Aston Martin and Supply Chain Strategy

Where will you find an Aston Martin and a book on Supply Chain Strategy together? Well, these are two of the things Pankaj Munjal considers as essentials. Pankaj is the managing director of Hero Motors Corporation in India, the largest two-wheeler company in the world.

Hours of Service: Bane or Boon?

The Federal Motor Carrier Safety Administration issued a new Hours-of-Service (HOS) rule on December 22, 2011. This may make the American roads safer, may make carriers more profitable by adjusting the demand-supply equation in their favor, and may enhance the quality of life for the American workers in the logistics industry. Or it may make the retail supply-chains more inefficient and more expensive to operate and everything just a little more expensive. As always change is hard to adopt and there is some truth on both sides of the argument.

The Power of the Process

Earlier this year, coming out of my book on supply chain strategy, I was highly focused on exploring what constitutes competitive advantage? How do companies build it and how do they sustain it? I believe superior processes lie at the heart of creating such advantages: Because a superior “process” not only creates a capability with a competitive advantage, but it is also what makes it repeatable and sustainable in the long run.  

The New Global Supply Chains: Shorter, Nimbler, Local

Past couple of decades have generally seen supply chains stretching ever longer from one end of the world to another. As manufacturing started becoming heavily concentrated in China, more and more companies found it was just cheaper to build or buy in China and ship it to their factories, assembly plants, and markets rather than maintaining traditional domestic sources. The volatility in energy prices and growing awareness of the cost of supply chain disruptions might just change that.   

 

From Fashionable to Foundational

Sustainability has been slowly gaining traction. This may be the year when it becomes mainstream theme for a majority of companies. While most companies adopted sustainability as a tool to enhance their corporate brand, a lot of them have discovered that it can also affect their bottom-lines. The sustainability seems to be going mainstream within the corporate culture and is being adopted as a business strategy to drive Growth, Return on Capital, and even Risk Management. That is the message from a recent survey from McKinsey Quarterly.

Big Data, Bigger Opportunities

Big data is here: The tools, technologies and the opportunities for gathering and analyzing large-scale data have finally evolved where most technology-savvy businesses can think of leveraging such data for competitive advantages. While retailers are focusing more on understanding the customer preferences to better manage their merchandise and enhance the business profitability, there is a definite play on leveraging the big data in supply chain functions as well to enhance operational efficiencies and reduce costs.

IT: The Savior?

Can IT be your business’s savior? Can IT propel your business, grow it, and give it the competitive edge it sorely needs? Information technology is generally not seen as the savior: Mismanaged IT projects, failed ERP implementations, piles of consulting bills, and too much drama – all of this has given bad rap to a discipline that can become the core strategic engine for your business. But whether you wield IT as a competitive weapon or as a tool to bleed the business, that is a choice you make explicitly.

What do Your Financials say About your Supply Chain?

What can a financial analyst tell about a company’s future by looking at its supply chain? What should they be looking for? How should they analyze such data? How does the supply chain competency affect the financial prospects of a company? These were some of the topics I discussed with Sherree Decovny of the CFA magazine a couple of months back. The interview is published in their Sep-Oct 2011 issue as an article on what should financial analysts know about the corporate supply chains to make better assessments of their financial future.

Are Your Advantages Expired?

Unfortunately, competitive advantages do not come in the prescription bottles with clearly displayed expiration dates. But advantages do expire: Competitors adopt them so it is no more a differentiation, the capability becomes too commonplace that it simply becomes a basic expectation, it gets commoditized and loses its value. Understanding that the competitive advantages have a window-of-opportunity can help corporations better prioritize their capital investments targeted at creating new capabilities. 

Mastered TCO? Now Learn TVO.

The total cost of ownership or TCO has long been the focus of sourcing and procurement  A new report from Accenture says the pioneers are now moving towards total value of ownership or TVO. Just semantics or real evolution: Decide for yourself though there are definite ideas that are worth emulating.

Making Capital Investments Matter

Too many projects chasing limited capital to invest: Almost all of us are familiar with this scenario. Most large corporations go through the annual rigmarole of creating proposals for capital investments, replete with justifications, projected savings, return on investments, and so on. Asking these two simple questions and plotting it on a simple graph may make this process simpler to make the final choices.

Strategy, Governance and Risk

With the recent financial melt-down, deep economic recession, and continuing drag on revival and growth, the logic would dictate that companies will focus on their business strategy to identify what makes them a winner, where does the value come from, and also focus on governance to promote risk awareness and planning. However, McKinsey Quarterly finds otherwise: In a survey of the company directors, they find that boards neither understand their company strategies any better, nor have they improved the governance.

Good Strategy, Bad Strategy

An UCLA management professor identifies the attributes of what he calls “bad strategy” and lays out a three-step process to build effective business strategies.

The Cost of Supply (Chain) Disruptions

According to Dun & Bradstreet, the business cost of disruptions due to earthquake and tsunami in Japan will be $209 billion in sales volume. This potentially affects 86,418 businesses, 311,934 employees and is spread across 715 industries. Manufacturing durables tops the list of number of suppliers based in Japan that are potentially impacted. Globally extended supply chains mean that this group of suppliers will affect many more businesses across the globe. 

The Customary Top 25

Gartner’s Top 25 supply chain list for 2011 is out. The surprises are not in who is in, but who is out! But the financial analysis proves once again that supply chain competence matters, even in a recession. 

Consumer Trends Trump, but Business Strategy Catches On

Between 2009 and 2011, successful execution of business strategy gained the highest momentum among retailers perception of risks. Retailers are less worried about the consumer spending, however, the consumer trends still rule: Retailers still want to know what interests consumers most and how to translate that into their merchandise on the shelf. Another significant finding from the BDO USA’s report on retailers’ perception of risks in 2011 reveals that they are much more focused on defining and executing a successful business strategy. The report is based on SEC 10-K filings of the 100 largest US retailers.   

Leverage Your Demand Forecasting

Not having a good demand forecast can create business inefficiencies from sub-par price realization, higher inventory costs, higher replenishment costs, and significant lost sales. But the same is true when companies have too many (disparate) demand forecasts driving these functions. What is an enterprise to do? Create a single demand forecast that addresses their various needs, across functions and across time, and create plans that are fully aligned with each other.

Technology: Enabler or Inhibitor

In their enthusiasm to cut costs during the great recession, American corporations cut spending across the board. These cuts included major reductions in capital spending, of which information technology is a substantial part. The result: Companies are now feeling constrained by the ability of their (obsolete) technology to enable new strategic business functions.

Sustainability Gets Wholesome

“We do not believe there is a conflict between sustainability and profitable growth”, says Paul Polman, Chief Executive Officer of Unilever. The words may be different, but similar sentiments are now reflected in more than one companies business plans. Sustainability seems to have found its (business) footing. And more and more companies seem to develop an understanding of what it means for their survival and growth. It is not constrained to saving energy in the stores or fuel in distribution, it now touches all aspects of the business: A wholesome rethinking of the corporate business.

Is Bigger Better?

Bigger may not necessarily be better: Not when it comes to companies’ ability to grow and make money. So says the CFO magazine (Too Big to Succeed, Gregory V. Milano, CFO magazine, April 29, 2011). But what is a big corporation to do, when the conventional growth strategies fail? Innovate!