by Elizabeth Hines | Nov 12, 2013 | Blog, Leadership, Strategy
Source: www.Chickenmaker.net
A 2013 study conducted by Deloitte found that 64 percent of the global executives surveyed reported they had a risk management program in place that is specific to the supply chain. That being said, 45 percent of the respondents said their programs were somewhat effective or not effective at all. Respondents — especially those in the technology, industrial products, and diversified manufacturing sectors — reported that supply chain disruptions have become more costly over the past three years. They also cited margin erosion and sudden demand change as two of the most costly problems. Moreover, the 2013 Global Supply Chain and Risk Management Survey conducted by the MIT Forum for Supply Innovation and PricewaterhouseCoopers found that in the last 12 months more than 60 percent of companies surveyed reported that their performance indicators had dropped by more than three percent due to supply chain disruptions. While there are many factors which are likely to contribute to the issues pointed to in these studies, I believe that one is that companies focus largely developing risk management strategies to mitigate and cope cataclysmic events and not the day-to-day bumps in the road. As such, companies tend to be ill-prepared to handle the day-to-day bumps.
Big events are outlier events
Because big events such as hurricanes, tornados, tsunamis, and terrorist attacks can have a long-lasting impact and often visual impact on the logistics and supply chain industries they tend to stay top of mind. That being said, these events are outlier events. “Outlier events have much more influence than they should,” Professor Ananth Raman of Harvard Business School told David Stauffer for an article for the school’s website. M. Eric Johnson, director of the Center for Digital Strategies at Dartmouth College’s Tuck School of Business, told Stauffer for the same article, “Managers will often consider the giant risk but ignore the smaller risks that create friction in the supply chain.” When companies ignore the smaller risks, they do so at their peril.
You can’t ignore the day-to-day
Creating risk management strategies that focus on the everyday events is critical. Dealing with these events in a reactive and piecemeal fashion is inefficient and ineffective and can significantly hurt your company. The following are some tips on what to consider when developing an effective risk management strategy which focuses on the everyday risks:
- Employ a strategy that is robust and closely monitored.
- Put a leader in charge.
- Clearly define your process and make it comprehensive. Establish a well-defined process to mitigate events such as cashflow contingencies, client credit risk and default, competitor interruptions, inventory risk, data backup and recovery, key client attrition, employee satisfaction and retention, social media use and abuse, and reputation recovery.
- Make sure the strategy is both nimble and flexible. Being intractable can exacerbate issues.
- Don’t forget about human resources. Don’t be afraid to move employees into new roles. Moving an employee into a new role permanently (or for a specified period to deal with an event) is a powerful and effective strategy.
- Be first. If there is a problem, be sure that the clients hear about the problem from you. When you contact clients, tell them what the issue is and what you are doing to address it. Be clear, concise, and honest.
- Educate. Take the time to make sure everyone is educated about the strategy. If just one person knows the strategy, it will not be effective.
A big event might happen, but everyday events will happen… every day. Don’t give your company Chicken Little syndrome by focusing only on big events.
by Elizabeth Hines | Oct 29, 2013 | Blog, Leadership, Logistics, Strategy
There are a host of issues and risks you need to consider and mitigate when implementing an international reverse logistics process. Here are six things to consider when taking your reverse logistics process international:
1. Laws, rules, and regulations
One of the first issues that you need to understand are the laws within the involved country (or countries) as well as any rules and regulations, such as taxes and tariffs, that focus specifically on border crossing of defective or non-working electronics. Not taking the time to understand the legal system could result in fines and/or costly delays.
2. Costs
Costs are another issue. Labor, transport, and disposal costs, for example, vary vastly from country to country. Accounting for even minor cost fluctuations is essential, and not only for budgeting and cost containment. Shifting cost can upend even the tightest client relationships.
3. Product classifications
Product classifications can vary from country to country. Research how the client country classifies product types. When it comes to defective or nonworking electronics, one country’s commodity can be another country’s contraband. Furthermore, misunderstandings can be expensive. For example, understanding product classifications such as tested-defected or non-tested-defective can mean the difference in being able to resell or recycle in one country to another.
4. Service levels
You must also consider service levels. What are the labor norms? Are they drastically different than those in the United States? How will the labor norms impact the service level agreements you have in place? More than likely you will find that what works well here in the United States will need to be amended elsewhere.
5. Culture
Another important thing to consider is culture. One cannot begin working in another country without taking the time to learn about and understand the culture. Although it may be tempting, don’t try and change the culture. Real success comes when you work with/within the culture.
6. How things work
Finally, take the time to fully understand what it means to work in the specific country. For example, does the country shut down around the Christmas holiday? What impact will that have on meeting deadlines? How far will you need to plan ahead?
by Elizabeth Hines | Jan 15, 2013 | Blog
If you are the CEO of your company, a business unit manager, or an executive tasked with developing your company’s strategic plan, it’s likely that you have learned that from time to time you need to rely on an expert to help tackle the business problems that can “make or break” your year or your career.
Savvy executives understand that not all business challenges can be resolved from inside your organization and are not afraid of the phrase “not invented here”. They rely on external experts or strategic advisors to know their internal business, know the external marketplace, and have the domain expertise to combine this knowledge into strategies that will work for today and the long term.
Why Use a Strategic Advisor?
- If you have ever thought about getting some help from the “outside” but weren’t sure of the value it would create for you and your organization, here are some benefits that should make your decision really easy. Strategic Advisors fill the “holes” in an organization that exist in a particular discipline, experience level, or accumulated knowledge base. As a result, they can speed decision making, time to market, or cost reductions with proven solutions and without the pain of trial and error.
- Strategic Advisors offer a viewpoint based on facts and real experiences; not on politics or prejudice. The advice they can offer is “agenda free”. Yes, the truth sometimes hurts, but savvy leaders know that the intellectual honesty that a strategic advisor brings drives innovation and growth.
- Strategic Advisors know when to stretch the targets. Whether cost reduction, sales growth or both. They have the experience to know when to step on the gas and when to apply the brakes…without driving you off the road. Their external expertise can put you and your team in a position to be successful for the short and long term.
- Strategic Advisors are always “up to speed”. They have a niche, know it well, and spend time and resources keeping abreast of the trends and the companies driving those trends. This “multiplier-effect” cannot be duplicated internally without a significant addition to headcount and expense.
- Strategic Advisors are extremely cost effective. They allow you to buy the highest level of experience, personal network and know-how, applied to your toughest challenges, for just the right amount of time.
Combining the best from inside your organization with the brightest from the outside is a winning formula. Smart business leaders solve this equation time and time again and reap the benefits listed above.
Interested in using a strategic advisor? For more information contact Fronetics here.
