George Kimball’s Tips for First-Time Outsourcing Buyers

Over on Horses for Sources, Phil Fersht recently ran a great piece on practical outsourcing tips over a pint which contained advice from George Kimball that is definitely worth your time.

The article contained nine essential tips for first-time buyers which can determine the difference between success and failure, including these too-often overlooked tips:

  • Get good advice.

    Don’t try to do it all in-house, and, definitely, don’t just “turn it over to the experts”. No outside advisor will know your business as well as you do. You need to find an outside advisor you can work with who will work with you to create the best agreement for your specific situation, as there is no one size fits all agreement for outsourcing.

  • Prepare to manage the contract and relationship.

    Weak governance — too few people, without sufficient clout, and accustomed to managing operations, rather than relationships — remain the single, most common, avoidable error among customers. A team needs to be built before the contract is signed and needs to be involved in the deal making process.

  • Tone matters more than people suspect.

    Not only does collaboration require good working relationships built on candor, civility, and trust, but you need to remember that the people you will be working with not only come from a different culture, but, likely, one that is much older than yours. (For example, civilization in China and India goes back thousands of years. They don’t want to deal with “children”.) Furthermore, the world is changing, and in just a few years, the “low cost” countries of today will be the economic powerhouses of tomorrow.

For the other six great tips, check out George’s practical outsourcing tips over a pint and if you really want to dive in, he recently published Outsourcing Agreements: A Practical Guide.

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How Will Your Organization Deal with the Sustainability Megatrend?

In a recent post we explained how “sustainability is the current megatrend”, but we did not give you any tips on how to deal with this information. In this post we’ll overview some of the advice provided in a recent Harvard Business Review article on “the sustainability imperative” and address how the sustainability imperative may impact your supply chain.

The first piece of advice given in the article is to learn from past megatrends. For example, in both the IT and quality business megatrends, the market leaders evolved through four principal stages of value creation:

  1. Cost, Risk, and Waste ReductionInitially, companies focussed on reducing costs, and on risks that could drive costs up and waste that also unnecessarily increased costs.
  2. Performance Optimization of Product, Process, or Business FunctionsIn this stage, businesses moved from doing old things in new ways to doing new things in new ways. Processes were transformed using new tools and methodologies so that overall operations were more efficient and more cost effective.
  3. Integration of Innovative Approaches into Core StrategiesInnovation was no longer relegated to a black-ops skunkworks unit as entire business strategies were built around continuous product innovation.
  4. Value Proposition Differentiation through New Business ModelsInnovation was extended throughout the enterprise and transformed the underlying business models.

So what do these classic stages of value creation mean to your organization, and, ultimately, your supply chain?

  1. Cost, Risk, and Waste ReductionIn this stage, a company will focus on outperforming competitors on regulatory compliance and environmental risk management. The company will implement trade manage solutions to keep abreast of current and upcoming regulations, switch to greener raw materials when a choice is available, and switch to suppliers with a lower carbon footprint.
  2. Performance Optimization of Product, Process, or Business FunctionsIn this stage, a company will optimize natural resource efficiency across the value chain. Products will be redesigned to remove environmentally harmful materials and reduce the environmental impact of the production process. Lean, Six Sigma, and related approaches will be applied where appropriate to minimize waste.
  3. Integration of Innovative Approaches into Core StrategiesIn this stage, sustainable innovations become the source of new revenue and growth. For example, the organization will switch from manual paper processes to automated systems to improve efficiency, move to the utilization and creation of energy efficient products, and embrace frugal innovation to capture an increasing share of emerging markets.
  4. Value Proposition Differentiation through New Business ModelsIn this stage, a company will embrace a new business model to the point where it permeates the corporate brand and employee engagement. For example, a car manufacturer may switch its entire product line to hybrids.

And that is how your organization will begin to deal with the sustainability megatrend.

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A Purdue Philosophy Degree — Literally Not Worth The Printed Paper

I found this recent article on Daily Finance on how “eBay halts indebted Purdue Grad’s diploma auction” very amusing. While I feel sorry for the alumnus, it strengthens my belief that a degree in the philosawfical isn’t worth the printed paper you hand over for the printed parchment in return. As per the article, the graduate said that his philosophy degree has not given him the means to earn enough income to cover his $470 per month obligations to Sallie Mae.

A degree is only an investment if it increases your income — and since most liberal arts degrees don’t lead to a job, these degrees are just expenses. So if you can’t afford them, i.e. if you can’t afford to flush the 30K, 50K, or 100K down the toilet that some institutions will charge you for the privilege of obtaining the degree, don’t borrow. It’ll only end in tears, as it did for one pour soul (referenced in a New York times article on May 29, 2010) who racked up 97K in debt getting degrees in religious and women’s studies.

This Is Gonna End Well … NOT!

As pointed out by Dick Locke in his post from earlier this week on More Headlines You Hate To See, this is an actual headline from DailyTech:

Foxconn Makes Employees Promise Not to Kill Themselves

FoxConn is asking all of its “colleagues” to sign a “health and wellness” letter that includes, in one of the numbered clauses, a statement that

I will not harm myself or others

in response to Apple’s demands to do something about the “suicide problem” in a factory that has seen almost fifteen suicides in recent months. (KokuGamer.com) I think the nets that Foxconn chairman Terry Gou plans to build around the dormitories are going to be more effecitive. (source)

After all, how are you going to reprimand a dead employee? Flail him? He’s already dead, moron.

Hopefully Apple and Dell can figure out what failed and force Foxconn to fix the problem. (source)

Are You Ready For Change?

Take this short 3-question quiz to find out!

1. Is Management Ready for Change?

Management must be ready and willing to demonstrate their commitment to change and keep their resolve through good times and bad. If the rank and file don’t see commitment, they will believe it’s just the fad of the month and ignore the effort as they expect it will be forgotten in a few months anyway when the next fad is announced.

2. Is Talent Ready to Step Up?

Management has to be ready, but the rank and file have to be willing and able to implement the change. If your employees aren’t committed, aren’t trained, and aren’t capable of implementing the change, you’ll be stuck at square one until they are.

3. Are You Ready to Communicate?

Regular and consistent communication is key to success. Efforts will need to be carefully coordinated, and this won’t happen without crystal clear communication. If you’re not ready to communicate, you’ll be stuck at square two indefinitely.

The reality, as clearly pointed out in “driving a turnaround in tumultuous times”, the case study on PolyOne Corporation that we will cover in our upcoming post on coming back from the brink to cash in the bank, if you can’t answer yes to these questions, you won’t have the basic building blocks for change and any change management initiative you undertake will just be a waste of time. Sorry, but that’s just how it is.

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