Sep 9, 2009 | Demand chains, Management
Power has shifted dramatically to consumers from the firms that inhabit the supply chains that serve them.
Scale used to give market power that could be leveraged, but IT development has radically changed the location of the power towards the customer.
Scale now just gives the opportunity through scope and access to resources, but that is no longer enough without the one to one engagement with customers enabled by technology.
You do not have to be big to be intimate with a customer, you just have to understand them and react to their needs, thereby turning the old notion of a supply chain on its head, creating a “demand chain”.
Aug 13, 2009 | Demand chains, Management
The following list was imbedded in an article “putting the I back in Alliances” by Rosabeth Moss Canter, one of the better management thinkers around. It creates a simple list of things any successful alliance requires.
-
Individual excellence: Both sides bring strengths and neither can be expected to prop up the other.
-
Importance: The relationship must matter strategically to both sides.
-
Interdependence: You need to need each other.
-
Investment: Have a stake in the partner’s success.
-
Information: Transparency strengthens the partnership; hiding information impedes trust.
-
Integration: Create several points of contact across the organizations.
-
Institutionalization: A formal structure can aid in objectivity and ensure the partnership works for both sides.
-
Integrity: Trust is critical and ethics are a must.
In all the work I have done in alliance formation and management, there is no time when this list would not have been of value.
|
Aug 11, 2009 | Demand chains, Management, Strategy
Technology has multiplied the potential for information flows through a value chain, but often human behavior hampers it as individuals use the available information to enhance their own position. This happens internally, but is even more prevalent in the interactions between firms, as individuals seek to enhance not only their own position, but the perceived negotiating position of their firm.
A key metric to look at when assessing the health of a value chain is the exchange of information between firms. The actual measurement will usually be a combination of hard & soft data such as joint strategic planning, shared KPI’s, availability of data when needed and in a useable form. A technique I have sometimes found useful is an adaptation of an HR practice, do a “360 degree” performance assessment on the available information amongst those who come into contact with it, and have a use for it.
Another of those paradoxes that exist in human relations, elicited by the information exchange in supply value chains:
Why is it that the passionate exchange of information that occurs on social networking sites is rarely replicated in a value chain?
It seems odd to me that people who are willing to share sometimes pretty personal stuff on a networking site are unwilling to share information of a non- personal nature in a commercial situation, even where the commercial case for the exchange is clearly made.
Such information exchange is a pre-requisite of creating a demand chain from a bog standard supply chain.
Aug 4, 2009 | Demand chains, Innovation, Operations
The impact of current behavior of all who are engaged in an alliance on the perceptions and expectations that will drive the evolution of the alliance into the future is pervasive.
Success breeds expectations of more success, and failure breeds blame and retribution. Any alliance has its setbacks, so the latter influence often brings alliance development to a shuddering halt. Those engaged in addressing the challenges of alliance evolution for the first time often do so from the perspective of the types of assumptions made by economists and accountants, that of rational behavior.
Anyone who has spent any time dealing with a number of alliances has seen evidence that much of what goes on cannot be explained by using assumptions of rational behavior, it is far more influenced by what may be seen as irrational behavior, until a social psychologist becomes involved, then many actions become predictable as the vagaries of behavior are factored in.
I have previously noted the impact of an apparently irrational need for revenge demonstrated by Ernst Fehr an economist at the University of Zurich, in a game widely known as the “trust game with revenge” in which an apparently irrational need for what can be termed revenge, is demonstrated to be a hard-wired behavior.
This apparently irrational drive for revenge, in this context of alliance development is often just a minor bit of “pay-back,” for perceived slights and misbehavior, but it has brought many nacent alliances to an end.
Aug 2, 2009 | Demand chains, Innovation, OE, Operations
Standard project management tools are designed to manage a sequential series of activities typified by a building project. They do this very well, as the work flows are dependent on the completion of previous work that is done to well understood, almost generic specifications.
They are far less useful when they are set up to manage processes that rely on the production of information for their success, where iteration between different activities are required, such as those in a product development project or a value chain development and improvement process.
This leads to the conclusion that when developing such a project that requires the production of information to be successful, spend a bit more time in the planning stage to map the flows of information, particularly where there are known dependencies, as well as the work flows. This added investment of time in the planning stages typically yields huge returns during the implementation.
A simple question, asked over and over, can help:
“What do I need to know from other tasks before I can complete this one?”
Jul 26, 2009 | Demand chains, OE, Operations
I recently wrote about the productivity of working capital, and my view that the productivity of the capital was a revised calculation that all businesses should consider.
Clearly, the best way to increase the productivity of the capital required to run the business, is to reduce the cycle time of processes in the business. Use inventory quicker, collect debts quicker, increase the throughput productivity of operational assets, reduce those activities that do not add to the customers experience.
All of those factors are internal to the business, and mostly we are pretty aware of them.
The emerging opportunity increasingly recognised by successful enterprises is the necessity to increase the collaboration between the sequential value adding points in a demand chain, by reducing the transaction costs that occur between firms in the chain. In effect, “Lean” for the supply chain, by reflecting the customers demand patterns back through the chain.
This is the core of the success of Toyota over 40 years, and as the world recession recedes, the enterprises tht emerge from the chaos will be different to those that went in, and there will be a far greater focus on transaction costs through the chain.
