Skip navigation
2015

I interviewed Junaid Tahir who discussed Supply Chain in a Distribution Company in Pakistan.

 

 

 

 

 

 

It’s great to speak with you again, Junaid. It’s been a long time since we did our last interview, and we actually did our first interview around 2008 or 2009. It’s good to stay in touch and in frequent communication to share with the supply chain community. Today I’m looking forward to hearing your views on supply chain in a distribution company in Pakistan. Can you first provide a brief background of yourself?

 

First of all, thanks, Dustin, for reconnecting; it’s been a while and thanks for getting my feedback. Basically, I’m a supply chain professional working in Pakistan for the past seven years. By professional degree, I have an M.B.A., and I also have a technology degree, which, I think, gives me a good mix of skills, education and experience to tackle supply chain challenges in Pakistan today. Apart from that, I’m also a certified supply chain professional, which is a CSCP, and I’m also a Project Management Professional, i.e. PMP. These two things, coupled with my university background, gives me a decent skill set to tackle supply chain challenges.

 

Can you talk about why you got involved with supply chain and why you think it’s important?

 

Well, I just stumbled into supply chain. I think with my background, I’m not the traditional supply chain professional. I was working in largest oil marketing company in Pakistan in their corporate planning department, when a supply chain position came up. I liked my new manager, and I thought the work would help me understand the whole company because supply chain is connected to virtually every function of the company. I think, by definition, supply chain is like the nucleus of a company through which all information, finances and physical products flow. Hence it has to be connected with everybody in the company. I thought this would give me a very good understanding of the whole company, which it did.

 

A few other things: Supply chain is a lot about data, it’s a lot about processes, which, given my technology background, I was always interested in. Added to this was the broad scope of supply chain is connected to every function of the company. Plus the data and process orientation. I think these were the few aspects that attracted me to supply chain and which I still find attractive, which is why I’m still in supply chain.

 

How does one get to know more about supply chain if they’re interested in being a supply chain professional?

 

In Pakistan, in the top tier universities, supply chain is still not a specialization. In other universities, supply chain does exist as a separate degree or separate discipline; however, now, over the past five or six years, supply chain courses are being offered. In my case, it was a process of exploration. You have to keep an open mind and understand supply chain is a lot about common sense as well. Now, professionals do have certification or some degree, but a few years back, it was a lot about common sense. In my case, I did my certified supply chain professional certification, which gave me an overview of the key components in supply chain; however, in most companies, they have a really specific kind of supply chain. Hence you need to keep an open mind and understand the situation. However, now in Pakistan, a lot of people are getting the CSCP or CSCM certification done. Now, the awareness is gradually and quickly increasing.

 

Can you talk about your experience in your country with doing supply chain?

 

Well, supply chain is still an evolving function. As I said, people are still getting certified; the education part has been picking up over the past few years. I’ve been in—this might be a personal experience, but I feel that companies are more driven by the sales initiatives, so, at times, it can be harder…

 

I wanted to ask you about the company * (5:55—unclear) and your experience with the distribution company in Pakistan.

 

Okay, fine.

 

Can you talk about your experience at a distribution company in Pakistan that you work with?

 

Mostly, the sales and distribution sector is not very, I would say, organized or a part of the best companies. This is what I was expecting as well when I joined my current company, but I was in for a nice surprise because I was about to be proven wrong. Firstly, most of the issues that I had observed, but was able to address fully in supply chain and thought of fixing supply chain or management issues. When I go in here, I saw that most of these issues and most of the fixes had already been done. This was a much more complicated and sophisticated supply chain that I was encountering.

 

Secondly, the supply-planning role was new in the company, so there was a lot of, I would say, revolution and evolution associated with my work because it was new, and you needed to get people to understand what it actually was. The role was also critical because, for a sales and distribution company, inventory is the most important, I would say the lifeline of the organization. Hence it was a very challenging role.

 

Thirdly, I was right on the boundary but working closely with the principal or manufacturing company. Basically, in a very short span of time, I was exposed to not one company, but two companies which were working close together hand in hand. I would say it was a rather overwhelming period for the initial few months.

 

Thank you. Do you have any final recommendations for supply chain management in your part of the world?

 

Recommendations, I would say that, again, theory and supply chain education is key to being a supply chain professional. In Pakistan, it’s still in the process of evolution, and other functions—like, maybe finance or marketing and sales—might seem stronger and more vocal within the company, but supply chain is a core function which has this opportunity to be structured. Most people in supply chain are working with most functions of the organization, so they have a lot of data. It’s all about organization and the more organized and structured you are, the smarter and stronger you’ll get and the better decisions you’ll make.

 

With regard to this part of the world, I think now, with the investment that China is making in Pakistan, I think a lot of opportunities and a lot of evolution will happen in terms of the road network, the transportation network. The whole initiative is about cost efficiency, so this will definitely—if it happens, and, eventually when it happens, this will definitely improve the quality and talent of supply chain that we have in Pakistan.

 

Thanks again for sharing.

 

 

 

 

About Junaid Tahir


 

19f9761.jpg

Junaid Tahir


Supply Planning Manager at Abudawood Pakistan

 

LinkedIn Profile

I interviewed Cheryl (Yancey) Biron who discussed Making Supply Chain Projections.

 

 

 

 

 

 

It’s great to speak with you today, Cheryl. This sounds like a very interesting topic on reinventing one’s company. I look forward to hearing your views with our supply chain audience. Can you first talk about what it means to reinvent your company?


Thank you, Dustin. For One Horn, it really means that we completely changed our business model. Back in 2005, we purchased the trucking company, so we owned our own tractor trailers, 15 * (00:38—unclear) between employee and owner-operators and 80 trailers.

 

Then, as the Great Recession started to hit, the housing market started to go away, a lot of the construction started to go away, and a lot of our business had to do with those industries. We had simultaneously started a freight brokerage company called One Horn Transportation. We decided, after doing a strategic analysis, that trucking was bad and brokerage was good because of the way the costs were structured in the sense that the trucking costs were all upfront, but the brokerage costs were only incurred when we had business to run.

 

We basically reinvented ourselves as a freight brokerage, sold off all our equipment, and serviced all our customers through the freight-brokerage side and got new customers that were more recession-resistant. Transforming our company, reinventing it from a trucking company that had assets to a nonasset-based freight brokerage.

 

Then in 2010, we decided we weren’t able to grow fast enough just by being a traditional freight brokerage. I was doing sales; my husband/business partner, Louie, was doing the operational side; we had another employee. What we decided to do was reinvent the company yet again into an agent-based freight brokerage where agents come with the book of business, they do the sales and dispatch, and we run the back office using our proprietary software package, which is called Stratebo. That is what Louie actually wrote during the down times during the Great Recession, when we had some extra time on our hands, when we had fewer loads to do, so we really became one of the most efficient back offices in the market.

 

Now, with the recruitment market for freight agents getting tight, we’re adding on—we’re not completely reinventing because we’re still completely committed to our current agents—we’re adding on a corporate-agent model where shippers, the companies that are our customers, can use our software package to broker their own freight. That’s just another reinvention, another way of doing business as the circumstances have changed.

 

Is there anything more you can say about why it’s needed? Why should companies be able to reinvent their companies?

 

I think reinvention is needed when there’s a change in the marketplace that affects one business. It could be something that’s most likely out of the control of the owners of the business. For us, it started with the Great Recession, the economy going down. In order to survive and thrive because we were all in—we’re entrepreneurs; we can’t just quit and get another job—we had to say, “How can we make this business work?” It could also be if somebody loses a major customer or something like that, maybe they would change the way that they’re doing business and go after a different type of customer base. It really has to do with when things happen in the business environment that are beyond your control, how you can survive, thrive, reorganize your business to continue to be successful.

 

And how do you do it effectively?

 

We do it effectively by assessing the environment and our own business strength. We basically do strategic-planning sessions all ghee time, every several months because our backgrounds are M.B.A.’s and we worked in Corporate America. By doing strategic-planning sessions, we take a look at what’s working for us, what’s not working for us, do more of what is working, abandon what’s not working, even if it’s really the bread and butter of the company. Like, the trucking, at a certain point, just wasn’t working anymore, while the brokerage was working.

 

That’s kind of how we did it. Me running around doing sales, the long lead time really wasn’t working for us with our growth objective, but being able to hire freight agents was a way for us to add revenue very quickly. Looking at options for alternative models is a way to do it as well.

 

I also read this book called The Blue Ocean Strategy, trying to figure out maybe a market that isn’t even out there to put our own footprint in there, and that’s how we came up with the corporate-agent model. I would say exposing oneself to other models that are out there and really being open to change and being open to abandoning any investments you’ve made that just aren’t working anymore.

 

Thanks. Can you provide a brief background of yourself?

 

Sure. I earned my M.B.A. from Wharton. Before that, I worked at Merrill Lynch for a couple years as a financial analyst, and I got my B.S. at Cornell. I worked in consumer packaged-goods marketing doing brand management at companies like Procter and Gamble and some pharmaceutical companies, but I really wanted the freedom and flexibility to do what I wanted when I wanted in terms of being able to see my children, and the corporate lifestyle back then didn’t really mesh with me seeing my kids.

 

I read this book called The Millionaire Next Door, which really featured the freedom entrepreneurs have and the entrepreneurial lifestyle. My husband, Louie, and I decided to buy a business together. His background was in the transportation industry, and that really made us credible borrowers and buyers for people who were selling trucking and distribution companies.

 

With my M.B.A. and marketing background, I felt I could run any business, so we just took that entrepreneurial plunge and decided to own our own business. We have the background of the corporations we worked for in the past to help us really know when things are run right, how well they can be.

 

Thanks for sharing today. This is a great story to share with the community.

 

Thank you.

 

 

About Cheryl (Yancey) Biron


 

cheryl.jpg

Cheryl (Yancey) Biron


President & CEO, One Horn Transportation | CMO, Stratebo Technologies |Freight Agent Blogger | Speaker | Guest Lecturer

LinkedIn Profile

dustinmattison1974

Location Codes

Posted by dustinmattison1974 Jul 13, 2015

I interviewed Martin Keyser who discussed Location Codes.

 

 

 

 

 

 

Can you tell us what location codes are and what they are used for?

 

Your computer tells you if you have an item and the quantity.

 

Location Codes tell you where they belong on your shelf. This is not only essential for storing merchandise as well as selling it, But also, when you have to find the merchandise for

counting it during Inventory time. So, your shelving, has to be labeled in such a way that you can identify what rack, shelf and, sometimes bin, the item is located and note it by part number in the computer.

 

What problems can arise from using Location Codes?

 

Well, first and foremost, the location codes in the computer have to be accurate. For example, I once worked at a company where taking inventory failed because the parts weren’t where the computer said it was. Other problems can arise if the code doesn’t fit the characteristics of the part and/or the company.

 

I Does the location code fit the characteristics of the part?

 

A. Unnecessarily specific

 

1. Code identifies

    a. Rack

    b. Shelf on rack

    c. Bin on shelf

 

  1. Bins are constantly moved as parts are added and removed
    • Changing location on the shelf
    • Changing location between shelves
  2. Necessitating
    • correcting codes in the computer
    • requiring 4 personnel over a week’s time
    • every six months
  3. Question:
    • Can the bin location be eliminated without taking more time to pull parts?
    • Time inventory guy while he
    • pulls parts using full location codes
    • pulls parts using just rack and bin locations
  4. The time was the same. So,
    • We can eliminate bin locations on the shelf

 

Conclusion: we can add or remove bins, and, as long as the bins on the shelf stay on the same shelf, no correction is needed in the computer.

 

B. Random Location Codes

 

1. The Characteristics of what the company sells necessitate location codes that are not dependent on what the product is or it’s quantity    


a. Examples    

  1. Pawn Shop
  2. Reseller of merchandise on the internet after buying from, say, garage sales or storage lockers 
  3. Car Rental company

 

2. Characteristics

    a. You do not know from day to day what space you will need. Hence, allocating space for each item may be OK one day but not enough space the next day.

    b. Solution

 

  1. Use a location code that is random. That is:
  2. No locations are allocated to product groups such as
    • toys, sporting goods, tools
    • Luxury cars, economy cars, trucks
  3. Instead
    • any category of item for sale/rent can be put in any location with a code that is easy to find such as included in the ad for the item or, in the case of a car, on the key tag.

 

So, my suggestion for assigning location codes for items a company sells is:

 

First: If your items are relatively fixed, that is, they stay the same from day to day, ONLY be as specific as necessary as to where the part is. If you can locate an item without using all the code, it’s too specific.

 

Second : If your items are constantly changing, don’t assign space on your shelf by what that thing is. It’s perfectly OK for unlike items to be next to each other if your location code in the computer allows you to find it.



About Martin Keyser


 

 

martin.jpg

Martin Keyser


Buyer

LinkedIn Profile

I interviewed Siva Sivakumar who discussed Additive Manufacturing/3D Printing and Its' Impact on the Supply Chain.

 

 

 

 

 

It’s great to speak with you today, Siva. This is going to be a very intriguing, insightful topic on how M2M and Internet of things can be a boom for supply chain. My first question is: Can you define what M2M and IOT are? How are they relevant to the supply chain industry?

 

Sure. M2M, or machine to machine, and IOT, Internet of things, mean one in the same. Earlier, M2M was the most relevant word, and now I think Internet of things is the right word also. What IOT and M2M mean is a set of technologies that allow things around us to connect, communicate in an intelligent fashion so as to improve their working. In a nutshell, it’s just a set of technologies that allows the things around us to communicate and provide data to the company or person using the thing to better manage, and that’s what IOT technology does today.

 

As it relates to logistics, it helps logistics companies to better manage their assets, better utilize them, or, in other words, asset transformation. Logistics is a pretty vast industry; it’s pretty broad and involves people, third-party logistics providers, trucking companies, large fleets, pallets, cold-chain storage, cold-chain logistics; it’s a vast area comprising many elements. IOT finds application in all these areas in one form or the other.

 

For example, a fleet company that owns several hundred or several thousand trucks would like to know where their trucks are at any given point in time. That’s just a primitive or most basic use, but today it’s used for a lot more than that. Not only to know where the truck is, but what the expected time of arrival is. Is it using the right route or the most optimal route? Are the goods carried by the truck at the right temperature? Are the goods carried by the truck being interfered with, or was there any pilferage? Things like that.

 

We have taken IOT to the next level, where location is just the starting point. But what we do with that location, the status of the asset—it’s not the truck that is the only thing important, but what is inside the truck is probably a lot more valuable than the truck itself. Let’s say a truck is loaded with a life-saving vaccine or medicine or some kind of pharmaceutical stuff, then it’s a lot more important to maintain the temperature of the vaccine at the right level rather than knowing where it is.

Similarly, an ice cream truck should be maintained at the same temperature throughout the journey; otherwise, the ice cream is going to melt. The same thing with meat, produce, fruits, vegetables, whatever. That’s the role of M2M and IOT in a nutshell of how it helps the logistics industry. I can talk more about it, but I’ll wait for you to ask other questions and go from there.

 

How should supply chain professionals respond to this? Do you have any recommendations?

 

Yes, I do. Initially, the logistics supply chain industry tends to think of technology as an interference or Big Brother attitude sort of thing, “Hey, you’re watching me.” Drivers look at it as, “Hey, are you spying on me? Are you checking on me,” things like that. I think we’ve gotten past that now.

 

The industry should view this technology as a way for them to improve their bottom line, as a way for them to improve their efficiency of operations, and not as an interference point of view. If they improve how much they can deliver based on better utilizing their trucks, they’re going to get more business. If they’re able to provide a temperature report to their customers, showing, “We not only transported your temperature-sensitive goods from point A to point B, but we also maintained it at the right temperature. By the way, here is the log showing the temperature of the * (5:01—unclear) truck all the way from Chicago to San Diego,” that makes the customer feel a lot more confident about the quality of the goods.

 

There are some goods that are not only perishable but lead to health issues if they’re not stored at the right temperature, and that’s a serious thing. For a beverage company, ice cream company, or meat company to put their name on the product and sell it to customers stating that it meets the highest-quality standards, they need to ensure the quality was not just maintained from their factory, but before the material got into their factory. It is very, very important for them to understand that IOT or M2M technologies can help them achieve that level of quality that they are used to starting from their factory, but until now, there was no way they could ensure the quality before the stuff reached their factory or warehouse.

 

That’s how they should look at it. They should look at it as a way of transforming their business to the next level and also as a way of improving their top and bottom lines. If the quality is good, they’re going to get better business, more business; if their quality and operations are more efficient, then they will save cost on their operations, so that’s a saving to their bottom line. IOT helps both top and bottom line improvement for the logistics and supply chain business.

 

Can you provide a brief background of yourself?

 

Myself, I’ve been in the wireless industry for the past two and a half decades. I spent about 15, 16 years in the United States working for a company called Qualcomm, where we pioneered the wireless TDMA technology. After that, I’ve been in this M2M-IOT space for the past 12 years. The company that I run—Nimble Wireless—we focus on M2M-IOT solutions specifically for logistics and cold-chain industries, health and pharma, and also for energy monitoring. That’s a totally different industry from logistics, but that is another segment we focus on.

 

I’ve been fascinated by M2M and IOT since the early 2000s, when the industry was really nascent that not a lot of people knew what M2M was. I always thought the next way was not just connecting people; it is going to be connecting things around us. Everything around is becoming more or less electronic these days. The washing machine or the refrigerator or the air conditioner has a lot more electronics than it had ten years ago. The cars that you drive today have a lot more electronic components than ten years ago.

 

The more electronic components, the more the chances that you could talk to them. Once you talk to them, there is a way to make them work better. That’s kind of my passion for the past ten years, and that’s why we’ve been involved in creating products that use wireless technology and the IOT technologies to provide real-time savings for all the customers that we help and also increase their top line by providing better customer service and quality.

 

Thanks for sharing today.

 

Thank you.

 

 

About Siva Sivakumar


 

 

siva.jpg

Siva Sivakumar


CEO & CTO - Nimble Wireless Inc.

LinkedIn Profile

I interviewed Jim Schlusemann who discussed Additive Manufacturing/3D Printing and Its' Impact on the Supply Chain.

 

 

 

 

 

 

Today we’re meeting with Jim Schlusemann, who’s the founder and president of Prosperia International, and we’re going to discuss some issues around additive manufacturing. Good afternoon, Jim. It’s great speaking with you again today. I’m looking forward to discussing your views on additive manufacturing and its future impact on the supply chain. Can you please provide a little bit of background and share with us who Prosperia International is?

 

Sure, I’m happy to, Dustin. Good afternoon and thanks for taking the time for our update today; it’s always a pleasure to talk with you. Prosperia International is my private consulting practice where I focus on improving new and existing businesses. I use my consulting practice to offer services to businesses and nonprofits. I use it by leveraging my experiences in manufacturing, engineering, information technology, and global business development. The experience came from my 40-year career with Navistar, a global manufacturer of on-highway trucks and diesel engines. My career there included 16 years as the chief information officer for their engine business.

 

What is additive manufacturing?

 

Additive manufacturing, or 3D printing, is any various process used to make a three-dimensional object. A 3D printer is really a type of industrial robot, and in 3D printing, additive processes are used in which successive layers and material are laid down under computer control, effectively building a part. These objects can be almost any shape, size, geometry and are produced from a 3D model or other electronic source of data.

 

I believe additive manufacturing is going to change how we design what we make, how we make it, and where it’s produced. All of these changes are going to disrupt our current business and create new opportunities for those ready to move ahead. One of the biggest benefits of additive manufacturing is that it can simply build parts that cannot be built in any other way.

 

What industries and markets are using this technology?

 

It’s easier to say where additive manufacturing is not being used than where it’s being used these days. The only place additive manufacturing doesn’t make sense at the moment is when you have or need thousands of parts. That can change too, because there are some things with networking and everything that can make it more applicable as the years go on. The list of additive-manufacturing materials gets longer every day, also. There are new machines doing composites using defined ceramics, they do sugar, chocolate, pizza, berry pies, meat. In the U.K. they can print concrete; and in Egypt, they’re using solar power and sand to make glass parts nowadays. There is also bio printing, which will change the quality of life for many in the future.

 

How is the technology catching on?

 

The past couple years, it’s become more obvious at how the technology’s going to change the world. At the 2015 IndustryWeek’s Best Plants conference, they featured a keynote from 3D Systems CEO Evan Hughes. He spoke on the amazing future that 3D printing offers for the manufacturing world. He said that after 30 years of development, 3D printing is finally ready to come out of the RD labs, into the real manufacturing world in a big way. He referenced this by saying it was 30 years for the Internet to become mainstream from the time it was initially discovered, and it was approximately 30 years that the semiconductor industry really went horizontal from the time that it was launched.

 

Three-D printing is in the same moment right now, so after 30 years of development, these machines are faster, cheaper, more reliable, more durable, and use many more materials. Now we’re seeing them start to show up in production, Dustin.

 

What kind of growth can we see in this industry?

 

The industry has seen somewhere around 30 percent growth per year. The machines and the processes are improving, and there are more and more companies making machines and supplying all these different types of materials for building parts. The original equipment manufacturers are reengineering their machines for higher throughput, better repeatability, which is going to help quality control and better ergonomic design. The industry, in 2014, was a $5 billion industry, and in 2015 it’s going to be hugging around $8 billion, and I’ve seen some projections as high as $35 billion by 2020.

 

What are some of the niche markets for additive manufacturing today?

 

There’s an endless array of applications that exist and can be 3D printed or additively manufactured. As RD efforts advance, we expect to see more applications and uses for additive manufacturing. Some current niche markets are precious metals, jewelry, fashion design, cellular materials, solar cells, ceramics, food is an interesting application of technology, and a real beneficial one is orthopedics and prosthetics.

 

Can you talk about how additive manufacturing is going to alter and disrupt the current business landscape, including business models that will be created?

 

Yes. What I see are probably three areas right off the top of my head. One is unique supply chains and how that’s going to change things in the industry. Second one is OEMs disrupting current business models and how they do things. A real exciting one is advanced modeling in the medical field.

 

In the area of unique supply chains, for example, Amazon has filed patents for mobile 3D-printing delivery trucks. Think about this: If you have a wall switch that goes bad or a plate that you need, you download the part or order on Amazon, they send a truck in front of your house, download and print the part, and bring it to you instantaneously. Huge impact on the supply chain there.

 

In the area of business models, Boeing has filed a patent application for 3D printing of replacement parts for aircraft. I’ve seen some projections where that could increase fuel economy by making better, smaller parts and increasing fuel economy in the aerospace industry by up to 7 percent, which is huge.

Also, in the medical field, a neat example I read about recently was that there was a complex separation of conjoined twins that was successfully planned using 3D printing. Some real exciting things out in that area.

 

What do companies need to do to benefit from this change in the business landscape?

 

It really all starts at the beginning of all other processes in a business, and that’s in market analysis and product analysis. If we think the way we did previously and don’t adapt in new ways that you could do as far as growing parts instead of making them from previous methods, we won’t be able to advance.

 

It starts with market and product analysis and thinking differently, then you move into engineering and designing parts differently. We used to hear all the time about design for manufacturing. Now, you want to design for additive. It’s a whole different way of thinking there, at the leverage capability of technology.

 

Then you want to add discussions about whether you want to buy this equipment or outsource. I’ve seen some scenarios where, in the current industry, if you wanted to make a part like this, you might go to a company and send out a purchase order for a thousand of these. With networking, new capabilities, and additive manufacturing in place, I can see a time in a world where, if you want a thousand of these, you put it out in a network to a thousand capable suppliers, and they’ll go ahead and deliver them to where you want to have them made. It’s really a whole new different way of thinking.

 

Big impacts on the supply chain, and then finally just making sure the companies invest and plan accordingly to take advantage of all these changes coming their way.

 

Thanks, Jim, for sharing today.

 

I’m always glad to participate. This is a real exciting dynamic area. There are going to be changes by the month. There are plenty of things to read every day; I like staying on top of it. I’d be happy to talk in the future sometime too, if you want another update on this or on other things, Dustin.

 

I look forward to it.

 

 

About Jim Schlusemann


 

jim.jpg

Jim Schlusemann


Business Development and Improvement

LinkedIn Profile

I interviewed Don Creswell who discussed Making Supply Chain Projections.

 

 

 

 

 

 

It’s great to speak with you today, Don, and I’m looking forward to hearing your views today on making supply chain projections. Can you first provide a brief background of yourself?

 

We come from a company called SmartOrg, which derives out of a long history of decision analysis. Our founders and forbearers have a long trail that started at MIT back with gain theory and things like that. In the 1960s and ’70s, they brought this to Stanford Research Institute—now SRI International—and Stanford University.

 

The whole idea is to use Beijing probability…” (Bayesian probability theory was developed by the Reverend Thomas Bayes in the 1700’s and further developed by LaPlace. Sir Harold Jeffreys put Bayes’ algorithm and Laplace’s formulation on an axiomatic basis, writing that Bayes’ theorem “is to the theory of probability what Pythagoras’s theorem is to geometry.”) Wow!, try to get your hands around a future where there no facts. Sometimes you find that even the very best big data, whatever you want to look at, while it’s good on the short-term basis and can give you immediate feedback, where things are very unlikely, let’s say a long-range projection of oil price. If oil is at $60 a barrel, you might be losing a lot of money; if oil’s at $100, you make a lot of money. But if you’re projecting something today that’s two years in the future, you really don’t know. How to get your hands around that, that’s where we work. We supply enterprise software to handle this to such clients as Boeing Technology because they’re developing airplane technology that’s decades in the future; oil and gas have a lot of the same problems.

 

Supply chain where there’s very high volume—manufacturing, particularly; I had a client in southern California who was part of supply chain for a whole bunch of stuff that went into Apple iPads and Apple iPhones, and the demand was subject to a tremendous amount of variation, so how do you get your hands around that when Apple might say, “Christmastime is coming up,” and instead of five billion units, they want seven billion units?

 

If we have to plan for that in advance, we do sensitivity analysis on our business models and see what the impact would be on our return on investment, for instance, or profitability. If it were to turn out at the lower end and we overproduced and had a lot of stuff sitting in the warehouse on the shelf that we couldn’t move or, alternatively, what would be the impact on us if we didn’t produce enough? And this has happened. I think Apple, a couple years ago, all of a sudden, we hit the buying season, and we ran out of products. We’re really looking at predictions in the long-term where there’s a lot of risk and uncertainty.

 

Can you talk about what it means to make projections within the supply chain? Do you have any specifics?

 

I was just talking about this one company that made a component in the supply chain. I’d try and talk about another one; it’s not an electronic supply chain, but we have a client whose supplies involve things like capsules, for drugs, that drug manufacturers have purchased and have to put the compounds in the drugs for ultimate sale and distribution.

 

Their big problem was that the demand from the big drug companies was very imperfect, and they were saddled with underproduction. The * (3:55—unclear), “How do we plan as best as we can around…if we miss it on the low side or the high side? What impact is this going to have on our ultimate ability to produce or to sell these things and make some money?” In their case, they could not put into the contracts penalty clauses.

 

I won’t mention any names here, but Truck Company X would say, “I want five million units, and I want them in November.” The company now gears up to produce five million units. October comes and the company says, “Guess what; we don’t need five million anymore, and we’re only going to take four million.” The company is stuck with a million that they’ve made that they can’t use.

 

We’re talking here about the forward planning, not during the operational, fulfilling the supply chain; we’re talking about planning now. The way to do it is future forecasting about where we want to place our bets, if you will.

 

Can you talk about how it’s done effectively?

 

Very few companies do it effectively. Most companies do it very badly. In fact, I’m very surprised how bad some of them do it. They’re watching spreadsheets; they have a tremendous amount of political arguments. What we try to do is say, “Let’s product a couple models.” When you really get down to it, the basic models around these demands, the variables that go into the demand and such are usually not more than fifteen or so top-level variables. Of the fifteen, there’re probably three or four at the most that are really key to whether you have a tremendous problem or whether you’re going to make money or not.

 

What we do in workshops, we work with these people to understand the nature of the business. We’ll construct a few models; you really need a handful of models. At this level, you don’t model it down to the micro units; you keep it at accurate units. Now, address each one of these factors or variables, as more technical people call them. We say, “Let’s let the experts in our company”—it could be R and D, it could be manufacturing, marketing, whatever—“who has an input to this particular variable, the best information we can get in planning, let’s look at how low it can be, how high it can be for each variable.”

 

We will put them into the computer. We will run what some people call Monte Carlo analysis; actually, we take it a little bit further than that and use what’s called decision-tree analysis that takes every possible variation of every fluctuation I just talked about, and now it constructs a whole group of curves that say, “This variable has the biggest impact on our final value. The next one has the next value,” and on down.

 

What you find is that it looks like a tornado. If this thing is at the low end of our value, we can lose a lot of money; at the high end, we could make a lot of money. If it’s cost, you reverse that; if it’s the low end, you make a lot of money; if it’s the high end, you lose a lot of money. Then you rank those down and see where you ought to apply your management at first. Is that the two or three top that can really make us or break us? That’s how this is used. Depending upon the volatility of the industry is how often it’s used; it depends on the industry characteristics. Some of our industries have very long-term between the time they make the plan and the time the plan is actuated; others have very short-term.

 

The shorter the term, by the way, the better because you can, now, with the data today, get immediate feedback and adjust the model. Have we made a good decision or not? On the other hand, if you’re making plans that aren’t going to pay off for a year from now, which is quite characteristic of some of our clients, then you don’t have feedback that you can now update the model quite quickly because time is going to pass and you don’t get feedback, say, for a year, at that time, you’ll know whether some of your assumptions were on target or not. In those cases, what people do is update this model, say, quarterly or such to make sure the assumptions they’ve made in the model at the beginning are holding, and that’s how they use this.

 

Is there any more you can talk about where you’ve seen good results?

 

I’m not going to talk about supply chain specifically. I can talk about investments in product development and R and D and making decisions about which projects and products to invest in. In one instance, we had a very large corporation whose technology people were holding on to their projects much too long. The people who were going to benefit on the commercial side were saying, “Come on, we really need this. We have to get this into the marketplace.

 

What are you doing?” Management at the top were saying they were going to cut some budgets, and they were stuck in the middle. When we put these kinds of models into place and it was transparent to everybody as to what created value at the end of the stream, the technical people, for the first time, saw they were working on lousy projects. They had no idea before; they were just getting it out. They volunteered to give up projects that should’ve been killed a long time ago or never killed in the past, and they created something like 50 percent additional flow from technology to commercialization within one year. They also doubled the number of projects killed simply by understanding where value was and wasn’t coming from. The head of the portfolio in this case said, “We saved enough money here that was equal to my entire operating budget for one year. What that allowed us to do was take money that would’ve been absorbed by poor projects and allocate it to projects that were going to make a lot more money.” That’s how the uses kind of trade off.

 

Thank you for sharing today on this topic.

 

I hope it’s been valuable. It’s a very deep topic, actually, and I’ve seen companies double the value of return in their portfolio within one year.

 

If you’d like to continue, we can do further interviews if you’d like to go into more detail on this in the future.

 

I would like to do interviews perhaps more around product development and portfolio management. When I say that, I mean strategic portfolio management.

 

The words portfolio management unfortunately have two connotations. One is the day-to-day operational portfolio management, the stage-gate management and things like that. That’s all the budgets, that’s all signing human resources to jobs, measuring how many hours you spent on this, how many hours on that; very, very very detailed-intensive and data-intensive. That we do not do. That a lot of people do very well. You’ve got Sofion, you’ve got SAP, you’ve got Oracle, you’ve got IBM; all the big players do that.

 

We’re one of the few, though, who emphasizes the other side: why we’re doing it in the first place; which ones we should select to put our money in because we can’t do everything; and once we have them in a portfolio, how we manage that portfolio to balance out risk. We want to take enough risk that we can have a chance of making a lot of money on the high end, but we don’t want to take too much risk that we end up losing money.

 

 

 

 

 

 

 

About Don Creswell


 

0f498ed.jpg

Don Creswell


Co-Founder of SmartOrg Inc.

 

LinkedIn Profile

I interviewed Clare Bottle who discussed Skills Shortages and Gender Diversity in Logistics.

 

 

 

 

 

 

It’s nice to speak with you today, Clare. Today I’m looking forward to hearing and sharing your views with the audience on the blog: skill shortages and gender diversity in logistics. Can you first provide a brief background of yourself?

 

Yes, certainly, Dustin. It’s nice to talk to you too. I’ve worked in logistics for about 20 years. I started out as a graduate trainee, and I spent quite a significant amount of my career working for myself as an interim manager, providing logistics services to various big blue-chip companies on a short-term-project basis. In my spare time, I also help to run an organization called Women in Logistics: UK, and I’m a trustee of an international charity called Transaid that uses transport skills around the world.

 

Can you talk about skill shortages as a major issue facing the industry?

 

Certainly. In the 20 years or so I’ve been working in logistics, I’ve seen a number of changes across our sector. For example, the rise of IT. Everybody is using more and more sophisticated information-technology systems, and that puts a certain demand on management skills. Equally, we’ve seen an increase in home delivery, a change in lot sizes, more interest in risk throughout the supply chain, and challenges and questions about insourcing versus outsourcing.

 

All of these issues tend to demand a very specific skill set for managers who are working in logistics. One of the things I’ve noticed is that it’s increasingly difficult—especially as the world economy seems to be recovering—to kind of get hold of the right kind of people who’ve got an interest in those issues, who’ve got experience and skills in those areas to really help logistics and supply chain organizations deliver at their best. I think there’s a shortage of skills, and I also think that by fishing only in one half of the talent pool by only thinking about men as potential candidates for management jobs in logistics, companies are doing themselves and women a disservice.

 

What is Women in Logistics in the UK doing to improve gender equality?

 

Women in Logistics was set up back in 2008. Around that time, our sector skills council in the UK—an organization called Skills for Logistics—had estimated that around 9 percent of managers in logistics were women, so that means that 91 percent were men. We felt that imbalance needed to be addressed in some way, and we’ve really come up with a three-part approach to doing something about it.

 

The first part of our approach is networking. We run a number of different networking events throughout the course of the year. Of course, those are located in the UK, so they’re really aimed at our UK audience, but, equally, we have quite a strong online presence, particularly through our own Web site, which is WomenInLogistics.org.uk, and also through LinkedIn, the networking Web site, so that people throughout the world can engage with each other, talk about logistics issues, and issues of gender diversity that are relevant in logistics. That’s our first aim.

 

Secondly, we run a mentoring scheme. What we found is that people who act as mentors can find that to be a very rewarding experience, and that can help to boost your confidence, build your network, and to get you thinking about issues in a new way. Equally, people who have a mentor can also find that a very helpful way to progress their career, and it seems to be particularly true for women in our industry that having a mentor can really unlock career potential, so we run a mentoring scheme.

 

Our third aim is to make sure that we provide a platform for women to be part of the wider debate about logistics issues. For example, at our own networking events, we tend to have women at the front talking about their own experiences, talking about logistics issues such as the ones I outlined at the start of our interview. We also work on other events. If we know of other organizations that are running events where they seem to have an all-male panel or are only men speaking, then we’ll contact those organizations and offer to help them to source a more diverse panel for their event.

 

The third thing we do is run an annual awards event, which is coming up at the end of June. We encourage high-profile and very successful women to put themselves forward for our awards, and then that gives them some publicity and puts them in a position where they can be role models to other women in our sector to see what can be achieved.

 

Is the issue of gender equality a problem for women or for everyone?

 

I’m glad you asked me that question, Dustin, because I suppose you could imagine some men might find it somewhat threatening to have an organization like Women in Logistics exist in the UK, and we talked about that amongst ourselves when we first set up our organization. It was very important to us from the start to say that men are welcome to join, and there are a couple different reasons for that.

 

One, if you look at some of the big companies who’ve been very successful in tackling issues of gender diversity—and in Europe, I would particularly point to companies like Coca-Cola Enterprises, like Royal Mail in the UK, like the Royal Logistics Corps of the British Army. Those are some big logistics organizations that have worked very ******* gender diversity. What we’ve found is that those have been successful because they’ve had women and men working as a team together to tackle these issues. Of course, the outcome benefits both women and men because it helps to overcome the talent issues that I was talking about before and the skill shortages, which are a problem for everybody.

 

But then the second point is, I mentioned earlier that men are half of the talent pool, but if you can break that down a bit more, you would say white, middle-class, able-bodied, heterosexual men with no caring duties at home are an even smaller—in fact, quite a tiny—proportion of the potential workforce. So, for men who don’t meet the stereotype, anything which challenges that stereotype and encourages diversity is going to be a good thing for them personally as well.

 

Thanks for sharing today.

 

Thank you. I would encourage anybody who’s accessing this interview to have a look at the Women in Logistics Web site and perhaps think about these issues and what you might be able to do locally to tackle them.

 

 

 

 

About Clare Bottle


 

39c5049.jpg

Clare Bottle


Logistics Specialist

 

LinkedIn Profile

Group on Linkedin

I interviewed James Fintain Lawler who discussed Mastering The Digitization Of The Supply Chain.

 

 

 

 

 

 

It’s great to speak with you today, James. I’m looking forward to hearing this interview with the supply chain community. The topic is mastering the digitization of the supply chain Digital by Design” is the beginning of the title, with a hashtag. Can you first provide a brief background of yourself?

 

Dustin, great to talk to you and the audience today. My background is: I’m the CEO of Digital Alchemist Consulting Services International. The revenue * (00:43—unclear) $300 billion U.S. We tend to support organizations on lifestyle and complex digital transformation. That includes the digitization of the supply chain. Our clients include governments both in the U.K. and in Canada, as well as some of the Fortune 100 companies. I guess that’s a little bit about our background.

 

Thanks. My first question is: Can you talk about what the strategic context is when you look at mastering the digitization of a supply chain?

 

That’s a great question, Dustin. Let me just give that strategic context. A lot of people view transforming the supply chain as a journey. I think it’s much more important than that. By sharing the views, the American inventor Douglas Everhart, who says digital revolution, is far more significant than the invention of writing or even printing.

 

To call the transformation of the supply chain a journey I think greatly underestimates the sight of the challenge and underestimates the sight of the opportunity. I really look at it as an oversee. An oversee is a more appropriate word, as it can be viewed as a challenging and adventurous experience in uncharted waters or uncharted space. Journey is not the right word for me; oversee is the word. It’s much more exciting, much more adventurous.

 

If you look at the strategic context of that, building a supply chain that is future-proof is essential; it’s got to be resilient and needs to recognize future mega trends. Those trends being the growth of smart cities—and you’re in a place, Dustin, where you’ve seen firsthand growth of smart cities, the challenge of an aging population, BRIC growth—that’s Brazil, Russia, India, and China growth. And we’ve operated in three of those four: India, Russia, and China. The challenge of * (3:24—unclear) unemployment; the prosperity gap globally; how care is evolving; and the scarcity of skilled digital resources. Those are the mega trends.

 

If you took that and tried to synchronize and weave the five digital forces of mobility, social media, big data, the cloud, and ion robotics interweaving and synchronizing those, it places a great challenge on organizations. What you really need to look at is radically altering the DNA of the organization. * (4:10—unclear) people look at the technology and isolation, but it’s the synchronization of things like customer experience. Do you have a clear digital strategy? Do you have a strategy to change the culture of your company? Are you going to change your governance model? Are you looking at changing your business model? Do your people have the right skills? Bringing those things together is like a digital * (4:38—unclear); very challenging. To that context when I look at digitization of the supply chain.

 

Can you give us some examples of where you think innovation plays a role in the digitization of the supply chain?

 

I’m happy to do that. I think it would be remiss of me if I didn’t also focus on—if you’ve got this strategy that takes into proportion those mega trends and the technologies, digital operation excellence in that execution is essential. It’s great to have a strategy, but excellent execution is what we’re looking for. I sometimes use the phrase “Give me one bricklayer for a thousand architects.” That means most people can design, but building, actually building something, takes excellent execution, excellent everything. If we look at innovation, I start with the end-customer experience or outcome.

 

A lot of research has been done on the customer experience, and there are four key elements for that customer experience. They are: responsiveness, reliability, relationship, and result. Some people refer to that as the four R’s. If you put those four R’s together—responsiveness, reliability, relationship, and result—you get an enhanced customer experience that delivers customer value. Now, as we look at innovation, a lot of people have looked at—in the supply chain they say you need a control tower. A control tower is a fixed point. In the digital world, to me, control tower is the wrong language. It needs to be a digital GPS; it’s something that moves with you throughout the value chain or pathway.

 

Now, the example I’m going to give on innovation, we actually put in place sensors into the product and services so that as it moved through the value chain, supported by drones and head cams, we could look at and track and monitor progress anywhere in the supply chain. It also is a great tool to facilitate visualization for the end-customer experience and * (7:36—unclear) augmented reality.

 

Let’s give a couple of examples. We created, with one of our clients, supply-innovation hubs. The way we took that approach was to gather * (7:53—unclear) insight as to where we thought the end-customer experience should be, where the critical suppliers were in each aspect to the value chain, and then sat down with them to identify the innovation gap both from a customer experience and from a value perspective, “value” being price and cost to both the client and to the supplier. We sat down, looked at that gap in terms of customer experience against those four criteria I referred to earlier—responsiveness, reliability, et cetera—and financial gap and said, “How are we going to close that gap?” We brought in the suppliers inside our team meetings and put a plan in place to improve that value for money and then customer experience.

 

I’m conscious of our time together, so I think the way I look at it and summarize is: It’s not a journey; it’s about an oversee, an adventure. It’s not about redesigning the customer experience; it’s about visualizing a compelling and exceptional customer experience. That is supported by real-life visualizations, supported by sensors, head cams, and augmented reality.

 

It’s not about continuous improvement, Dustin; it’s about discontinous improvement. If you looked at masters of the supply chain, they’ve actually put in place discontinous improvement. Their revenue growth average is greater than 10 percent, and their profitability is greater than 30 percent growth. Some people talk about the importance of change. It’s not about making change stick; it’s about making and embedding the right culture and values into the DNA of the organization. It’s not about innovation within your organization; it’s about leveraging the innovation inside and outside your organization. It’s not about digital by default; it’s about digital by design.

 

Thank you, James, for sharing today.

 

My pleasure, Dustin. Have a great day.

 

What key action item should the readers of this blog pay attention to?

 

Again, another good question, Dustin. It’s all about excellent execution. I would say the key actions—some of them are very obvious. Do you have a strategy that is completely visualized? Most people have a strategy, but the client or end user, unless you help them in that visualization of that strategy, of how that customer experience will be improved, strategy without visualization, to me, is empty. I would then ask: Do you have the right digital background in place, and have you synchronized it to your business? The next question I would ask: Do you have a complete end-to-end line of sight to your customer? Next one: How transparent is your governance process? Have you changed the governance process and prioritization of that process in line with the new digital world? Last but not least: Have you got plans in place to change the digital DNA culture of both your organization and that of your suppliers? Integrating them into your family. #DigitalByDesign

 

 

digitalstrategy.JPG

www.the-digital-alchemist.com

 

 

About James Fintain Lawler


 

james.jpg

James Fintain Lawler


President & CEO at Digital Alchemist Consulting Services International Ltd.

 

LinkedIn Profile

I interviewed Morgan Swink who discussed The State of Supply Chain Innovation.

 

 

 

 

 

 

It’s nice to speak with you today, Morgan. I’m looking forward to hearing your views on the state of supply chain innovation. Can you first provide a brief background of yourself?

 

Sure, I’m a professor at TCU—that’s Texas Christian University—in Fort Worth, Texas. I’ve been there for about five years. I spent over a decade at Michigan State University and Indiana University before that. I’ve been a professor for about 25 years, mainly researching in areas in supply chain innovation and integration. I started out in engineering and worked for Texas Instruments for ten years as well.

 

I’m a professor at TCU, but in addition, I’m also the executive director of our supply and value chain center, which is the entrepreneurial arm of our supply chain program at TCU. We work with businesses around the Dallas-Fort Worth area and partner with them, set up conferences and events, and do things like that.

 

Great. Can you talk about the state of supply chain innovation?

 

We have a conference coming up next week, actually, that the theme is supply chain innovation. As a part of that, we’ve invited some companies who are recent award winners. The Council of Supply Chain Management Professionals gives a supply chain innovation award every year—they’ve done that for ten years now. I’m the chair of the committee that grants that award and have been on that committee for a number of years. We’ve had a chance to review, in depth, about 60 innovations over the past ten years that were finalists in the competition and, in the larger frame, about four hundred different submissions of innovations.

 

Through analyzing some of that and being part of that process, I’ve gotten a pretty good handle on what companies are doing. It’s really interesting. Innovation in the supply chain space really runs the gamut from a lot of companies who are implementing solutions developed by third-party providers, consultants, or technology companies to what I would consider, to be a lot more innovative, and that is companies actually developing technology solutions or organizational solutions or, even more interesting, new business models internally. I would consider those kinds of things to be the most innovative, and I have a couple examples I can share with you on that.

 

In general, supply chain innovations tend to be focused around new ways to handle, source, make, and deliver new product introductions or new packaging of products, or they tend to be around new customer service systems or new production systems or new delivery systems. Many times technology solutions apply to those, and those could be information technologies, collaboration technologies, or specific process-oriented technologies, like robots, et cetera.

 

In terms of the state of innovation itself, I think there’s a big transition underway right now. In the past and historically—as I long as I can remember, at least—most of supply chain innovation—if you want to even use that term—has been very short-term focused; it’s been very cost-focused. Supply chain managers and executives are constantly under pressure to deliver year-on-year cost reductions—3 to 5 percent, typically—so, they’re always looking for these incremental improvements. Now we’re starting to see a shift—at least in some of the leaders—toward more of a top-line way of thinking, where supply chain is not only about managing costs and efficiency and quality and reliable delivery, but it’s actually starting to emerge as a competitive weapon and a way to drive revenue growth through some new supply chain-enabled business models.

 

I can give you a couple examples of that, but, in general, that’s where we are with innovation, and I do see this as a profession in supply chain and within certain industries, especially, you see this change of thinking from very much internal cost-efficiency focus to more of—the cost is always going to be there, it’s still there, but also more of a growth opportunity in supply chain as a competitive weapon.

 

You mentioned some examples. What are some good examples you think would be interesting?

 

A couple of quick ones that come from past award winners of CSCMP’s award, a couple of years ago, the award went to Mercy Health Systems. Mercy Health Systems is a hospital network; they have about 40 hospitals. They’re based in St. Louis, but their 40 hospitals are located all around the Midwest. It’s an interesting story—they’re going to be speaking at our conference.

 

They started out with the traditional internal focus. The way the corporation was run, most of the hospitals were very independent. It was operated very much as a holding company, so each of the hospitals ran its own operations, had its own supply chain, leadership, and managed most of its own internal operations and purchasing and supply management activities independently.

 

What started out as kind of an incremental quality-improvement program, where they were really focusing on specifically how to reduce errors and improve the quality of care within their hospitals kind of evolved to a larger focus on best practices in procurement and purchasing and then a sharing of those practices across the hospitals until, finally, Mercy saw so much progress that the corporate office decided to consolidate all supply chain operations and management of supply chain into a corporate office.

 

Eventually, they created a whole new business unit, which is called Mercy ROI. This new business unit handles all the supply chain operations and internal operational excellence programs for the 40-hospital network. They’ve gotten so good at it that now it’s become a new business for them, and they sell hospital supply chain services to other health care networks. This is a great example of how some, initially, small, internally focused innovations can grow a competence and a capability that can actually turn into a new business opportunity. It turns out this Mercy ROI business unit is the fourth most profitable business unit within their entire corporation. It’s just a really good example of the power of supply chain and the potential of it driving business growth, as well as reducing cost.

 

Another example we’re going to have presented at the conference is this past year’s winner, the 2014 winner was Flextronics. Many of your readers may be familiar with Flextronics; they’re one of the largest contract manufacturers in the world and about a $20-billion company. They started out in electronics manufacturing, but they do a lot of contract manufacturing for many different industries now.

 

Traditionally, their bread and butter has been to take product designs from original equipment manufacturers or big developers and then just produce the items that the developers order from them. They produce a lot of the final assembly for computers and all kinds of electronic goods. What they’ve done now with their supply chain capabilities, they’ve gotten so good at managing supply chain that they’ve built an incubator, a new product and prototyping and development incubator in California so, now, they have a whole new market they can sell services to: mainly startup firms and small- to midsize firms that don’t have their internal R and D capability.

 

They’ve built this really fantastic facility that has 3D printing and lots of other rapid prototyping technologies. Plus, they will set up an R and D space in their facility for a startup or client company to come in, and they will host a design team to work together with Flextronics engineers and supply chain mangers to not only help flesh out their product design and create rapid prototypes, but to concurrently do process design and design for supply chain kinds of things so these products come out with not only a fantastic functional design and high-quality performance, but also very producible form.

 

Again, this is another example of a company that’s taking its supply chain expertise and applying that into a new market in a new way to create new business opportunities.

 

Thanks, Morgan, for sharing today.

 

You’re welcome. Happy to share with you.

 

 

 

 

About Morgan Swink


 

30812f9.jpg

Morgan Swink


Professor at TCU

 

LinkedIn Profile

I interviewed Sigi Osagie who discussed Leadership Effectiveness in Procurement/Supply Chain Management.

 

 

 

 

 

 

It’s nice to speak with you today, Sigi, and today this is going to be an interesting topic on leadership effectiveness in procurement and supply chain management. Can you first provide a brief background of yourself?

 

Excellent. Thank you very much for the opportunity to share some of my perspectives, Dustin; I appreciate it. My background is probably best described as—I often say to people that I have a broad end-to-end supply chain management background. I've had responsibility for pretty much all functions in the supply chain spectrum, from forecasting and demand management at the front end of the supply chain through procurement, strategic sourcing, and manufacturing to the back-end, logistics.

 

I’ve done that in both SME businesses—small- and medium-size enterprises—as well as large, multinational blue chips in several sectors. In my corporate carrier I worked for large organizations like Viasystems, GEC Marconi, and Bombardier including as a global supply executive, responsible for different functions across the supply chain domain, I think probably the key thread running through my carrier background has been 'change', managing change.

 

Pretty much all the roles I’ve had have been about going in to set up brand-new functions or going in to transform functions, drive or turn around performance capability. I have robust change-management experience, including running big business processes of engineering initiatives, as well as being a Six Sigma black belt.

 

That’s in terms of the corporate side, and on the academic side, probably the more pertinent thing to mention is, as part of my M.B.A. studies many years ago, I carried out a novel research, looking at management effectiveness and organizational performance, how the effectiveness of leaders in businesses affect the performance success of organizations.

 

That work pretty much informs what I do today. I bring the findings from that research together with my end-to-end experience across supply chain to help organizations up their game in terms of improving effectiveness capability and performance in the procurement and supply chain space. I do that as a business adviser, or sometimes clients want me to actually sit in the chair and drive the change, so I act as an interim executive. I act as a coach and mentor to folks in the procurement and supply chain space, and I also share my expertise as a speaker and writer and have just had my first book—Procurement Mojo—published a few months ago. That’s my background.

 

What is leadership effectiveness?

 

That’s a good question to start off with. I smile to myself when I think about it because it’s probably one of the most common things people think about when they start getting into this area of organizations. The truth is, Dustin, there isn’t a single preeminent or ultimate definition of leadership effectiveness because there are so many facets and so many angles and so many components, both in terms of what leadership is and how it applies to organizations and then how you apply effectiveness to that.

 

If you look at the literature out there—either by academics or by practitioners—you will see so many definitions and descriptions. But I think they have a common thread. If I was to offer a simple definition or description—I do like to keep things simple—I would say leadership effectiveness is about embodying effectiveness in our conduct as leaders.

 

There are three important points to pull out of that description. One is: When I talk about the word conduct, I’m referring primarily to how we think, how we communicate, and how we act, the behaviors that we exhibit. Then the other important point, as I talked about, embodying effectiveness through our conduct as leaders. The truth is that when we talk about leadership or leaders, we often think about people who lead functions or organizations—managers or executives who have responsibility for a function, which typically might involve managing people but not necessarily all the time.

 

Really, there are two aspects of leadership. There’s an element of leadership that’s about leading yourself, what I call self-leadership. Leadership effectiveness applies as much to that as it applies to the more common dimension of leadership that most people think about, which is leading others.

 

Then the final key point to pull out of the description I gave is about effectiveness itself. I’ll remind you what I said: Leadership effectiveness, in simple terms, is about embodying effectiveness in our conduct as leaders. But what does effectiveness really mean? It’s really about doing the right things or taking the right actions to achieve the goals or outcomes or objectives we’re trying to obtain. It’s important for people to grasp that.

 

I think the way we manage organizations today and a lot of the KPIs and performance metrics we use are so centered and biased toward efficiency that it’s so easy to get lost and forget about effectiveness, which is actually more important than efficiency. You can be very efficient at doing the wrong things, and you will fail, whereas if you’re effective—even if you’re not efficient at doing it—you will be fine. In a sense, if I was to wrap all that up, I would say that leadership effectiveness is really about thinking, communicating, and acting in the right ways relative to the goals, objectives, or outcomes we’re pursuing.

 

How is leadership effectiveness applied in procurement and supply chain management?

 

That’s an excellent question, Dustin. I think it’s important, also, to think about this because, for all organizations, including procurement and supply chain management functions, effective leadership is a primary requirement for success. Leadership is the glue that holds everything else together. If leaders in an organization—whether that’s procurement, supply chain, or any other functional area or the whole enterprise—if the leaders are not effective, then chasing success will become like the pursuit of a mirage.

 

In Procurement Mojo, I address this idea of leadership effectiveness within procurement and supply chain in great deal. I’m conscious, of course, that here, we don’t have too much time, so I can’t go into as much detail as I did in Procurement Mojo, but I’ll give you a few pointers. In essence, it’s really about leaders first and foremost recognizing the importance of their roles. That’s absolutely critical leadership is the single biggest factor that affects organizational success, and that’s about how we motivate and inspire people within organizations and how we manage performance.

 

Also, leaders need to recognize that there are many elements that come together to help us achieve success in procurement and supply chain. There’re obviously the strategy, the tools we have, and what's happening in the marketplace and all of that, but people are also a key aspect of that. With the best strategy and world-class systems and processes, if a leader is not focusing adequate attention on his people, on growing them, on bringing the best out of them, on helping them to perform, on aligning their efforts to the enterprise priorities, and helping them demonstrate the right attitudes and behaviors and how to deal with stakeholders across the wider enterprise, basically aligning the whole of the procurement and supply chain organization to the enterprise priorities, if the leader isn’t doing that, then he’s never going to achieve success for the function.

 

I think that’s one of the first aspects of applying leadership effectiveness to procurement and supply chain management. Another key angle is about focusing everything the supply chain and procurement function does on what the enterprise is trying to achieve.

 

One of the mistakes I find when I work with clients today in helping them up their game is that many procurement and supply chain functions get caught up in the technical elements of the job, or what I call the task, and they completely lose sight of what's important and forget that we’re not actually there to do procurement or to do logistics or to do inventory management or to do any of that functional activity; what we’re there for primarily is to serve the business. We’re the custodians of that organizational activity within the function, but primarily, we’re there in the business eight hours a day, five days a week to help the enterprise achieve its goals.

 

I think a key element of leadership effectiveness in procurement and supply chain is for leaders to make sure that they are channeling all the efforts within procurement and supply chain on helping the enterprise achieve its goals. That covers the organization, which I mentioned earlier, also, the enablers—processes, systems, tools, strategy—as well as managing performance robustly.

 

Within all of that, without spending too much time on it, certainly, the key thing I would like to highlight and draw attention to—and probably an area where many procurement and supply chain leaders have a deficit in terms of their focus—is really their people. Organizations are, first and foremost, about people. If we can build 'people capability' within the procurement and supply chain function and help our people manage their interactions with others outside their functions, then we’re already over 50 percent of the way to success.

 

When I talk about focusing on people within procurement and supply chain, I’m talking about things like providing clarity of purpose, giving people a vision of the supply chain and procurement function we’re trying to create, what the long-term intent is, which, as I mentioned, must be aligned to what the enterprise priorities are, making sure we’re targeting people with SMART goals - that's the way we make the procurement and supply chain functions more relevant to the enterprise, by disaggregating the functional goals into individual objectives for the people and the teams. Also inspiring and mentoring people to help them reach beyond what they think their capabilities are, instilling self-belief, help them light the fire in their bellies and ignite their passions, help them “build muscle” because you often find that procurement and supply chain functions are frequently held back by people’s perspectives.

 

One of the most common phrases you’ll hear is “We’ve always done it this way” or complaints about having the right reputation within the organization or dealing with the challenges of stakeholders across the business. We have to help people build the muscle that allows them to cope with these sorts of challenges, create the right environment for them to actually grow and demonstrate their abilities. Probably another angle to leadership effectiveness in procurement and supply chain is about the functional leader using his/her position as a senior executive to champion the function, to clear the way for the guys on the team and steer the function towards success; steer the function and know how to dance the organizational dance we often have to go through, especially in large organizations, and really be the number one champion of the procurement and supply chain function. It’s a very important aspect of leadership effectiveness in procurement and supply chain.

 

Where have you seen success?

 

Good question, Dustin. In Procurement Mojo, I give an example of the CPO of a health care, finance, and insurance-services group. He shared some tips from his experience of transforming his supply-management function in his organization, and some of the things he talked about were great examples of what leadership effectiveness means. I’ll just pull out three.

 

He talked about aligning the team’s goals to the corporate priorities, which is one of the key things I mentioned, and also about managing individual’s performance, what I call making sure we’re calibrating people to recognize that we must deliver performance to support the enterprise; pretty much in line with I said earlier, and something else I mentioned about communicating to the business sensibly.

 

If I look at my own career, another example of success in leadership effectiveness in the procurement and supply chain space was when I worked for a chief procurement officer while at Marconi. Probably one of the best things he was really good at—and I learned a lot from him—was he was very adept at managing inter-functional stakeholder relationships.

 

We were a business developing, designing, and launching products in the technology space, as well as services related to that, so as you can imagine, stakeholder interactions was a big element of our day-to-day activities. Dealing with other functions like engineering, marketing, and finance, he was fantastic in managing those interactions, as well as the organizational dynamics, and he helped put our supply-management function on the consciousness of the organization as a key function. A great example of using one’s position as a leader to actually create success in a procurement and supply chain function, which is one of the elements of leadership effectiveness.

 

More recently, in the past three months or so, I met a chief supply officer for a household luxury brand who was talking to me about his efforts to transform his function. When he shared some of his thoughts about what he was trying to do, I wanted to give him a big hug and a kiss because, to me, he demonstrated that he got it; he understood what leadership effectiveness was about.

 

I’ll just summarize a phrase that he used. He talked about "the journey", and what he said was that he wanted his team to be aware and think about the experience stakeholders in the business had when they went through a journey of dealing with a supply-management function. It had to be seamless; it had to be painless; it had to be effective; it had to be efficient; ultimately, it had to be focused on delivering value for those stakeholders. It’s a fantastic demonstration of how the way we think, especially as leaders, impacts our ability to take the right actions, which is what effectiveness is about, to create success for our procurement and supply chain functions.

 

And then about a couple of months or so ago, I gave a talk on effectiveness within procurement, and I met the CPO of a large multinational facilities-management business. We got into a discussion after my talk, and she was telling me about deliberately spending a significant proportion of her time, effort, and energy on people issues. That was music to my ears because, again, it was great to speak to an executive who really got it.

 

As I said at the start of this interview, organizations are about people, first and foremost. The more procurement and supply chain leaders can grasp this and leverage it, the more successful procurement and supply chain functions will be. To be effective and achieve this, it’s important that procurement and supply chain leaders always think about the end goals and the outcomes that they’re trying to get to. These might be hard, tangible outcomes like cost savings or on-time delivery or inventory turns or supplier performance, or it might be soft elements like the reputation of the supply-management function. Ultimately, it’s always important for us to make sure we’re delivering value to the enterprise.

 

One element to remember is that 'success' is not just about numbers, but making sure the supply chain function is baked into the fabric of the enterprise. Leadership effectiveness is a key element of procurement and supply chain functions achieving that. I think those three examples indicate some of the things that effective leaders do to achieve that.

 

Thanks, Sigi, for sharing these really insightful views on leadership effectiveness in procurement and supply chain.

 

Thank you very much. It’s been great speaking to you, and I appreciate the opportunity.

 

 

 

 

 

About Sigi Osagie


 

3cd5cc6.jpg

Sigi Osagie


Business Adviser, Coach, Speaker and Author – “Procurement Mojo"

 

LinkedIn Profile