Category Archives: Supply Chain

Mulally’s Turnaround Strategies Are Good Fodder for Supply Management

A recent article in Industry Week on “management lessons you can learn from Alan Mulally” presented six pieces of advice that should be taken to heart by any Supply Management organization looking to turnaround its operations and take its performance to the next level. Simply put, they are:

  • One Vision
    Just like Mullally created a “One Ford” plan, which charted a course for product development, manufacturing strategy, and financial rehabilitation, your Supply Management organization needs to help the business construct its own “One Company” vision that defines what products and services its going to focus on, the manufacturing strategies it is going to employ, and the market goals. Then Supply Management needs to create the “Single Supply Management Operation” plan that describes how Supply Management is going to operate to support the “One Company” vision.
  • Act with Urgency
    Why put off until tomorrow what can be done today? That being said, there is a difference between acting with urgency and rushing things out the door. Never put anything off, but take the time that is needed to get it right.
  • Develop the Guiding Coalition
    Be sure to involved all of the affected stakeholders, internal and external. This will significantly increase buy-in and support for Supply Management.
  • Communicate the Vision
    Everyone inside and outside of Supply Management needs to be on the same page. Savings only materialize if contracts are adhered to, best practices only provide value if followed, and efficiency is only obtained when operations are in sync.
  • Generate Short Term Wins
    Go for the low-hanging fruit, get some success stories, and then communicate them up the wazoo.
  • Make Change Stick
    Instill a disciplined sourcing review process and make sure it is followed at all times. Support will be easier to obtain after the organization sees some short-term wins.

In addition, it will help if you are a charismatic, creative, and decisive collaborator. You need to work with your stakeholders, but when an impasse is reached, you have to clear the way.

Will Procurement Heads Also Be Responsible for Facilities and CSR?

A recent article over on the CPO Agenda on how the CPO is “an agent for change” pointed out that, at many organizations, the CPO is getting a broader realm of responsibility as she has to be well versed in change management to succeed at her job. In particular, many CPOs are now being tasked with logistics, risk, revenue, demand management, IT, sales support, property, CSR (Corporate Social Responsibility), and/or FM (Facilities Management) — with CSR and facilities becoming increasingly common.

The article highlighted three individuals in particular who were also responsibile for property and/or Procurement — Kath Harmeston, CPO of Royal Mail; Steve Jones, Director of Procurement and Property at Biffa Waste Services; and Patrick Dunne, Director of Procurement and Property at Alliance Boots — and how their role is not only cross-functional, but logical. Property and Facilities Management require great Procurement skills to keep costs down and value up, and combining the functions results in synergies that reduces internal management costs across the board. Plus, CPOs who are responsible for multiple functions get a much broader view of the business and the experience they gain gathers them a lot of respect in the C-Suite. As Kath Harmeston noted:

I was accepted as a budget-holder, a stakeholder and CPO at the same time. I was seen as quite a different animal — one that could see both sides, played a fair game and stood for accountability, traceability, auditability and transparency.

Similarly, CSR fits well with Procurement. Both Siemens and Clarks, where Barbara Kux is the head of Supply Chain Management and Chief Sustainability Officer and Matt Turner is the CPO and CSR officer, respectively, have combined the functions. It makes logical sense since Procurement directly dictates how sustainable the company is with what it buys and determines how sustainable the company’s suppliers are.

Reading the article, it appears only logical that, as more
companies figure out that the head of Procurement is the perfect candidate to lead these functions, more and more CPOs are going to be tasked with property, facilities, and sustainability as time goes on. What do you think?

Apprenticeship is the Answer

Back in March when I asked if we can fix supply chain education because academic programs, third-party programs, private programs, and vendor programs are, for the most part, not meeting our needs, I pointed out that the answer was to go back in time to when apprenticeshipos were common. When students studied on the job under the guidance of a master who prepared them for the job they had to do, not to advance an understanding of purely intellectual pursuits devoid of a real world application.

While I didn’t get much of a public reaction, I did get some very positive feedback from some old-school folks who have tried everything and realized that work-alongside training is the best answer. But a few old coots, as brilliant as they may be, do not deliver enough critical mass to get the idea out there. However, it seems that India is proving my point. As per this recent article over on Global Services that asks if “everything we know about offshoring innovation is wrong”, not only does an appropriately designed test prove to be a better indication of ability than a University degree, but intensive on-the-job training under a skilled expert tends to produce a better worker in months than is typically produced by years of higher education.

In other words, apprenticeships are the answer.

Every Supply Management Vendor Should Review Their Strategy, Not Just Ariba

There was an interesting article over on Fast Company recently that described three steps for re-evaluating your company’s strategy. To illustrate why a company might need to reevaluate, the article chronicled Ariba’s rise, fall, and their recent 300% growth in their stock price over the last year.

According to the article, Ariba, which has a Supplier Network with over 500,000 participants that conducts 170B in transactions a year, had to change their model and refocus when their stock crashed from over $700 a share to $10 in a matter of months. This included opening up their network and switching to SaaS. Furthermore, according to the article, this change was the result of learning the following three strategic lessons:

  1. Don’t Confuse Missed Timing with Missed Vision
    Often the vision is right but ahead of its time.
  2. Look for the Rise in the Fall
    When a company is forced to revisit its strategy, it may find an opportunity it overlooked.
  3. Build the Snowball
    Find a solution that will draw in customers that will in turn draw in more customers.

While the lessons are important for Ariba, if Ariba has truly learned them (as I believe they could have done, and could still do, better than they have done with respect to lessons two and three), they are equally important for Ariba’s competitors. And, as the article points out, Ariba’s competitors have to ask the following questions:

  • If it ends up taking three times as long to achieve our vision, what would we do differently today?
    While some would argue the Supply Chain space is dead, only the leaders have adopted modern solutions, and the laggards are still struggling to get past a spreadsheet to an outdated ERP.
  • If our core business fails, how else could we profit from the assets and activities of our business?
    Sometimes it’s the right vision, but the wrong implementation. Sometimes an idea belongs in the consumer space. Sometimes the add-on becomes the application. And sometimes its just a different deployment model. The original business plan is just the starting point.
  • What is the kernal of our snowball?
    It’s all about making it almost viral.

If they do, many will be in a better position than they are today.

Bob’s Three Dimensions of Sustainable Success

I’d like to point your attention to a recent post of Robert Rudzki, author of Straight to the Bottom Line and the forthcoming Next Level Supply Management (which is a must read for anyone who desires to take their Supply Management organization to the Next Level) over on the SCMR Blogs on alignment and compatibility with supplier partners. In it, he reviewed his simple, yet powerful, framework for evaluating the likely success or failure of two companies working together.

The basic idea is that success is more likely to occur — and be sustainable over time — if there is alignment, and compatibility, across three key dimensions:

  1. Strategic
    the overarching business strategies of the two parties should be close since they will need to be in sync for success
  2. Operational
    the two company’s systems and procedures will need to be integrated into one set of systems and procedures; if the will is not there to make this happen, the chances of success will be diminished greatly
  3. Cultural
    the business cultures must be similar; the core mission and values must be similar and it holds true whether you are merging two operations in New York or an operation in New York with an operation in Singapore and puting a head office in London

While these conditions are not sufficient for success, they are necessary. So if you fail the SOC test, sock the partnership from the get-go.