What is this gap, and how does it happen? How does this gap harm you and your company? In my newest book, Unchain Your Corporation, I explore these questions in greater detail.
The digital revolution (aka tech revolution) has changed the way we live, work and play. The boom of software and IT solutions have caused disruption and realignment for businesses. When business intelligence is implemented and used effectively there is a real pay-off. There are still a lot more developments in technology to come and businesses that have their finger on the pulse have a huge vantage point. For business transformation, the key question will be how IT can facilitate the process without everyone feeling enslaved by technology. For more information on the answer to this critical question please refer to my newest book Unchain Your Corporation.
A switched on team of senior management makes all the difference. No matter which part of the world, and how unfamiliar the concepts are – an interactive team will always find how to use ideas for their business. I recently had the pleasure of interacting with the chairman and top management team of one of the most strategic companies in Asia. The healthy discussion and the response proved the power of ideas to me once again. Was also pleased to be presented the Chairman’s award. Thank you. You can see a gist of ideas I presented on my book “The 5 Star Business Network”.
Yet, even the most senior sea masters and chief engineers trembled invisibly, at least once, if summoned into his office. He had a way of sizing up the people and quickly telling them exactly where they needed to focus.
As I sat across him, he asked “Lad, do you see this sign under my desk?” I glanced at the sign – neatly typewritten and carefully tucked under the glass covering his desk. I started reading it because it seemed interesting. It said:
“A captain is a man who starts knowing a little bit about a few things. As he gains experience, he learns less and less about more and more – till he comes to a point where he knows nothing about everything.
A chief engineer, on the other hand, also starts knowing a little bit about a few things. However, as he gains experience, he learns more and more about less and less – till he knows everything about nothing.”
It was an amusing sign, especially for a junior officer barely into 20s. I cracked a smile and looked at him with puzzled eyes. I was wondering why this serious man with hardly a minute to spare would show me such a frivolous thing.
In his thunderous voice, he asked me: “Which one are you, Lad?”
I answered: “It is obvious, I work on the deck side – so eventually I will become a captain.”
“So, you want to end up knowing nothing about everything?” he asked.
I replied: “Now that you put it this way – no, not really. I want to know about more and more things for sure, but I want also to make sure that I know enough about those things to be able to effectively use that knowledge.”
“Keep that answer in your mind as you gain experience – now you can go and join your ship.”
I wondered if he gave the same lesson to everyone. Then I remembered there were several other sayings taped on his desk.
In the next blog I will write about how to get everything for nothing.
The customer centric model mentioned in the previous post is still a model of last decade and later in this piece we will see the reasons for this assertion. First, let us examine the impact of this model in practice of the commerce as conducted by many companies today. Due to persistence of traditional supplier-buyer relationships, when this model is applied across multiple organisations it morphs into an unworkable hierarchical structure shown in Figure 1 below.
Imagine if 5 of more organisations are linked in a multi-layer structure shown above. Unfortunately, that happens to be the case with many large organisations that compete with Apple in the market-place today. While such a structure minimises cost and responds predictably to all external stimuli, it is not suitable for the world of rapid change we live in today.
Today, businesses collaborate in a robust network
Success of Apple has shown that in the next decade this model needs to be supplemented by an even more evolved model which we have called Efficient Global Leadership model (EGL model for short). In this model we recognise that no single organisation by itself is in a position to service all the needs of a customer relating to even a single product. The fact is that two or more, in general three organisations come together as a supply chain, work together collaboratively, to fulfil the customer’s need.
As shown in Figure 2, each one of these organisations work in close harmony with each other, where the research & development teams of each organisation work together as do marketing teams and even sales teams of these organisations.
To create products, and then to manufacture those products, the production teams and the procurement teams work together to put those products in customer’s hands. In such a model, close collaboration is required among the supply chain partners to create market and sell the products.
Similarly, close cooperation is also required to produce the products, move the products and store the products in such a way that highly innovative products are produced in shortest period of time at a fraction of the cost of traditional products and put in customers’ hands extremely quickly.
Needless to say, when Apple manages to put out one innovative product after another in the market place, it is not only its own innovation but also an innovation of all its partners, which is at play here. Only when companies work together in such an efficient leadership model, do they achieve the level of success which Apple has achieved over the last 5 to 10 years. Figure 3 reminds one of the team huddles as shown below:
When an individual works on his own he is neither very efficient, nor very effective. That is the key reason, from early civilisations, humans have created organisations that give them the benefit of either effectiveness, or efficiency, or a bit of both. Figure 4, on the other hand reminds one of camel trains or dog sleds – where one animal is closely following another as shown in the picture below. Now imagine what would happen to the whole camel train, if the first beast lost its way!
Naturally, the question is why is this important? Think about it for a minute. In fact, stop reading and just reflect on the metaphors. A camel train was a great technology – but is now largely redundant. Moreover, with a limited room to collaborate, it is essentially a command and control organisation. In periods of rapid development, if such organisations stick to the tried and tested, they get left behind by their more innovative peers.
If you would like to see how Supply Chain 3.0 differ vastly from its predecessors, please read the next blog entry of this series.
New challenges need new responses. The common organizational model looks like the generic drainpipe structure, meeting the mammalian need for an ordered hierarchy and flow of power within a business. Most companies have evolved in the last 2 decades and their functioning has become almost entirely customer centric. Their customers’ priorities drive most of the business workings. The traditional drainpipe model frequently stifles customer responsiveness and innovation, therefore there is a clear need for a new standardized customer centric model of business. The new customer centric model starts with customers at the apex of the organization. It is the customers’ needs which the organization is trying to serve, so directly aligned with the customers is the sales team. The function of the sales team is to have an https://www.viagrapascherfr.com/le-viagra-vente-libre/ intimate understanding of the customers’ needs. Only then can an organization create successful products. An organization can outsource almost everything else it does, but it can never outsource its sales. Two other key functions which are equally important and support the sales team is marketing and research & development. Between these three we form the top tier of the modern organization’s structure.
We were discussing the invention of electricity and he asked me: “Dad, what would happen if there was no electricity?”
Since I actually had such an experience, I recounted to him my life in a remote village in Himalayas when my mother had taken a one-year assignment to teach economics to children in a school nearby.
I told my son that there was no internet, no computers, no telephones, no television, no radio and no light bulbs. Even more so, there was no electricity in that village at all. As a result, the whole village would get up at sunrise, go through their daily routines and were go to bed just after the sunset. People used kerosene lamps to light up for an hour or so after dark and only in case of necessity.
My son is only 8 years old, and grew up in Australia. Hence, obviously enough he found this life almost completely incomprehensible.
On my part, this conversation inspired me to think about life without supply chain management.
I have been lucky enough to have the opportunity of working closely with Dr. Wolfgang Partsch – who is one of the co-inventors of supply chain management (SCM) in the early 80s. I have had a number of discussions with him about how the business life has changed compared to the life before SCM was invented.
No doubt, the division of labour was one of the biggest and most popular concepts which came out of the industrial revolution. The principle is that every job is divided into its constituent parts to the lowest possible level, so that each person can specialise in what he does best, this would increase the productivity of the overall system immensely. By the late 70s, the division of labour had totally taken over the business as well as governmental work.
Unfortunately, bureaucratic complications combined with the division of labour had created a world in which every department within any company was running as a small fiefdom.
Imagine that a purchasing clerk would issue a purchase order. Then he would let his boss know that he has issued the purchase order as per the boss’s instruction. Then his boss will countersign the purchase order and would inform his boss that such and such item has been purchased, who would then inform his boss, who would most likely be the head of purchasing.
The department head of purchasing would inform the head of manufacturing, who would inform his subordinate, assistant head of manufacturing, who would inform his subordinate, the factory manager, who would inform the manufacturing planner that the purchasing order had been issued.
There were 6 to 8 different links in this communication chain running from the purchasing clerk to the manufacturing planner or production planner. Each message would go up the chain in a department, right up to the department head, and then across to another department head who would filter the message down all the way to a person who would act on it. In such a world with these eight or more different links in the chain, the time difference by itself was enough for the message to lose its effectiveness.
Combine that timing issue with the possibility of a message getting garbled in a long chain of communication, due to the differences of intentions and possibility of misinterpretations of messages, suddenly you realize what a nightmare it would cause.
Not only that, the departmental heads were almost always the biggest bottlenecks in such a communication scheme where nothing would go up, down or sideways without a departmental head’s approval. Obviously, their capacity to process information was only limited by how much time they had.
Now before you think of this as a ludicrous, and imaginary situation – let me add that I encountered exactly this situation in an Island airlines where I had the opportunity to participate in a business transformation exercise a few years ago.
Many other organisations I have had the opportunity to serve exhibit at least some symptoms of the same malaise.
So, what would be the typical complications you could encounter if there was no SCM?
You would notice that some easy five-minute jobs could quite possibly take days to accomplish, for a simple reason of the lengthy communication chain required to get the cooperation. You would also see a lot of confusion, because of the possibility of the message getting misrepresented. You would see some coordination, but not a lot of it because of the nature and length of the communication chain.
You would see a lot of bureaucratic nonsense with people hoarding information and only giving it to their bosses or their subordinates in a very selective manner. In many cases, this information hoarding would be pointless and even harmful. The rationale behind the behaviour might simply be a cultural norm or an expectation in such a hierarchical organization.
You would also see too much command and control in this type of organization, for the simple reason that when everything has to pass through a departmental head, he becomes an ultimate arbiter of what information filters through and what does not.
You would also see that the departmental head would have to make all the decisions. Even the smallest scheduling decisions, or planning decisions, or execution decisions, which could have easily be made by people several layers lower than him/her, would need to be made by the departmental heads themselves, again for the same reasons.
You would also see such systems as very rigid with no adaptive capabilities to changing needs of the market place. If you notice any of these symptoms within your company, then there is bound to be a problem with how the supply chain functions in your company.
No matter whether you have somebody with a title of supply chain director or vice-president, your company does not act as an organization with an effective supply chain which cuts across the departmental silos.
As this is a very important subject, in another article I will talk about how supply chain helps to alleviate the silos mentality and integrate departments to act as one company.
It’s no surprise that customers hate companies with too much internal focus. As organizations free up their inter-departmental planning from rigidities, the communications start to bloom. Efficiency improves considerable and everybody starts running together, faster. However, a higher set of problems emerge due to lack of external focus – on suppliers, customers, and end-consumers. Many times everybody inside the organization is running together, faster, but in the wrong direction.