Category Archives: Best Practices

The Best Argument for Making Your Data Available Online 24/7

If your data isn’t immediately accessible online, either behind your firewall or behind someone else’s firewall or in the cloud, when your employees need it, then they are going to download it to their machines. If their machine is a laptop, and the data is not securely encrypted, and the laptop is stolen, then, as per a ZoneAlarm Blog Entry on “what is the cost of a missing laptop” from earlier this year, it could cost your organization 1 Million (or more). (And even if the data is encrypted, and it’s valuable enough, someone will invest the time in breaking the encryption.)

But if your data is always available, and, better yet, the applications that do the processing reside on the servers the data is on, then your employees and contractors won’t need to download it to their laptops to process it. And you can even implement safeguards to prevent such. Then, when the laptop gets stolen, your loss will be the replacement cost and a minimal lost productivity cost (as you can replace it in hours), which will max out at a few thousand. Compare this to the situation where you have data breaches, IP loss, and forensics and investigation costs which can be 10, 100, or even 1000 times the replacement and lost productivity costs.

So encrypt your data, put it on a VPN behind a firewall, and make it available 24/7. It will be much cheaper, and safer, than having it unencrpyted on your employees’ laptops which will, inevitably, get stolen despite their best efforts to protect them.

Four Good and One Bad Suggestion For Preparing Your Supply Chain for Volatility

A recent article over on ChiefExecutive.net on Volatility: Predictions and Prescriptions presented five suggestions for dealing with the current market volatility that guarantees both minor and massive disruptions will continue to occur on a global scale, impacting your supply chain(s) to various degrees as they occur. Four of them were quite good. One wasn’t. Since it is important for a supply management organization to face the reality of increased volatility and plan for it to mitigate its risk, this post will review the suggestions presented in the article. Disruptions are going to happen. The only unknown is how bad the disruption will be. Since a disruption is always worse for an unprepared organization, it’s important that an organization do everything it can to be prepared.

The organization should start by:

  1. Expecting Disruptions
    They’re going to happen. Some you will predict. Some you won’t. The more flexible the organization is, the more capable it will be in dealing with the disruption. Plus, an organization that expects to be disrupted won’t be shocked by a disruption and won’t have the additional disruption of having to deal with the emotional impact of not being prepared for the initial disruption.
  2. Feeling the Malaise
    An organization that expects disruptions will, at first, feel uneasy and weary knowing that at least some of its best laid plans will come to ruin. But once the organization gets used to the feeling, and begins to savor it, the preparedness will save the organization in its hour of need because the disruption won’t seem so bad.

The the organization should take heed of the following four suggestions:

  1. Simulate Scenarios
    Once the organization expects disruptions, it can “game plan” how to deal with them. It can identify the different kinds of disruptions that can occur and scope out a sequence of responses to each. And although some disruptions can never be anticipated and “game planned”, if similar disruptions have been addressed, the organization will have a starting plan that should be workable with only a few minor tweaks.
  2. Diversify Geographies
    Many disruptions, such as natural disasters and political turmoil, are localized to a region or a country. A supply chain that multi-sources key products and services from different regions and countries should be in better shape to withstand a shock of a product no longer being available from a supplier in a certain region due to a natural disaster or political disturbance.
  3. Diversify Products and Services
    Not only should geographies be diversified, but so should raw materials, products, and services when applicable. Although the former will often be hard to diversify, as certain raw materials will not be substitutable, services are very easy to diversify and should be.
  4. Deleverage Balance Sheets
    While a leveraged supply chain can generate great returns in good markets, it can be downright risky in bad markets. In a volatile market, it is often safer to sacrifice some ROE in return for safer debt/equity ratios (or inventory/equity) over the longer term.

However, the organization should not listen to the fifth and final suggestion, which is downright destructive:

  1. Enable Rapid Downsizing
    Supply Management is getting more knowledge-intensive by the day and we’re in a serious talent crunch. The last thing you do is get rid of good people, especially those that can often generate savings of 10 to 100 times their annual salary on a single buy. While high fixed costs can be dangerous in times of reduced cash flow, it is much better to get rid of assets (and rent them back if you need to) then to get rid of good people.

PPT isn’t enough, you need EAI as well (NPX Deep Dive #1)

As many of you are well aware by now, a few weeks ago I attended The Mpower Group‘s Next Practices Xchange. A gathering of some of the top supply management personnel from a select group of Fortune 500 companies who met to discuss how to get to the next level of supply management, the NPX participants are leaders in their fields. On average, NPX members beat the field at the macro level at supply chain visibility, risk management, strategy execution, and value creation (at least according to a recent joint survey undertaken with the IACCM that will be explored in a future post).

But today’s best is not enough to sustain value in an increasingly competitive and economically challenging global marketplace, and the best of the best know it. The supply management leaders are already working hard to figure out how they are going to maintain their edge in tomorrow’s supply chain landscape. While there are still a number of questions to be answered, they know that the first step is to understand value, that the second step is to get to value, the third step is to capture value, and the fourth, and most critical step, is to step is to execute.

But execution is tricky. It’s more than just People, Process, and Technology (PPT) that consultants have been talking about for decades. It’s more than just the following framework, which isn’t enough.

 

People
Organization
Talent
use
Process
Strategy
Procedure
Tools and Templates
supported by
Technology
Infrastructure

 

It’s Exploration, Alignment, and Information. It’s the Adoption, Execution, Implementation, Optimization, and Utilization of the People, Process, and Technology to their fullest potential, as illustrated by the following framework:

 

Information
Visibility
Metrics and Reporting
Knowledge Management
undergoes
Alignment
Decision Process
Business Strategy
Change Management
by way of
Exploration
Learning
Coaching &Mentoring

 

Technology enables the processing of information which is used by good processes that support organizational alignment with the business by people who explore next generation supply management practices and techniques and take the business to the next level. PPT goes hand in hand with EAI and neither on their own will deliver EBR (Exceptional Business Results).

The importance of the vowels in next generation supply management, and the EAI framework they define, will be explored further in future posts. The reality is that best (PPT) framework in the world is useless if you don’t execute. So master the vowels and see your organization advance to the next level of supply management.

If You Have to Hire, Maybe You Should Hire At Home (Bonus NPX Take Away 2)

Yes, the doctor is back on his home-sourcing horse, but there are good reasons. It’s now literally cheaper to “off-shore” in Oklahoma, Alabama, and Michigan than to go to Maharastra, Andhra Pradesh, or Rajasthan. At both the Hackett Group Conference and the NPX gathering put on by The Mpower Group, I heard a number of top executives from Fortune 500 companies note how it was cheaper to bring certain operations and services back home than keep them in India where labor rates are still increasing in the double-digits year after year.

And if this isn’t enough to convince you, this fact should really make you think twice. Not only are American companies hiring at home, but now Indian companies are hiring American citizens on American soil to fulfill the outsourcing contracts granted to them by American companies. And this is happening in Procurement, Finance, and Legal. That’s right! There are so many unemployed lawyers now that it’s cheaper for Indian firms to hire unemployed American lawyers than to try and recruit lawyers that know American law because they are few and far between, in great demand in India outsourcing shops, and command ever increasing salaries.

So hire at home before India (and, in short order, China) scoop up all your talent!

Can Your Supply Chain Be More Agile? Yes It Can!

A recent article on speeding up business agility over on ChiefExecutive.net had some great tips for making your supply chain more agile.

  1. The CIO is Your Business Partner
    Let’s face it, the best supply management organizations run on modern technology platforms that have to be implemented quickly and efficiently and operate 24/7/365. Supply Management needs to make a partner out of IT to insure that this happens.
  2. Foster a Culture of Innovation
    Yesterday’s best practice is today’s common practice is tomorrow’s laggard practice. The best organizations are constantly innovating, and this takes an innovative culture.
  3. Use Software to Fail Fast and Minimize Risk
    Model potential supply strategies and simulate both expected flow and disrupted flows to insure that the supply strategy chosen has the maximum chance of succeeding in today’s volatile and unpredictable global market place.
  4. Integrate IT at the Grass-Roots Level
    Not only is the CIO your business partner, but IT is part of every sourcing team. You need their support, and they need your help to minimize their costs. And they are your best ally when you need a new system.
  5. Establish Centers of Excellence
    Not only are the best supply management organizations generally center-led or hybrid (center-led / centralized models), but they have teams dedicated to nothing but strategy and innovation.

These are all great pieces of advice. They are so good that not only has SI recommended each individually before, but will do so again. Agile supply chains survive volatile times. Make yours agile before its too late.