Archive for September, 2008

Teddy Bears With Quality

September 4, 2008

This summer I read an article in Financial Times about Steiff, the German company that claims it made the first teddy bear with moveable arms and legs in 1902. A hundred years after the foundation, the teddy bear company followed the outsourcing wave and moved parts of the production from Germany to China. Now, five years later, they are bringing the production back in-house. They have learnt that cost is not everything. Martin Frechen, co-chief executive, says “The things we wanted to be done were not the things the Chinese were used to doing” and “We have learnt our products are better if we make them ourselves”.

What I like in Steiff’s product strategy is the striving for quality. They tried to enter a lower price range and therefore sourced from China. They then identified a lower quality in the production and brought it back in-house. I think this high quality thinking is a good counterweight to the many discounters that are dominating the toys market.

In The Aftermath of British Airways Heathrow Terminal 5 Failure

September 4, 2008

British Airways is still struggling with the reputation shock drop the airline carrier experienced due to the complete failure of the baggage system on the opening day of Heathrows Terminal 5. In the days after the catastrophy, BA (the sole occupant) and BAA (the owner of the terminal) traded accusations ranging from system failure (on BAA’s part) to untrained staff (employeed by BA).

That was five months ago, yet BA is still trying to pursuade it’s travelers that Heathrow Terminal 5 is working. For the past few weeks BA is running an online ad campaign with the tagline »Terminal 5 is working«, complete with daily updates showing people who actually dared to fly from the terminal despite it’s bad reputation.

I guess it just goes to show that supply chain disruptions or other failures in delivery has serious effects on consumer behavior. But I have to admit that the fact that BA has to advertise the fact that their flagship terminal is working (which I would assume was the minimal requirement even for a traveller in the dawn of aviation, let alone today) put a smile on my face.

Communication as an E-procurement Implementation Enabler

September 3, 2008

A while back Gustav Hasselskog posted an eight point list of advice relating to how to make e-procurement a success. In the discussion that followed; there was a consensus that the need for “selling the product” (point number seven on the list) cannot be underemphasized.

To sell e-procurement one needs to ensure that end users both understand the why and the how. This is the basic prerequisite for change. The organization needs to fully agree with the reason and objective of the change as well as getting training in the new procedures (be it processes or tools). Change requires effort and as humans we must believe that the rewards are greater than the urge to resist.

Communication (I’ll get back to training in a later post) does not only rely on the message being sent, it is a complex issue depending on context, communication channel, codes and feedback. Messages are often distorted (and misread) due to the sender not being aware of the surrounding factors. Thus communication often fails.

The best way to ensure that every one gets the message is to invest time and effort into a stakeholder analysis that generates a comprehensive communications plan. By identifying the stakeholders, targeted information can be sent to these groups using appropriate channels. This means that everyone will receive the necessary information, yet no one will experience information overload. It’s also important to remember that this is not a one-off effort; communication needs to be constant throughout the entire change process. Treat it as an ongoing process instead of an activity.
For example; a successful roll-out project can include project specific newsletters, a dedicated intranet site, end-user competitions and posters that were distributed and hung in affected offices.

  • Newsletters can be distributed on a monthly basis to both management and important stakeholders as well as to trainers in order to get everyone on the same level, ensuring that all background information was available to all that need it and keeping everyone informed of the process. One can also look at opportunities to present the project in newsletters that belong to other organizational units – by using existing channels information hit rate will rise.
  • Most companies have employee magazines or other employee news media; use them to promote and explain the initiative and spread the word around.
  • By creating a dedicated intranet site which is frequently updated with project specifications, supplier status, training schedules and target descriptions information can be sought out by all, further enhancing the information hit rate.
  • End-user competitions can be used to lighten up the roll-out project. It can be as simple as giving away movie tickets to who ever places the 50th order.
  • In time for go-live; increase the information intensity by providing physical poster that can be hung in the offices of the affected units.

It’s also important to remember that once go-live is achieved; the need for communication does not diminish. Keep the users informed of the progress and allow them to feedback their experiences. By taking the communication needs of your audience seriously, chances are that your message will get through loud and clear.

Vertical Integration Revisisted

September 3, 2008

Recent comments and analysis concerning the state of the steel industry (Supply Excellence here and Spend Matters here) have pointed out that there is a strong trend of vertical integration going on; “certain industries now realize that these “old school” routines could help business” as Spend Matters Jason Busch puts it. WSJ reports that a growing number of steelmakers are shopping for iron-ore mines.

But using vertical integration as a strategic advantage never really went away; it just received a bad reputation. For instance, back in the late eighties/early nineties, as most companies were going horizontal; IKEA took a look at what they were doing and decided to go the other way. With a long history of doing business in Eastern Europe, IKEA founded Swedwood, to ensure supply in what they believed would become volatile times after the fall of communism. IKEA needed to safeguard itself against the loss of vital suppliers, and actively played a role in the privatization of their former suppliers.

Today, IKEA/Swedwood takes an active interest in the whole wood based furniture value chain; from forestry operations to sawmills and the board industry.

The reason IKEA did it back in the early nineties is the same that the steel industry is citing today: ensure supply and quality at competitive prices.

And if you haven’t forgotten your purchasing basics; that’s why you’re in the business.

And You Thought Youtube Was Just For Kicks – Think Again – Supply Chain Video

September 3, 2008

One of the great things about user created content and the so called web 2.0 technologies is when these tools and ideas are picked up by professionals and used for non-entertainment purposes.

My favourite pastime at the moment is checking out the supply chain videos compiled Ehsan Ehsani on Supplychainer.com. Most of the content linked from youtube.com and have been published by a wide array of publishers big and small.

If you have been led to believe that web sites such as Youtube is for kids or for after curricular activities; think again. If you don’t believe me, just check out how online publishers such as GasgooTV  use Youtube as the medium to provide indepth analysis of the Chinese automotive industry.

Another Look at the Drivers Behind Green Procurement

September 2, 2008

My post from last week regarding green procurement (be sure to check the links in the comments as well) and where to start got me digging a little deeper into the realities of green procurement and the how’s and why’s of sustainability issues. While the research available tells only parts of the story; most distinctly indicate where the trends are going.

Industry Week recently ran a piece on the subject authored by Chris Ferrell, Associate Director of the Supply Chain Consortium (who also provided the data for the analysis) and the findings quite neatly match those published in the Global Supply Chain Trends 2008-2010 report which we highlighted a few days ago.

One of the findings was that even though environmental sustainability is considered to be a key factor in future globalization strategies regulatory compliance and customer requirements are ranked higher than more cost driven factors such as differentiation and optimized logistics/processes.

That said; regulations and requirements vary by industry, with electronics and consumer goods more likely to face these requirements than other industries. The approaches to complying with these requirements vary as well, but it’s clear that involving the partners and suppliers in your supply chain is the path that most companies follow; in addition to looking for traditional supply chain efficiencies which carry environmental benefits (such as packaging and transportations).

From my point of view, environmental sustainability is an issue that affects us all which in it self justifies that collaboration is the key to greening your procurement.

As Supply Chains Globalize, So Should Your Purchasing Organization

September 1, 2008

 
Tim Albinson recently penned a post on his very worthwhile 2sustain.com-blog regarding PRTM:s Global Supply Chain Trends 2008-2010 report and I’d just like to spread the word. The sixth annual report is indeed worth your time.

While 2sustain highlighted some of the sustainablity aspects of the report, I’d like to focus on some of the other trends that the report points out: the need for supply chain flexibility due to increased globalization and the inability to manage global partnerships in global value chains.

More than half of the survey participants stated that they lack internal competencies to manage their external partners. Whilst most companies have grasped the opportunities that lie in the global markets, many have missread the need for preparation to handle challanges such as global operations management, it-support and culture clash issues.

With a truly international global supply chain let these words from General Motors CPO Bo Andersson be a guiding light.

If you look at our organization chart, managers come from many different countries and have worked in at least two countries outside their own. Efficient Purchasing 2005

Successful supply chain management rests upon the ability to understand and partake in multi-cultural supplier relationships. That said; take a look at your organization chart, does it match the needs of your supply chain?


Follow

Get every new post delivered to your Inbox.