… and then there’s the risk management advice in the Logistics Management version of the Supply Chain 2010 article. According to this version, you should:
- get in the habit of much shorter contracts
… and throw any hope of cooperative innovation right out the window
- adopt a logically variable cost structure
… and watch your costs go through the roof every time an index runs wild
- get in the habit of stress testing your supply chain
… instead of taking the time to design it properly so that it survives the stress tests
Risk isn’t going away and you have to start managing it better, but don’t make stupid decisions based on the assumption that this transient, lengthy recovery is the way things are going to stay. We’re working our way back to the Old Normal, and as I pointed out in my last post, that requires visibility, flexibility, and education. Don’t forget that.
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A recent article in Stores offered up 20 Ideas Worth Stealing. It was interesting, but what really struck me is how sometimes even the greatest ideas don’t translate when we take the supply chain as a whole into consideration.
Specifically, the following ideas in particular don’t translate well:
- 15 Seconds of Fame
In supply chain, this usually results from a late shipment, a crisis, or a supply chain disaster, such as lead-painted toys, poisoned toothpaste, or tainted food.
- Downward Dog = Upward Momentum
You don’t get the same kind of collective experience in a classroom that you get at a concert, movie theatre, or yoga class. (And that’s probably a good thing.)
- Lickity-Split Product Trail
Try-before-you-buy is a great strategy, but it only works if you’re offering SaaS supply chain software. You can’t try out a custom made component before it’s built, and no plant is going to invest tens of thousands (or millions) to make a custom product before you commit to paying for it.
- Luxury Goes Recession Chic
“Good-enough” is not always “good-enough” where health and safety are concerned.
- Temporary Stores, Lasting Impressions
While it’s relatively cheap to put up a temporary store (just lease some available retail space), it’s very expensive to put up, or even lease, a temporary factory.
- Tweet Success
Please, No! Please, Please, No! (Like your suppliers are really going to care about your random thoughts.)
- Putting the Gas in Gastronomy
While a proliferation of easily configurable options might please the customer base of the food and beverage industry, a proliferation of SKUs will strain your operations.
- Prime the Sales Pump
The equivalent would be telling suppliers you’ll pick up the tab no matter how they ship. This is dangerous if they always ship late and you have to expedite every order.
- Experts on Call
Why is it your responsibility to hold all of the expertise? Shouldn’t it be a collaboration between you and your supplier?
- Partnerships for Change
Change is good, innovation is better.
- Social Colonization Shifts the Power of Influence
Customers usually know what they “want”, not what they “need”. They know the “problem” they want solved, but not the “solution”.
- Crowd-Sourcing Flavour
Again, customers can provide input, but not solutions. That’s why you’re in business.
- Appetite for Apps
While you need good technology to get ahead, application overload, or big-bang system upgrades, can kill you.
- Door to Floor in a Flash
While JIT sounds great in theory, too much in practice can be costly. Better demand management and demand planning is a smarter option.
On the other hand, these ideas do translate well:
- Tapping Outside Expertise
You should bring in outside expertise regularly to complement your own.
- Driving Sustainability
Sustainability helps you stick around for the long term.
- Keeping Gen Y Engaged
You need to keep them interested, if they are not already your employees today, they are your employees of tomorrow.
- Credit Where Credit’s Due
You should always credit your suppliers for the value and service they provide you.
- Channel Shifting
If you can shift, you have flexibility, and that can be a good risk mitigation strategy.
- Smart Assist
If you help your suppliers in their time of need, maybe some day they’ll return the favour.
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