Wednesday, July 30, 2014

What Creates an Advantage: Technology or Process?

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Most companies succeed when they are successful at competing with others. Being successful in a competitive environment obviously requires developing competitive advantages. In an earlier post, we identified that there are only four aspects of competitive advantage: Cost, Time, Efficiency, and Quality. You can further combine the last two to finally have a more compact set of attributes of an advantage as, Cost (cheaper), Time (faster), and Process(better). Therefore, to answer the question on whether you have a competitive advantage or not, you simply have to answer these three questions.

Monday, March 24, 2014

Upping the Ante: Savings Catcher from Wal-Mart

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Yup, it is that simple. Shop at Wal-Mart, log-on, and save: Wal-Mart will do the comparison shopping for you and return the difference. Wal-Mart will also tell you which stores are they going to compare their prices from and it is a pretty good list! It is still in beta, and therefore available in selected markets.

What is covered? CBS reports that, “(this app) compares its prices on 80,000 food and household products — from canned beans to dishwashing soap — with those of its competitors.” It only covers the purchases in the Wal-Mart stores and not purchases made online.   

Monday, February 24, 2014

Fear of the Black-box

imageAlmost a decade ago, I was involved in implementing a replenishment planning system for a large retailer. The new system used statistically projected demand forecasts, available and projected inventory, and dynamically computed lead-times to recommend the replenishments. It took care of order sizing to comply with vendor contract terms and pack-sizes, and rounded up/down using demand volume, frequency, and variability. The intent of  implementing such an advanced system was to relieve the inventory planners from the daily grind of reviewing and approving thousands of recommended replenishment suggestions. The idea was to automate the largest volume of regular replenishment decisions so that the human intervention could focus on the most difficult replenishment issues, which were kicked out for human attention by the system based on a custom criteria. This was obviously supposed to reduce the inventory in the network, reduce capital requirements and enhance profitability. Care to guess the reaction from the planners?

Wednesday, February 19, 2014

Next-shoring Now

imageSupply chains manage variability. Variability naturally exists in all processes. Specific to supply chains, you could quote variability in demand, supply, lead-times to replenish, and so on. So the corporate supply chains singular objective is to manage this variability profitably. If you can do it better than the next guy, you win! That is competitive advantage for you. Where do you see this most in action? Look around and you will see this principle in action in how global supply chains are emerging.

First there was off-shoring, the primary focus being cost. Then companies like Zara built their business models around being responsive to customer demand invented near-shoring. Now McKinsey says there is next-shoring and provides a blue-print for the companies to follow. But what is behind all this? The same old desire to reduce cots and increase the ability to quickly respond to emerging customer demand and preferences.

Wednesday, January 29, 2014

Better Late than Never!

image“US CEOs are coming to realize that no matter their industry, they must now think like technology companies,” says PwC, reporting on their annual CEO survey for 2014. I am just happy to see that the executive offices are finally realizing the competitive advantages of technology. The report is chockfull of sentences like, “Technology is everyone’s business” and “The consensus is that IT has firmly moved from the back office to the corner office”. This is unlike any other report in recent times that I have seen. The report quotes that 86% of US CEOs say technological advances will transform their business over the next five years. That is a very high number!