Nov 5, 2009 | Demand chains, Leadership, Strategy
Suddenly, post GFC, transparency has become a buzz-word.
Regulators are calling for “transparency” in financial products, shareholders (and regulators supposedly on their behalf) are calling for “transparency” in executive remuneration schemes, and so on.
Those of us who have been building demand chains know that transparency is a fundamental building block, not because it is just a feel good, but because it reduces transaction costs, exposed arbitrage profits, and enables the needs of the end customer to be the driver in the chain.
From the noise coming from newly enthused regulators, you would think they have discovered something new, rather than just catching up with the practices of a small but growing part of the commercial community that has recognised the contribution transparency can make to their economic and competitive sustainability.
Oct 23, 2009 | Demand chains, Management, Operations, Sales, Small business
Demand chains are a representation of the drivers of “flow” through a supply chain, a concept familiar to those engaged in “lean” initiatives, when the motivator to the flow is demand rather than an ability to produce for inventory or against a forecast of sales.
Category management is a process of welding the drivers of demand, the consumer preferences and behavior to the supply of their preferred products, whilst maximizing the returns to the retailer, and others in the chain, as well as delighting the customer.
Few who claim to engage in category management would see the explicit link, as they are typically engrossed in the numbers, but it is there nevertheless, and the successful exponents recognise the link, and leverage the numbers for the sake of the outcome of the entire chain, not just for one link who happens to hold the power.
Oct 18, 2009 | Demand chains, Management, OE
We can learn a lot about supply chain management from successful retailers.
To be successful, generally they have identified their logistics chains as a key source of competitive advantage and they work on it.
Their business model depends on having the stock on shelf when a consumer wants it, but with a minimum in reserve stock, and none “left over” that requires discounting or dumping to clear.
Li & Fung, the extraordinary Chinese supply chain manager who have had a key role in the boom in Asian sources fashion wear, Woolworths, the dominant Australian supermarket chain, and Spanish retailer Zara have all based their success on supply chain innovation supporting their service offer to customers.
A usual metaphor when explaining the Japanese Kanban system of managing “flow” through a process is of a supermarket shelf, a consumer takes one off, a replacement is delivered to the hole from a JIT flow from the supply chain. The appearance of a hole on a supermarket shelf is a physical representation of “pull” or demand, the basic building block of a chain that maximises demand chain efficiency, and builds a competitive advantage
Oct 14, 2009 | Demand chains, Management, Operations
If you want a prediction, go to the lady in the tent at the local fair.
If you want a forecast, talk to those who have an intimate knowledge of the drivers of the outcomes you are seeking to forecast.
Good forecasting is an iterative process, the more you do, the better you get, so long as you understand why the forecast is (almost) never right on each occasion it is done. Continuous improvement techniques are the core functions of good forecasting, and good forecasting is essential to smooth operations.
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.
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Individual excellence: Both sides bring strengths and neither can be expected to prop up the other.
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Importance: The relationship must matter strategically to both sides.
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Interdependence: You need to need each other.
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Investment: Have a stake in the partner’s success.
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Information: Transparency strengthens the partnership; hiding information impedes trust.
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Integration: Create several points of contact across the organizations.
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Institutionalization: A formal structure can aid in objectivity and ensure the partnership works for both sides.
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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.
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