I recently joined Frank Quinn at Supply Chain Management Review (SCMR) for the webcast "Getting Supply Chain on the CEO’s Agenda."

I am glad Frank selected this topic, as we’ve been more and more engaged on this very subject. Although "supply chain" is certainly not a new subject, it is new to some CEOs. So it’s the responsibility of the supply chain professional to help CEOs understand how they can use supply chain technology and strategy as a competitive weapon.

Supply chain leaders need to know how to speak the language of the CEO and how to prepare a successful business case. To do this, they need to be able to convey the importance of the supply chain, understand the CEO’s interests, and ensure the supply chain is meeting the interests of the CEO.

So, first, it is essential to communicate to the CEO the importance of the supply chain:

1. The objective of the supply chain is to increase the top line, reduce the cost of performance, and therefore, maximize profits.

2. Increasing the top line comes from the supply chain focus on responding to the customer.

3. Reducing the cost of performance comes from the supply chain focus on total delivered cost.

4. The supply chain focus on responding to the customer involves synchronizing supply with demand while minimizing the impact of variability.

5. The supply chain focus on total delivered cost involves the synergistic reduction of costs of the supply chain (procurement, manufacturing, inventory management, warehousing, transportation, etc.).

We also need to get to the heart of the CEO’s interests:

CEOs are very interested in profitability and happy customers.

 

CEOs are very interested in mitigating risk, forward-looking strategy, and working with, supporting, and encouraging professionals who can help their organizations become more successful.

 

CEOs are very interested in using their time wisely.

And most importantly, answering the following five questions about your supply chain will help determine your CEO’s interest in supply chain:

1. Does the supply chain have a positive impact on profitability and customer satisfaction?

2. Does the supply chain help mitigate risk?

3. Does the supply chain contribute to the forward-looking strategy of the company?

4. Does the supply chain make the organization more successful?

5. Is the time invested in the supply chain by the CEO time well spent?

As companies are pulling out of the recession, CEOs are dealing with the short-term issue: budget. At the same time, they also have a long-term issue on their minds: preparing for the coming boom.

Now is the perfect time to get supply chain on your CEO’s agenda and prepare your competitive weapon for 2010. How do you talk to your CEO about supply chain, and does it yield results? I’d like to hear your thoughts.

Go!Go!Go!

Jim

Photo credit: lrargerich

Carpe Diem. Seize the Day. Great motivating phrases, but would you recognize an opportunity if someone dangled it right in front of your face? Most of us would like to think so.

Well, let’s test this theory. An opportunity has been forming right under your nose, but you may have missed it because you were focused on doom, doom, and more doom.

Although for the past several months we’ve been hanging out in this dreary, dark economic hole that we fell into, there is a light at the end of the tunnel. For now, you just need to make sure that you reach the end of the tunnel by seizing the right opportunities.

This is a great time to be in business because the doom is starting to lift, and we are on the uphill. Don’t believe it? Here are the top five reasons why now is the most exciting time to be in business.

1) There is no new normal.
What I mean is that the pace of change is so rapid, there is no time for complacency. This is very exciting if you are one of the movers and shakers. However, if you are a wall flower, you may want to get out of the way, because the wall is about to fall and you don’t want to be underneath. Know your direction and take action. Don’t stand there waiting for someone to ask you to dance. Get at the head of the conga line and make everyone else follow you.

 

Make sure your supply chain has substantial flexibility and modularity to succeed and thrive, along with supply chain visibility, and the possibilities will be endless.

 

2) Your weaknesses are staring you in the eye.
How great is it to be aware of your weaknesses? From my perspective, it’s really great. I like to know my weaknesses, before it’s too late. This gives me time to be proactive and prepare for the future.

 

Like with the Bernie Madoff situation, the economic downturn revealed numerous vulnerabilities that led to even greater problems. Repairing a crack in the Hoover Dam would be a lot easier than rebuilding it. Take the time to patch up the areas that need the most work now so that you are not fighting against the current as the recession ends.

 

3) You can put your best foot forward – OK, right foot, now, left foot.
As we climb out of the recession, it’s an uphill struggle. As you huff and puff to make it to the top, it may be easy to forget that your competition is struggling too. However, now is the most opportune time to get ahead of your competition. The best way to do this is by knowing what you are up against and understanding what it is that will put you ahead in the race. Evaluate your competition and stay at least one step ahead.

 

4) You control your destiny.
You can sit on your hands and wait to see what happens, or you can get out there and create your own destiny. Keep up to date on what’s going on in the economy as a whole and know what’s going on in your industry. For example, the supply chain challenges food and beverage industry executives due to many issues like new FDA regulations, not to mention the changes in consumer habits due to tighter food budgets as a result of economic pressures. Usher in smart strategies and processes for your industry and your business. You can check out the Executive Briefing that I recently wrote on "The Great Comeback," which will help you create a plan and be more prepared, no matter what your industry.

 

5) Did you think any of the above metaphors were a little too cheesy? Well, here’s one for you: America’s Got Talent. And I mean lots of it.
What’s been happening to all of the folks who make up the high percentage of unemployment? They’re waiting to hear from you. As the economy rode the down slopes, we tried to encourage companies to keep their talent, but many continued with layoffs for various reasons. Now, here we are on the lift, and you can pick up some really talented passengers.

 

Stay positive as you create your Comeback Plan. Keep these five exciting reasons in mind and be open to new opportunities. In the end, you’ll be on top, leading others out of the recession.

Go!Go!Go!

Jim

Photo credit: conanil

You’ve had the secret weapon to beating the Great Recession all along. What you need to do now is remove it from hiding, read the user manual, and customize it to your industry sector and company.

In my last blog post, I talked about why we are on the uphill climb to economic recovery. Now I want to talk about developing and using your secret weapon – a Comeback Plan. This should be an actual concrete (while flexible) plan and you need to launch it now – even if you believe that your company’s recovery is a year away. Any delays now can have a major and lasting long-term effect on your organization’s health.

In short, think about the current marketplace, your competition, what you are going to do when the market returns to "normal," how your business is currently performing, and build a plan that will help your company prosper when the time is right.

If you pull this plan out of your arsenal at the right moment, you will blow away your competition and become a leading contender in your industry sector.

The most successful Comeback Plan includes the "Five Steps to Recovery and Growth" (click to watch a video on this topic.) 

Step 1: Environmental Assessment:
Examine the impacts that the following factors are having and will have on your business. These are indicators of when your market will grow.

Step 2: Competitive Intelligence:
Know your competition. What have they done in response to the recession and what are they likely to do going forward? Have they hunkered down or have they raised the competitive bar? Think about how they will respond to what you do and vice versa. Understanding your competitors and staying ahead of their next move will put you in the lead.

Metaphorically speaking, keep in mind that if you are with a group of people in the woods and a bear starts chasing you, you don’t have to be faster than the bear; you just have to be faster than the slowest person. It pays to know what you are up against.

Step 3: Comeback Expectations:
The more you read and understand about the economic recovery, the more prepared you will be. Understand the timing and magnitude of your company’s Comeback from the recession, given marketplace demand and response from your competition. Know when your turning points are and what your recovery lead time and future volumes will be. Although forecasts are not entirely reliable, it’s good to have the full picture in mind when thinking about your company’s Comeback.

Step 4: Organizational Analysis:
This step is about knowing the capabilities of your organization and determining how your organization compares to others (click here to learn more about the process of benchmarking and best practices) performing the same processes. What process upgrades do you need to deploy in order to not only recover, but to also gain market share, grow and prosper? What are the process upgrades that you need to have in place after the recession to enhance customer satisfaction, increase capital efficiency, increase profitability and increase long-term shareholder value?

This is about knowing where you stand, and again, knowing how you compare to your competition. Take into account what you learned during the recession and employ a formal process of global supply chain best practices and benchmarking.

Step 5: Define a Comeback Plan:
After thinking through each of the previous four steps, it is time to create a list of process upgrades that need to occur to allow you to gain market share, grow and prosper. This may not be easy. Many times you will need to plan ahead for lead times of these implementations, and being too cautious or too slow as your organization begins to pull out of the recession could prove to be reckless.

Build and brandish your secret weapon now by creating your Comeback Plan before your competition gets wind of your mission. Keep your eye on the target and Go!Go!Go!

Jim

More on how to build your secret weapon:

Download the new Executive Briefing, The Great Comeback From the Recession: Your Company’s Secret Weapon – Create Your Plan, Reduce Future Risks and Pull Ahead of the Competition.

 

Watch video of a recent live presentation.

Watch for parts 3 and 4 of this Great Comeback blog series in the coming days.

Photo credit: Bogdan Suditu

As I mentioned in my previous post, I began a four-part series of podcasts this week on your post-recession return to recovery, growth and prosperity.

In "The Great Comeback, Part One: Responding to the Recession," one of issues that I discuss is the role that our highly efficient supply chains have played in the recessionary cycle. For the first time ever, could it be that global supply chains actually helped accelerate the economic downturn? I think so.

When the U.S. economic situation went into meltdown in 2008, the entire world felt the effects almost immediately. The recession went global as imports and exports shrunk everywhere. I believe that this worldwide impact was the result of the global integration and connectivity of supply chains today.

If that is so, then we should have had plenty of warning. We have been living in various eras of globalization all the way back to 1492, according to the author of The World is Flat, Thomas Friedman. That year, of course, is when Columbus set sail for the West Indies. Friedman calls that event Globalization 1.0, followed up by innovations made between the 19th and 20th centuries such as electricity, phones, fiber optics, and the Internet – Globalization 2.0.

The current era, Globalization 3.0, is where we are today. Friedman defines this 3.0 era with the collaboration and competition we are now able to participate in globally due to innovations in software and communications. I think the global supply chain is a part of what makes it a new era as well.

Globalization is created through human innovation, such as the discoveries and revelations Friedman points out. The world has been shrinking for generations, and with Internet software and communications, it seems to get smaller by the minute.

Just as globalization and global supply chains were a factor in the recession's spread being more rapid worldwide, it will also help it end faster. I believe the global supply chain currently is – and will continue to be – a key factor in recovery from this recession. As consumer confidence returns, companies that are the best prepared will have busy global supply chains in place all over the world to meet the demands of the market while staying efficient and hitting benchmarks.

It is important that all business leaders and managers be prepared for this situation, as the benchmarking of the supply chain will be a big factor in how competitive a company will be in the post-recession market. The economic bottoming-out of some industries such as pharmaceuticals, food and beverage, and inexpensive consumer electronics has already begun, and these companies are leading the Great Comeback.

To listen to this podcast, or to see the text transcript, go to

http://www.tompkinsinc.com/podcast/transcripts/7-7-09_podcast22_great_comeback1.asp  

I would be very interested in your thoughts on the connection between supercharged, global supply chains and economic recovery. What has your experience been and what are your predictions?

Jim

The answer: FedEx and UPS as they fight tooth and nail against each other over the FAA Reauthorization Act of 2009.

Chris Ferrell, Associate Director of the Supply Chain Consortium, is not only a transportation and benchmarking and best practices guru, he also knows an enticing, controversial story when he sees one. As you’ll see in his post below, FedEx and UPS are in a heated battle involving unionized labor. Chris pulls out the humor in the situation, while summarizing a pretty serious situation.

Here’s what he has to say.

___________

As a transportation professional, I have been fascinated by the recent wrangling between United Parcel Service (UPS) and FedEx over how the two parcel giants should be governed. You see, FedEx has launched a multimillion dollar ad campaign, including a thinly-veiled website that takes potshots at UPS for promoting legislation aimed squarely at making it easier for FedEx employees to unionize. In response, UPS quickly replied with a very direct press release, which also has a lot of valid points.

I encourage you to take a look at both websites, if for no other reason than the hilarious parody of UPS’s "whiteboard guy" with the goofy haircut. But be forewarned: Both are as heavily slanted as you might expect, and there are no innocent victims here.

Here’s the meat and potatoes of the situation: The FAA Reauthorization Act of 2009, which passed the House on May 21 by a 2:1 ratio, has a clause (Section 806, for those so inclined) that essentially says that those employees of express delivery services who are not directly involved in the airplane component (flying, maintenance, loading/unloading, etc.) should be governed by the National Labor Relations Act (NLRA) rather than the Railway Labor Act (RLA). Section 806 takes up a little more than one page of an otherwise mundane 325-page bill intended to appropriate funds for the FAA through 2012.

The RLA has overseen the railroads since 1926 (amended to include airlines in 1936) because of the unique aspects of transportation networks. It exists "to avoid any interruption to commerce and to assist in the prompt settlement of disputes," while working "to ensure the right of employees to organize." This has the effect of allowing employees to unionize but only if they vote to do so nationwide, and even then, it effectively prevents them from utilizing organized labor’s most damaging weapon: the prolonged strike. The NLRA, on the other hand, allows for any definable group – a specific type of employee, employees at an individual location, etc... – to elect to unionize.

FedEx, which began exclusively as an overnight delivery airline, was correctly placed under the jurisdiction of the RLA and is largely non-union. UPS, which began in the time of the horse-and-carriage, is governed by the NLRA and is heavily unionized. Still, I doubt many of today’s consumers could tell a discernable difference between the modern-day versions of the two companies, as both offer a full line of next-day air, second-day air, and ground services ... and there is absolutely no difference in the pickup and delivery components of the two competitors.

So, on the one hand, UPS is entirely correct to want the same rules imposed on their competition (and make no mistake, the legislation is absolutely being driven by UPS). On the other hand, no one who remembers the UPS strike during the fall of 1997 would deny that the parcel giants have the potential to cause prolonged "interruption of commerce" capable of crippling an entire economy.

For its part, FedEx has its own history of exploiting political loopholes. Before they got into the ground and parcel business, the company went to great lengths to get all of its air-express employees under the jurisdiction of the RLA. They have also taken the oft-criticized (by unions and lawyers) and highly scrutinized (by the I.R.S.) tact of classifying their drivers as independent contractors rather than company employees. So, despite consistently being named to lists of best places to work, FedEx clearly sees sporadic – or even wholesale – unionization as a legitimate threat.

From a business perspective, the correct answer would be to have UPS governed by the RLA. UPS even made that case when they originally launched their air service; however, the Teamsters blocked UPS’s attempt to re-classify, and the two competitors have been playing by different rules ever since. So, should a company be able to maintain an exclusive competitive advantage even though it’s no longer unique, or should the playing field be leveled – likely at the expense of consumers – by legislation manufactured by its unionized competition, which has nothing to lose?

Neither choice seems right to me, but the issue has never really been about right and wrong. Rather, it is about two competitors, unchecked, inflicting as much damage to each other as possible. My guess is that the bill passes with the provision intact and that FedEx will be subjected to the NLRA – and potentially the Employee Free Choice Act (EFCA) – which is either pork barrel spoils for organized labor or the path to rebuilding America's middle class, depending on your perspective. But that’s another blog post altogether.

So, is one company more "right" here than the other? How do you think this will turn out? And what will be the ramifications of the outcome (good or bad)? Let me know what you think.

Chris Ferrell