Mar 1, 2023 | Collaboration, Lean, Operations
Our supply chains are suddenly under great scrutiny given the frailties surfaced by Covid. Calls for a greater proportion of domestic procurement are now more common than ever, but is domestic availability the only answer?
Most supply chains are actually run by procurement and logistics people. While there is senior management oversight, the actual purchase choices are routinely made in lower levels of most organisations. To affect change, this is where we need to start, in the bowels of the organisation.
The KPIs of procurement personnel are generally around invoice cost, as it is easy to track. In future, the decision should be more about security of supply, and total procurement cost, which are much harder to measure, and availability which is relatively easy to measure, but in my experience is often ignored.
The huge caveat of course is that the CEO must give ‘permission’ for the procurement people to go off the reservation, and make the necessary changes, and risk buying other than from ‘IBM’.
We also need deep supply chain mapping that captures the dynamics of the chain, and all the transaction costs that apply, as well as the visible financial costs.
The KPI’s of procurement must change if we are to build the resilience of our supply chains.
- Collaborative DIFOT analyses through the chain
- Switch KPI focus from cost savings, usually measured against the invoice cost, to give greater weight to availability.
- Tracking of the drivers of cost, quality and delivery throughout the supply chain.
- Quantifying transaction and opportunity costs, (particularly of management time) at all points through the chain.
- Measures of resilience such as alternative, qualified, and immediately capable suppliers, utilising differing logistics
Together these measures will give you a measure of the resilience of your supply chain, or its ability to recover competitive performance after a failure. The greater the number of nodes in a chain, the greater the risks, which become amplified as you move further way from direct control.
Local suppliers will have to be prepared for the scrutiny of their sourcing. Company A, procuring from Company B, where there are sub-assemblies necessary will want to stress check the suppliers to company B as part of their procurement processes. This will take supply chain transparency to a whole new level. To this point the concerns have been mostly about cost and the time in the chain. In future, it will go much deeper, digging into a range of items that deliver resilience and reliable quality.
The speed of recovery of your supply chain after the inevitable disruption will be key to competitive performance.
Dec 2, 2022 | Collaboration, Strategy
There are a lot of misconceptions about workshops, and having run many, they are hard work, although participants rarely see that work. ‘Blue sky’ thinking is sometimes necessary, but in the absence of strategic discipline, can become completely disconnected from the real world where implementation occurs.
Here are some things workshop are not:
Workshops are not a democracy.
Someone must lead, show the way, and the bigger the group, the greater the call on the workshop convenor to be a real leader if there is to be any useful outcomes
Workshops are not an unplanned free for all.
Planning is a core part of a successful workshop. Planning the content and the flow of the discussions, having the appropriate breaks and discussions to elicit the creative insights being sought, and in the makeup of the group is essential. As a convenor, you sometimes do not have much control over the participants, and in this case, it is vital to assign ‘roles’ very quickly to participants based on the behaviour in the very early stages, then manage those individuals appropriately.
Workshops are not the same for all participants.
Everyone’s role is different, based on what is assigned to them and what their individual personalities, position in the external hierarchy, domain knowledge, and many other factors. Recognising as a convenor that the participants are all seeing the proceedings through their own eyes is important as a key to gaining collaboration, and developing a set of useable actionable outcomes that are aligned with the objectives sought.
Workshops are not stand-alone activities. Workshops that work are not a day (or three) out of the normal management processes, they should be an integral and rich part of the flow of planning, review and adjustment processes that optimise performance. If not, you just wasted your time, and a lot of money.
Facilitating workshops is not easy, but in the best of them, it just seems so.
Over an extended period of both facilitating and being the ‘facilitated’, it seems there are a small number of characteristics of the best of them.
- The best facilitators are listeners. They do not impose their views on the group, they use what they know to steer from the back
- They have no skin in the game beyond creating an environment for the workshop to generate the best outcomes. When a facilitator has skin in the game, the expectation is that there will be a vested interest that is being pushed.
- There must be a well-rounded knowledge of the context of the questions being examined.
- The ability to put together disconnected ideas and together make them stronger. They see connections that are not obvious to others.
- They are smart enough, and sufficiently well grounded in the key business attributes necessary to the workshop topic to add value to the thinking of those in the group.
- They can clearly articulate different perspectives from the status quo, different ways of seeing the questions and options being examined, and the context in which they will be answered.
- They are willing to serve all interests represented at the tabl. In the case of a business’s workshop, the facilitator needs to be able to assist the individuals, and have the credibility and trust to be able to do so.
- Preparing for a workshop is time consuming when done well, as is the reporting process. A skilled facilitator will spend a lot of time considering the discussion and output that occurred to pull together the fabric of the discussions into a form that can be leveraged.
A successful workshop can be the circuit-breaker so often required when any sort of change is necessary to future success. It is just unfortunate and poor management that most are little more than a pleasant interlude before you get back to the office, and business as usual.
Sep 29, 2022 | Collaboration, Leadership
A business is like a money machine.
Put a dollar in, and get 2, or 5, or 10 back, and you have a good business.
Put a dollar in and get 0.90 back, is a big red sign that the machine is broken.
The caveat is that it may be a start-up, in which case, a dip before returns start is both inevitable and foreseeable.
Put simply, it is the return on Investment. ROI.
However, when you get the money back is almost as important as how much you get back.
The value of a dollar returned in a years’ time is less than the value of a dollar today. In a decade, it will probably be almost worthless.
It is also important to note that you must put the money in the machine before there is any chance of getting anything back, which is the chicken, and which is the egg is very clear.
In a world increasingly dominated by intangibles, what is inside people’s heads, the equation becomes much more complex.
To what extent do you need to invest in stakeholders heads, as distinct from investing in the tangible assets of the business, or are they increasingly the same thing?
In which case, the challenge is to figure out how to maximise the content of your stakeholders heads, and how best to leverage that content to mutual benefit.
Jun 6, 2022 | Change, Collaboration
Fragmentation of supply chains is the reality post covid, and now with the turmoil in Europe, evolving attitude of the world’s factory, China, Brexit, polarisation of the US, and the increasingly fragile geopolitical world order.
Many businesses I see have spent considerable effort internally, progressively optimising their own operations. Very few have spent anything like the same effort externally, optimising the interactions with others in their supply chain with the objective of increasing the strength of the whole, rather than just increasing their negotiating leverage.
Making one link in a chain stronger is great, but it is the strength of the weakest link that is critical.
One of my SME clients faces this dilemma.
His business is in a rapidly growing segment of a very large and well established market. He is the last link in the chain to the client, and has done an excellent job over the last couple of years building the foundations that will enable him to scale at an increasing rate. He has a number of suppliers for a key part of his offering, to which he then adds the value to the end client. Each of those suppliers has their own set of challenges, but the common feature is that they are modest sized, often relatively new businesses, all are underfunded, and management structures and discipline are generally poor. To varying degrees, and in differing ways, they present barriers to my client’s growth.
Question is, how does my client inject the ‘improvement DNA’ into his suppliers, so that they can grow together, make the pie for both parties bigger?
Collaboration is the easy answer, it is just that the distance between where they are now, and a fruitful collaboration is significant.
In my experience, there are four critical steps to be taken. These are not always sequential, although the deeper you become involved, the harder it becomes to extract yourself should that be necessary.
Pick the right partner.
Choosing a partner for a long-term collaboration is not unlike picking a partner for life. None is going to be perfect, and it will take time and effort, but in the absence of the right foundations, it will not work. Jim Collins in his book ‘Good to Great’ offers the advice to: ‘start with the who and then focus on the what’. Seems to be good advice.
Your chosen partner, and making a choice is essential so that you can focus resources where they will have the greatest impact, must be aligned with your strategy, and vision of the future. Only then can you engage collaboratively in the journey.
Learn together.
We humans learn better in groups than we do individually. The greater the variety of input and perspective the better decision making. Quicker recognition and wide acknowledgement of errors, and understanding of why they were made, leads to more robust recovery from those errors, and growth.
Leverage each other’s strengths
Every relationship requires ‘give and take’. When you assist a partner to improve their operations, you will benefit. That benefit may not always be directly evident, but indirectly it will be there. Reciprocity is a powerful motivation, on top of the commercial benefits that accrue from optimised operations. Often it is the case that the strengths of one partner fills the hole left by the weakness of the other, greatly benefitting both.
Measure together.
‘What gets measured gets done’ holds true, although you must be cognisant of Goodhart’s law. This states that when a measure becomes an objective, it ceases to be a good measure.
Both parties should be on parallel and intersecting continuous improvement efforts. Where these intersect there is significant opportunity for mutual improvement. Most often that is where there are shared measures. The most common I have seen are ‘DIFOT’ (delivered in full on time) and production scheduling and inventory measures. For example, years ago a business I worked for built a small number of measures that had shared production scheduling and inventory measures across the two collaborators. The result was a radically increased rate of ‘flow’ between the raw material and production scheduling of one party and the inventory and volume offtake of the other. Both parties benefitted enormously.
Such collaborative efforts, when they are successful provide the most effective antidote to the fragmentation of supply chains. While your competitors struggle with the fragmentation, you and your collaborators can leverage your success into market share and sustainable profitability.
Apr 4, 2022 | Collaboration, Leadership
Ask them for their advice, rather than an opinion.
When you ask for advice, you are doing the right thing, you are getting people inside the tent.
When you ask for an opinion, you are often doing the wrong thing.
You are giving them the opportunity for them to go back inside themselves, weigh up their views, and then tell you what they think you should do. Once said, it becomes harder for them to accept when the action you take is different.
When you by contrast ask for their advice, one word only is changed, but you have them inside your tent, they are a part of the solution you then present.
It seems logical to use props to make your position clear before you asked for something, setting out to engage others before you ask. However, it does not work all that well.
If I was collecting for the wilderness society, I would not dress up in a koala suit and hang around corners with a bucket asking for donations.
Instead, I would ensure that I was neatly dressed, and approached people who looked similar to me, and ask if they felt that there was enough being done to save the environment. Most would say ‘no’, which is then the time to ask for a donation to do more.
When they agree with your proposition, you have them inside your tent, the one that is concerned about the degradation of the environment. Under that circumstance they will be more likely to give you a donation, than they would if you accost them on a corner in a koala suit.
Nov 22, 2021 | Collaboration, Leadership
When the owner of a medium sized business is thinking of selling, the road in front to complete a transaction is a rocky one.
On top of the pressure and tension of financial and strategic due diligence, there are always questions about employee reaction.
- Will it impact on the value of the business?
- Will productivity drop?
- Will key employees leave?
- Will they disrupt the process?
- How will I replace any that leave when the business is for sale?
These questions, and more will be out in force.
Given that the large majority of private sales processes do not end in a transaction, the long term impact of a failed process can be significant.
Is it better to take employees into your confidence, and include them in the process, giving them the opportunity to contribute, or better to keep quiet and hope they do not find out?
Employees in a medium sized business are generally close to each other. Rumour and assumptions that might impact them, accurate or otherwise, get around very quickly. It is also the case that employees are rarely stupid, they can see when the owner is getting near retirement, has had an approach, or just getting tired of the grind, and draw their own conclusions.
The stress of uncertainty is far more corrosive the certain knowledge of difficult things to come.
On several occasions, once in defiance of instructions, I have taken employees into my confidence when a plant has been nominated for closure. In every case, all I did was confirm what they suspected, and knowing the truth proved to be much better than the uncertainty of not knowing. In every case, the plant closure, or sale process has been greatly assisted by the employees, who now had a clear picture of what lay in front of them, and of the measures put in place to assist.
Similarly, I have been in several situations where the closure of a plant or sale of a business was kept as confidential as was humanly possible. In every case, the corrosive impact of the suspicion that something was up amongst employees greatly impacted the outcome negatively.
My recommendation: Always assume employees are not stupid, and that they will react positively to being taken into your confidence, and even assist the process, not just for your benefit, but for theirs. There are many examples around the world of the impact employees can have on the success of a business. I have been in a small way involved in several. The current poster-boy for employee engagement is Chobani founder and CEO Hamdi Ulukaya, who turned an old, broken yogurt plant in upstate New York into a global success by engaging employees, then told the story in this TED talk.
Cartoon credit: www.gapingvoid.com
Questions in cartoons
