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2011
tbrouill

Focus on the Basics!

Posted by tbrouill Dec 29, 2011

So for the end of the year I thought it would be appropriate to come back to some of what I consider the key concepts, or ‘basics’, required for success in any endeavor.  These concepts are the ‘mom and apple buy’ points that I believe you should focus on delivering and maintaining until they become second nature to you.  These basics will pay dividends in all of your challenges and objectives. 

 

I guess that everyone has their own list of ‘basics’ so I encourage you to take my list and add to as you see fit, especially when taking on a new endeavor. 

 

-          Define and maintain the definition of your current state, or environment.  This is important to help you understand the level of effort and degree of change a new initiative will involve.

 

-          Clearly define your objective(s) in a way that can be measured.  The critical point is to define measurable objectives.  This will provide the basis, or starting point, for a continuous improvement program.  Clearly defined and measurable objectives also provide a means to determine when you are done.

 

-          Clearly define key stakeholders along with a champion for your initiative.  Without this point your chances for success will be dramatically lower.  You must have someone that is responsible for helping to guide your initiative through the organization along with someone that can address issues and challenges.

 

-          Define a strategic roadmap that provides a guide to delivering your objectives.  After the roadmap is defined you can then define, and prioritize a list of projects that will deliver the roadmap.  The roadmap, projects and plans should define the relationships and priorities of the individual projects as they relate to the roadmap.

 

As you can see from my list, these basics are not earth shattering in the concept, however, I hope you can also see that they require some hard work and careful analysis to provide the tools necessary to be successful.  Hard work, understanding your current situation, careful and thoughtful planning and clear definition of obtainable objectives are the founding principles for your success in determining how to move forward along with the effort required to deliver your initiatives.  Too many initiatives fail because of a lack of focus on the basics and what I refer to as ‘shiny object syndrome’!  Don’t let the allure of a shiny new system cause you to overlook the analysis and basics required for success.  Remember, a decision to outsource, or replace software is not necessarily the best decision for your situation.  You cannot identify the decision for your situation without going through the effort and time required to develop the basics on the list I provide above.  You must truly understand your challenge and your current environment in order to have the best chances for success and adding value to your organization.

 

I hope you find this discussion to come at a good time for you to recommit to developing your process mapping and commit to the basics for your success.  Don’t be afraid of a little hard work up front to ensure your success in the long run.

 

Happy New Year!  Let’s all commit, or recommit, to the basics to start the year right.

 

Now folks please take a moment to provide your feedback.  This will become even more valuable with robust participation!

 

Now for the audience participation portion of this program……

 

Have you developed business process documentation for your operation?  I have found that the business process model can provide the highest value to your organization for developing transformational improvements and also for benchmarking your operation with other organizations.

 

Do you have documented service levels along with key performance indicators to measure them?

After my recent discussions on the benefits to outsourcing and building a strong and mutually beneficial partnership with a Third Party Logistics provider I thought it would be a good time to discuss your plan to achieve success with an outsourcing transition engagement.  The key to success in a supply chain outsourcing engagement is the same as the key to success for an ERP implementation and integration project, careful, and thoughtful, planning and then a ruthless execution and management of the plan.  Focus and follow-through are the critical factors to the success of any engagement and a supply chain outsourcing engagement is no different.

 

So you’ve been thinking about the ‘benefits’ of outsourcing, maybe you’ve even discussed the opportunity with potential partners and even identified a partner with whom you feel comfortable.  You’re getting to the point now that you believe you are ready to entertain proposals.  I recommend that at this point you step back for 4 to 6 weeks to assess your environment and try to define your objectives and at least some high level requirements.  I think it is critical to the success of your potential outsourcing engagement to take a brief ‘breather’ to objectively evaluate your starting point and where you hope to end.  It is also critical to develop a conceptual plan and perform some due diligence to objectively define your starting point and realistic goals you would like to achieve.

 

Now for my friendly warning… Don’t be surprised if you come out of this 4 to 6 week breather period with the realization that you have a lot more work to achieve success than you initially anticipated.  In fact, if you don’t come out of this period with that realization there’s a very high probability that you didn’t do it right!  Remember my initial explanation in the first paragraph regarding keys to success – careful and thoughtful planning followed by ruthless execution of the plan will dramatically reduce the risk of failure.  Here are some important activities and requirements to increase the likelihood of success.  First and foremost is an accurate business process model, this will allow you to both provide your partner with guidelines and your requirements along with a means for you to measure and plan the transition and integration requirements.  Second is a definition of your service level requirements along with key performance indicators to measure and qualify the service levels.  Third is a plan for your partner’s performance management, including an evaluation and revision schedule to ensure that your performance management program is fair and measurable and includes a pre-arrange method to revise on a regular basis.

 

Your next step then will be a more extensive due diligence phase to analyze and develop requirements, Service Levels and Key Performance Indicators along with a detailed RFP to distribute to your potential partners.  I realize that this is a lot of work and these are steps that you must take in order to increase the likelihood of success in your outsourcing engagement.  I have found through experience, good and bad, that the more effort you put into your analysis and preparation the higher the likelihood you will be successful.

 

Now folks please take a moment to provide your feedback.  This will become even more valuable with robust participation!

 

Now for the audience participation portion of this program……

 

Have you developed business process documentation for your operation?  I have found that the business process model can provide the highest value to your organization for developing transformational improvements and also for benchmarking your operation with other organizations.

 

Do you have documented service levels along with key performance indicators to measure them?

So with all of these capabilities and methods to develop a mutually beneficial partnership, I believe that the logical progression for the 3PL market is a cloud type of service, Service as a Service, or Supply Chain as a Service!

 

I’ve come to this belief because I see the client requirements moving into this direction based on the progression of cloud service, the progression of software capabilities and especially the progression of cloud service offerings in the supply chain vertical.  So based on all these factors I believe that the next logical step for 3PL providers is to buddle the services and software into a solutions based cloud service offering.  This will allow the 3PL to bundle full service offerings into niche markets and extend their partner base and market share.  Bundling the services and software capabilities will allow their partners to extend their visibility and provide more accurate forecasting an planning based on the metrics provided by the 3PL through their bundled service offerings.

 

This concept will allow the 3PL provider to quickly and efficiently provide overflow service support capabilities that can quickly and efficiently extend their clients capabilities during peak processing and volume periods without the client loosing visibility.  This concept will also allow the 3PL to offer additional capabilities to their clients and efficiently extend their software and capability solutions quickly and cost effectively, allowing their clients to try new services and quickly extend capabilities to support new business requirements.  This can provide a compelling value proposition in this economy allowing the 3PL community to expand and contract quickly and cost effectively to adjust to the market pressures without large investments or a long lead time.

 

Now, to add to this value, the leaders will add portal capabilities and services to their menu of service offerings for the client community to kick the value proposition into high gear!  The portal simplifies the integration requirements and allows the clients to quickly integrate into the community taking advantage of new capabilities.  The leading 3PL’s providing the portal capabilities to their community of clients will help to cement their relationships into long term partnerships.  The value of bundling is driving the telecom and cable TV marketplace and I think that the 3PL and outsource supply chain market can achieve significant value for both the clients and the providers by bundling their services and capabilities.  The benefits to the supply chain outsourcing, or 3PL , clients is cost containment and cost efficiencies achieved by taking advantage of the bundled services that would be offered by the 3PL provider.  The benefits to the provider is the retention and development of a long term relationship with their clients.  Additional benefits of bundling is the word of mouth recommendations for the providers that are first to market. 

 

The providers’ outsource client community also gains intrinsic value through the extension of the community.  In other words the larger the community, the greater the value provided by the community, to the community.

 

Now folks please take a moment to provide your feedback.  This will become even more valuable with robust participation!

 

Now for the audience participation portion of this program……

 

How are you developing a mutually beneficial relationship with the Third Party Logistics Provider?  Is it a traditional customer / vendor relationship that focuses on one-sided benefits and short term objectives? Or, is it based on a partnership that provides mutually beneficial benefits and long term objectives?

 

Do you see organizational benefits and opportunities to improve based on the cloud style services offering and the portal community capabilities described above?

 

If you see the benefits to this type of relationship, will you be taking steps to implement this type of relationship?

 

Would you say that your focus is long term and strategic, or short term and tactical?

This is my third post in my series on Third Party Logistics Outsourcing Success and I will try to tie things together with a discussion on Performance Improvement Programs.  By now you would have to have been living under a rock to not have been exposed to Six Sigma, or Lean concepts.  These are engineered programs that have gained great exposure and recommendations and as a result you will also see these requested now as ‘soft’ job requirements.  This has also provided a boon to education and certification programs.

 

 

These concepts have also brought dramatic savings to the organizations that have implemented these practices through continuous improvement programs.  These practices and resulting continuous improvement programs will also provide a strong foundation to developing a mutually beneficial partnership with your third party logistics partner.  The key to success and developing a long term relationship is the focus on mutual benefits.

 

While focusing on mutual benefits is the key to a successful partnership it is also the hardest aspect to deliver!  I think there are two factors that make it hard to deliver on the concept of ‘mutually beneficial’; the first is human nature and the tendency to focus on the importance of me to the detriment of you, and the second is the competition involved in business and the desire to ‘win’.  This is the second concept that you must focus on maintaining until it becomes a natural reaction, you must continuously ask yourself – are these performance measurements mutually beneficial?

 

 

The second aspect of a successful, and mutually beneficial, performance improvement program is ‘time’.  There are two dimensions to this measurement and they are both related to frequencies; the first is the frequency of measurement (hourly, daily, weekly, monthly, etc), and the second is the frequency of review (weekly, monthly, quarterly, etc).  The reviews will help to determine if the frequencies are appropriate.  I would suggest that you identify shorter cycles for the reviews initially because there is a strong probability that you will identify immediate improvements and revisions in the initial year that should be adjusted as quickly as possible to ensure that your measurements are meaningful.

 

 

The frequency of measurement is an aspect that will help to nurture the partnership and I think it’s critical that you spend the time in the beginning to ensure that you are measuring meaningful indicators in a meaningful, and appropriate, frequency cycle.  It is important to be flexible and fair in these evaluations and you must expect to make frequent adjustments initially.  This is probably the area that is most frequently overlooked and the result is normally that you will find out that your initial performance indicators are too loose, or too tight.  It is important to plan for frequent reviews and adjustments to these measurements to ensure that your reach a high performance program as quickly as possible.

 

 

Remember to assume innocence and focus on a mutually beneficial performance improvement program and you will be rewarded with a strong partnership that brings dramatic benefits to your enterprise.  Focus on the long term and you will find that the benefits achieved are much greater and longer lasting.

 

 

Now folks please take a moment to provide your feedback.  This will become even more value with robust participation!

 

 

Now for the audience participation portion of this program……

 

 

How would you define your relationship with the Third Party Logistics Provider?  Is it a traditional customer / vendor relationship that focuses on one-sided benefits and short term objectives? Or, is it based on a partnership that provides mutually beneficial benefits and long term objectives?

 

 

Do you see organizational benefits and opportunities to improve based on the partnership relationships that I describe above?

 

 

If you see the benefits to this type of relationship, will you be taking steps to implement this type of relationship?

 

 

Would you say that your focus is long term and strategic, or short term and tactical?