Daily Archives: March 22, 2011

Is Your Emerging Supply Chain Ready for Growth?

According to this recent article over on CNNMoney.com on how emerging markets are hot, total sales are expected to rise an average 10% among S&P 500 companies that derive more than half of their revenues overseas. In comparison, we’re expecting just a 6% uptick in total sales for companies that draw a majority of sales from the US, where GDP grew a paltry 2.9% last year.

Growth is skyrocketing across the BRIC, where Russia saw 4% growth, Brazil 8.4%, and China 10.3% last year. And this growth is expected to continue. But growth in these countries comes with challenges. China has pockets of prosperity among wide expanses of poverty. Russia is also vast and most of the profit to be made is on lower-end consumer goods. Brazil still has large pockets of poverty, serious problems with drugs and weapons struggling, and only easily reachable coastal areas. In other words, in each of these countries logistics outside of a few areas makes North American distribution look like child’s play in comparison, violence can be a constant threat in poorer areas, and relative lack of wealth among the population at large compared to the US (and UK) makes price control a huge issue.

So, is your emerging supply chain ready for growth (and the distribution challenges that lie ahead)?

Cross-Functional Tactical Planning Matters

Because if you don’t get tactical planning right, you cannot align cross-functionally, as pointed out in a post over on Supply Chain Shaman by Lora Cecere who said Enough!

So how do you get tactical planning right? According to Laura, you need to address four attributes:

  • Assessment
    Tactical planning aligns functions beyond the enterprise with market drivers and insights using outside-in thinking. It goes beyond a corporate silo.
  • Action
    The team must be knowledgeable and have the authority of line management to act.
  • Accuracy
    Companies need to have access to the right data model and recognize the different value networks because one model does not fit all supply chains. The appropriate risks and opportunities are only identified when tactical options for a strategy are evaluated against market drivers.
  • Timeliness
    Analysis needs to happen within a finite window of actionability.

Then you have to understand the success requirements. According to Laura, to be successful you need to first answer three questions:

  1. What is the goal?
    Good tactical outcomes cannot be reached if the company is not aligned on the strategy. The goal has to be well understood.
  2. What does good look like?
    How are incentives aligned cross-functionally to achieve the goal? The answer is more than rewarding organizations for the same-old same-old.
  3. What are our risks and opportunities?
    Has a proper sensitivity analysis been performed? Has the right data been used?

Once you have the answers, you can start proper planning. Until then, the questions need to be addressed and re-addressed until they are understood.