Category Archives: Supply Chain

Supply Chain Excellence Pays Off In Spades

“Does Supply Chain Excellence Really Pay Off?”

You don’t even have to go beyond the first page of this recent article in the Supply Chain Management Review (subscription required) to find the answer. According to a recent study by Morgan L. Swink, Rajdeep Golecha and Tim Richardson at Michigan State University, which analyzed the financials of top supply chain management companies and their nearest competitors from 2004 to 2007, supply chain leaders clearly outperformed their closest competitors across the following 10 metrics:

  • 50% higher net margins
  • 20% lower operating and SG&A expenses
  • 12% lower average inventories
  • 30% less working capital expenses
  • 2X the ROA
  • 2X the ROE
  • 44% higher economic value add
  • 2X the return on stock price
  • 2.4X the risk-weighted stock return
  • 46% greater market value-to-assets ratio

Excellence pays. What else do you need to know?

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A Framework For Making Better Supply Chain Decisions

A recent article in the Harvard Business Review on how to “make better decisions” (subscription required) provided a framework you can use to improve your supply chain decision making process if you don’t currently have one. It consists of four simple steps to take you down the decision making path:

  • Identify
    Start by listing the decisions that must be made to decide which are the most important. This will help to insure that you spend enough time analyzing the important decisions with enough care.
  • Inventory
    Assess the factors that affect each decision that must be made. This will help you understand what you need to consider, what decision making processes might be effective, and what data is relevant.
  • Intervene
    Design the roles, processes, systems, and behaviours your organization should be using to make the decisions. A successful decision making process considers all methods of improvement and execution before making a decision.
  • Institutionalize
    Companies serious about decision making have a process for determining who should make a decision, when, and how and all major projects have the benefit of systematic decision analysis.

It’s pretty simple, but just taking the time to identify, and document, the important decisions, relevant factors, appropriate data, and appropriate methods to make, and repeat, the process on similar decisions in the future is a great first step to better decisions.

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Supply Chain Social Networks: Getting Better, But Are They Compounding the Problem?

About a year ago, in Supply Chain Social Networks: Useful Resource or Productivity Killer, I reviewed the new kids on the supply chain social network block, “SCM Professionals” and iProcurement.org, in my effort to determine whether they offer supply management professionals benefits above and beyond regular social networking.

I noted that they had blog, news headline, and presentation sharing capabilities — which are useful if the blog posts, presentations, and news articles contain useful information, as well as the ability to form groups, but that they also had all of the banes of time-wasting social networking sites, such as latest activity tracker, comment walls, and photo free-for-alls.

Checking them out again, I see that iProcurement.org has added a Jobs section, improved discussion forums, created an on-line book store, developed a better events calendar, gained more members, and launched a cleaner look. SCMP has transformed their video section into the beginnings of an online training portal, also added a Jobs section, improved their event calendar, and integrated with Google Docs. Since then, Kinaxis has created the “Supply Chain Expert Community” with similar capabilities and Inovis has launched the private “Inovis Social Network” for trading partners to keep in touch. This, of course, is in addition to the communities on Linked-In, Plaxo, and Xing (with Linked-In alone having over 300 supply chain groups).

So they are getting better, and offering some value to select groups of people, but when you look at the big picture, I think they might be reducing productivity instead of increasing it. There’s so many networks with so many groups, forums, and blogs that you could literally spend all day scouring them for useful information and still not find anything. If I had to log in to 60 groups and forums across 6 social networks every day to try and keep up with what’s going on, I don’t think I’d get anything done at all! And while many of the networks allow you to create e-mail digest summaries from the groups, this just compounds the e-mail box clutter problem that we’ve been tackling for years.

Long story short, I think a well designed knowledge network can be a boon to supply chain professionals, but only if its A well designed knowledge network. One network with links to all of the groups, forums, blogs, and communities a professional needs. In other words, instead of dozens of vendors, organizations, and groups creating their own little, separate, communities, they need to adopt the predominant business social network (which right now is Linked-In) and build on it. And if the network doesn’t have everything they need, they should focus their development resources on helping the network create what they need.

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Three Answers Every Supply Chain Executive Should Give Themselves This Year

A recent post over on the Harvard Business Review Blogs pointed out “Three Questions Executives Should Ask for the New Year” based upon eight characteristics of top performers and four characteristics of under-achievers identified by Melissa Raffoni of Raffoni Ceo Consulting and author of “Managing Time” in the HBR Pocket Mentor Series.

According to Raffoni, who identified the following eight characteristics of top performers:

  • they set clear measurable goals
  • they seek feedback
  • they communicate thoughtfully
  • they act thoughtfully
  • they are decisive
  • they have integrity
  • they have ego-less confidence
  • they study to make themselves smarter

and the following four characteristics of underachievers:

  • they don’t set goals with leverage in mind
  • they don’t get enough out of the people around them
  • they don’t listen well
  • they lack the energy and boldness to try new things

executives should ask themselves the following three questions before setting their goals for 2010:

  • If there was only one thing I could do to improve my business, what would it be and how would I make it happen?
  • If there was only one thing I could focus on to improve my personal performance, what would that be and how would I make it happen?
  • What messages am I not listening to or refusing to confront in my business and personal performance and how am I going to overcome that this year?

I agree. But even more importantly, I think supply chain executives (CPOs, CSCOs, etc.) should start with these three answers:

  • I’m going to improve my organization’s technology platform.
    Supply management is too complex, and the opportunity costs associated with continuing to use antiquated spreadsheet technology (which never fit in the first place), are too great not to have the right tools. I’m going to get the right platform for the job, make my people more productive, and watch the savings go Straight to the Bottom Line as efficiency soars and my people are able to strategically source more categories than they were able to in the past.
  • I’m going to get training.
    I’m going to learn what I’m missing, fill the holes in my vision, understand what my team needs to be the best they can be, and then get them the right training.
  • I’m going to say “uncertainty be damned”.
    “I’m not one of the lemmings“. “If my brethren want to jump off the cliff into the ocean, that’s their choice”. “I’m going to forge ahead and be successful, economy be damned”. “I’ll make the tough choices”. “And I’ll win”.

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The Best Supply Chains are Flexible in Design and in the Office

A recent article over on Discovery News that headlined that “Employees With Flex Time Put In More Hours” is a must-read. Consider the headline findings:

  • working the usual nine to five may not be the ideal schedule for employees or employers
  • workers with flexible hours are not only more satisfied with their jobs, they also work more intensely
  • the findings also apply to remote workers and employees with reduced office hours

Basically, as those of us who work flex, or who have worked in flex environments know, it’s a boon to your business if you’re in a knowledge industry. And it has nothing to do with the quoted theory that the “intensified work effort given to employers is reciprocity for the relaxed schedule”. It has to do with the fact that not everything about life can be scheduled and, as a result, some days, nine-to-five will not be the best time for your employee to work.

Consider the following:

  • your employee gets a 24-hour virus at 1:00 pm on Wednesday
  • your employee’s toddler is ill and his partner is not available until noon on Thursday
  • an accident Thursday morning shuts down the main highway between your employee’s house and your office and triples commute time

If your employee comes into work Thursday morning, how productive is your employee going to be if he comes in

  • sick,
  • worried, or
  • stressed out from road rage

vs. waiting until Thursday afternoon when he’s well, not worried, and not stressed?

If you’ve hired the right employee, who likes his job and believes in the company as much as the company should believe in him, he wants to do a good job and will happily put in the time it needs to get the job done right, even if it means going (significantly) beyond 40 hours once in a while if it doesn’t (significantly) interfere with his life. Instead of 9-5 on Thursday, he’d probably happily do 1-10, or a few spare hours on the weekend. And if he can do it at home, and not have to waste an hour or two on an office commute, he’ll find it easy to find those hours. Most of what we do is not grunt work, it’s brain work, and that work gets done best when we are at are best and not distracted, plain and simple. And when your employees are allowed to control at least some of their schedules, you’ll find that they’ll organize said schedules so that you get their peak productivity times. So loosen up. You’ll be a better organization for it.

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