Daily Archives: April 2, 2010

A 2-Minute Opportunity Checklist for Supply Chain Initiatives

Slightly modified, the 2-Minute Isenberg validation test for business ideas, as chronicled in this HBR Blog post on the 2-minute opportunity checklist for entrepreneurs, is a great test to determine which supply management initiative you should run with. Specifically, if you line up your opportunities, the one that scores highest is the one most likely to get the organizational support you need for success and the one that you should focus on in your quest for purchasing fire.

It’s 17 short questions, and I would recommend that you answer yes to at least 13 of them before proceeding with any effort that is going to take a lot of time and resources.

  1. Will your initiative ease the pain, frustration, or dissatisfaction of someone outside of Supply Management?
  2. Are there more of these people in the organization?
  3. Will any of these people commit budget or resources to get it done?
  4. Will they be able to make a decision to support your initiative quickly?
  5. Does the initiative exploit and showcase a strength of Supply Management?
  6. Are you able to bring to bear unique assets in the initiative?
  7. Can you think of at least two C-Suite executives who will support you?
  8. Can they commit resources with complementary skill sets?
  9. Will they see the value that you do?
  10. Do you have evidence that you will be able to convince a majority of the decision makers that your idea is a good one?
  11. Will at least one person disagree with you?
  12. Is the idea compelling enough that your staff will do what it takes to get it done?
  13. Can you sneak by the trolls in accounting and get it done?
  14. Can you find someone in the organization who will commit to trying it and help you work out the kinks?
  15. Can you start without a huge cash outlay up front?
  16. Can you keep the long-term costs low?
  17. Does the initiative lay the foundation for future incremental initiatives that will generate more cost reductions and additional value?

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Can The Five Attributes of Enduring Family Business Strengthen Your Supply Chain?

A recent article in the McKinsey Quarterly on the five attributes of enduring family businesses got me thinking about whether some of the finer points could be translated to supply chains. According to the article, the five dimensions of enduring family businesses are:

  • Foundations,
  • Ownership,
  • Wealth Management,
  • Business & Portfolio Governance, and
  • Family.

Basically, four dimensions of any good business plus the family dimension. But what got my attention was some of the points elaborated upon in the article. Specifically:

  • Long-term survivors usually share a meritocratic approach to management.

    They recognize and reward talent. This is a trait that is common to all winners.

  • Enduring family businesses regulate ownership issues — for example, how shares can (and cannot) be traded inside and outside the family — through carefully designed shareholders’ agreements that usually last for 15 to 20 years.

    They structure the business for long term stability. Supply chains need to be designed to stand the test of time as well if the business is going to survive.

  • Strong boards and a long-term view coupled with a prudent but dynamic portfolio strategy.

    Where supply chains are involved, there are no quick fixes that will generate long term gains and, in fact, most quick fixes will actually generate long term problems if a holistic view isn’t taken. Consider the case of the chemical manufacturer chronicled in the Strategy + Business article on Virtuous Connections that successively made matters worse with each quick fix they tried to make. However, when a more holistic view was taken with the eye to the long term, significant, rapid improvements materialized.

  • By diversifying risk and providing a source of cash to the family in conjunction with liquidity events, successful wealth management helps preserve harmony.

    Stable supply chains manage risk and diversify their supply base to prevent significant disruptions should one source of supply fail. They focus on cost avoidance, not savings, and reward their top performers for their success, sharing the wealth that is generated.

  • Charity is an important element in keeping families committed to the business that promotes family values as the generations come and go.

    The best Supply Management organizations are socially responsible and in addition to only supporting sustainable businesses, also support sustainable charities because they are good corporate citizens.

In other words, they plan for the future in everything they do. They don’t think about what is best today, they think about what is best tomorrow as they want to pass a successful company on to the next generation. And if you start thinking about passing a successful Supply Management organization on to your successor, whomever that happens to be, and think about the long term, I think you’ll find that you’ll build a stronger organization in the process that reduces emissions, avoids costs, and adds value in everything it does.

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