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 Fronetics | Aug 21, 2013 | Blog
This post is written by our Marketing Analyst Intern, James Kane. James is a senior at the University of New Hampshire’s Whittemore School of Business and Economics.
Truck drivers are in short supply. This has had, and will continue to have an impact the logistics and supply chain industry. Here’s how to leverage this challenging time.
The 24th Annual State of Logistics Report reported that there is currently a truck driver shortage of 30,000. With the new HOS regulations, this number will increase. The Report predicts the shortage to increase to 115,000 by 2016. The driver shortage has resulted in an increase in truckload prices and a decrease in the percentage of on time deliveries. 3PL providers are taxed – they are working around the clock to meet the needs of their clients. The question is – can you and your 3PL provider ride out the storm together? Or is it time to move on?
First, it is important for your company to acknowledge the driver shortage and its impact. Next, open the lines of communication with you 3PL provider. Let them know you want to determine how you can best work together. Once you have opened the lines of communication – keep them open. Make sure that you establish a transparent 24/7 tracing system – a system through which both you and your 3PL provider know what is going on and where everything is.
Communication and transparency will enable your 3PL provider to better serve your company. Additionally, it enables both you and the 3PL provider to identify issues and address – quickly.
If you and your 3PL are able to work together through the implementation of the HOS regulations and driver shortages – great. If you find that issues are continually cropping up and/or are not being addressed quickly enough, it may be time to find a new 3PL provider.
by Elizabeth Hines | Aug 7, 2013 | Blog
In NBC’s comedy Outsourced,Todd Dempsy (Ben Rappaport) moves to India to manage the company’s newly outsourced call center. When he meets the team he will be managing he discovers that they have little to no understanding of the product-line and how to engage with customers in a culturally appropriate manner. The show is a great illustration of the need to give serious thought to: 1) Should I outsource?; and 2) To/with whom?
While outsourcing is fast becoming the successful business battle cry, it is not the panacea. You need to determine your company’s core competencies and how you can deliver the best value to your customers. Are there services at which your company does not excel, or non-critical services which could be carried out more efficiently/effectively if the service were outsourced? If so, you may want to think about outsourcing.
Look before you leap
However, before making the decision to outsource, consider the hidden and long-term costs which can potentially be expensive. Additionally, it is important to weigh the risks of losing customers or market share.
Acquisition?
If, through evaluation and analysis of your core competencies and value proposition, you believe you have the capability but not the technology, you may want to consider acquisition. Explore the competencies of small and/or niche companies in the technology, logistics, and supply chain industries. There are many such companies that have unique capabilities in terms of technology, talent, and/or customer depth or growth. Would acquisition make more sense than outsourcing? How would this impact your company? Your customers?
If you do decide to outsource, think carefully about what company you want to partner with. I’ve previously written about what to consider when choosing a partner.
by Elizabeth Hines | Feb 22, 2012 | Blog, Strategy
Over time, we discovered that throwing electronics away is extremely damaging to the environment. With the increasing innovation of new and trendy electronic devices continually entering the marketplace, there is high turnover and greater demand than ever before. Manufacturers and retailers are seeking partnerships with third party logistics (3PL) providers that can decrease e-waste through reverse logistics for used and outdated devices. With consumers more concerned about their carbon footprint, manufacturers and retailers as well as their supply chain partners have a commitment to reducing negative impact on the environment.
Fortunately, profitable businesses that have capitalized on this emerging green and are known as “urban miners.” In general, there are now two primary methods for disposing of our personal e-waste supply.
- Trade in the device for the latest model. This is common with smartphones, since they’re small and easy to carry. The process is convenient for the providers and device manufacturers as well. It’s the proverbial “win-win.”
- “Take-back” events. Typically orchestrated and sponsored by your local municipality, school, or civic organization, these are a local recycle e-waste process. It’s best for devices that are not readily exchangeable in their current form. You’ve probably seen flyers or advertisements encouraging you to bring your dead electronics to a local school parking lot or municipal depot where they will be loaded on a truck, never to be seen again, all in the name of charity and ecology.
There’s Gold in ‘Urban Mining’
While the local organization that hosts the event gets a portion of the fees paid to dispose of the electronics, it’s the e-waste disposal companies that do especially well.
Known as “Urban Miners” in the disposal world, these e-waste disposal companies aggregate millions of pounds of commodities that are bought and sold in a secondary market every day and shipped all over the world. E-waste disposal companies are mining items like plastics, precious and non-precious metals, and rare earth minerals from our basements and closets. It’s one of the most profitable and reliable forms or reverse supply chain.
There is no better testament to the old adage, “One man’s trash is another man’s gold.” I’m not saying this is an easy process. You need to be able to aggregate tons of e-waste material (literally) in order to make money. You need to have the “right” e-waste material, meaning recyclable and not so much disposable, and you need to have your fixed costs low enough to be able to afford the high-touch breakdown process. That’s one reason you see these take-back events popping up more often. These aggregators need tonnage in order to make the model work.
Sometimes they win. Sometimes they lose. But they are providing a service by relieving us of our e-waste in a compliant manner; and they’re supporting the charity or organization with some sort of share of the day’s take, and keeping the green theme going… thus, a win-win-win.
Today’s modern-day gold rush is happening right in our neighborhoods and cities. Instead of a pick and shovel, urban miners’ tools are a truck, a forklift, and a well-placed flyer.
