Supply Chain Profits

7 07 2009

In terms of delivering goods or services to the consumer, the supply chain is not created equally.  More often than not, one part in the chain controls the bulk of the profits.  How did they get there?  They most likely earned it (though there are some interesting examples of other methods).  They have the power in chain to manipulate and control the negotiations.  They are the perceived value provider.

  • Where do you stand in terms of delivering value to the consumer?
  • What do the other parts in the supply chain offer in terms of value?
  • Can this chain be altered either from someone in the chain, or perhaps a whole new value chain?
  • What are your relations with the people in control, or with the entire chain?

Depending upon your business model, this could be a potential opportunity or threat.  We need to understand our position in the supply (or value) chain and if the position is changing.  We may not need to do it constantly, but we need to make sure someone owns the process and it is built into an ongoing management discussion.  At the very least it should be part of the strategy development plan.





Is Strategy top of Mind

10 05 2009

I recently read a few blogs from Jonathan D. Becher and it reminded me of a couple of stories.  I did a couple of webinars a year or so ago with the lead in being a question about how well do you know your corporate strategies.  What I consistently found was that 80%+ of the respondants could not cite the strategy off the top of their head.  This is clearly not new research as their are a number of people/companies that cite very similar numbers.  

I think there are a number of factors at play here:

  • Corporate Strategy has no lasting communication vehicle.  It is often discussed in conference calls and writen on walls, but we have no effective, living tool.  We need to build a communication plan around articulating strategy.  Here is a reference to an older blog of mine on Strategy Maps that touches on this subject.
  • We often lack a consistent framework for Strategy (or a single version of the truth), so we end up with a number of different frameworks for defining strategic objectives.  Corporate uses one framework, the business units another, and then each department creates something new as well.  What we end up with is too many messages and no clarity into priorities.  All of this becomes to difficult for anyone person to understand, so they just go about their day doing the things that want to do or that are easy to do.
  • We also have unstated strategic objectives, or as Oski refers to them in a comment on this blog post, “shadow strategies” where the organization says one thing, but actually does another. 
  • There is also personal politics and empire building that is probably more widely used than anyone would care to admit.  I have seen too many examples where people talk more about how big their team is than provide the value their team creates.  If this is what is top of mind, it is probably an indicator of their motivation.  
  • We don’t have a strategy management process.  Strategy is done independently from budget, or we hire some consulting firm to develop it and then the binders and reports are placed in an archive.