CareerReflexions

Sunday Night Outlook - State of Grace

2011-05-22T14:42:00.000-07:00

Just saw the Tree of Life. A strange but interesting movie.

Grace is a state of mind.

It is about letting go and enjoying letting go. When all worries are behind us, we live in a state of grace.

Live in a state of grace is the ultimate form of happiness. We can learn it by practicing love, service and gratitude.

Love is about having this thought for the beloved. At any moment. There is no reason not to love, because love is choice, a decision without conditions. Love is about loving. Without forgetting to love yourself first. When you love yourself, you don't need to receive love. You give love.

Service is to give all your talents without holding back. Expressing your potential. And enjoying doing so. Cause the results of service is a smile.

Gratitude is celebration of life. We in our fast paced society tend to be too busy to enjoy expressing our blessings for the wonderful moments of life.

Let's slowdown once in a while, just before sleeping to remind ourself we live in a dream larger than life!

Sunday Night Outlook - My ToBeHappy List

2011-05-14T08:11:00.001-07:00

Lastly I was trying to understand what makes people happy. Did not turn 40 for nothing... :))))

What makes me happy? Is it money? A fulfilling mission? Vacation? Great relationships?

Not really. In fact all these are part of one simple equation.

My happiness = Freedom to do what I like x the pace I most enjoy doing these things

I want a bit of everything we like in the right proportions. And what I like, desire and when is as different as we are different people.

So as of today I replaced my todo list with a tobehappy list.

Nothing is more fun than creating a daily or weekly tobehappy list. Starting from the basics and moving into more personalized pleasures. . Fresh air. Clean water. Some money. A great fruit salad. A smoothie. A steak. A walk outside. A chat. Playtime with the dog. A sailing race.Encounters with dear people. Time for a good conversation. Or a cup of coffee. A massage. Or best of all, a surprise for a friend, child or a total stranger.

And the most exciting is actually to keep free timeslots for improvisation.

My tobehappiness list almost empty this week!

Sunday night outlook

2011-05-07T15:00:00.000-07:00

Changing country can be a daunting experience. And in Europe England is the most exotic place to go to. But I am simply loving it!

They speak this strange language called English. They eat roastbeef, or fish and chips with mushy peas, a green version of mashed potatoes, have bacon and beans in red tomato sauce and hashbrowns for breakfast. They go to pubs to drink beer with almost no alcohol and believe they will get drunk with water. And most strange they adore their royal family as if these were movie stars... Charles, Diana, Andrew,... gear up your acting talent! Please...

Cars drive on the wrong side of the road over there and it rains every day.

Let's move to England fast. Can't wait. Like a fish I need to acclimatize!

Sunday night outlook

2011-05-01T14:01:00.000-07:00

Writing an article is like a therapy. Suddenly all the dreams and experiences accumulate into an idea. And what do you do with this data overload? Will you let this idea live on paper and share its power with others?

Kill the idea or kill some trees? That is the question.

Personally I then grab my iPad and start pushing on the screen with various fingers pretending there is a keyboard there. :)

Then from blog, I copy on both social media I use, Facebook and Linkedin, pretending someone will find it interesting. Somewhere in the world, there must be someone waiting for this message or not? :)

My message to the universe this week is very simple. If you ever had a dream worth pursuing, start with a first little step. Write it down before the idea dies.

All books ever written started with a blank page and motivation.

Deep inside we men know that all we ever wrote, invented or did is because there was a woman that cared.

To me knowing that made all the difference. Thanks for keeping my ideas alive. I honor all your beautiful memories too.

Why success will come from your supply chain

2011-04-22T13:33:00.000-07:00

Supply chains are a dramatic way to double, triple, even increase your profit margins tenfold.

Unfortunately many supply chain professionals look at the wrong side of the equation. When targeting cost reduction one must look at service, not at costs to improve the business situation. Below is an explanation of the reason why.

Ever heart about the battles and wars between Supply chains? Such big words might sound funny, but if I you are a business executive, please pay attention!

Businesses globalize and technology spreads. Nothing new. New suppliers from low-cost countries invade new markets as patents expire and cheaper versions can be offered to the customers. Whole markets became commodities and once loyal customers jump to cheaper options.

Many would have a spontaneous reaction to cut costs.

What if I would tell you a much better solution is to do exactly opposite? Instead of trying to analyze cost-base and try to match the competitors costs, my advise is companies should completely review their service offer. Supply chains are a balance of service and costs but the larger chunk of these costs are hidden in the term 'service'.

My message today for you is that' The fastest way to cut costs is by understanding the services you offer'!

By challenging the service offer, new opportunities to reduce costs but also to generate extra revenue quickly emerge. The battle for service in many companies still has many unwritten rules, and unless you talk with customers you are doomed to work on your cost-base only and miss these enormous opportunities. There is indeed a much better option than Poor Service @ Lowest Cost ... and that is Right Service @ Right Cost!

And the great news is that the more competitive your market is the more it pays off to review your service offer. The maths are very simple. Service reviews typically lead to 10 to 15% cost savings or extra revenue.

If you still enjoy a 40 percent profit margin, a service review will increase this margin to 49%. You only make 20% margin? No problem, I make it 39%. If you say 10% margin, I double it to 19%. A 5% margin triples to 14.5%. If you would only have a 1% margin, even better. You would get a tenfold increase of your margin: 10.9% after the review of your service offer.

The business case for a herbicide my previous employer sells in large volumes in Brazil is exemplary. We could have implemented a traditional cost saving programme and we would have succeeded to cut costs with 1 or 2%. Nothing spectacular.

Instead we started a cross-functional customer-driven initiative. And in 3 years time we made 15% cost savings a reality, or 5 to 7 million each year depending on the sold volumes! Because Supply Chain engaged with the Business we started to understand what customers value and what they don't, and as a result, we saw ways to save 24 USD cents per litre in different areas like packaging, duties, logistics and pricing. When you know each cent cost reduction we implemented gave the business 300,000 USD saving per year, then you can easily trace back how a review of the service offer led to millions USD savings per year.

Are we really able to separate the needs and wants for each customer and product?

That is what Customer-driven approaches are about. Unless your business understands how to eliminate lots of hidden service costs (Over-availability, Over-quality, Over-flexibility, Over-reliability and Over-delivery), your company will be doomed to scratch the surface of potentially huge cost savings. And why would we not explore all extra fee opportunities of generating new sources of revenue thanks to your supply chains!!!

Hope I made a point why success will come from your supply chain!

What logisticians could learn from Julius Caesar

2011-01-20T22:30:00.000-08:00

What would the Roman army be like without their logistics mastership?

Would they have built the empire we know stretching as far north as Britania, following the Rhine north across Switzerland and Germany till the wall of Hadrianus, stretching South over Egypt, Lybia and North-Africa, including the Middle East and the region around Greece and stretching West to Iberic peninsula and all of France?

Asking the question is giving the answer. The Romans were masters in moving soldiers and inventory at the right time to the right place and there is a lot we can learn from them.

What were their key logistics principles?

1. Structured but decentralized organization

The army was subdivided in units with clear scope and leadership. They operated independently but had a clear reporting lines. Because each square of soldiers fitted into a bigger square to form a compact unit acting with one voice. That of the commander.

2. Standardization

Each soldier was equipped in a standard way making all equipment and skills interchangeable leading to flexibility and independence. Each soldier was also carrying part of the infrastructure to help continuous improvement of the roads and camps they were building during their invasions.

3. Predesigned layouts for their camps but with variable size at predetermined distance

As the army conquered new territory new outposts were created at exactly the right walking distance supporting a progressing army. These outposts were enhanced based on importance and maturity model. But they all had a standard layout but adapted size making it easy for newcommers to find their way and efficiently defend the place.

4. Well-maintained infrastructure

Roads were of highest quality and bridges or other constructs were built to last.

5. Predesigned expediting services and fast communication

Horses and stables with fresh well-rested animals at regular intervals allowed fast crossing of distances. Pigeon mail ensured regular and effective long-distance communication.

Lots we can learn of how Romans moved their soldiers, food supplies, weapons and repair material in time and at the right place.

Lots we can learn from them!

Building blocks of a Customer-driven Supply chain

2011-01-16T15:11:00.000-08:00

Just think about the explosion in choice customers are being offered today.

Amazon.com, Alibaba.com, Walmart, Ikea, Procter&Gamble, Apple, Cisco,..., all face an ever increasing number of customizations to their products and services, customers buy. Just walk into any retailer outlet and you can choose amongst a wide variety of options.

How can such a responsiveness concept be achieved? We call it a Customer-driven Supply Chain. And article below shares with you key enablers of such powerful new supply chains.

In theory all that is needed is the widely publicized kanban-system promoted by Toyota and other Japanese companies for more than 50 years. Or the idea to focus on less is more under the motto 'Without orders we do not produce'. Which means 'each time the customer buys, we replenish, but if there is no sales, we do not keep ourselves busy producing excess inventory, hoping these will sell later', as traditional companies do!

In reality such a boringly predictable, low inventory and profitable efficient supply chain takes years to put in place. For a kanban to function correctly, reliable and cost-efficient supply is absolutely essential. Short leadtimes from order to delivery become an obsessive focus. Long and variable leadtimes must be shortened and stabilized all across the chain and all customers and products must fit into the design of the supply chain. Automation, mechanization, simplification. No investment is avoided to meet this objective.

To understand how customers fit into the design, think of Amazon as an exemple. Each customer can choose a service option and must then accept the resulting rules and waiting times. This service comes at a cost as each order line shows purchase and delivery price separately. A customer either chooses the lowest price (slow delivery) or pays a premium for superior delivery service. To make this workable, distribution must be fast and responsive.

Products must be produced to refill the inventories, whenever there is a need. Here flexibility and changing production from one model to the next fast guarantees the speed. as Henry Ford used to say when inventing the assembly line for his famous Black Ford T, speed leads to superior quality.

Speed in distribution, coupled with transparent delivery costs for the customer, and flexibility to change production based on order patterns and inventory changes is what determines how customer-driven your supply chain is.

Without this speed there is no way a company can reduce its reliance on sales forecasting. And that is the ultimate goal of a customer-driven Supply Chain: reduce forecast-driven activities which are based on wrong predictions of the future in favor of customer-driven actions. It makes your supply chain more efficient, less costly and higher value-add with dramatically less inventory!

This does not mean forecasting is not important in a customer-driven Supply chain. On the contrary! Whereas forecasts in a traditional supply chain are very detailed, fragmented and used at operational level, the customer-driven supply chain emphasizes the importance of information quality and sharing! In a Customer-driven supply chain all parties down the chain must know the forecast, aggregated or disaggregated to the level where it supports business decisions, instead of supporting execution of a transaction. Data standards must be shared across the chain, with clear and agreed conversion rules for bottom-up aggregation and top-down translation.

In a customer-driven supply chain, forecasts, supply plans and inventory information are available to all in simple dashboard format. but the data underneath the dashboards are transactional building blocks that can be aggregated, added, subtracted and multiplied without complex translations.

We have now completed the review of the 3 key building blocks that enable a Customer-driven SC to operate correctly:

1. flexible production

2. predictable distribution leadtimes allowing customers to choose a service option with transparent costs associated to them

3. shared, real-time quality information in dashboard format to support decisions based on very detailed, transactional, standardized data-building blocks all in the chain can access

Exciting work in coming years for all supply chain professionals. Redesigning the supply chains of the future. Customer-driven supply chains! As Toyota envisioned more than 50 years ago. The journey just started.

My ill Supply Chain

2010-12-24T03:25:00.000-08:00

What are the symptoms?

1. Everybody complaining about the forecast

Projected business levels led to prepositioned inventory and now we have excess inventory for products we cannot sell and stock-outs and shortages for our bestsellers. A perfect recipe to make our customers very unhappy but also to make our financial director cream at us.

“Forecasting is very difficult, especially if it's about the future”

“The only function of forecasting is to make astrology look respectable.”

“The trouble with forecasting is that it's right too often for us to ignore it and wrong too often for us to rely on it.”

2. Planners operating as a fire brigade working long hours trying to build-up inventory and limit number of shortages

As we assumed the numbers we received from Sales and marketing were reliable, and planned to supply for these volumes we get surprised daily by unexpected or unmet orders. Our plans must be changed and adjusted all the time.

“Planning is bringing the future into the present so that you can do something about it now”

“He who fails to plan, plans to fail”

“It pays to plan ahead. It wasn't raining when Noah built the ark.”

3. All partners in supply chain working with older versions of the Forecast and applying their own rules of interpretation to each number

Check-out:

http://www.shmula.com/the-bullwhip-effect/310/

4. Poor Customer Service figures and non-budgetted expenses for supplied products

5. Customers buying from competitors

Topic 5: Process and execution details are ill-defined or managemment of relation left to partner

2010-12-22T11:21:00.000-08:00

SOPs are hard work.

In general, the process description is what gets done. But a process description does not clearly define link to KPIs, roles and responsibilities nor system implications for the general management and the operators.

My suggestion would therefore be to document the SOP at 3 detail levels:

1. Stakeholder agreement
Process fowchart with DACI and KPI
This document is a high-level summary of roles, responsibilities, exception resolution and KPI.

What is scope of service?
Who does what?
Who intervenes for which issues?

2. Operations Quality Manual
Detailed Procedure description. With monitoring mechisms (meetings, reports, decisions), timing and delays for remediation.

3. User Training Manual
The implementation of a process is as good as the employees understood why, what and how to operate the process.

A system is best explained via a concrete exemple covering all steps with printscreens showing everyone in clear way how to work with systems.

Topic 4: Service level agreements that cannot be enforced without lots of extra manual effort

2010-12-22T11:20:00.000-08:00

Remember before the contract is signed!

An SLA must be easy to enforce without much manual effort

Logistics is execution. And operations are a complex mix of details. The Big Picture is not always easy to grasp.

Did we deliver Ontime? Was the provided service without too much hassle? Is the service provider transparent in terms of costs and charges?

All these questions often end up with No, but...

Avoiding these back and forth discussions between service provider and customer requires upfront homework.

Key Performance Indicators are important but much more relevant for succes of the paartnership is to allign Operational Performance Indicators.

OTIF KPI is business critical but what we want to review as part of SLA is OPI reason for delay is a category our service provider was supposed to avoid.

Perfect Order KPI tells us how good we are but number of errors in logistics documents or documents not delivered at right point in process SOP is where the logistic partner was accountable for our poor transactional performance with a customer.

Transport cost KPI is business critical but what we want to monitor in SLA is surcharges like demurrage, weekend surcharge and other exceptional but avoidable charges.

And question to work on is not the definition of these OPI but how to measure and review them with partner.

Do available reports cover them? Do we need to adjust internal KPI reports? Can our partner fill the reporting gaps? And if noit, is the manual reporting of issues documented, standardized and sustainable?

Once the contract is signed, it will be too late and difficult to enforce the agreed service if we cannot monitor the partner with minimal effort!

Topic 3 : Assumption 3pl can cover more ground and geographical scope than reality

2010-12-22T11:19:00.000-08:00

When contracting logistics suppliers, one of the crucial elements is subcontracting.

There are very few Global players and their service quality is very variable by region, market and by service.

Who is great in Australia is not best in West-Africa. A company serving the chemical industry is not perse the best in bulk. Tapping into specialists is the key to success.

But creating relationships with LSPs is a job in itself.

On one hand we say we want to develop these partnerships, on the other hand we want to keep a healthy competition and options to change to supplier with lowest cost.

The secret is to design logistics processes that can evolve and where multiple suppliers can operate via one common setup.

A supplier relationship management setup...

Topic 2: Limiting parties that can offer their service in a market with undercapacity

2010-12-22T11:18:00.000-08:00

The greatest danger when selecting an LSP is to choose a large Global logistics player to service a smaller company.

First the bargaining power will not be in favor of the smaller company. Second, the Global Logistics partner will not necessarily be willing to offer flexible terms and services.

Best for a smaller company is to help a smaller or several selected smaller logistics providers to develop jointly.

A win-win relationship will be established for many years with a clear bargaining power to get best price st best cost.

When the number of relationships becomes hard and complex to manage a Global logistics player can be brought in to manage the relationships.

But always keep control over logistics contract and price negotiations.

Nobody negotiates better than the one needing the right service!

Topic 1 - Avoid short-term cost and focus instead on long-term service

2010-12-22T11:15:00.000-08:00

Logistics is about the best trade-off between service and cost.

Cost-savings are a gamble on the sustainability of the quality of the logistics service.

Creating a cut-throat cost competition is a short-term strategy that will backfire when the demand exceeds the supply.

There is only so much room for a business to give its margin away.

Once the right balance in terms of margin for all involvwed in the logistics chain has been reached, logistics can in reality only deliver sustainable savings via innovations like improved collaboration and transparency. With other words by reducing risks and unexpected costs from bad processes. And by making the relationship better based on clear win-win objectives with logistics experts.

What are some of the critical mistakes people make when outsourcing logistics to 3PLs?

2010-12-22T11:13:00.000-08:00

Outsourcing is a strategic decision, and when we talk about logistics the make or buy decision becomes very complicated.

Why?

- because logistics is a service and services are difficult to compare before the experience

"There is a subjective element how great the service will be because all customers are not treated the same"

Wallmart and Ikea ship much more volume and containers.

Do you think you will get same service as them from Maersk?

- Logistics is about solutions

One can assemble services into a great logistics service combining carriers, forwarders and system providers. There is an infinite mix of options with pros and cons.

And all we know is someone will invent a new way of combining the building blocks in a concept that is larger than the sum of its parts.

- Logistics is about Win/Win

Down the chain all need to be making a living. Squeezing the smal partners is fine but will come back as a boomerang as lower quality service!

- Logistics is about service via technology

Better ships, planes and trucks, better infrastructure and equipment, top IT to automate document handling, better tracking technology and other enablers that reengineer the supply chain and offer top quality services at lower costs.

- logistics is about flawless execution

Better get it right first time. Each mistake is costly!

Ever heart about Customer-driven Supply Chains?

2010-11-06T14:49:00.000-07:00

What Wikipedia says...

In a customer driven supply chain, end-user demand drives all activities among trading partners.

Customer driven supply chain distinguishes between actions that provide customers with real value, and actions which just add costs. It facilitates and possibly maximizes collaboration with suppliers. It reduces throughout time, touchpoints and decision points. It increases machine and transport effectiveness. It provides quick and easy access to inventory for sales and service. It reduces excess inventory, stockouts,shrinkage, and order delays, as well as automates inventory data transfers between stores and warehouses. It reduces purchase order errors. It accelerates time to market.

Concept

Analysing the firm's activities as a linked chain is tried and tested way of revealing value creation opportunities. The business economist Michael Porter of Harvard Business School pioneered this value chain approach: "the value chain disaggregates the firm into its strategically relevant activities in order to understand the costs and existing potential sources of differentiation" ^[1]. It is the micro mechanism at the level of the firm that equalizes supply and demand at the macro market level.

Early applications in distribution, manufacturing and purchasing collectively gave rise to a subject known as the supply chain ^[2]. Old supply chains have been transformed into faster, cheaper and more reliable modern supply chains and a result of investment in information technology, cost-analysis and process-analysis.

Marketing, sales and service are the other half of the value-chain, which collectively drive and sustain demand, and are known as the Demand Chain. Progress in transforming the demand side of business is behind the supply side but there is growing interest today in transforming demand chains.

[edit]Demand chain challenges

At present there appear to be four main challenges to progress in transforming Demand Chains and making them faster, leaner and better:

Linking Demand and Supply Chains
Demand Chain Information Systems
Demand Chain Process Re-Engineering
Demand Chain Resource Distribution and Optimisation

[edit]Linking demand and supply chains

The challenge of linking demand and supply chains has occupied many supply chain specialists in recent years and concepts such as "demand-driven supply chains", customer-driven supply chains amd sales and operations planning have attracted attention and become the subject of conferences and seminars.^[3],^[4]

The core problem from the supply chain perspective is getting good demand plans and forecasts from the people driving demand: marketing, sales promotions, new product developments etc. The aim is to minimise out-of-stock (OOS) situations and excessive cost of supply due to spiky demand. Much attention has been drawn to the bullwhip effect. This occurs when demand patterns are extremely volatile, usually as a result ofsales promotions, and it has the unintended consequences of driving up supply chain costs and service issues, due to supply capacity being unable to meet the spiky demand pattern and the entire chain becoming unstable as a consequence ^[5].

While the aim of linking the chains is clearly sensible, most of the people involved so far come from the supply side, and there has been a noticeable lack of input to these debates from Marketing and Sales specialists. Progress in modernising marketing and sales processes and information systems has also been slow, and the poor quality of information systems and processes in marketing and sales have been an obstacle to linking the two chains.

[edit]Demand chain information systems

Information about activities and costs is an essential resource for improving value chain performance. Such information is nowadays readily available for the supply chain, due to the widespread implementation ofERP technology (systems such as SAP), and these systems have been instrumental in the transformation of supply chain performance.

Demand chain IT development has focused on database marketing and CRM systems ^[6]. Demand driving activities and associated costs are still recorded in an inconsistent manner, mostly on spreadsheets and even then the quality of the information tends to be incomplete and inaccurate ^[7].^[8]

Recently, however, Marketing Resource Management systems have become available that plan, track and measure activities and costs as an embedded part of marketing workflows.

"MRM is a set of processes and capabilities that aim to enhance your ability to orchestrate and optimize the use of internal and external marketing resources...The desire to deal with increased marketing complexity, along with a mandate to do more with less, are the primary drivers behind the growth of MRM" ^[9]

Implementation of MRM systems often reveals process issues that must be tackled, as Gartner have observed

"All too often, large enterprises lack documented or standardized marketing processes — resulting in misalignments, inconsistencies and wasted effort. Marketing personnel frequently rotate job responsibilities. Along with thwarting progress toward best practices and processes, this disarray contributes to a loss of corporate memory and key lessons learned. The elongated learning curve affects new or transferred employees as they struggle to find information or have to relearn what the organization, in effect, already "knows." ^[10]

[edit]Demand chain process improvement

Processes in the demand chain are often less well-organised and disciplined than their supply side equivalents. This arises partly from the absence of an agreed framework for analysing the demand chain process.

Professors Philip Kotler and Robert Shaw have recently proposed such a framework ^[11]. Describing it as the "Idea to Demand Chain" they say:

"The I2D process can be pictured as shown in Exhibit 1; it is the mirror image of the supply chain, and contains all the activities that result in demand being stimulated. Yet unlike the supply chain, which has successfully delivered economies of scale through process simplification and process control, marketing’s demand chain is primitive and inefficient. In many firms it is fragmented, obscured by departmental boundaries, invisible and unmanaged."

[edit]Demand chain budget segmentation, targeting and optimization

Demand chain budgets for marketing, sales and service expenditure are substantial. Maximising their impact on shareholder value has become an important financial goal for decision makers. Developing a shared language across marketing and finance is one the challenges to achieving this goal.^[12]

Segmentation is the initial thing to decide. From a strategic finance perspective "segments are responsibility centers for which a separate measure of revenues and costs is obtained" ^[13]. From a marketing perspective "segmentation is the act of dividing the market into distinct groups of buyers who might require separate products and/or marketing mixes" ^[14]. An important challenge for decision makers is how to align these two marketing and finance perspectives on segmentation.

Targeting of the budget is the final thing to decide. From the marketing perspective the challenge is how "to optimally allocate a given marketing budget to various target markets" ^[15]. From a finance perspective the problem is one of resource and budget allocation "determining the right quantity of resources to implement the value maximising strategy" ^[16].

Optimization provides the technical basis for targeting decisions. Whilst mathematical optimization theory has been in existence since the 1950s, its application to marketing only began in the 1970s ^[17], and lack of data and computer power were limiting factors until the 1990s.

Since 2000, applying maths to budget segmentation, targeting and optimization has become more commonplace. In the UK the IPA Awards have documented over 1000 cases of modelling over the 15 years, as part of their award process. The judging criteria are rigorous and not a matter of taste or fashion. Entrants must prove beyond all reasonable doubt that the marketing is profitable ^[18]. It enables marketing to be brought centre stage in four important ways ^[19]

First, it translates the language of marketing and sales into the language of the boardroom. Finance and profits are the preferred language of the modern executive suite. Marketing and sales strategies have to be justified in terms of their ability to increase the financial value of the business. It provides a bridge between marketing and the other functions.

Second, it strengthens demand chain accountability. In Marketing Departments awareness, preference and satisfaction are often tracked as alternative objectives to shareholder value. In Sales Departments, sales promotion spending is often used to boost volumes, even when the result is unprofitable ^[20]. Optimization modelling can assess these practices and support more rigorous accountability methods.

Third, it provides a counter-argument to the arbitrary cutting of demand-chain budgets. Return on marketing investment models can help demonstrate where financial impact of demand driving activities is positive and negative, and so help support fact-based budgeting.

Finally, demand-chain profitability modelling encourages a strategic debate. Because long-term cashflow and NPV calculations can show the shareholder value effect of marketing, sales and service, strong arguments can be made for putting the Demand Chain on an equal footing to the Supply Chain.

[edit]References

^ Porter, M. E. (1985). Competitive Advantage. Free Press, New York
^ Oliver, R.K., Webber, M.D., 1982, “Supply-chain management: logistics catches up with strategy”, Outlook, Booz, Allen and Hamilton Inc. Reprinted 1992, in Logistics: The Strategic Issues, ed. M Christopher, Chapman Hall, London, pp. 63-75
^ http://www.centaurconferences.co.uk/brands/theawarenessgroup/events/demanddrivensupplychain/overview.aspx
^ http://www.shiftworldwide.com/vpanels/demandchain.htm
^ Chen, Y. F., Z. Drezner, J. K. Ryan and D. Simchi-Levi (2000), Quantifying the Bullwhip Effect in a Simple Supply Chain: The Impact of Forecasting, Lead Times and Information. Management Science, 46 pp. 436—443.
^ Greenberg, P. (2010) CRM at the speed of light, McGraw Hill
^ Wilson, R.M.S. (2001) Marketing Controllership, Ashgate Dartmouth
^ Shaw, R and Merrick (2005) Marketing Payback, FT Prentice Hall, pp 450-463
^ Gartner (2004) The Future of Marketing Automation Arrives With MRM, 9 April 2004
^ as above
^ Shaw, R. and Kotler, P. (2009) Rethinking the Chain, Marketing Management, July/August 2009
^ Shaw, R and Merrick, D. (2005) Marketing Payback, FT Prentice Hall, pp154 - 182
^ Horngren, Sundem and Stratton (1996) Strategic Management Accounting, Prentice Hall, 10th Ed. pp343-345
^ Kotler, P. (1991) Marketing Management, Prentice Hall
^ Kotler p89
^ McTaggart, J.M., Kontes, P.W. and Mankins, M.C. (1994) The Value Imperative: managing for superior shareholder returns, Free Press
^ Kotler, pp82-93
^ www.ipa.co.uk
^ Shaw, R. and Kotler. P (2010) Marketing Efficiency: leaner, faster and better marketing; Market Leader Quarter 1 2010
^ Abraham, M.M. and Lodish L.M. (1990) Getting the most out of advertising and promotion, Harvard Business Review, 68 (3): 50

How to boost your career

2010-10-31T12:46:00.000-07:00

Ever heart about I-types and T-types professionals?

The I-type earns from expertise and knowledge. That person has academic knowledge and as he or she moves up the career ladder, this specialized knowledge becomes so precious, everybody relies on that expertise. The person feels powerful, valued and enjoys clear role and purpose in the organization. Typical I-persons are specialized surgeons, lawyers, accountants or financial experts. They build up a knowledge monopoly and this makes the position difficult to reach for others. Experience and dedication created the value offer.

Now let's look at the T-type. How does that professional creates value? In this case the knowledge comes from relationships. Rather than deepening the knowledge in one field, the expertise is to create valuable relationships that will complement the basic speciality gained during the studies. Generalists know a little about everything while specialists know everything about nothing. So goes the saying.

Now back to reality.

For an I-type professional the deepest knowledge is not valuable without a sense of reality. And the best way to have a grounded opinion is by understanding the views of others. Hence better know a little from the other areas and functions to leverage a speciality and add value to the team.

The T-type professional on the other hand must be careful to avoid only building relationships without content or with knowledge too superficial to be of any value.

Because innovation comes from blending knowledge. Therefore both I-types and T-types must focus on becoming a bit more knowledgeable in the content in other domains. And better go deep and in-depth in a few unfamiliar areas than remaining superficial.

How old you are, does not matter, if you wish to boost your career, keep learning - in new areas - because it is the variety that sparks innovation. And nothing adds more value than innovation!

A T-type with genuine interest to put the dots on the Is of colleagues is the most valuable kind of person in any organization!

Supply Chain Redesign - A job for problem-solvers?

2010-10-31T04:15:00.000-07:00

Not really. Engineering is only part of it. Designing a great supply chain is an art.

Supply Chain redesigns start with understanding the customer offer. And that is where the problem starts...

Who is the customer or customers we design for? How do we design a supply chain meeting the needs of these customers? Can we form an opinion talking to sales and marketing? Does that give us insights we can use in supply chain areas? How do we approach these customers?

Second we try to understand our current supply chain. But what supply chain are we talking about? Is the scope clear? Is there a supply chain we can isolate and change without impacting the rest of the business? Reality is that products form a very localized and complex offering in each market but the products do share production, distribution and storage assets. How do we segment the supply chain? Simple question. Complex answers.

Third we try to envision the best possible supply chain. But what does an excellent supply chain look like? Is it realistic to try to implement such a large scope? And should we include the information systems to the scope?

At the end of the day, the best possible supply chain is a value chain, which means the offer of products and services must be fully integrated. Both product and service values flow to chosen customer thanks to one coherent design. Just like when you go to the restaurant. You want a clear menu with transparent pricing and service that exceeds your expectations.

A value chain as designed by Apple. All is integrated into a full offer. Designed to offer the full value to the customer. Thanks to artistic design and skill full engineering.

A beautiful but engineered value chain. As opposed to a supply chain held together with nuts and bolts to adjust the way it operates each time the market forces its volatility on it.

Problem-solving is great but only after designing the right concept.

Why eventually Lean and Six Sigma efforts cannot be sustained

2010-10-31T01:31:00.000-07:00

Don't get me wrong.

Lean is a tremendous filosofy of more profit using less resources. Less is more.

And the right use of tools like Value-Stream mapping, Quick change-over (SMED) or Total Productivity Maintenance (TPM) cannot be underestimated. Stronger, each company should embed lean thinking in every operation and apply these tools where they can be value-adding.

Six Sigma is a wonderful concept too.

If you want to fix a process, first make it predictable. Listen to the process first. Analyze symptoms and root causes based on data. Identify the steady state or work towards a stable system. Then like a doctor, apply the remedy that will really make a difference in performance. The one way that will align the Voice of the Process with the the Voice of the Customer. Performance driven by Customer specifications and data. Powerful. Simple. And Scientific. No arguing.

Original thinkers thought best way to embed processes in an organization was via documentation. Hence the ISO Quality movements preaching quality via documents and creating a living for lots of junior consultants creating huge piles of documents.

Then tools for Business Process Management (BPM) were invented. Rather than paperwork, flow diagrams are now kept in huge databases which can be administrated by Process Analysts and governed by Process Owners. Main advantage is the versioning and comparison of processes can be centrally maintained while leaving the local experts to map and document their parts of the processes. Additionally, these tools offer embedded training modules, making process training much more dynamic. A SAP module can now have a dynamic screen set to train the users embedded in the application. Great progress.

But the great gap these tools could not bridge so far is how to adjust the systems and software to optimize these processes.

How to apply lean and six sigma on information flows. In the information age, flexible processes depend from flexible IT systems. A changed process is only as optimal as the support the underlying sofware provides to the user. And optimal systems must be continuously improved to stay optimized.

Nowhere is that more obvious than in Supply Chain Management. Agile supply chains need agile and integrated planning concepts. Such a system takes forever to build. As business planning integrates more and more functions and departments.

We planned production in sites with Material Requirements Planning (MRP), then Distribution with Distribution Requirements Planning (DRP), then Supply Advanced Planning Software (APS).

The next race is to embed financial planning, marketing planning, sales planning and product creation planning to the existing planning systems landscape.

Planning workflows to drive execution and processes.

Welcome the age of eBusiness design.

Marketing, the weakest link in the Value Chain?

2010-10-17T11:29:00.000-07:00

Last week at a Conference about Customer-driven Supply Chains we were exposed to the idea that Demand Chains are lacking systems to respond to human creativity and therefore suffer from same symptoms as we experience in chaos theory. Chaos in different forms..

The underlying idea is that some rigor and efficiency would make sales and marketing stronger and more efficient and bring it on a par with the well-engineered processes and ERP-systems that rule in logistics, production planning and procurement.

Interestingly the clash between left brain and right brain, efficiency and effectivity or structure versus chaos and how to marry these skills are becoming the key to business success in the 21st century.

Value creation requires creative brains to design the solutions customers want but rigour and engineering to make these solutions sustainable.

Supply Chain people got to become more creative. Then they will be able to share benefits of a more engineered approach and beautiful design with their marketing folks.

That is what made Apple great. Innovative solutions. but beautiful engineered designs...

Why is change difficult or is it easy?

2010-05-18T13:18:00.000-07:00

People make it a science. People make theories about it. But it is not only about motivation and desire? Conviction? Dialogue? Here is my opinion!

In fact 3 critical points are necessary to make any change effort successful:

1) Benefits, risks and rewards must be clear for all parties

A win/win deal will ensure all parties pull the same strings.

2) Capabilities like experience, skills and expertise are a prerequisite for success

All too often the change agents do not have the necessary skills, experience and expertise. How can you implement a tool you do not master in a language you do not master when trying for the first time to manage a project?

3) Most important is to have will power to walk the talk

How many New Year resolutions are already forgotten on January 2nd?

The 7 possible differentiators of a 4PL Solution

2009-10-28T09:49:00.000-07:00

Converting a traffic control tower concept into a warroom solution in essence means 7 new differentiators can be offered to the customer on top of the already provided operational excellence:

1. Ontime tracking for all flows with delay and root cause analysis
2. e2e Logistics Cost reporting with drilldown
3. e2e Leadtime Variance Analysis
4. e2e Inventory Visibility
5. e2e Load Unit and flow efficiency Simulations
6. e2e trace-ability of products
7. e2e Mileage and CO2 calculation models

A simple dashboard can standardize this service offering across your customer-base and providing a plug-and play architecture to install one of these 7 services with high ROI but low entry cost make this offering a decisive advantage in the competition for logistics services.

According to an article published in Harvard Busines Review, by Frederick F. Reichheld, The One Number you Need to Grow your company in difficult times is the Net Promoter score. It is the ratio of promotors to detractors. Companies with a loyal customer base have net-promotor scores from 70 to 80 percent.

An offer like the one above would definitely contribute to the score for a logistics service provider...

Value-Based Management

2009-10-27T10:45:00.000-07:00

One key take-away for me is that successful business change is about one of 5 following elements or a combination of these:

1. Plans based on understanding of the external environment
Without a thorough understanding of the customer needs and drivers to buy the goods or services and how change will impact the market an initiative cannot be sustainable

2. People and organization
Objectives and relations need to be alligned based on shared values

3. Optimized Processes
Processes often need to be redesigned to meet needs of the customers or suppliers or changes to inputs or outputs

4. Systems and tools
Without the right tools and systems optimized processes cannot be reproduced easily and efficiently

5. KPI tracking
Reports to check actuals against plan allow the organization to stay disciplined and keep the learning going

Point-Of-Sales Data - Prerequisite for SC design?

2009-09-20T05:57:00.000-07:00

If the objective of a Supply Chain redesign is to refocus all involved parties to enhance the end customer experience, then the major source of information could well be point-of-sales data.

The customer behaviour determines the key performance objectives a supply chain needs to meet in terms of:

1. Cost
2. Reliability
3. Speed
4. Quality
5. Flexibility

Unfortunately talking to sales and marketing will only give a list of prioritized objectives and in the best cases a gap compared to the competition.

It is the data which will show what customers buy and which customers change their buyng behaviour based on price and the various levels of service that are offered.

The solution for LSPs is Business Intelligence

2009-09-18T11:32:00.000-07:00

As Logistics Service Providers by definition provide Logistics Support to their customers, one only has to go back in history to see how the army developed the logistics function from the transportation and storage of critical supplies to the collection of mission critical warfare information.

The Romans started the process. Napoleon followed the approach and military intelligence is now the most visible part of American warfare.

From satellites to unmanned planes to control centers. All are organized to provide the commanders in chief with mission-critical information.

This new need creates new requirements in terms of assets. Best of breed information technology and data exchange protocols now drive the outcomes of the wars and this trend will beome more and more visible.

To provide business intelligence LSPs will need to be able to create long-term linkages with their customers, capture and organize critical information in a way the customer is getting value from this work.

Process excellence, continuously improving the working together is creating the necessary condition for long-term operational relations. Via project and IS mastery the LSP can then leverage these shared processes to provide the customer with value-critical information.

More details in a next section.

Why LSPs need to re-invent their profession

2009-09-18T11:05:00.001-07:00

Today transport is a commodity. So is warehousing. Both services can be started up from scratch on an asset-free basis leasing assets for the transport and warehouse on demand. Large multis have established themselves to partner and serve customers and their efficiency in this low margin business is extreme. The cut-throat competition is comparable to the ones airlines face globally.

To compete in such a marketplace, the only differetiatior is how the LSPs service their customers, how they leverage information to continuously improve their relationships with their customer and become strategic partners.

But even these approaches do not provide a winning business model for the likes of DHL, K&N or Agility. The problem here is that business success depends from the critical assets a company owns in the supply chain. And the reality is that LSPs do not own any critical assets. Most of them are perfectly interchangeable.

That is why the LSPs need to re-invent themselves.

Advise from Dale Carnegie

2009-09-15T21:56:00.000-07:00

Do not underestimate Self-importance

Names Matter

Noble Motives Appeal

Questions can replace Orders in a subtle way

No critics

Avoid confrontation

Allow Saving Face

Praise and recognize mistakes

Create reputation to live up to

Know persons drivers

Know and share passions and interests

Check others viewpoints

Listen intensively

Let Others talk

Read message

Sympathize

Make happy about job

Create Challenges

Make fixes easy

Practice Smile

Add Drama

Dogs show love - always

What are the keys to Organizational Excellence?

2009-09-01T12:25:00.001-07:00

Please, help me to find out, what are the keys to Organizational Excellence?
The keys to organizational excellence concerns with: Mission, Vision and Core Values Style of Management; Strategic Management; Structure and Systems; Organizational Renewal Processes. Please help me on this issues, because it does relate with practical scenario..

1. Sustainability.
As long as you did not train your employees to have a certain standard which allows each of them to share and exchange tips about how to work better you will not have empowered employees and you will not have a team continuously improving their ways of work with colleagues.

2. Empowerment
Without empowerment, no sustainability.

3. Customer Feedback
Without Customer Feedback no sustainability, and therefore no excellence.

The limits of Process Excellence

2009-08-23T12:07:00.000-07:00

Processes have subprocesses and subprocesses are group of tasks.

When the system becomes too complex, like the human body or a supply chain, tweaking a few inputs will not adress the problems.

The system requires redesign or drastic adjustments which neither Lean methods nor Six Sigma can provide...

Why standardization matters

2009-08-22T06:19:00.000-07:00

Standardization creates power and speed of reaction.

Take the United States of America. They all speak the same language. This in turn, allows them to share stories, myths and beliefs and build a common culture. It provides a base to build large systems, efficient organizations and rapidly share information. It is the basis of the power of Walmart, MacDonald, Coca Cola, Microsoft, Google, Disney or Hollywood. This culture can then dominate other less efficient cultures with fewer economies of scale.

While a dominant culture is great to leverage investments and efforts, it is said that efficiency and cultural dominance can reduce the richness of other cultures and block competition. The main argument against standardization is indeed that it blocks innovation.

I would tend to disagree with that. Innovation does require standards, a systemic approach and discipline. As Toyota discovered where there is no standard, there cannot be improvements. And where there is no quality new, more effective cultures will take the upper hand from the dominant thinking.

The Complexity of Human Systems

2009-08-12T14:37:00.000-07:00

Inspired from the 8th Habit by Steve Covey

A statement from the book.

John Gardner summarized it as follows: 'Most ailing organizations have developed a functional blindness to their own defects'. They are not suffering because they cannot resolve their problems, but because they cannot see their problems'.

Flawed paradigms are at the basis of the poor business results; in this case it is that the industrial age was based on the assumption that machines and capital created the wealth and not people. People were necessary but replacable.

The fundamental reality is human beings are not things needing to be motivated and controlled. Knowledge workers are four-dimensional - body, mind, heart and spirit.

And great organizations unleash this human potential by inspiring individuals to find their voice, a complex balancing act of trust through shared values, empowerment and allignment.

Too complex for a mathematician. Data and statistics are more easy to 'stimulate' and 'control'. And Google will organize the worlds' information for us.

The essence of Six Sigma

2009-08-10T11:24:00.000-07:00

If one would ask about the essence of Six Sigma, it would be not to jump to conclusions but observe the process first and listen to the data.

Is the process really broken? Is this a real problem? Should we do something about this? Or are we just facing natural process variation?

Wherever we see numbers change, our Western filosofy leads to action and reaction. Stock price down, we buy more or sell the stock. Increase of the unemployment number, we get worried about a looming recession. Less Profit. Down goes our bonus or we re-organize the department.

Six Sigma teaches that instead of over-reacting, we should first ask 5 times Why? Do we really face a problem? Do we understand the root cause? And more important, can we fix the problem?

Six Sigma theory shows that only predictable processes can be improved. You can only fix what already works. And something that works is predictable and understood.

Where there is no standard, there can be no improvement.

Business Success by John Collins - Just a Marketing Fad?

2009-08-09T01:25:00.000-07:00

Business Book writer John Collins demonstrates an obsession with Business Success.

All his books are around that theme:

1) From Good to Great
2) Build to Last
3) How the mighty fail

Can we apply all these learnings? Is the methodology applied in these books scientifically sound? Is it justified to learn from the experience from others to become successfull? Without an answer to these important questions, it is impossible to become successfull just by copying successfull companies.

Eventually the very systematic and data-driven approach from John Collins would be laughed away by Andrew Cox as merely barefoot empiricism. Years ago, this excentric University lecturer from Birmingham University started a crusade against the dominant thinking that success comes from successful competition in the marketplace.

In the end this critique is against an inappropriate way of thinking.

* 'Fads' cannot work outside the circumstances in which it was originally implemented
* 'Fads' are based on a benchmarking mentality of observation of past practices and is no guide to future action
* Succesful adaptation can only lead to a war of competitive imitation
* Such approach is unsound as a guide to appropriate behabviour for particular companies under specific circumstances

Taking a fresh look at our ignorance about why some companies are successfull and others are not, Andrew Cox came to see power relations in the supply chain as the key lever to business success. The one who controls the key assets in the supply chain through innovation builds a successfull monopoly and temporarily eliminates the competitive pressures of the marketplace.

A new exciting area of scientific exploration that could give great rewards - if one came to understand better what brings business success...

Entrepreneur, Leader or Manager?

2009-08-08T13:22:00.000-07:00

In business, many talk about leadership.

Leaders shape the world. Leaders create vision. Leaders are the modern version of the ancient Greek heroes. Hercules was a Leader.Ulysses was a Leader. Achiles was a Leader. Each used a unique godly strenth to shape their world. They knew what they were good at and exploited these Strength. Very similar to the Strength Movement.

What the authors claim is that we can all be leaders provided we know our Strength.

Go to their Website and you'll discover StrengthBased Leadership.

http://strengths.gallup.com/110659/Homepage.aspx

Managers are like Mother Theresa. They love People. They understand we are not Gods and have more weaknesses than strengths. They watch, listen, feel, talk, laugh, hug and whisper caring words. They are taking care of each, making sure we feel loved and happy. They create a family to avoid that problems are hindering our wellbeing and performance.

Entrepreneurs, to complete the gallery are like Richard Branson. At the heart of business are people bursting with ideas and surrounded by people willing to give it a try. Great entrepreneurs create excitement about a not yet created future. They create a new future, together with others. They want to become rich.

Let's all become entrepreneurs and we will discover the great managers and leaders amongst us.

CareerReflexions

Sunday Night Outlook - State of Grace

Sunday Night Outlook - My ToBeHappy List

Sunday night outlook

Sunday night outlook

Why success will come from your supply chain

What logisticians could learn from Julius Caesar

Building blocks of a Customer-driven Supply chain

My ill Supply Chain

Topic 5: Process and execution details are ill-defined or managemment of relation left to partner

Topic 4: Service level agreements that cannot be enforced without lots of extra manual effort

Topic 3 : Assumption 3pl can cover more ground and geographical scope than reality

Topic 2: Limiting parties that can offer their service in a market with undercapacity

Topic 1 - Avoid short-term cost and focus instead on long-term service

What are some of the critical mistakes people make when outsourcing logistics to 3PLs?

Ever heart about Customer-driven Supply Chains?

Concept

[edit]Demand chain challenges

[edit]Linking demand and supply chains

[edit]Demand chain information systems

[edit]Demand chain process improvement

[edit]Demand chain budget segmentation, targeting and optimization

[edit]References

[edit]See also

How to boost your career

Supply Chain Redesign - A job for problem-solvers?

Why eventually Lean and Six Sigma efforts cannot be sustained

Marketing, the weakest link in the Value Chain?

Why is change difficult or is it easy?

The 7 possible differentiators of a 4PL Solution

Value-Based Management

Point-Of-Sales Data - Prerequisite for SC design?

The solution for LSPs is Business Intelligence

Why LSPs need to re-invent their profession

Advise from Dale Carnegie

What are the keys to Organizational Excellence?

The limits of Process Excellence

Why standardization matters

The Complexity of Human Systems

The essence of Six Sigma

Business Success by John Collins - Just a Marketing Fad?

Entrepreneur, Leader or Manager?