Author Archives: thedoctor

Getting a Grip on Multi-Tier Supply Chain Risk – A Resilinc Commentary


Today’s commentary guest post is from Jon Bovit, Chief Marketing Officer of Resilinc, a provider of supply chain resiliency solutions for industries including high-tech, medical devices, and automotive manufacturers. SI recently covered Resilinc in detail in Do You Know What’s At Risk? Resilinc Does! and Will Resilinc Resonate with Your Supply Chain.

Today’s supply chains are complex, global, and highly dependent on
sub-tier suppliers. Long term sustained success of companies is hugely dependent on the resiliency of their suppliers. Despite this, most supply chain leaders are unable to readily access critical supplier information necessary in order to manage business effectively. Supply chain leaders need a solution that maps the global supply chain across multiple tiers, identifies critical supply chain dependencies, exposes critical vulnerabilities and single points of failure, manages risk mitigation across the organization, and optimizes resiliency practices throughout the organization.

Despite popular opinion to the contrary, the harsh reality is that measuring supply chain risk at the supplier, or even the location, level is inadequate for today’s global and complex supply chains. In order to properly managing supply chain risk, a company must start by mapping its global supply chain down to the individual products, parts, sites, and revenue across each of the multiple tiers. Once the multi-tier supply chain is mapped down to the product and part level, with the proper methodology, the company can calculate risk scores based on (multiple measures of) financial risk, location (economic and geopolitical) risk, and recovery risk (recovery time and BCP). By evaluating supply chain elements based on inherent financial, location and recovery risks (which align well with the risks identified in the recent World Economic Forum Global Risks report), supply chain practitioners can choose the most effective mitigation
strategies.

As an example, by utilizing the above methodology, the Resilinc platform is able to quickly identify high risk, high revenue, single sourced parts for a high-revenue producing business unit. The high risk may come from long recovery times from a specific supplier manufacturing site in Malaysia or Japan. The customer can then come up with specific risk mitigations strategies for those specific high risk, high revenue single sourced parts before a disruption occurs, which could save the company millions in losses and unmeasurable damage to its brand. If risk was measured at the supplier level, these details would have been missed completely.

Customers should not only focus on assessing and mapping risks based on their supplier global footprint and site locations, but also should capture sub-contractor and sub-tier supplier dependencies, site activities, part origin, alternate sites, recovery times, emergency
contacts, and business continuity planning (BCP) information. By focusing on identifying critical vulnerabilities and the highest risk exposures using quantitative scores and impact analysis at the product, part, and site level, leaders can direct limited budget and resources into the right areas for optimal protection against future supply chain disruptions.

Thanks, Jon!

Strategy is Not Always an Academic Pursuit

And a consideration of market leading companies should put this into perspective. the doctor was reminded of this while reading a recent piece over on the HBR Blogs on “Apple Versus the Strategy Professors” where the author noted that the how of Apple’s fall (or continued rise) will hinge on strategy — because strategy has driven its success.

In the article, the author referenced Michael Porter, famous for his five force analysis, W. Chan Kim and Renee Mauborgne, and their blue oceans, Clayton Christensen, and his disruption model, Michael Raynor, and his successful growth strategies (co-devised with Clayton Christensen), Carl Shapiro and Hal Varian, and their information economy, and Amar Bhide, and his hustle. He then illustrated how Apple has drawn on the teachings of all of these professors (of the Harvard Business School, INSEAD, UC Berkeley, and Tufts) to achieve their transformation and market leadership of the last decade.

It does a great job of demonstrating how strategy is key to success, and, more importantly, how strategy has to be taken beyond the classroom to be effective. Apple didn’t subscribe to any one philosophy or methodology, it borrowed from the teachings of all of the greatest management and strategy thinkers of our time and incorporated those that made sense. But it didn’t do so randomly.

What Apple really did, and what you need to do if you want to ensure consumer success, is figure out what your customers need and give it to them before they have figured out what they need. It took note of what it could do, and then searched for products that would fulfill what people wanted in blue oceans. For example, going back to the iPod, it realized that consumers wanted a portable music device that was easy to use AND easy to manage.

At the time, the mp3 players available were few, used different, proprietary operating systems, and were difficult to use. Furthermore, even if you weren’t a computer geek, getting music on and off was a pain in the backside, and the whole experience — compared to popping a cassette into a Sony Walkman — was unpleasant. Apple realized that people needed an end-to-end solution — a great device, a great software tool for managing the device, and, equally important, an easy way to acquire legally licensed music in the appropriate format. Hence, it developed, and released, in order, iTunes for easy mp3 (and device) management, the iPod, and, finally, the iTunes Store that negated the need to get music from third parties. It was an end-to-end solution that even the most novice of computer users could master — and it was cool. Market dominance was just a matter of time.

While your customer might not be able to tell you what they want when you ask, they know it when the see it and, if you listen, can give you lots of hints. For example, Apple’s future customers were saying things like: “I want my music on the go.”, “This portable music player is cr@p., and How do I manage a library when all I can see is 1 song at a time.” “I can’t figure out how to get the music files I buy from Mperia onto my mp3 player.” All they had to do was listen closely, come up with an entirely new solution that met all the most common wants, and find a way to make it desirable (cool, sexy, fun, etc.). Yes, that’s a tall order — but not that tall when you think about it.

And when you figure out not only what your customers want, but what you are going to give them to make them want your product over the competition, that’s when your supply chain can really give you an edge by getting involved early in the NPD (new product design) effort and finding creative and innovative ways to keep costs down, quality up, and value-add at the right level for maximum reward.