We all know that globalization is creating longer, more complex supply chains. And naturally, this increases the risk of delay or disruption.

That’s why when we talk about global trade management, we include strategies for risks. So it should really be called global trade and risk management (GTRM).

Our global transportation experts, Don Anderson and Susan Evans, recently presented a Supply Chaincast on Global Trade and Risk Management: Capturing the Business Value. This webcast explores the practices and technologies to reduce total landed cost of goods sold or procured, improve cross-border process cycle times, and boost customer and trading partner satisfaction.

But optimizing your supply chain for cross-border transactions requires more than following rules and regulations. Success stems from a strategic risk agenda that includes:

• Identification and assessment of risks;
• Quantification of potential risk exposure;
• Development of scenarios and contingency plans;
• And establishment of risk mitigation and biz resumption action plans.

To learn more about GTRM benefits and strategies, download the on-demand webcast.

What are you doing to address these risks? What is your  current take on GTRM?

Go!Go!Go! Jim

More Resources

Tompkins Supply Chaincasts

Supply Chain News: Did Major Supply Chain Disruptions from Natural Disasters in 2011 Really Change Approach to Supply Chain Risk Management? (Supply Chain Digest)

 

Photo credit:  Tupwanders

Procurement certainly has come a long way.

The simple definition of “procure” that everyone knows is “to obtain, buy or acquire.” A more complicated definition would be something such as “obtaining goods and services from requisition to receipt and approval of invoice payment.”

Today, procurement (as “BUY”) plays a crucial role in all aspects of the supply chain mega processes of PLAN – BUY – MAKE – MOVE – STORE – SELL/DELIVER.

The new Tompkins Supply Chain Consortium report, Leading Procurement Practices: Trends of the New Procurement Organization, notes that procurement is shifting from tactical to more strategic activities.

In the past, procurement was very much a transaction-oriented process, whereas today it is a strategic initiative process. The shift from tactical to strategic can be attributed to procurement activities such as market knowledge, supply base management, risk management, and supplier selection, However, the core functions of strategic sourcing, purchasing, procurement IT and supplier relationship management are also still highly important.

Procurement is beginning to add value to the company through strategic alliances and advanced competitive analysis. And as the function gains ground, supply chains are demanding more skilled procurement professionals.

Some of the best and brightest are currently seeking careers in the procurement field, and they need to understand how to be effective in today’s complex supply chain environment.

Organizations are looking for broader experience in procurement due to increased globalization. This includes advanced relationship building and multilingual skills. Even professional societies are providing certification to enhance the skills of the professional workforce.

The Consortium report also indicated that the number of colleges with supply chain and procurement degrees is on the rise. So, I think it is safe to say that involvement in procurement is higher and will continue to advance further into supply chains.

What is your company’s current take on procurement? Is the evolving nature of procurement affecting how you hire staff?

Resources

Hot Topic Report: Leading Procurement Practices: Trends of the New Procurement Organization

Article: Procurement Process Improvements Can Lead to Increased Shareholder Value

Case Study: Procurement Assessment  

The Buy Process: Asia Supply Chain Excellence

I know what you’re thinking. Jim, you briefed the President? Right ….

Well folks, it’s true. And it all started with one characteristic that no entrepreneur can succeed without: being prepared.

Back when I was in college in 1969, I was the engineer from Purdue University selected to be a part of the White House Fellows Program. Once they found out I was interested in material handling, they assigned me to the U.S. Post Office, where I worked three times a week. 

At this time, the post office was transferring over to an independent agency, described by the Kappel Commission. These documents were about 18 inches high, but I figured if I was supposed to know anything about it, I had better read the whole thing.  I read it from front to back, and I even created an index for myself.

Eventually, the Postmaster General had a meeting where he provided an explanation of the Kappel Commission, which I found wasn’t entirely accurate. I showed him my notes after the meeting and ended up with an appointment in his office the next day. He was impressed by how prepared I was and even asked for a copy of my index.

The next day, I get a call from the Postmaster General himself. “Jim, it seems to me that you know more about the Kappel Commission than I thought, so will you come help me brief the President.” And that is how my preparation for a meeting that I wasn’t even involved in led me to personally briefing President Nixon.

And this rare accomplishment was achieved by going the extra mile.

My advice to budding entrepreneurs is this: Think about the next meeting. Who is going to be there? What questions are they going to ask? Why will they ask these questions? What are the objectives? What might the objections be? How do we explain the value?

Think. Think. Think. There’s no such thing as too much preparation. (Read more about the other 22 traits of a successful entrepreneur in this article that I recently wrote.)

When has being prepared led you to accomplish something great? What other qualities do you find essential to being a successful entrepreneur?

Go! Go! Go!

Jim

Photo Credit: Zena C

Bob Dylan asked in his thought provoking song, “Blowin’ In The Wind”:

How many roads must a man walk down, before you call him a man?

And then he really gets on it with:

How many times will a man turn his head and just pretend he just doesn’t see?

Well, almost 50 years after Dylan wrote this amazing song, this makes me want to ask:

How many times will we turn our heads and pretend we just do not know any better when we see huge organizations make major mistakes?

I know, I know … you can’t sing my question to the Bob Dylan music, but nevertheless, I have had it with organizations that refuse to grasp the reality about the sequence of steps in Strategy-Process-People-Technology. To be successful today, you must:

• First do Strategy
• Then do Process
• Then do People
• And lastly do Technology

The sequence here is what this is all about. If the sequence is broken, then the results will also be broken. But in spite of this, I continue to see organizations get this wrong in a big way. The two most common mistakes that I see are:

• Organizations jumping right into Process without knowing the Strategy
• Organizations starting with Technology (example. we WILL use ABC ERP) without understanding Strategy-Process-People

Well, I have stopped turning my head and am yelling, “Stop the music!” It is time we really grasp the essential rule that sequence matters. Please help pass this along:

• First we do Strategy
• Once we understand the Strategy, then we  design the Process
• Based on the designed Process, we next determine the People
• Working with the Process-People, we then define Technology.

We have turned our heads too many times and found ourselves just “Blowin’ In The Wind.” What song are you singing these days?

More Resources

Strategic Market Planning

Global Supply Chain Podcast

The 2010 holiday season was a busy one. And judging from the retail executives that I’ve talked to recently, plus the early numbers from sales, it looks like this will be the best retail season for this industry since before the Great Recession.

I’ve also had several conversations and done a lot of reading about the continuing growth of online shopping and the ease of having packages delivered right to our doorsteps – no crowded malls, no standing in line and no looking for that last spot in the mall parking lot. This year, more of us decided to park ourselves in front of our computers and buy our gifts with a click of the mouse. I personally never entered a store.

According to a MasterCard Advisors SpendingPulse report, consumers spent $36.4 billion online this holiday season – a significant 15.4% increase from last year.

So with e-commerce on the rise, how are retail companies handling the increase? E-commerce has become such a significant portion of total sales that the entire supply chain strategy is being reassessed, making e-commerce one of the Top 11 Priorities for Profitable Growth in 2011 for the retail industry. From network analysis, DC optimization, and improved shipping practices, the retail supply chain is focusing more on direct-to-consumer service.

At the same time, the new technologies that are pushing e-commerce are also changing the buying habits of consumers, giving them instantaneous information and access to products. Adapting to this wave of increased consumer intelligence is another top priority for this industry in 2011. Retailers who adjust to meet the needs of their customers will see the payout for years to come.

Take a look at other top priorities for the retail industry in 2011 and see how yours compare. Is your company prepared for the challenges and opportunities of the upcoming year as you work to achieve profitable growth?

What do you plan to focus on in 2011?

Happy New Year and Go!Go!Go!

Jim

Resources:

Top 11 in 2011 Priorities for Profitable Growth 

Photo credit: alancleaver_2000 

I am looking forward to the New Year with much anticipation. And I am sure that we are all glad to hear the recent news that consumer sentiment is on the rise and spending is expected to continue.

As consumer products companies prepare for the coming months, one of their biggest challenges is trying to stay ahead of consumer buying trends. This is one of the big challenges noted in our consumer products industry list of Top 11 Priorities for Profitable Growth in 2011.

Consumer buying trends are influenced by three main drivers: consumer confidence, the economy, and product changes. As the economy strengthens, consumers are more likely to purchase more and higher priced goods.

The ability to understand and react to consumer buying trends as early as possible, before they become obvious, creates a huge advantage.

Organizations that are thinking ahead of the consumer are also staying ahead of the competition. Check out the other trends and priorities on the Top 11 list to see what consumer product companies can expect in 2011.

Go!Go!Go!

Jim


Resources:

Top 11 in 2011 Priorities for Profitable Growth 

Photo credit: Amagill 

Leaves are falling and the air is crisp (and so are the apples!). Doesn’t this time of year always invite change? There are changes in our routines, changes in the way we dress, and changes in our thinking as we prepare for the winter months ahead.

In my general discussions with business professionals, I have noticed that there also seem to be changes in the air for business strategy. A new approach is needed to keep the blood flowing. In some instances, executives have cut costs, cut payroll, and cut excitement out of their business day.  They crave positive action.

The new buzz word is growth.  Companies in some industries have gone out of business or decreased their services greatly.  And this creates opportunities for those who want to grow their business in an economic downturn, just as it is coming back up. Now is the time!

There are several options to determine the best potential for growth through strategic market planning.  The best way to start is to take all of those thoughts in your head and write them on paper.  “I want to sell my product into Asia,” or “I want to offer my service into different vertical markets,” or “I want to buy this competitor.”

The potential growth strategies are endless, and therefore the sky should be the limit in making a laundry list of growth ideas.

Once the opportunities have been identified, they need to be quantified.  Key questions must be answered: How much revenue will this strategy produce? Better yet: How much will this add to the bottom line?  How will this affect our current supply chain strategy?

Steve Ganster, Managing Director in our Asia office, and I have had several conversations on growth given current market conditions. We invite you to discuss how you have turned your company into a win-win value proposition and moved forward during the downturn.

What are your plans for 2011?  What are your plans for growth?  I would love to chat about ideas to make next year bigger and brighter. The future should be so bright … you have to wear shades this winter.

GOGOGO!

Jim

More Resources

Resources for Specific Industries
Mergers and Acquisitions Resources

Photo Credit: Memotions

One’s first reaction to the question, "What to do with 2009?" may understandably be, "Forget about it." Say goodbye, gone and good riddance! Certainly I agree, but wait a minute. I do not think we can legitimately do this without further review, because, whether we like it or not, the 2009 data is a portion of our history, and we are forced to deal with it.

Dealing with it by just forgetting about it does not result in our closing out 2009, but rather it prolongs the agony we all felt in 2009.

Before I continue with this thought, let me pick up on a parallel track that helps me make this point even stronger.

Remember the survey showing that 75% of all men thought they were in the top 10% of all male athletes? Now, some of the women reading this will say yes, and the other 25% of the men will think they are in the top half. But, most men know this is because men interpret the question as being asked about men of their own age in the sport in which they perform best – not all male athletes in all sports.

Of course, some women may be rolling their eyes, and with good reason. Now let me go on to a related, but unfortunately, never-conducted survey that I also believe would ring true. I believe 75% of all the CEOs in the world (male and female CEOs) believe their organizations will be in the top 10% in growth in the coming years.

What do these two thoughts about 2009 data and 75% of CEOs seeing their organizations in the top 10% have to do with each other?

They both have to do with the base of data that we use going forward to conduct planning, budgeting, forecasting and target setting. Let me be even clearer by asking these 8 big questions:

1) Do you want to include 2009 (and possibly 2008 as well) data in your planning exercises going forward?

2) Do you want to include 2009 (2008) data when doing forecasting going forward?

3) How do you want to handle 2009 (2008) actuals when developing budgets going forward?

4) How do you want to handle 2009 (2008) performance when developing future targets for KPIs?

5) When planning the future, how do you want to handle the CEO's view of growth?

6) When forecasting future business levels, how do you want to handle the CEO's view of growth?

7) When establishing budgets, how do you want to handle the CEO's view of growth?

8) When establishing KPIs for the future, how do you want to handle the CEO's view of growth?

The answer to all these questions is the same, and it is not "Forget about it." 

The best possible answer to all of the above inquiries is: "with realism and thoughtfulness." Let me explain.

If, for example, your business performed in 2008 and 2009 in accordance with a long-term trends and your CEO has a good history of presenting achievable goals and your industry is not undergoing significant change, well then, stop reading this blog post, and go back to the bliss within which you live.

Now for the other 999 of us out of 1000, this blog post is for you and has in mind your goals of organizational excellence. You must proactively address "What to do with 2009?"

I strongly believe that in answering these 8 big questions, you must:

1) Adjust historical data to what would have been without the economic turmoil of the last 17 months prior to doing future planning.

2) Adjust historical data to what would have been without the economic turmoil of the last 17 months when doing forecasting going forward.

3) Adjust actual financial results to what would have been without the economic turmoil of the last 17 months when developing budgets going forward.

4) Adjust KPIs to what would have been without the economic turmoil of the last 17 months when developing future KPI targets.

5) Reflect upon the CEO's optimism when planning the future and filter this optimism with considerable sensitivity analysis so that you do the best job of planning for reality.

6) Reflect upon the CEO's optimism when forecasting the future and filter this optimism with considerable sensitivity analysis so that you do the best job of forecasting reality.

7) Reflect upon the CEO's optimism when establishing budgets and filter this optimism with considerable sensitivity analysis so that you do the best job of budgeting for reality.

8) Reflect upon the CEO's optimism when establishing KPIs for the future, and filter this optimism with considerable sensitivity analysis so that you do the best job of establishing realistic KPIs.

I am sure that you are noticing a pattern here.

So, "Forget About It" does not work to put 2009 behind you. In fact, if you do not proactively address the impacts of the Great Recession and make the appropriate adjustments, the evil of the economic meltdown of the last 17 months will continue to play havoc with your ability to perform.

Only after these adjustments are all made do I then believe the best thing you can do with 2009 is to just "Forget about it."

Go!Go!Go!

Jim

Other Resources

Great Comeback Executive Briefing: http://www.tompkinsinc.com/news/PR_2009/pr_102309.asp

Organizational Excellence: http://www.tompkinsinc.com/operations/organizational_excellence.asp

Bold Leadership Book: http://www.tompkinsinc.com/boldleadership/default.asp

Photo credit: lautsu

It’s no big surprise to many of us, but you have to say, wow, what a year for China economically. I won’t get into the politics and philosophies of this China boom that really began some years back, but I do want to address it from a business and supply chain perspective.

China surpassed the United States to become the world’s largest automobile market in 2009, figures just released show. China has also surged past Germany to become the biggest exporter of manufactured goods (in the midst of a global recession). The World Bank predicts that soon, China will overtake Japan to become the second largest economy in the world.

So what is the smartest China strategy for U.S. businesses to react with? I believe we have to look at the opportunities that the situation in China presents and discover how to grow trade, provide them with the supply chain and industry resources they need, and grow our own jobs and capital. There are other alternatives to be sure, but none that I see that will benefit U.S. companies as much in the long run.

Just look at the report issued last month by The American Chamber of Commerce (AmCham) in Shanghai showing that China presents one of the few future growth areas for U.S. businesses around the world. Based on a survey conducted by AmCham and Technomic Asia, the report reveals that 60% of American companies are investing in China for the revenue that is being created by the China market. In other words, their investment is not related so much to the availability of low-cost labor.

Another big, glaring bright spot is the material handling industry in China. If your business is involved in material handling systems and the technology, equipment and processes of warehousing and distribution, the door is wide open. It is quickly becoming one of the most important material handling markets in the world, and you don’t want to miss this fast boat to China (pardon the pun).

Other key sectors to watch right now in China include: 1) Medical, particularly healthcare services, look for the privatization of hospitals; 2) Automotive, consolidation of OEMs, growing strength of dealers and dealer groups, stronger aftermarket parts distribution; and 3) Consumer products.

I’d like to know your thoughts on China strategy for U.S. companies. What do you foresee in the next year or the next decade?

Go!Go!Go!

Jim

More resources

 

Multi-client report on warehousing opportunities in China: http://www.tompkinsinc.com/china/warehouse/china-warehouse-report.asp

 

Strategic sourcing and procurement: http://www.tompkinsinc.com/operations/procurement.asp

 

Caught Between the Tiger and the Dragon: A Business Novel

 

Book: The China Ready Company

After further reflection on "innovation" and what it means to be "innovative," I think we have a real problem when it comes to the recent thinking on this topic.

I just read a thought-provoking article on "the discovery skills that separate the true innovators from the rest of us." This article included the things we could learn about innovation from understanding Michael Dell, Steven Jobs, Jeff Bezos, etc.

Well guess what? Interesting read, but we could also probably learn some things from studying Superman, Batman and Spiderman. However, I seriously doubt that any of these six real or fictional men have much to teach us about the reality of business innovation as practiced today. Sure, if you are like Dell, Jobs or Bezos go for it, but for normal companies trying to move forward into 2010, a whole different mindset is needed.

Let me be clear:

1. It’s not about the breakthrough. Rarely is business innovation about a big breakthrough. Most of the time, business innovation is a refinement of an existing product, service or process that has huge value to the marketplace or to our business. Leadership is responsible to capitalize on this value.

2. It’s often in hiding. The greatest enemy of business innovation is not the failure to create innovation, but rather that no one notices the innovation and the resistance to change kills the innovation before it sees the light of day. Leadership must actively seek out and pursue the innovations that are in front of us but are hidden from the view of those too busy to notice.

3. It doesn’t take a superhero. Lastly, most people think innovation comes from "Innovation Centers," think tanks or R&D. Not true. The facts are most business innovation comes from the normal people within your company who have open minds, who listen well and who understand your business and your customers. Leadership must grab innovation and accelerate the value creation brought about from it.

So, clearly, innovation is leadership's job; not to create the innovations, but to stimulate, recognize and obtain value from innovations. My favorite question I hear from CEOs is: " How can I make my organization more innovative?" My answer is always, "Be innovative in how you attack innovation."

What does this mean? Do things differently. Shake some things up. Change reporting relationships, change responsibilities, change internal communications, and so on; do things differently. This is particularly true in today's business climate with the supply chain – a huge hot bed of opportunity for innovation today. It is very clear that only by doing things differently can we achieve innovation.

My top three thoughts on how you can "innovate with innovation" are:

1. Clearly communicate the message that: You expect every person in your organization to be engaged in some aspect of innovation. Interact across the business and across the supply chain. Better understand the needs and challenges of your supplier relationship management and your relationship management with customers. Look for opportunities to improve products, services and processes. Do not be afraid to collaborate outside of your organization or to use outside resources that have value to contribute.

2. Ask good questions. For example:

A. Ask questions about maximizing profits. Can you increase profits by reducing revenue? How can you grow profits?

 

B. Ask questions about elimination. Amazon eliminated the bookstore; Dell the computer store; Sony eliminated speakers. What can you eliminate?

 

C. Ask questions about additions to your products and/or services. Like adding wheels to suitcases, adding a camera to a telephone, adding value-added information to your customers. What can you add?

 

D. Ask questions about the customer experience. How can you alter your product or service to enhance customer value? What are your customers using your product or service for that is outside of your original intent?

3. Ensure that your organization has breadth of experiences and assign people of diverse background to work together. Innovations often occur when cross-functional knowledge of customer needs and industry trends are integrated to understand opportunities for improvement. Consider collaboration with suppliers, customers and outside resources. Engage business and social networking to listen to the marketplace. Understand the competition. Create a culture of identifying, prioritizing, allocating time and resources and recognizing and rewarding innovation. Encourage risk taking and understand the importance of learning from innovations that are not productive.

So, just as the thought-provoking article I referred to at the top of this article says, "Innovation is the secret sauce of business success," this secret sauce needs to be applied by today's leadership. Trying to be Dell, Superman, Jobs or others in that category is not the assignment; being yourself but innovating on innovation is what it is all about today.

Go!Go!Go!

Photo credit: Tostie14

I’ve had a lot of things on my mind since returning from an enlightening trip to Egypt. Traveling to ancient worlds tends to focus and refocus your thoughts and leads you to hone in on certain ideas about life and strategies.

For the last 34 years, I’ve been very fortunate in that I have had an opportunity to work in supply chain consulting for many of the most successful companies in the world – to interact with their executives and to learn.

As I reflect on what I’ve learned, two words come to mind to describe the secret of success. These two words are "High Intensity." This is clearly a work-in-progress, but let me share with you my current thinking on the Top 7 High Intensity Principles:

1. High intensity flows from being strategic, focused and purposeful.

 

2. It is always accompanied by a passionate pursuit of meaningful goals.

 

3. It demands speed, responsiveness, flexibility and agility.

 

4. It requires the fulfillment of expectations throughout the organization and the supply chain.

 

5. It will spread throughout an organization or supply chain when there is alignment around a shared consistent vision.

 

6. It nets substantial growth.

 

7. High intensity begets success, low intensity does not.

This is certainly a time to tap into the principles of high intensity; the world needs great energy and concentration as we continue to recover from the Great Recession. Living off the past and continuing with low intensity strategies will never result in successful economies, supply chains, or individuals.

I’ll delve deeper in high intensity in my next two blog posts, as well as expand a little on what I learned in Egypt. In the meantime, let me know your thoughts on this concept and how it applies to your life and your organization.

Go!Go!Go!

Jim

Photo credit: quatro.sinko

At the recent Supply Chain Leadership Forum in Chicago, we had a great opportunity to survey executives from some of the world’s leading high-technology, retail, consumer products and pharmaceutical companies.

But what really makes this survey unique is that we asked attendees what questions they wanted answered – in other words, what keeps them up at night? What do they really want to know to be fully prepared to improve their supply chain planning? The survey was given real-time via Zarca Interactive, and the results were presented the next day in a forum general session.

The question topics ranged from demand variability to logistics network designs to sourcing and economic recovery. Basically, they covered many of the key components found in any supply chain strategy today. I want to share a few significant results with you now in hopes that it will shed light on your own organization’s goals and needs:

41% say they think the economy will turn around and "The Great Comeback" will occur in the second quarter of 2010. However, more than 90% indicate that they have not developed a significant Comeback Plan or the initiatives to carry it out. See the two graphs below for details. 

Half of respondents report that their companies are becoming more centralized toward a global supply chain structure, while 22% say there has been no change in their organizational structure to accommodate global demands.

50% say that their sourcing in Asia is moderate, and nearly 17% say their sourcing in Asia is significant. And by far, a majority (almost 70%) report that cost reduction is the main reason their company pursues Asian sourcing. More details in the graphs below.

These are interesting findings that give a broader view into global supply chains. How does your company stack up in these areas? Let me know when you think the economy will rebound, how you are handling global demands, and how much and why you are sourcing in Asia.

I will share more results of the Leadership Forum survey in a future post.

Go!Go!Go!

Jim

P.S. If you are interested in attending next year’s Supply Chain Leadership Forum, save the dates of August 31-September 1, 2010. Here’s the agenda we used for the 2009 forum, just an example of the range of topics and networking opportunities.