Jun 17, 2009 | Demand chains, Management, Strategy
Nice thought.
Contracts are the usual form of defining an agreement, they are an enforceable substitute for trust that each party will keep his end of the bargain.
However, the web has made information so freely available, that the potential is for a substitute form to evolve, a form that calls for, and publishes performance data for all to see.
The ambient threat that non performance to an agreement will become public knowledge is going to become as powerful as a contract, as it will inform others that your business is not to be trusted. Similarly, the converse is true.
Will facebook replace a contact, perhaps not, but it may mitigate the current monopoly lawyers and the courts have on the process of agreement enforcement, becoming entirely more democratic and affordable in the process.
Jun 16, 2009 | Demand chains, Management, Marketing, Strategy
There is a theme in the demand chain category of this blog. Wherever I go, I see the power of information transparency to improve performance, not just in commercial situations.
There is an ongoing battle in Australian education for school scorecards, anyone who seriously thinks about performance improvement of Australia’s education system comes to the conclusion that information on current performance is a pre-requisite for improvement, but the bureaucracy, and the teachers union together, but for their own reasons are making it difficult, all in the name of our childrens education.
Bullshit. It is in the name of retaining the very comfortable status quo.
Similarly, a scorecard of hospital performance has been shown in parts of the US to have a dramatic effect on surgical outcomes. Won’t happen here, even with the seeming catalysts for change that are evident in several hospitals, Bundaberg in QLD and Campelltown in NSW amongst others.
In the event we ever get real transparency, where results can be seen, and lessons learnt, the productivity of public dollars spent on health care would improve dramatically.
Businesses and value chains that have used transparency as a management tool routinely see productivity double over time, and there is no reason the results in Healthcare and Education would not repeat that performance.
Jun 11, 2009 | Demand chains, Management, Sales, Strategy
Most supply chains are driven by orders, someone reacts when an order is received.
The niggling question is always about demand, as most recognise it drives orders, inventories, innovation, competitive pressure, and so on, but is rarely measured.
Orders are at the end of the process, they arrive after making allowances for out of stocks, poor display, customers memory, competitive activity, the skill and interest of the sales person, and many other factors.
Demand is created by understanding the customer, and positioning your good or services in their minds as the best value solution available to address their need. This is longer term stuff, harder to measure, easy to ignore, but it is the foundation of commercial sustainability.
How much better would it be to have in place signals that reflect demand, they might give us an opportunity to reduce the incidence of lost opportunities, whilst better managing our investment in inventories, brands, customers, and the short term sales tactics used to stimulate an order.
Jun 1, 2009 | Demand chains, Management, Sales
The churn of employees in large companies often creates difficulties in retaining a continuity of relationship with customers. This particularly happens in situations where a buyer has substantial market power, such as a large retailer.
How do you build a relationship in these circumstances where the buyers get rotated on a regular basis, and there is usually a very active competitive environment for the attention of the buyer currently in the chair ?
- Account management personnel need to ensure there is a focus on the value you bring to the customer, not just on the price of the deal on the table being negotiated, or the person currently filling the buying role.
- Do not allow the costs of doing business with a customer to overwhelm the investment needed in your consumers and the brand benefits you deliver to them. Retailers are not good marketers for you, they are interested in their brand, not yours.
- Maintain as many personal relationships and points of contact as possible by engaging as many people in your business as possible with their peers in the customers business. Particularly valuable are relationships around service provision and logistics, removed from the negotiating battlefield.
- Be proactive in all things, rather than reactive.
- Be prepared to say “no”, and be able to do so without damaging the ongoing relationship, rarely easy to do, just easy to say, but it must be done to maintain a sustainable negotiating position that leaves you with appropriate margin. Many businesses have gone broke being “successful” with customers with whom they have little leverage.
May 27, 2009 | Demand chains, Operations
About the only thing we know about forecasts is that they are virtually always wrong, often drastically. This being the case, the ability to quickly react to short term changes in supply and demand, an advanced degree of agility would be a pretty useful weapon in the survival kit.
Consider the agility in your business, and do not get it mixed up with flexibility, which is the ability to adapt your business to accommodate the longer term structural changes in the competitive environment.
Many of the “lean” tools are designed to assist the agility of a business, as they enable agile response to changes in short term demand.
May 17, 2009 | Demand chains
Coordination and Control are the key words in managing demand chains, and an orchestra is a great metaphor for a demand chain.
To work effectively a chain needs control in the sense of a conductor in an orchestra, who dictates the interpretation of a piece of music, and then co-ordinates the detailed contribution of the players.
The individual players need the detailed performance information about the mechanics of their contribution contained in the music, and a clear and unambiguous understanding of their role in the production of the complete sound of the orchestra from the conductor, including a clear understanding of the consequences on the whole, of a failure to perform to the agreed standard by them.
Without both types of information, the detail of the individual actions, and the understanding of how those actions fit into and enhances the whole, there is no possibility of an optimum outcome.
