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 10, 2009 | Management, Marketing, Sales
As a senior marketing executive in a previous life, in a business with a highly seasonal FMCG product range, I used to force the marketing department to spend substantial amounts of time in the field with our field sales force in the critical pre Christmas period.
The November and December period was critical to the achievement of the years budget, a miss by more than a couple of percentage points would never be made up before the June 30 year end.
This provided a great excuse to get desk bound marketing staff into stores, interacting with the consumers, products and brands in the categories where they had responsability. “All hands on deck” speeches were common, to overcome the reluctance, after all, they consistently told me, they looked after the brands, and the long term interests of the business, and stacking shelves in Woolworths was a waste of their time.
The underlying motivation, much more important than a few extra relatively unskilled (in that environment) people in the field, was the opportunity to gain the first hand views of the “coal face” which were much more directly connected to our consumers in a competitive market than a research report ever will be, albeit at a qualitative level. It also offered the front line personnel a chance to get stuff off their chest, very useful feedback for office bound marketers.
Interestingly, the marketing staff who enjoyed the experience were also generally good at the marketing job, and those who resisted, only went out reluctantly (usually with my boot up their clacker) were also not the best marketers, and so the process offered me another measure of the potential of an employee to make a worthwhile contribution to the marketing and brand building challenges we faced.
Aug 8, 2009 | Management, Marketing, Strategy
That ability to make quick decisions that more often than not, turn out to the right choice is an envied and rare talent. How much is just pure talent, and how much is training, instinct, and experience?
After 35 years of engagement with management, it appears to me that the talent, without the training and experience is as good as a great cricketer with his favorite bat in hand, approaching the first tee in a golf tournament.
Aug 6, 2009 | Innovation, Management, Marketing, Sales
Every business has in some form a process for generating, qualifying, and allocating resources to sales leads. In many businesses, it is a very expensive, resource hungry exercise, so finding a way to short circuit the process, would be offer the potential for a major increase in productivity.
One Australian business, Cormack Packaging has evolved an Innovation Award over a number of years that is a collaboration between Cormack, and a number of universities offering design degrees. Cormack coordinates a competitive process judged by industry experts, that offers final year design students a project that carries a monetary prize, a commercial design assignment, and increasing prestige for those who do well, as well as royalties on anything that is commercialized. Cormack offers technical support, and access to its facilities to the students, providing valuable real world experience for the participants.
Importantly, for a modest investment, Cormack is creating a “bank” of ideas that address real world problems, and a forum for the ideas to be given a commercial airing. Apart from contributing to the “design gene pool” in a substantial manner, they are able to identify emerging design talent and harness it, as well as providing a reason for their customers and potential customers to shop with Cormack for solutions to their problems.
This is a massive short circuit of the lead generation and qualification processes their competitors engage in. How much better to engage with the decision-makers from existing and potential customers in a forum whose objective is the development of innovative solutions to a specific set of packaging challenges, rather than having reps cold call potential customers in an attempt to get an audience with someone who cares.
Aug 5, 2009 | Innovation, Management, Strategy
The usual interpretation of the function of the hemispheres of the brain is that left brain types become actuaries, and right brain types become artists. How then do you accommodate Albert Einstein, a great mathematician, and a great creative brain in one, Leonardo is another, we all know some, perhaps a bit less well known than those two.
Could it be that our accepted model is wrong? Perhaps left brain types are comfortable with the status quo, the way things are, whereas the right brain types are more likely to seek a different way of looking at things, are comfortable with ambiguity, and see things in ways others do not.
Innovation has at its core a restlessness with the status quo, and it is well accepted that “dissidents” in organizations are the ones who are the catalysts to change, they also suffer a higher than average corporate mortality rate, but without dissidents, nothing new gets done, so don’t just tolerate them, attract, encourage, and reward them.
Jul 27, 2009 | Management, OE, Operations
Operational management is becoming harder pressed to find reductions in the working capital required to keep the operations running, with the constant option of outsourcing, “off-shoring”, consolidation, and so on as the price of not running hard enough. Working capital numbers over time are a good measure of the cost awareness of your operation, but do not really address how productive the working capital is, for that you need a denominator in the equation.
Working capital is: Accounts recievable + inventories – accounts payable. If you add a denominator, you can get a measure of the productivity of your investment in working capital:
Working Capital Productivity= Working Capital/net sales. How much better to measure the productivity of the investment rather than just the amount of the investment.
