborative relationships and leading to higher levels of partner/customer satisfaction.  Trust is not gained in a day or two; trust is built up over a series of interpersonal encounters, in which the parties establish reciprocal obligations.

“An ounce of performance is worth pounds of promises”. In order to turn your promises into performance you need commitment. The third ingredient for the supply chain success recipe is commitment; commitment means to show loyalty, duty or pledge to the core organizational values.  In a partnership commitment plays a vital role along with trust. Someone rightly said, “unless commitment is made, there are only promises and hopes; but no plans.” Unless the supply chain partners are committed to a common goal which could deliver mutual benefits, it would be a challenge to establish a trusting and successful relationship.

According to a recent report from Boston-based AMR Research Inc., “companies that excel in supply-chain operations perform better in almost every financial measure of success. Where supply chain excellence improves demand-forecast accuracy, companies have a 5% higher profit margin, 15% less inventory, up to 17% stronger “perfect order” ratings, and 35% shorter cash-to-cash cycle times than their peers. Companies with higher perfect-order performance have higher earnings per share, a better return on assets, and higher profit margins — roughly 1% higher for every three percentage-point improvement in perfect orders”.  In order to achieve these two key measures (i.e. demand forecast accuracy and perfect order performance), committed collaborative and trusting relationships are crucial.

Hachiko – A Dog’s Story motivated me to write this article. This story is based on a true incident from Japan. This story is about the relationships, trust and commitment shown by a dog and also explains how invincible bonds form instantaneously in the most unlikely situations. We do not realize the value of relationships until reality bites.

Read Full Post »

%d bloggers like this: