Category Archives: Strategy

What’s Driving Your Supply Chain Strategy?

The recent report on “Supply Chain Strategy in the Board Room” by the Cranfield School of Management and Solving Efeso listed the top 10 functional drivers of supply chain strategy at the 181 companies surveyed in the report. While all are valid considerations, the reality is that there should be only one driver of corporate supply chain strategy, because there’s a big difference between a consideration and a driver.

Customer service, distribution, and planning are all valid considerations, but none should drive the supply chain strategy. The supply chain strategy should be driven by the corporate strategy and corporate strategy alone. It does not matter what level of service the supply chain supports, how efficient or cost effective the distribution is, or how simplified planning becomes if the supply chain strategy is not in line with the corporate strategy. If the corporate strategy is to be the lowest cost provider, then customer service (which can be costly) is not at the top of the list — cost and availability are. If the strategy is immediate availability, quick distribution is a must, even if air shipments are five times as expensive as ocean freight. And if the business is subject to the whims of the market (like fashion), plans are short term.

The reality is that the customer service strategy, distribution strategy, customer proposition, production processes, planning, purchasing strategy, product design processes, returns management, and the disposal strategy should all be determined from the corporate strategy, not the other way around … because if the supply chain is not in synch with the rest of the business, it’s full value proposition will never be realized.

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Is There a Hole in CPO Agenda’s Synergy Strategy Bucket?

A recent article on CPO Agenda that asked if there is “a hole in your synergy strategy bucket” made some very good points about how Procurement can often help to identify the right IT strategy and synergies to make a merger or acquisition a success.

However, what it failed to mention is that in addition to contract analysis and risk assessment, market research, negotiation management, and should-cost analysis, procurement can also serve as the mediator who helps the organization identify the IT needs and the most appropriate strategies. Furthermore, until the desired go-forward strategies are identified, contract analysis and negotiation management are irrelevant — who cares about license rights, location of use, competitive intelligence, or contract consolidation if you’re no longer going to use the system.

Furthermore, trying to determine the right IT solutions to keep based on license agreement analysis is worse than putting the cart before the horse. If you can get the horse angry enough, maybe he’ll kick at the cart until it moves forward. But if you keep the wrong IT solution, your employees won’t even kick at it … they’ll find every means possible to go around and bypass it completely.

Procurement can play a crucial role here as well. As the one unit that has to continually negotiate with all organizational units with respect to purchases, it can lead the analysis team that reaches out to every organizational unit to understand not only what software they are currently using, but what their needs actually are and work with IT to come up with a strategy that addresses the anticipated needs of the merged organization. Furthermore, as the central mediator and (hopefully) technology-savvy market analysts (who should be using modern e-Sourcing and e-Procurement systems) who talk to both IT departments and external entities, they have a better chance of figuring out when an objection is due to platform limitations (hardware, software, etc.) or simply a resource limitation (the support techs don’t know the software or don’t think it’s the right solution). In the end, the biggest negotiation will likely be with the organizational units that want to merge, and not the vendors, who will probably be more responsive to demands in exchange for a bigger customer and more dollars in their pocket in the long run.

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You Can Have Any Color You Want …

… so long as it is black.

This is one piece of advice from the early 20th century that we should not have forgotten in the early 21st. Maybe if a few more companies remembered this, they would not be in such dire straits. Consider the case of PolyOne Corporation that we discussed in a recent post on coming back from the brink to cash in the bank and how the complexity of too many manufacturing locations producing too many product variants was running them deep into the red.

Now consider the case of Apple — one iPad with 2 network connectivity options and 3 memory options. That’s only 6 variations, with only 2 components different in each variation. They’re “you can have any iPad you want, as long as it’s white” produced the best selling pad/tablet PC this year (with sales in excess of 2 Million units in less than 60 days, before it was available outside of the US), just like their “you can have any iPhone you want as long as it’s black” produced the best selling phone three years ago.

I was reminded of this while reading a recent piece on getting a handle on complexity which offered up a four step approach to reduce complexity, which, while workable, lacks the simplicity of:

You can have any color you want, so long as it is black.

Remember this, and you just might get your complexity, and associated costs, under control.

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Getting Execution Right in a Megatrend

A couple of posts ago, we told you that sustainability is the current megatrend and that your organization needed to adapt. Then, in our last sustainability megatrend post, we discussed the four stages of value creation that traditionally identified megatrends and what they meant to your supply chain. In this post, we’ll offer some tips on getting execution right, courtesy of the Harvard Business Review and its article on “the sustainability imperative”.

While vision, and a good working knowledge of the value creation process, is important, the key to success ultimately relies in execution. Specifically, a company has to get leadership, methods, strategy, management, and reporting right. In each area, the company must transition from tactical, ad hoc, and siloed approaches to strategic, systematic, and integrated ones.

Leadership: Strategic sustainability initiatives need C-level leadership. The leader needs to be able to move the company through progressive levels of environmental maturity, from regulatory compliance through energy conservation to the design and creation of products that are totally green and free of hazardous materials . The leader will do this by redefining performance expectations, specifying accountability, tracking results, and rewarding success at each stage of maturity.

Methods: The company must adopt new methods of value assessment that assign value to sustainability and adequately capture the risks associated with not going green as well as the benefits of a proposed solution. Business case analysis, scenario planning, risk modelling, and even cost accounting must all be updated to encompass environmental sustainability.

Strategy: The focus must be on the creation of strategies that are sustainable at the core. This will become easier over time as more analytical data from sustainable initiatives becomes available and as more companies adopt open-source and crowd-sourcing approaches that engage outsiders with expertise in sustainability.

Management: For sustainability to truly take root in an operation, a firm must integrate sustainable goals into day-to-day management. Success lies in operations, and managers on the ground have to lead the charge. Sustainable objectives should be incorporated into processes, training, and compensation plans.

Reporting: With increasing public scrutiny, governmental regulations, and customer expectations, companies will need to include sustainability reporting in annual reports and forward looking statements in addition to sharing required information on energy usage, carbon footprints, etc. with new environmental agencies.

In addition, the leaders will adopt sustainability scorecards to keep track of their success. This will ultimately enable a company to chart their impacts in financial terms, which will make it easier for market analysts to identify the advantages of companies that have embraced eco-platforms.

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Do You Make These Six Common Talent Management Mistakes?

It might be a “jobless recovery”, but the talent war is here as firms have to do more with less. Are you ready for it? Or are you making these six common talent management mistakes, as highlighted in a recent Harvard Business Review article on “How to Keep Your Top Talent”, that will cost your organization your top talent?

  1. Assuming that High Potentials are Highly Engaged
    • 12 in 60 (20%) believe that personal aspirations are not in line with organizational plans
    • 15 in 60 (25%) intend to leave your employ within the year
    • 20 in 60 (33%) admit to not giving 100%
    • 24 in 60 (40%) have little confidence in coworkers and even less confidence in the senior team

    Your high potentials have great expectations with respect to

    • personal goals,
    • corporate goals, and
    • the caliber of teammates and leadership.

    If the employee’s goals aren’t compatible with organizational goals, if the employee doesn’t believe that her goals can be realized, if the employee doesn’t see the same level of aspiration and commitment from her teammates and leaders, and doesn’t get challenged regularly, she’s probably not going to give 100% and is probably keeping her eyes open for a new opportunity if she’s not actively looking already.

  2. Equating Current High Performance with Future PotentialWhile a high performer is driven to maintain performance, chances are you’re expecting high performance in future roles that are more significant and challenging than your employee’s current role. More than 70% of top performers lack critical attributes necessary to succeed in more senior roles. Only a subset of your high performers have future potential, and they will need training to realize it.
  3. Delegating Down the Management of Top TalentWhile it’s true that line managers know their people best, it’s a bad idea to delegate management and training of true high potentials to line managers. These employees are your future and should be treated as a valuable long-term corporate asset. Top talent must be trained and groomed by senior managers if it is to grow into larger, more senior roles, within the organization.
  4. Shielding Risking Stars from Early DerailmentBy being too cautious and too focussed on success, emerging talent is never truly developed and tested. This puts the business at greater risk in the long term as it ends up with a sizeable cadre of middle managers who are unable to shoulder the demands of the company’s most challenging opportunities.
  5. Expecting Star Employees to Share the PainThe decision by a senior executive team to freeze or cut salaries and performance based compensation across the board may seem fair, but it erodes the engagement of the star performer. Under normal circumstances, a high potential will put 20% more effort than other employees in the same role — and in sales or cost savings roles, such as strategic sourcing, their contributions will tend to be significantly higher than the average employee. The reality is that, in tough times, it actually costs less to create meaningful differentiation in compensation than to slash across the board and risk losing key employees.
  6. Failing to Link Star Performers to Corporate StrategyA star’s confidence in her manager and her insight into the firm’s strategic capabilities is a key factor in her engagement. An organization that goes “radio silent” with respect to strategy runs the risk of alienating a rising star when she is needed most.

So how can you identify and properly manage top talent? Check out the “10 critical components” (subscription required) of a talent development program identified by the authors of the HBR article on “How to Keep Your Top Talent”.

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