Category Archives: Strategy

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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What are the Obstacles to Supply Strategy Implementation?

Late last year, CAPS Research released a report on “Supply Strategy Implementation: Current State and Future Opportunities 2009” that was based on data from 130 supply organizations across 26 industries. The data contained over 1,000 short-sentence responses that were analyzed to come up with this list of the top eight obstacles to supply strategy implementation:

  • Lack of Executive Engagement and Resource Support
  • Inappropriate Organization and Governance
  • Business / Manufacturing / Operations / Technology / Supply Strategies Not Aligned and Integrated
  • Limited External Economic Environment Impact
  • People- and Culture-limiting Change
  • Lack of Information Systems and Data Availability
  • Internal / External Communications
  • Inadequate Measurement and Evaluation

So how can you fix this and implement much needed supply strategies?

  • Follow the twelve steps to purchasing fire (on the e-Sourcing Wiki) and define the value proposition, get the right credentials, perfect the pitch, address the big nos, build the case, and sell the solution.
  • Task the CPO/CSCO with a supply chain re-organization. If you don’t have a CPO/CSCO, get one.
  • Form a cross-functional team, headed by a neutral (and possibly external) party, and task them with a strategy and process alignment.
  • If your organization hasn’t been hit hard, either because you are selling a required resource or commodity, such as energy or food, or because your sound supply management strategies did their job, focus on future threats to get the support required to take your supply management strategies to the next level.
  • If cultural conflicts are standing in the way, enroll your team in a cross-cultural training program, such as the custom program offered by the Global Procurement Group or Global Supply Training.
  • Adopt modern e-Sourcing, e-Procurement, and Trade Management systems.
  • Adopt a collaborative approach and work on streamlining communication channels. Also, develop a crisis management plan, just in case.
  • Create a balanced supply chain scorecard and track the key metrics at least monthly, if not weekly.

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What is The Price of Flexible Supply Chains? Part III: A Customer Focus

In this post, I’m going to discuss highlights from the CPO Executive Debate on “the price of flexible supply chains” and focus on why you have to focus on the end consumer.

Although Supply Management doesn’t typically deal with the end customer, one of the ultimate keys to success is a fanatical focus on the end customer. In a successful organization, everything you source is sourced to add value to the products and services you offer the end customer. Everything. No exceptions. Legal spend? Services to protect your IP and ensure you can offer your customers unparalleled products and services. Market spend? Services to not only communicate the products and servies you offer to the market, but to also educate the market as to the value they contain. IT? Systems to help you source higher quality materials at lower price points to increase the overall value of the products and services you offer. Simply put, if a product or service isn’t adding value to the end customer, it’s not adding value to the organization’s bottom line. This means that it isn’t increasing shareholder value (which business is all about) and the organization should be thinking twice about that product or service. But enough of my ranting … let’s see what the participants of the executive debate had to say.

When asked if it is a priority for any business to know exactly what their customers want and to build everything around it and if it should become a high priority for the corporate strategy, Austen Bushrod responded that we don’t want to wait for the customer to get to that point. We have started putting in some strategy in terms of targeted marketing, which allows us potentially to tie in with various suppliers in terms of targeted promotions. This is because successful Supply Management operations know what their customers want and actively pursue sources of supply that will give the organization’s customers exactly what they want.

Furthermore, when asked how it would work in a business-to-business environment as opposed to business-to-consumer environment, Guy Allen responded that if you don’t totally satisfy your customer, they will cancel the contract, but if your customer only thinks you are average you could lose out on extending that contract and taking on new areas, indicating that you need to be almost obsessive about what your customer wants and deliver service above and beyond what they are expecting.

But if you become obsessed about the customer, as Austen Bushrod noted when asked if they were first out of [the recession], you will be the first to recover after a down-market when customers start spending again because, just as Colin Davis said when asked if he was talking about the people, when it comes to a focus on the customer, the answer is yes, absolutely.

In the next post we’ll talk about how you have to balance this customer obsession with supply base involvement.

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What is The Price of Flexible Supply Chains? Part II: Strategy

In this post, I’m going to discuss highlights from the CPO Executive Debate on “the price of flexible supply chains” and focus on why you have to take a strategic focus.

In response to whether a CPO would be prepared to be more fluid on quality or on price in order to get that flexibility, Colin Davis said that their organization’s primary goal is going all the way back to the sourcing decision and making sure that they have got everything absolutely aligned to business drivers with the initial contracts and also in the relationship going forward. In response to whether non-retailers get this flexibility to be part of the corporate strategy, Andrew Vaughan said that it comes down to the link with the market, and that if you start with the market from a strategic perspective and work back down, then to my mind it is just about effective communication. And in response to what extent might they be out of the loop if the stakeholders are talking to the suppliers directly, Andrew then said you want your stakeholders to engage because you want to drive innovation. What we try to do is operate cross-functionally so we go together as a team and discuss innovation; we discuss delivery and we discuss quality and costs.

Clearly one of the primary prices of flexible supply chains is strategy, but this is a good thing. Because when you get right down to it, your ultimate success or failure comes right down to your supply chain strategy. If your strategy is to ocean freight high-priced low-volume consumer electronics like laptops, tablets, and cell phones to try and save a few dollars on freight, which is a rather low percentage of the total cost of these items, instead of air freighting them in well-engineered, low-volume, packaging, you’ll not only have difficulty responding to demand changes (when it takes three weeks to restock instead of three days), but lose more in market value than it costs you to ship the products (as most products depreciate in value a couple of percentage points a month).

Furthermore, if your strategy is purely to get the best price today and you overlook the going-forward innovation capabilities of a supplier who could be a strategic partner and who is willing to work with you to take cost out over time, you could not only be giving up 5% year-over-year savings in the future, which the supplier might be willing to commit to because your contract will enable them to purchase more efficient equipment and institute more efficient processes, but a potential source of innovation, integration, and/or inspiration that could be the source of the next big breakthrough in your market … which the supplier might end up taking to an emerging competitor who is willing to look beyond current cost to future value.

You need strategy, and in particularl, you need a strategy that is collaboratively derived through the participation of stakeholders because if what you have is a failure to communicate, your supply chain won’t be very effective, with everyone walking around blindly with dead eyes, following orders, not knowing what they do, not caring. If you want to succeed, you have to remember that your assignment tonight is strategic. You can’t give the enemy a break and the only way to win is to saddle up, lock and load and tackle strategy head on. But with double digit percentage returns available from strategic spend analysis, strategic sourcing enabled by advanced negotiation methods (such as strategic sourcing decision optimization), and global trade visibility, what do you have to lose?

In the next post we’ll address why a customer obsession has to be part of this strategy.

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