Dave Carroll, of the Sons of Maxwell, decided to recount his unfortunate story about his trials and tribulations on a United Airlines trip last year the way a musician does best: in song. Even if you think the style of music isn’t your style, the video (and song) is definitely worth checking out all the way. Trust me. (And give a local boy some support.)
Monthly Archives: July 2009
Supply Chain Disaster Lessons
Over on Supply Chain Digest, who recently updated their list of the “top supply chain disasters of all time”, you can find a short article chronicling some of their “lessons from supply chain disasters”. Simply put, the key lessons were as follows:
- “Big Bang” Go-Lives are Risky Business
Despite the fact that the risks of this approach are well documented, this approach is still taken all too often. - Pioneers Get Arrows in the Back
Being the first increases your odds of failure dramatically … whether it’s a new technology, new methodology, or new market. - Do Not Ignore Early Warning Signs
Just about every disaster post mortem uncovers dozens of indications of emerging problems that were ignored. These warnings are usually ignored or minimized because someone doesn’t want to fess up that things are not going as promised. - Avoid hard cut-offs/transitions
Many project disasters are caused by hard deadlines. Hard deadlines, especially if the project schedule is too tight, are often the largest contributor to project failure. - Beware the ROI trap
Many projects go south because they whittle away key elements for success just to make an (unrealistic) ROI expectation.
And they must be taken to heart. I’ve seen many projects, and companies, fail because they didn’t heed these lessons.
Five Great Ideas for Supply Chain Value Generation
A recent Supply Chain Management Review article presented “10 ideas for value generation” that were quite good. Here are five in particular that you should not ignore:
- Adopt a “Follow the Sun” model for skill development
If you’re going to have a global IT or Services support base, use it wisely. Properly globalizing your support supply chain will save you money and create value. As the article notes, it can allow you to tap into the English speaking skills in the Philippines, the tax advantages of Ireland, and the technical skills of India and deliver 24/7 support. - Focus on real-time updates to increase agility
Static forecasting without dynamic updates is passe. In today’s dynamic environment, you need to dynamically adjust the plan based on real-time market signals such as point-of-sale data, purchase order activity, and competitive market factors. Although you can’t function without good forecasts, even the best laid plans will go awry, and they’ll do so before you know it if you don’t monitor against them and update them regularly. - Make your supply-chain, and your company, value chain-centric.
The supply chain function in most corporations is initiated and integrated at the time of new product commercialization and continues until the product is shipped. For supply chain to truly add value, it needs to be involved at the stage of conception to help the design team select designs with sourceable components and to select those designs that use the components with the lowest cost and highest quality. - Shift to a product-and-services management focus.
Product excellence and direct cost savings are great, but services (still) provide a huge untapped opportunity. Furthermore, value-added services can create “stickiness” with their channel partners. - Utilize on-demand processes and associated supporting technology.
This approach will allow for the optimal usage of capital expenditures while leading to higher than average adoption rates of the process in order to derive maximum benefit. And there is a wide selection of e-Sourcing, e-Procurement, e-Logistics, and Analytics solutions to choose from.
Another DUH! Report … but I Like It!
A recent article in Industry Week pointed out that a recent “report blames petroleum industry for 25% of toxic pollutants”. More specifically, the Commission for Environmental Cooperation (CEC) reported that 90% of toxic pollutants in North America came from fifteen industries, with over 25% coming from the U.S. Petroleum Industry. We need to extract cleaner, refine cleaner, and burn cleaner.
Because, when you combine this with the fact that global shipping is responsible for almost 4% of all climate change emissions worldwide, things get scary. So next time you get to choose a power source, choose a clean one. Once carbon credits take effect, it will be cheaper in the long run.
Getting Ready for the Recovery … Whenever It May Be
Industry Week recently ran an article on “repositioning your business for the recovery phase” that noted that it could be years before volumes return to the near record highs of 2007 and that many companies will need to restructure their operations if they wish to return to profitability. Specifically, companies need to focus on activities that are not dependent on volume to be profitable. The article recommends the following:
- Design Cost Optimization
Focus not on the design process but on design changes that can reduce production costs. This will reduce costs across the board. - Make vs. Buy Decisions
Rethink what you make vs. what you buy. Now might be a good opportunity to offload non-core product design, process engineering, and quality control activities that are inefficient and costly for you but more efficient and affordable for a (new) strategic supplier. - Fixed Asset Productivity
Optimize the effectiveness of your fixed asset portfolio. Increase equipment utilization and effectiveness, decrease required warehouse space, and get rid of, or lease out, unused or unprofitable assets. - Reduce Working Capital
Up to 83% of working capital in your supply chain is needlessly tied up longer than it needs to be. It will take you a while to identify and make the necessary improvements to make your efficiency, so start by making sure you’re not paying more interest and fees and working capital loans than you need to. If you’re not sure how good your bank’s offer is, try The Receivables Exchange and see if you can get a (much) better offer. - Re-Analyze Your Business Model
What was your optimal business model last year might not be your optimal business model this year. Re-analyze your products, markets, and regions and change your strategy accordingly.
Which is a great start, but don’t forget the basics:
- Analyze Your Spend
Do a real spend analysis, possibly with the help of a leading spend analysis consultancy, to find out not just where you’re spending money (direct, indirect, operations, etc.) but where you have the biggest cost savings opportunities. - e-Source
e-Source those direct and indirect categories with the biggest cost savings potential. - e-Procure
implement e-Procurement to save time and money … a good solution can automatically insure that you don’t pay more than the contracted price or miss an early payment discount you intended to take advantage of