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Category Archives for "Demand Management"

What is Chaining Today’s Corporations?

A divided organization cannot stand together for too long

Within the organization, division of labor was a fine concept when it came out. Obviously, if people focused on their individual area of expertise, in general they can be a lot more productive, if there is a robust mechanism to integrate the fruits of their labor. Unfortunately, the attempts to integrate conflict with the human nature driven by divide and rule from the top, and interdepartmental jealousies at the bottom. If someone gave me a penny for every time I have to listen to a mid-level manager tell me about how everybody else in other departments is under - performing, I would be a very rich man by now.

Most organizations became veritable bureaucracies as they grew bigger. Every person sat inside his/her own department, and was careful about making sure their department did not carry the blame if there was mix-up. Covering the tracks became the norm, and a rigid protocol was developed for interdepartmental co-operational. The resulting departmental silos create silted communication and a culture in which inter-departmental planning is simply not possible.

So what are the problems you might notice in such a divided organization?
We have worked so long on projects where we see these symptoms that it will probably take an entire chapter to explain each of these root causes. So, rather than dwelling too much on explaining each of them here, look out for the case examples embedded throughout this book and see if you can do a quick diagnostic based on these symptoms.

Too much rigidity in planning can lead to discord and disruption

A common tools deployed by most divided organizations to achieve integration was very rigid Enterprise Resource Planning (ERP) system to run their internal processes that co-ordinate inter-departmental communication. By their very nature such systems were very formulaic and prescriptive with a one size fit all approach to planning.

If you are familiar with internal operations of a large corporation, and wonder why you see so much chaos, anxiety, blamegame and other such dysfunctional behavior, this is the key reason. The systems are not setup for the type of operation. Again, I am sure you and I both could probably write a book full of case studies illustrating these types of problems. My purpose in this chapter is just to highlight what is chaining today's corporations and not to dwell too much on it. 

Of course, if you do think of an extremely poignant case study which stands far above those recounted in this book, do send them through to me for inclusion in a subsequent edition of this book.

Customers hate companies with too much internal focus

As organizations free up their inter-departmental planning from rigidities of prescriptive, monolithic systems the communications start to bloom, and planning becomes flexible, fluid and adaptive. Efficiency improves considerably and everybody is running together, faster.
However, a higher set of problems emerge due to lack of external focus - on suppliers, on customers and on end- consumers
. Many times everybody inside the company is running together, faster in the wrong direction. For a quick example take a look at Sony Corporation. Unhappy customers, slower product development, key new products missing the mark are symptoms of such problems as shown in figure 1.3:

Let us now move quickly to the macro-level picture

At a macro level, we will discuss only a few of the shackles that chain today's corporations and that too at a very high level. The aim of this discussion is to name a few hidden drags on corporate  and economic  performance, whose full impact may be difficult to recognize at a first glance. Rest of this book does NOT contain much discussion on these so it is important to put these on record here.
Why? 
  Because like it or not, you will face this in your business. And, whether you can do something directly or not, you will somehow have to overcome these drags. So, when you are reading the rest of this material and working out how to use it in your business, keep in mind these chains as well.

Supply Chain Relationships- Partnerships Or Partnershaft?

By Stuart Emmett

Business & Relationships Business and supply chain management maybe technically simple, but it is usually managerially difficult. In supply chains for example, there are many technically simple solutions which give better business performance. There are also many “hard” technical systems approaches such as, MRP and SAP, which are most useful and can have a vital impact on efficiency. However to be totally effective, it is usually the things like teamwork, and motivation, which need the closer attention of management. Improving the people relationships is the main key for more effective supply chain management.

Do you for example know of any relationship, (business or otherwise), that cannot be improved? The financial lead view and hard side of business becomes an increasing difficult one to predict in fast changing global economies. Business can however, always look to improve. One way to out perform the competition is to improve people and the way people relate to each other. There are riches to be harvested here that will enhance and improve business and the quality of life.

A view that a company is able to do something by itself is a dangerous myth that obscures the reality that a company only ever does anything as a result of its people doing something. Too many people, usually unconsciously, ignore the plain fact that it is the people who are the key element in all companies. Surely, we can only ever do the core of business through dealing with people relationships? Looking at what has happened when company performance fails dramatically through receivership shows the importance of people relationships. Officially appointed receivers have identified the following three causes of failure:

  • Lack of information, meaning for example, a limited view of options
  • Lack of top team balance, meaning there is little “challenge” and there is negative compliance as boards are too similar and do not have the depth or breadth.
  • Lack of others opinions, for example an autocratic C.E.O. who goes only for say, growth. A one-man rule with non-participating boards is found.

It seems here that wider views from open debate were missing. Autocratic management has prevented any positive conflict of ideas. Company performance and profitability have failed and can be directly linked to the lack of open debate and considering wider viewpoints. If relationships had been improved, then the companies may have survived. Supply Chain Relationships Supply Chain Management has as its key principle, individual businesses coming together to integrate, co-ordinate and control, their supplier/customer activities of buying, making, moving and selling. Relationship handling with all the supply-chain players is fundamental to the overall supply chains effectiveness.

With people relationships however, how many times is the partnership word used only for “spin” and “public relationship” purposes? Traditionally, there is often found an adversary them/us tussle in the supplier/customer activities. Power is not distributed evenly; a major barrier to a full partnerships approach. Even however when there is a more partnership approach, (token or otherwise), this can result in a response from some involved, that the German word for partnership is partnershaft.

This is a reflection of the “you will”, “I win/you loose” viewpoints from this adversary point of view. However, some supply chains do demonstrate a share to gain approach. Here as a basic philosophy, they will recognise that “none of us, are as strong as all of us” and adopts a “win/win” approach. The use of power by the strongest does not dominate in these supply chains. The message can be a need for change from old to new ways. This message for supply chain management shows that the following changes in Figure 1 Supply Chain Changes, (a too brief overview), are needed:

From more Traditional Ways To more Supply Chain Ways
Independent of the next link Each link is dependant on the next one
Links are protective End to end visibility
Uncertainty in demand visibility More certainty
Unresponsive to change Quicker response to change
High cost and low service levels High service with lower costs
transactional partnership
Fragmented internal structures “joined up” structures of extended enterprises
Hierarchical management Collaborative management

The core of these changes, involves changing the way people respond and relate to each other. It is not only hard technical improvements that are needed and companies who see this as the only way forward are scheduled to face real difficulties and future failure in their expectations. Unless of course they are dominantly powerful so “opposition” does not matter. Developing effective people relationships will however, beyond doubt, bring benefit. It is the only eventual way forward to achieve better supply chain management.

Effective Relationships

Effective relationships fundamentally require a total open and trusting environment, with shared beliefs, values and a common identity and purpose. Mechanisms are needed to allow people the right to “agree to disagree” in a supportive and trusting way. The Supply Chain principle of “sharing to gain”, also needs to include differing people’s viewpoints with active listening and the encouragement of open debate. Developing such relationships is certainly not going to be a soft option.

Getting to the “inside” is not easy and can be time consuming and personally difficult to those who are “schooled” in old ways adversary and power based models of relationship handling. Indeed this “soft stuff” so often becomes the hard staff- especially for those who prefer a partnershaft view of supply chain management. Maybe however this is actually “saying it like it is” and is a better reflection of what actually is happening? Hopefully for those who have this partnershaft view, they do not really believe that people relationships in the supply chain is just more “people crap and has no part to play at all”, (comments from a former colleague).

Win the home games first

Effective relationship building needs to start internally. In my experience, the partnershaft view always reflects poor internal relationships. Here the best “knockers” of a company, and its “worst” ambassadors” are its own employees. Companies must “win the home games first”. A business must win on the inside before it can go outside.

Why so many companies appear not to realise this is a surprise.

An efficient and relationship mature internal team of purchasing, production, distribution, marketing, finance is often not found. However such mental preparation is a recognised pre-requisite for sports people, before their outside external and public performance. The battle here is frequently “won on the inside first” and without this internal alignment, going forward to develop external relationships can be fraught with difficulties.

What many internally focussed companies also do not often realise is that their internal divisions will certainly be reflected and be visible externally. External people will be then most rightly uneasy about the effectiveness of any so-called partnership. Where a company sets out as policy to not listen or involve its “partners”, internal or external, then clearly the partnership word should not be used. Using it in these circumstances is dis-honest.

The critical thing to be done before developing external supply chain partnership relationships is to “win the home games first” and to engage the hearts and minds of the employed and contracted; individuals, groups and teams, inside the company.

Can We Agree To Disagree?

To be able to win the home games first, many organisations need to fully recognise that they actually do have people at all levels in the organisation, which do actually go along with events, which they actually disagree with. This is, maybe because they do not want to rock the boat. They have discovered it is safer to keep their head down. Indeed, as noted by the management guru, Peter Drucker, the biggest single hidden aspect in most companies is fear.

When there is such a “going along with syndrome,” then this is really negative for an organisation, as well as for the individuals concerned. The following case study, Figure 2, The ABC Ltd Problem, explores this issue.

Figure 2 The ABC Ltd Problem

  • F (the C.E.O. of ABC Ltd) takes pride in the company mission statement about the positive open communication with everyone pulling together to create new opportunities for the benefit of the customer.
  • G (a senior manager) sees his job is all about exploring new opportunities and that problem are “negative” barriers to this end.
  • H (a middle manager) is keeping quiet about a staff problem, as G never wants to hear about problems and has said before in similar situations to H, that he is a troublemaker who is rocking the boat and needs to stop being negative.
  • I to K (all clerks) have all just left ABC Ltd. They resigned as they felt they could no longer work for a company that will not listen to their concerns and problems and which stopped them from providing service to customers.
  • XYZ Ltd. (a major customer) confirms they are placing orders elsewhere, as they cannot get answers about delayed orders since I to K have left.

What would be your answer to the “problem”?

The simple answer is to say it’s a communication problem. Well for sure, it is a “communication problem” and one answer is to have the C.E.O. to get everyone to talk to each other. But it is deeper than this. Staff has left and an important customer has gone elsewhere, so something more “radical” needs to happen! Discussions-a core element in organisations Discussions and interactions between people are the core component in most organisations. These discussions take place take place at many levels, both internally, between employees/ employers, and externally, between suppliers/ customers.

If such discussions are stifling, restricting, and limiting; then this can result in stagnation, a refusal to learn and change and a refusal to do things differently. To overcome any such difficulties in any people business process, then it must be understood that conflicts, challenges, and compliance are all related interactions. These are important aspects to be efficiently managed and understood.

Challenge and Conflict

As perception is reality, then the words and style used in discussions and interactions, may mean that any “challenges” can be perceived by the giver, as being constructive; however, the receiver may perceive “challenge” as causing conflict. (By conflict, I am meaning the conflict of ideas and not conflict between people, conflict here is meant to be an open disagreement on ideas-I am not in any way taking about any conflict of verbal or other types of, violence!) The following case study, figure 3 Research Findings, will help to clarify my view.

Figure 3 Research Findings

When talking with employees in different companies, researchers noticed that some employees said they avoided conflict whenever possible in discussions, while others seemed to thrive on conflict in much the same circumstances. To confuse the researchers even further, those who seemed “positive” about conflict seemed to perform better in many respects in their jobs (and in overall organisational performance) than those who discussed conflict “negatively”.

Probing further, the researchers found that different people (and organisations) used the term conflict in very different ways. For some, those whom perceived conflict as negative, conflict was personalised and represented destructive personal tensions. For others, those who viewed conflict as positive, conflict was simply an intellectual disagreement to be resolved and had no relation at all with their feelings about the other party. The first approach can be called conflict among people (or destructive conflict) and the latter, conflict of ideas (or constructive conflict). Many people however, will still not like the word conflict, as it will be associated with aggravation and unease between people.

But this is just one possible side, as conflict has positive and negative sides, one which can be both creative and constructive or one side that is, feared and destructive. When conflict is creative, it explores differences and is not a concentration on only one position. Creative constructive criticism can take and build up from a newly discovered “third” position. Here both parties may concede to win or to loose. There will be a common cause, perhaps with tough trust and where “truth” comes from debate and discussion amongst equal friends. When conflict is feared it is so often because it has become personal. This will often happen when partners are treated as being unequal.

Unresolved differences can go onto create stand off’s, which can continue with destructive outcomes, and perhaps even end with “taking the ball and bat” home! (Whoever said that grown ups are children in disguise, was surely right). People can “withdraw” and “curl up into their shell”. They may well comply and “go along” with things. However, this is not really very helpful over the medium term, as it works like an internal cancer, attacking company mission statements about developing positive relationships between people.

Challenge and Compliance

When two people discuss and “face each other”, then without any challenge, there will only ever be an outcome of compliance. Now such compliance may be fine if it is genuine and agreed by both parties, and it may also be fine, if it is has followed from a useful dialogue of constructive criticism. But, positive challenge is needed and is definitely helpful, if there is to be any learning. “Blind”, forced, or negative compliance is really no use at all to anyone wanting to develop and to grow.

When there is only negative compliance around, then there is little learning, as there can be no real change from the current position. With negative compliance, for example, people will learn to keep quiet and cover up anything that will expose them when they put their head over the parapet. Mistakes will be hidden, as this is no place to be where you can learn from mistakes. Furthermore, negative compliance can be covert with “unspoken disagreement”. It can exist amongst unequal partners where, one of the parties does not “want to rock the boat”. The following, figure 4 SCM Ltd., views this further:

Figure 4 SCM Ltd

The managing director of a successful component manufacturer (SCM Limited) has a very simple human resources policy: hire winners and fire losers. In practice being seen as a loser by the MD means demotion, or at worst, termination. Unfortunately, this MD is on a rather short fuse and any employee seen making a mistake will always be a loser. Consequently, the clever employees learnt many astute ways of covering up failures, even when they were genuine ones.

As a result, problems tend to appear too late, when nothing can be done about them. The MD then has to step in, fix them as he can, and look for a scapegoat. He keeps complaining that he spends his time fire fighting rather than dealing with fundamental strategic issues. Effective challenge and conflict is needed to open up differences, as differences can be essential to learning. (The MD, above, for example, needs a good mentor or coach so that the differences can be positively explored). Here each party will be encouraged and supported to arrive at a place and position where there is a mutual awareness of differences.

This then leads to debate and onto a greater level of understanding, finishing perhaps with a compromise where both parties may have conceded, so that they both can win. When this type of challenging approach is used, then it prevents any compliance of false agreement. Here one side thinks it has “won”, or the other side has concluded, “why should I bother, they always want to do it their way?” With negative compliance, each remains with its own position. The others viewpoint is not listened to – there are no seeing the third position. Without any positive compliance, there will be no long term developing and no growth, no learning and no changing.

Yet, some people will foster negative compliance. The employees in the last mentioned case study above are for example, fostering compliance, (although they probably do not see this). This is possibly happening because they do not like the personal conflict, which they see as destructive. Also, the MD is fostering compliance through his personal style and approach, (although he probably does not realise this). Furthermore, some will like negative compliance, as they want to remain where they are, as they do not want to change. Some will also continue to steadfastly not “give up” their position as they cannot “loose face”.

What can be done?

There is clearly a need to expose, with challenge and conflict, the compliance issue. All the people involved, (internally and then externally), need to be clear and agree on the following definitions:

  • Positive conflict

Is constructive as it enables new learning through an open disagreement and discussion on ideas between people. The outcome is either a full agreement about the others position, or, finding a new “third” position. All those involved believe they have gained something from the conflict process.

  • Negative conflict

Is destructive as it inhibits new learning through creating personal tensions among people. The outcome is on “one” position only. Those involved are usually divided, as whilst one side may feel they have gained, the other side feels they have lost something.

  • Positive Compliance

Encourages challenge and conflicts and recognises these are needed for effective learning and changing. People are actively involved in shaping the outcome from a mutual awareness and understanding of the differences. They can change their position in the process.

  • Negative compliance

Encourages blind or forced agreement which hinders effective learning and changing as open challenge and conflict on any differences from the “status quo” are not encouraged. One party remains uninvolved and keeps quiet with “unspoken disagreement”. This gives a “false” agreement, which can encourage mistakes to be repeated, and little change brought to the “status quo”. People will internally remain with their own position, even thought this will unlikely be externally expressed in their false agreement. After understanding the above definitions, then people need encouraging to use and adopt such practices in internal business relationships.

New learning (and changing) is needed. However without any changing, then it will be no surprise that challenge, conflict and compliance issues are often going to be dealt with in a negative way-as the case studies have shown. Effective supply chain management will clearly be a myth for some of the partners and players. There is quite a challenge here, I believe, for most companies, organisations, and many of the people involved. However, in promoting efficient and effective supply chain relationships and going for the “prizes” available, then the challenge has to be faced and overcome – with positive conflict, of course!

Perception is reality

A problem can however still remain. Simply that I believe in dealing with “managerially difficult people”, or by using “partnershaft people management techniques”, that too many managers are just too content to gloss over developing longer term effective people relationships. The “macho kick ass manager” is still around and thriving in short term heavily task oriented business. The contrast between “old “and “new” managing is distinctive, see figure 5.

Figure 5 Old and New Managing “Old” managing represents: – keeping control – holding onto people – being judgmental – “telling” – seeing though a “pinhole” – being directive and more autocratic – using a “push” approach – Mechanistic view of people, they are only a resource.

“New” managing, (some call it leading, coaching, or empowering), represents more of the following: – letting people try – given people a “self release” – being non judgmental – “selling” – seeing the wider view – being supportive and more charismatic – using a “pull” approach – Collaborative view of people, they are what bring innovation and improvement. It is important for a business to have its manager’s face up to viewing these differences and to recognising the ensuing problems and opportunities that occur from the application of the different models. It is critical for individual managers to see just how they look at things, and then to be prepared to change their view.

This can be a most difficult from of learning for many managers. When we view people, we have our “fixed” perception, which can, in effect, block our view. Therefore, if we are able to see differently, we need to change our perception. Remember that perception is reality. The way we see, leads to what we do and what we do, leads to the results we get. So to change the results, we really do need to change the way we see! To help view our own reality of how we manage people, it is useful to take a polarised view, so that we can focus on two “opposites”. After such a “black and white” view, we can then search for the “grey” if we want to. Let me, therefore, put forward another such a polarised stereotype of people that says people run on emotion but justify things by calculation. In other words:

  • The emotion view is seeing people as more “heart”/feelings based. It’s all that “soft stuff’ that is “gut feel” and subjective. It’s “touchy/feely” and not at all, what a “macho manager” or partnershaft supply chain manager likes to deal with.
  • The calculation view is, however, a more “head”/logic based view. It’s the “hard stuff’ that can be proved/quantified and is, therefore, more objective. It’s all those who say, “The numbers speak for themselves”.

I would accept this looks just too “black and white”. I know in the real world we are often more in the “shades of grey” zone. But we have to start somewhere and I am suggesting we should try and start with a polarised view and spend some time looking at the “soft stuff”. I believe it is all this soft stuff that is really the hard stuff. It is not the “technically simple” that causes us major problems in supply chain management, it is that which is more “managerially difficult”. But to get into this, we need to have a view of “where we are at”. We need to be able to have the confidence to view which side we lean towards. Is it the “Emotion Soft Stuff’ or the “Calculative Hard Stuff’?

Are we, ruled by the heart or by the head? It is my belief that these stereotypes view is sound. For me, business heavily involves emotions, (usually though covertly as, after all, it’s not macho and not British for us to show emotions). The calculative “bottom line” is, however, usually more overt. But the “bottom line” is only ever going to an outcome of all the other activities, which for example, involve people showing each other “touchy/feely” mutual respect and trust in their business relationships. So emotions, feelings, behaviour and thinking are all related.

After all, as a person thinks, so they are! Business is, therefore, at its roots, an emotional experience. Trying to pretend people’s emotions don’t exist in business relationships is dangerous. It ignores the way forward to develop better and more effective supply chains for all the partners and the players. To make supply chain management with partnerships a reality for all the partners and players, then we must fully consider how the people relationships are to be handled. To ignore such relationships is folly and frankly plain “daft”. Unless of course, the ending point is not for partnership at all, but for old style supply chain partnershaft.

All written by Stuart Emmett, after spending over 30 years in commercial private sector service industries, working in the UK and in Nigeria, I then moved into Training. This was associated with the, then, Institute of Logistics and Distribution Management (now the Chartered Institute of Logistics and Transport). After being a Director of Training for nine years, I then chose to become a freelance independant mentor/coach, trainer, and consultant. This built on my past operational and strategic experience and my particular interest in the “people issues” of management processes. Link for the blog: http://www.learnandchange.com/freestuff_23.html

Dropping an Anchor – Strategic Thinking on Centralisation vs Decentralisation

The chief mate was on the forecastle with the bosun and 3 sailors preparing to anchor the ship. Master was on the bridge of the ship with the second mate, a helmsman and a lookout.

The ship had just arrived in the pearl river delta after a long sea voyage, and this being the middle of the night there was no means of communication between the bridge and the forecastle except for flashing lights, a loud ships horn,  or a loud voice though a megaphone.

We are talking about 100 years ago, the ship was relatively small and still ran on coal fired boilers. The communication between the ships bridge and the engine room was even more difficult. Coal fired steam boilers were very messy, and the steam engines were extremely noisy. Engine telegraph transmitted the bridge commands from the bridge to the engine – such as full steam ahead, or half ahead, or stop, or half astern. There being no brakes on the ship, the master was extremely good at anticipating the next movement necessary and transmit the command to the chief engineer in the engine room, as well as to the chief mate on the forecastle.

These two men had to be also extremely adept at not only understanding and following the orders from the ships bridge, but also as understanding the entire complexity of the situation in their respective stations and taking actions that would facilitate the final outcome – safely anchored ship without any damage to the ship, anchor, chain, propeller or any other ship.

For example, if the chain was running out too fast, the bosun, or chief mate would have no way to ask the master what was the depth of the water on the chart map or how high the tide was expected to be. They would have to use their own judgment to let go the anchor with sufficient force for it to hold the weight of the entire ship for several days, yet not too much force for it to take out the entire windlass with it. They were aware of other ships which accidentally let go anchor in far more depth than anticipated, and did not control the force in time so that the anchor chain just ran out and broke the windlass.

The chief engineer’s job was even more complex. He had no visibility of what was happening on the bridge, or the forecastle. Yet, he was somehow expected to anticipate the engine movement and respond in time for it to stop the ship so that the anchor can take hold and ship can swing into the tide.

The master relied on these two highly skilled operators who each has their own teams of skilled operators to help them.

And, then, the walkie-talkies were invented.

The master and chief mate are constantly talking to each other about the situation. The engine room can be reliably controlled from the navigation bridge so engineers in the engine control room stay there only for emergency coverage. Chief mate can now provide accurate information from the forecastle station, and master can issue precise instructions of what to do, and when. Chief mates, chief engineers and even masters do not need to be so highly skilled in the ‘art of anchoring’.

Reliable and constant flow of communication has made it unnecessary to anticipate and act. Co-ordination is a lot easier. Less need for contingency planning at each station.

Dropping an anchor, even in the middle of the night and/or in a busy channel with high current, wind or tide, has become a relatively far simpler exercise.

Communication technology always leads to possibilities of centralisation.

How much to centralise, and how to create a new operating system is an art.

The debate continues in every company.

How much to centralise? How to centralise? Why to centralise?

Strategic thinking is a must. No school can teach this – not even with the best case studies. Experience is the best teacher.

Data DATA Everywhere – Not A Drop to Drink…

I had some personal experience in 1990 with the ancient mariners’ rhyme or The Rime of the Ancyent Marinere:

Day after day, day after day,
We stuck, nor breath nor motion;
As idle as a painted ship
Upon a painted ocean.

Continue reading

What Two African Entrepreneurs Have Learnt from Amazon.com – Globalization in Action Serving Humanity

Boasting exponential growth since its inception in 2012, Jumia became the first e-commerce site to bring the coveted Play Station 4 to Nigeria. The company announced the offering after just two days of the release in the US. The Nigerian would-be Amazon is following the global giant’s footsteps in becoming a super networked business, although there is still a long way to go.

Jumia started with a relatively similar aim and manifesto to Amazon, which puts customers at the heart of its operation. In the same vein, the Nigerian site also reaps benefits from being one of the pioneers in Africa’s emerging online retail market. “Being first is good, but it is not everything. What fuels Jumia’s success so far is somewhat akin to Amazon’s evolution into a Five-star business network” – said Vivek Sood, CEO of Global Supply Chain Group.

Jumia is not shy of innovation either, given the fact that people are still skeptical about online retailing as well as online payment in Africa. The Lagos-based retailer launched a range of online payment options but steers its technology-shy consumers by accepting cash on delivery and offering free returns. “It’s very important that people know it’s not a scam,” said co-founder Tunde Kehinde. They even take a step further and deploy a direct sales team of 200 to educate Nigerians about secure online shopping, which also serves as a means to build trust. Now with pick-up stations spanning over 6 locations, a warehouse facility, 200 delivery vehicles in Nigeria and 4 other country-specific microsites, Jumia seriously strives to become a one stop shop for retail in Sub-Saharan Africa. “Here you are collecting cash and reconciling payments almost like a bank desk, here you are building a logistics company,” said co-founder Raphel Afaedor.

Both co-founders and Harvard Business School graduates built the business from $75 billion in funding and are bringing “a couple of million” dollars in monthly revenue, a growth rate of nearly 20%. Vivek Sood, author of the book “Move Beyond the Traditional Supply Chains: The 5-STAR Business Network”, said: “Jumia is taking the right steps towards building the five cornerstones of a super networked business: innovation, efficiency, profitability maximisation, product phasing and result-oriented outsourcing. With the promising results so far, perhaps we could see the next perfect example of a 5-star business network besides Amazon.”

Ten Reasons Why Your Business Network is Your Business’ Net Worth, and, How To Make the Most of it?

The simplest definition of business is to sell or buy the goods or services. Though, It may define the trading style of the past centuries but now business is not that much simple. One need to compete strongly to stay in the market, to be the best in every sense and above all being a part of business network is almost inevitable. Joining a network is not at all about catching the bandwagon instead it’s a shield which saves you in more than a dozen ways. In other words you can say that your business network is your business’ net worth. Hows and whys are discussed here:

1. Like Nokia like Network… connecting people

Business network works almost in similar way to the Nokia slogan “ connecting people”. People live in society to avoid isolation and same thing a businessman do by joining an already existing network or creating his/her own network. It serves as a platform to share the ideas and knowledge, to meet new ones, to guide them and get the guidance from the experienced ones. Find out more about how a business network enables connection among the business men here: http://www.forbes.com/sites/geristengel/2013/04/24/6-ways-women-can-power-up-their-businesses-with-networking/

2. Source of practical information

You can learn 100s of the tricks from a book to sell your service or product but only the information which you gained through market research can reveal that what actually the customers want. Loyal and trustworthy friends in a network offer this unique and 100% relevant information. Its better to find few trust worthy people instead of expanding the network to the endless limits.

3. A realm of similar people with similar interests.

In “5-Star Business Networks” Vivek Sood, famous business writer, recalls that how he found a group of trustworthy and loyal people ready to share their ideas at Linkedin.com. You may find it interesting to read the whole story and his view point about how joining networks positively effects the business here. http://www.amazon.com/The-5-STAR-Business-Network-Corporations/dp/061579419X Same thing happens when you become part of a network. Joining a business network enables you to find people with common interests and goals similar to yours. Their knowledge and first hand information improves your understanding towards the business.

4. Makes yourself more visible

You may find it difficult to meet new people but in order to expand your business or to brighten your career it is highly recommended to make yourself as much visible as possible. The easiest way to do so is to join a network where simply interacting with others can do wonders for you and your business as well. Wisely chosen or created business network offers you the right place with the right people, to do the business.

5. Recruiting Platform:

No matter whether you need to recruit or to be recruited, in either sense business network can be helpful. By making yourself visible in your network, you can easily be remained in the mind of those who are the part of this network. Business network works like referral programme where the most visible ones are highly refered as well. Once you get referred or having a referral, respond positively. It will create more chances for you in future.

6. Refines communication skills.

When we discuss business networking, it also means communication between the two individuals. This interaction helps in learning that how a team leader deals with the staff or how a businessman responds in a crucial matters and takes decision. Business networks enable to learn the suitable human behaviour in various situations. Keep interacting with others because only the practice will bring perfection to your communication skills.

7. Refines Target market

Every businessman goes for some market research to find its target market where the offered service or product is highly needed. The loyal and trustworthy members of the business networks help in cutting down the research expenditures and directly targeting the refined market. You may also share your knowledge to strengthen this bond because business network is all about mutual interests.

8. Your network is your personal asset too!

Remember that you are social being at first and to keep socializing is the basic need of any human being. Business network built on pure relationship is one of the most precious assets you have. So don’t hesitate in making strong relationships much more worthy than your business. For more information on the topic , please follow the link: http://www.cbsnews.com/8301-505125_162-28245723/10-reasons-why-your-network-is-your-biggest-asset/

9. Networking ,the top CBM for today’s business

The concept of business rivalry is fading because the concept of business network has made it possible for the key rivals to sit on a same table or to connect via internet and discuss the common interest of each other and threats being faced .Thus, business networking is working like confidence building measure for the two rivals. Not only the rivals, the two strangers connected through a network also start believing in each other because of the connection built through this network.

10. Business Network-a multiplying factor

Business network is all about mutual trust, which leads to cooperation and finally makes it possible to have a multiplying factor in each sense. This mutual cooperation can lead to the joint ventures or increase in investments and much more. You only need to focus on strengthening your relationships with other members of the network. Be loyal and trust them to get the same in return. For more tips you may follow the link: http://business.financialpost.com/2013/05/27/6-tips-on-how-to-get-the-most-out-of-business-networking/ Using the web for your business is an art and those those who are running their business from home, surely needs mastery because here the situation is quite different from the ordinary business. The guardian pays more light on the issue in the following link: http://www.theguardian.com/small-business-network/2013/feb/25/niche-business-networking-groups

Nokia Sheds Iconic Phone Unit in an Attempt to Re-bundle Itself

Virtually all its shareholders gave their approval, and with a stroke of pen the Finnish firm that once dominated the global mobile phone market officially announced the sale of its mobile phone unit to Microsoft Corp yesterday.

The $US 7.4 billion deal will see Nokia transform its business model into a telecom equipment and network services provider, a major step towards re-bundling itself into a super networked business. The move was given a green light by virtually all Nokia equity owners, who saw it was time to let go of a high-fixed-cost and increasingly-low-margin division. The company has been lagging behind at number 8th in the smartphone arena, although it still maintains number two position in the overall mobile phone market according to Gartner. Chairman Risto Siilasmaa told investors. “We have no doubt that this is the right decision.”

Talks surrounded Nokia’s string of wrong turns in the past such as investing in the smart phone technology too early (as noted by former chief executive Jorma Ollila), and reaping poor results from software design efforts. “Nokia’s high fixed costs signal underlying issues in its supply chain management.

The network of supplies has not been optimally selected and articulated to maximize its product offerings to the end customer. At the same time, both Apple and Samsung have created partnerships to leverage their business network to the maximum. For example Samsung’s partnership with Android allowed it to bypass costly software development that plagued Nokia. Similarly, most of Apple componentry is still manufactured by its business network partners” – said Vivek Sood, author of “Move Beyond the Traditional Supply Chains: The 5-STAR Business Network.”

A key reason cited for the poor performance of Nokia’s phone division is not enough innovation. While its rivals such as Apple and Samsung continue to gather momentum with their smart phone lines revamped utilizing the core of their business network partners, Nokia’s only notable attempt was when it embraced the Windows operating system in 2011. Even so, the move did not substantially lift Nokia to its market leading position decades ago. Life after mobile handsets for Nokia will include attempts to make its existing business units profitable, by focusing on its infrastructure. Speculations are already underway about the new moves.

For example acquisition of Alcatel-Lucent’s wireless-equipment unit could build a substantial competency base to enable robust market competition. A super networked business is created by a business forming strong supply networks that allows efficiency and effectiveness in three core competencies: customers, infrastructure and innovation. Vivek Sood, who is the CEO of Global Supply Chain Group, said: “Now that Nokia has freed itself of its past legacies, it is the perfect time to focus on its core competency and cherry-pick its partners that can complement the gaps. If done properly, Nokia can then re-emerge as a super networked business again ready for the next few decades.” Click here to get first three chapters of the book The 5-STAR Business Network

The Second Biggest Mistake in Business Transformations

In this article I want to focus on the second biggest mistake companies make during business transformations.

In case you are wondering why I am focusing on the second biggest mistake rather than the biggest one – it is because I have already written a blog post on that topic last week. Here is the link to it.

But the second biggest mistake is even more common and well known.

It is so easy to recognise that there are a whole lot of cliches used to describe it.

Yet it is so common that it worth spending half an hour writing a blog post about it. Even if 10 business transformations are put back on track after reading this blogpost – it would have done its job. After all each derailed business transformation is a huge waste of human effort and ingenuity.

So, what are the cliches that are used to describe this second mistake. I am sure everyone is familiar with these:

Putting the Horse Before the Cart.

Confusing the Cause with Effect.

Post Hoc Fallacy

A theoretical discussion of human fallacies is out of scope of this blogpost. You can read more about these here.

Practical observation shows that most business transformations require at least some degree of IT upgrade.

In many cases these IT upgrades take a life of their own and business objectives of the transformation projects start taking a back seat to these technological considerations.

In my book UNCHAIN YOUR CORPORATIONS I have given more than 20 examples of this phenomenon, in various contexts. Below I quote from the book:

Modern supply chains collect information at each node of the network. This rich data is methodically analyzed to optimize demand, supply, inventory, costs and service levels to create the best profit results. Not many people know this art – while there might be many pretenders.

The next component in business transformations is the informational part of the business network, which is strongly bounded by its IT systems. A word of caution, though, IT should always be viewed as a means to an end rather than the end in itself. In other words, systems are implemented to facilitate information exchange that is conducive to business transformation.

In the project we were working on, the challenge was indeed, moving the system from the regional to the global structure. Apart from having islands of data to consolidate, the company also found themselves dissatisfied with a system that met only 70% of its needs.

Even though you may be tempted by flexibility as it offers more room for maneuver in the future, every additional bit of flexibility breeds corresponding complexity.

To some extent, if a supply chain forms the backbone of your business, then IT is like the nervous system that helps circulate pulses of information and intelligence around the body.

To get a more realistic picture of the complexity, type “supply chain software” into Google and you will get more than 75 million results. How do you know which one is the right one? Though many of them will pretend that they can, there is not a single piece of software that can do everything that you require from a supply chain software solution.

Plethora of tools are available – each with its own peculiarities and limitations. Old ERP type systems can lead your operations into a big hole from which it will take years to emerge. Furthermore, each tool is most suitable for certain situations, and unsuitable for other situations. You need the ability get the right tools – just the ones that suit your situation – and combine them well.

As mentioned above, even though IT is not a solution to every problem, it should not be allowed to create even more problems than those that exist in the first place.

I have dedicated a whole chapter to IT systems in my book The 5-Star Business Network and here I would like to focus only on a few key things. To get this component right, you also need to see things through the eyes of the system provider. It is a delicate dance between rigid functionality and flexible business outcome.

How do you choose the right software for, say forecasting, from among more than 2,500 such systems? How do you link this system to the other systems it needs to work closely with – say inventory management software? How do you pick the right inventory management software from among more than 2,000 systems that claim to do more or less the same thing? Do you go for a single solution that is about 50%-60% right, at best – or do you go for a best-of-breed solution that can cover more than 85% of your need, if you do it properly? All these are very complex questions to answer.

Figure below, taken from my book The 5-Star Business Network, illustrates just some of the ways a business can falter along their road to using IT for business transformation.

GLOBAL SUPPLY CHAIN GROUP

FIGURE: PROBLEMS WITH USING INFORMATION TECHNOLOGY FOR BUSINESS TRANSFORMATIONS

Your job is to mix and match a best-of-breed solution suite.

Then you configure the pieces to form an integrated system, that meets your rapidly changing needs in a business transformation.

How?

We need to revisit the strategic component, to examine the level of disconnect between the corporate strategy and the IT capabilities and carefully find tools that fill that gap.

In the past, it might have been the case that corporate strategies were made up in the air, then supply chain strategies were formed by people down in the warehouses based on their own assumptions about what the business wanted to achieve, and the IT staff work in their own cubicles to provide systems based on poorly articulated needs.

If the above example of three isolated types of strategies resonates with your personal experience, you would also concur that despite numerous vocal calls for enterprise-wide collaboration, people still continue to work in silos. This is equal to saying many companies are still staying at Supply Chain 0.0 while others are moving towards 1.0 or 2.0 or, even mastering Supply Chain 3.0.

Figure – The process and service component

As you can see from Figure above, which shows typical processes in a supply chain 1.0, there are four levels that need to be weaved into a cohesive whole. Typically, there can be missing links between processes – vertically, or even horizontally.

Someone working at the operational level may not know how their work is related to the work of someone at the tactical level.

Even worse, for instance, a delivery scheduler may not know how his work output related to that of his next cubicle neighbor – the customer forecast expert.

During a transformation, processes and services may get streamlined, re-aligned or even created from scratch to accommodate change. That is why it is pivotal to keep in mind how they all fit together by devising a visual presentation such as the pyramid diagram above.

Another practical example may illustrate the point better.

supply chain managementI was having a conversation with one of the senior executives responsible for business transformation in a large-sized industrial company with operations and plants across the developed world. This particular person had come from one of the top tier global consulting houses and obviously was very well versed in the hypothesis-driven problem-solving approach, which both he and I had learned in our formative years in top tier consulting houses. He was adamant that this approach would be enough to carry out a large-scale supply chain transformation in his business. Hence, he was very skeptical about the supply chain methodologies that we were espousing.

In his mind, he could derive the same results from the first principles using his hypothesis-driven approach. And I was patiently explaining to him the difference between going back to the first principles to create a new approach, and deploying a tried and tested approach for supply chain transformations which had the benefit of having adapted the same hypothesis-driven approach.

So I gave him an example of the early stage motorcars where people were still using solid rubber tires and a number of fittings which were a carry-over from the days of horse buggies. Of course, if he had the luxury of time and budget to make all the mistakes there were, he could probably recreate a modern-day motorcar, going through all the stages of evolution. He was smarter than most of the population, so he could perhaps complete the task in 20% of the time that it took for the actual evolution to take place and perhaps, at 20% of the budget. Yet, if a modern-day motorcar was already developed, wouldn’t he be better off testing if it suited his purpose and adapting it for his use?

The role of “process” in business transformation cannot be overemphasized or under-emphasized.

Obviously, on one hand, you can become too rigid and attached to the process itself. On the other hand, robust processes, based on experience from a number of similar business transformations in the past, are far more useful than some skeptics envisage.

After all, who would you like to be your guide for a climb – a person who can theoretically show you a path through a map of a mountain, or a person who has actually traversed that particular journey several times before, and knows all the pitfalls along the road?

Now let us talk about the “service” bit in the process and service component.

One of the hangovers from the last century industrial organizations which never ceases to surprise me in a modern-day organization, is the importance attached to a product in comparison to the importance attached to service by the company.

What do I mean by that?

Most companies still think they are selling a product, when it is clear that in today’s information economy, most companies are selling the combination of product and service.

The service might be just fitting the product, or providing the right information about the product, or helping customers choose the right product for their needs.

To give you an example, if you are a customer of a motorcar company like Ford or General Motors and you are looking for a particular part, you will be amazed to know how many different possibilities there are of fitting the right part for the purpose. You will then need to discuss your particular needs with someone called a Parts Interpreter in order to pick a suitable part for your motorcar. It is a very specialized job and invaluable service provided by the car industry to its customers. It is the service that makes the cost of parts more expensive than the base cost of manufacturing and selling that part.

GLOBAL SUPPLY CHAIN GROUPIn almost every project we have done, when we calculated the overall cost-to-serve, it is very clear that the product component of the cost was supplemented by the service component of the cost, which was quite substantial to start with, and getting higher progressively.

In other words, the overall cost-to-serve is made up of cost of product plus cost of service, each a fairly significant component of the overall cost-to-serve. Then why do companies keep ignoring the cost of service or treat it as a minor hassle, rather than manage it as an overall part of the full cost equation?

In many companies, especially engineering-oriented companies, product takes the center stage, because it is tangible and visible, and these companies take great pride in creating superior products.

Hence, service is merely an after-thought, even though the cost of service might, in many cases, be higher than the cost of product.

That is the reason why a cost-to-serve analysis is an eye-opener for senior management teams or for boards of directors, when an overall cost breakdown is laid out, clearly showing that cost of product is far less than the cost of service. Suddenly, the entire orientation of the management changes towards managing the service component much more efficiently and effectively than they have ever done in the past.

We have noticed that tendency in airlines, in the automotive industry, the mining industry and in many other industries.

If you look at it from a customer perspective, the service is the most important part of the equation – it is well remembered long after the part (or the product) has been fitted and used.

Similar to the informational component, companies are increasingly discovering their ability to cherry-pick service providers that deal with different service modules. Before this can happen, service components must be broken up into geographical, asset based and activity based components to discover and engage best service provider for each module. This is known as modularization.

GLOBAL SUPPLY CHAIN GROUPThen, service modules are homogenized in order to create and manage parallel interactions with several service providers at same time. The cherry-picking or commoditization of service modules enables you to configure a best-of-breed customized business-to-business network that would be impossible to emulate for your competitors, and provide flexibility, cost advantage and risk mitigation to your company.

All this is possible only if you avoid making this second biggest mistake in business transformations and keep the focus firmly on the business – not on the tools – IT systems, or processes – used to achieve the business transformations.

Sure you will need the right tools, and deploy them rightly – that is important. But much more important is why you are deploying them, and are you getting the right results from them?

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