The Eagle's Dynamic Strategy

The Eagle's Dynamic Strategy

Business strategy is important as it can give you a competitive edge in securing clients over other companies who are pursuing the same business model.

In order to develop that edge, you need to identify a competitive advantage and develop your business strategy around it. Once you have done that, you need to sustain that advantage. Simply put:

Business strategy is the process that allows you to leverage, develop and sustain a competitive advantage over other companies targeting a similar market. The problem is sustaining that competitive advantage over time.

Can you sustain your advantage?

The problem is that we no longer do business in a bubble. Therefore, your competitive advantage can be enjoyed only for a short period of time. Modern business strategy must be a continuous process evolving with new competitive advantages. One must build their business on the basis of moving from one competitive advantage to another as smoothly as possible. This is a continuous process and one that is critically important to long-term success.

In general, you can only depend on new innovations giving you an edge for a year or two. For example, lower cost of base elements and new configurations can last a short period of time, sometimes as little as one-quarter of a year. These are tangibles that will impact your current edge. There are intangibles that must be paid attention to as well including how you are perceived by your customer base. This includes issues like how satisfied your customers are, how strong your brand is nationally and in some cases, internationally, how strong your distribution channels are and whether they can be expanded. The best part of the intangibles is they are far more challenging for your competition to duplicate without a significant investment in time, energy and in some cases, money.

 What is the bottom line?

In short: your overall business strategy and the competitive advantages you develop and nurture have to be more dynamic than ever. You have to identify a business strategy that works for you, analyze your competition's responses to your advances and work out your next steps. Stop and think about it like an eagle on a migration route: The eagle already knows where he is going and how he is going to get there. However, his decisions remain dynamic, responding to altitude, air currents and stops. There may be other factors that come into play including the weather and his need for food and shelter. Simply put: The eagle is always on the lookout for a new competitive advantage and he has developed a dynamic strategy to ensure he reaches his destination regardless of the circumstances he is facing. Without this type of dynamic strategy, the eagle would quickly exhaust himself; he must always be ready to adapt to changing conditions along his route.

While this may seem like an oversimplification of the problem, business strategies must have a competitive advantage roadmap. This means determining early on how long we will have a competitive edge once we have a new innovation and being able to jump to the next area that will provide us that competitive advantage once again.

If it were only that cut and dry

One of the biggest obstacles that a company has with maintaining a competitive edge is internal issues. One has to be poised to extract maximum value from each advantage and have the flexibility to adapt to new advantages nearly immediately. For most companies, this means having a continuous process of innovation and research and development.

Competition within the industry is not always the main competitive threat; in fact, there are far more significant threats that most businesses face like new business models, new technologies or new companies. You might be surprised to find out that the least of your problems is current competitors; there may be others waiting in the wings to pounce at an opportunity. These "nonobvious players" may be a more significant threat than your current competition.

This means you have to be constantly looking out for ways to keep your brand in a competitive model and be prepared to address changes nearly immediately. This is why businesses are now dealing with what we identify as "transitory competitive advantages". If your strategy for staying on top is not flexible and easily maintained through a dynamic strategy, you will lose any competitive advantage you have quickly and may not have an opportunity to regain your position.

What is the new approach?

Whether you are operating a small company, a business unit inside a major corporation or a medium sized company, we all have to change how we look at how we develop proper strategies. Successful companies may have a static strategy that allows them to focus on a single, sustainable competitive advantage. While this may work in the short term as new competitors arrive in the market, prices erode and our products become more mainstays, we will lose our competitive edge. Today, business strategies are far more complex and a product roadmap should be drawn up that includes the potential that another player is going to step into the field and how long you will have the advantage both prior to their involvement and immediately following the involvement.

"Yes, God plays dice with business"

Albert Einstein in a 1943 conversation with William Hermanns said "God doesn't play dice with the world" refer to quantum mechanics. He was not happy with the idea that probabilistic interpretation of Quantum Mechanics where identical measurements get you different outcomes. While we want to stay away from these complicated theories, they can be helpful in some manner. Bad strategies will produce bad results and a good strategy will produce good results.

The take-away is simple: A good strategy is important and critical for long-term business success. Your outcomes may not always be exactly what you anticipate but if you have a plan in place for dealing with both positive and negative outcomes, you should be able to succeed. Never forget about "probabilistic interpretation": The strategy perhaps does not deliver the outcome you expect but the end result is close enough. When developing your strategy in the end, this must always be taken into consideration.

Gaining a competitive advantage in today's marketplace means not only being able to bring new products to market but it also means tamping down the ability of your competitors to imitate your success. It also means being flexible enough to move onto the next project that will keep your business, brand strong and your competitive advantage high.

Only when you combine the right business strategy with a history of strong innovation and keep your competition at bay can you hope to maintain a competitive advantage. This may be done by keeping your company's internal and external successes from becoming formulaic which could increase competition. Today's business markets are more challenging than ever, once you have developed a strategy for "staying on top" you need to have the tools, talents and financials to stay that way. And do not forget your strategy perhaps does not deliver the outcome you expect but should be close enough.

The challenge in the current business world is not just to develop a competitive advantage. The main challenge is to sustain that advantage. Can we really sustain today a static strategy focus on a single, sustainable competitive advantage? Or do we really need a new approach to develop our business strategy?

Author: Miguel Amor
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Business Strategy Lessons From Apollo 13

Business Strategy Lessons From Apollo 13

Here are three lessons from the Apollo 13 mission that you can use to improve your strategic plan.

If you've seen the movie Apollo 13, you might remember that early in the crisis, Gene Kranz, the flight director, gives assignments to his engineers.  He cautions them to rely on data, telling everyone to "work the problem," and not make things worse by guessing.

Throughout the crisis, the astronauts and the team in Houston study the data, perform calculations, conduct simulations, observe the results and then calculate again.  They never guess when they don't have to - they obsess over data to ensure they understand the whole problem and the entire range of possible solutions.

Creating a great business strategy requires the same obsessive attention to data.  You have to base your solutions on statistically valid and comprehensive information about your company, your customers, your competitors and your industry.

Whenever you start a strategic planning process, every member of the planning team brings his own paradigms to the discussion.  People make assumptions based on their experience, anecdotes and "corporate urban legends" that exist in every company.

Generally, we've found that 80% of these assumptions are relatively accurate, but the rest are not.  That sounds like a good success ratio until you realize that if every executive is 20% wrong in her assumptions, then the team is seriously misaligned in their views of the current business situation. There's just no substitute for good data. It level-sets the team and equips them to make decisions with facts instead of hunches.

Another great lesson from Apollo 13 is how the engineers dove into the details to develop and implement solutions. One of my favorite examples is when they realize that they need a round air filter to fit into a square filter box.  They don't waste time discussing it theoretically - they simply gather up everything that they know is available to the astronauts in the spacecraft, and they build a prototype solution.  They hand-write detailed instructions about how to use a sock and some duct tape to solve the problem.  Then they radio the instructions to the astronauts who implement the solution. This situation models the second characteristic of a great strategy - your plans must be detailed enough so that everyone knows exactly what to do.  Getting very specific is challenging for a visionary executive team that's used to operating in the stratosphere. Some strategic plans fail at implementation because the strategy team doesn't agree on who will do what by when - and with which resources.

The movie "Apollo 13" depicts one last extremely important strategy lesson. The flight director knows his team faces huge risks and that the outcome is uncertain, but he refuses to water down the goal.  He doesn't say, "Wouldn't it be great if we could save the astronauts?" or, "Let's try to save two out of three." He says from the start that failure is not an option, and he deals with every situation assuming his team can overcome every obstacle.  He won't allow anyone to think otherwise. At one point, a White House representative asks the head of the Apollo program what he should tell the president.  The NASA chief gives a dismal assessment, saying, "This could be the worst disaster we've ever faced."

Flight Director Kranz overhears the comment, faces the two men and says, "With all due respect, I believe this will be our finest hour."  Let me ask you:  If the flight director didn't send this strong message to his team, if he showed any signs of doubt, do you think his team might have believed just a little less that they could save the astronauts?  Do you think the outcome could have been different? A great strategy is bold, clear and uncompromising; it energizes your whole company around significant and vital goals. And remember, your people want to be on a winning team - your strategy must convey that you are serious about beating the competition.

So there you have it - three lessons from the Apollo 13 mission that will improve your strategic plan. Remember to base your strategy on data, develop detailed action plans, and set goals that build excitement and conviction across your company.

Author: Ian Heller
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Supply Chain Management in Retail

Supply Chain Management in Retail

Supply Chain Management (SCM) is a network of facilities that procure raw materials, transform them into intermediate goods and then final products to customers through a distribution system.

Previously, individual activities of the SCM process were warehousing, distribution, transportation etc. done separately. Later, the process moved on to logistics where every activity was carried out in a logical sequence following a specific timetable. Now, an information backbone supporting the SCM process has helped retailers in greatly reducing cycle times and attaining efficiency.

SCM MANAGEMENT DECISIONS

There are three levels of decisions-strategic, tactical   and operational. The strategic level decisions are long-term decisions about location, production, inventory and transportation. Location decisions include size, number geographic location of supply chain entities. Production decisions determine what to produce, where to produce, which suppliers to use etc. Inventory decisions decide the way of managing inventories throughout. Transport decisions decide the mode of transport. Tactical level decisions are medium term decisions such as weekly demand forecasts, distribution planning production planning, material procurement planning. The operational level decisions are of short-term decisions concerned with day to day operations

Efficient Inventory Planning: Efficient inventory planning enables the retail organization to achieve its strategies and benchmarked standards of customer deliveries and thereby reducing supply chain expenses. Forward planning is done by forecasting sales and Beginning of Month (BOM) and End of Month (EOM) inventories for specific periods, and preparing the OTB (Open to Buy) plans. Efficient inventory planning optimizes purchasing controls through OTB so that the planned stock turns are achieved for the store with just-in-time inventories for freshness and achieving customer satisfaction through the seven 'rights' of merchandising –right product, right place, right quantity, right quality, right price, right mix and right time
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Pre-Purchase Order (PPO) and Purchase Order (PO): The PPO is an instrument through which the tentative plan of order placement to the vendor is done for the whole season as soon as the inventory planning is completed. The Purchase Order is the confirmed order for supply.

INTEGRATION OF SUPPLY CHAIN

The end-to-end integration of all supply chain elements and functions are achieved by applying interlinked packages. The integrated supply chain starts from the design stage at the vendor level to the time when there is consumer response at the retail stage. The benefits of having an integrated supply chain are best delivery performance, reduced inventory, faster cycle time, accurate forecasts, lower supply chain costs, improvement in overall productivity, improvement in capacity utilization, and so on.

Vendor Management: Efficient vendor management involves selecting the right vendors capable of giving the right quality of merchandise and to deliver the right quantities to get the right 'hit ratio'. The right hit ratio measures the gap between delivery and purchase orders and helps eliminate backlog in deliveries. In a chain store scenario, vendors’ direct delivery to stores is an important element in attaining good supply chain efficiency.

The vendors directly manage inventories in a few retail organizations. Vendor Managed Inventory (VMI) is ideal for retail organizations as it totally eliminates inventory-carrying costs. The vendors manage the inventory at every store, monitoring the flow of information and ensuring just-in-time deliveries. The vendors are able to take back slow-selling and non-moving merchandise, thus reducing the scope for mark-down losses for the store.

Electronic Data Interchange (EDI) helps in establishing an efficient information flow on stock movement, and the vendors can know sales and inventories instantaneously. Reorder supplies are immediately planned and executed by the vendors. The time taken to exchange documents for placing orders is eliminated thus achieving just-in-time inventory management. EDI is done with the help of the organization's ERP package that interacts with the vendors' systems.

Warehouse Management The retail warehouse or the distribution centre receives the ordered stocks; checks for the right quality, quantity and price; stores and tags the merchandise with both the MRP and security tags; prepares the merchandise; transports the merchandise; receives goods returned from retail stores, if any; and sends returned merchandise ‘to vendors back as returns..

A Goods Received Note (GRN) is prepared when the merchandise received at the warehouse from suppliers is checked and matched with the relevant purchase order after certifying all the elements of quality, quantity, etc. The GRN is then automatically recognized by the system after authorization for payment to the vendor by the accounts department. The merchandise is then docked and tagged with bar codes and price tags if applicable.

Inter-Transfer Note (ITN) When the prepared and readied merchandise is supplied to the retail stores ITN is prepared. The reverse ITN (ITN out) is prepared when goods are sent back to the warehouse by the retail store. Goods that are returned to the warehouse are then sent back to the suppliers and vendors. The system recognizes the same and raises a debit note to the vendors.
Transportation is done according to timely delivery schedules so that replenishments are delivered as per the plan. Cost efficiency and reduction in delivery time are critical success factors in transportation.

Efficient docking with a plan ensures the best utilization of space. Docking ensures that the First in First out (FIFO) delivery plan is followed so that ageing of merchandise in the warehouse is kept to the minimum.

Material Handling Equipment in the warehouse should be tailored for specific varieties of merchandise. At a micro level of handling, most of the time garments are delivered by hangers and sometimes by the browser itself in a ready-to-sell state.
Value Chain The entire SCM process is a value chain where bottlenecks, value-adding factors and liability factors are identified and addressed, thus enabling the retail organization to have an efficient supply chain. The entire process needs to be audited to meet timelines, and may be reengineered to achieve cost efficiencies and reduce cycle times.

Efficient Consumer Response (ECR) This is a replenishment system designed to link all parties in the logistics channel to create a massive flow-through distribution network. Replenishment depends upon consumer demand and point of sale information. In a retail organization, an integrated supply chain — with the right application of packages enabling the free flow of information and consequently merchandise and services elicits the greatest response from consumers since it addresses their needs appropriately.

PROBLEMS OF INVENTORY IN SCM

While oversized inventories are a costly inventory management strategy; low fill rates are also costly. Therefore the company’s interest to balance inventories holding cost and the cost of imperfect satisfaction. The main pitfalls in inventory management are:

• Inappropriate information system
• Incorrect delivery dates
• Organizational barrier
• Incomplete supply chain
• Failure to account uncertainties.

RETAIL AUTOMATION AND SUPPLY CHAIN MANAGEMENT

The challenges that a retail organization include huge stock-keeping units (SKUs), seasonal variations of product lines necessitating the introduction of new SKUs, complex tax structures, the sheer geographic spread of the country, changing consumer demands, etc. A retail organization has to plan perfectly to satisfy the needs of every customer. Automation through the implementation of ERP systems has helped many organizations improve their efficiency and helped them grow.

 

Author: Dr.L.Lakshmi

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Impacts Of E-Commerce On Business

Impacts Of E-Commerce On Business

E-commerce has made a profound impact on society. People can now shop online in the privacy of their own homes without ever having to leave. This can force larger brick and mortar retailers to open an online division. In some cases, it can also force smaller businesses to shut their doors, or change to being completely online. It also changes the way people look at making purchases and spending money. E-commerce has changed the face of retail, services, and other things that make our economy work. Undoubtedly, it will continue to influence how companies sell and market their products, as well as how people choose to make purchases for many years to come. The following are the impact of e-commerce on the global economy.

Impacts on Direct Marketing

Product promotion E-commerce enhances promotion of products and services through direct, information-rich, and interactive contact with customers.

New sales channel E-commerce creates a new distribution channel for existing products. It facilitates direct reach of customers and the bi-directional nature of communication.

Direct savings The cost of delivering information to customers over the Internet results in substantial savings to senders when compared with non ­electronic delivery. Major savings are also realized in delivering digitized products versus physical delivery.

Reduced cycle time The delivery of digitized products and services can be reduced to seconds. Also, the administrative work related to physical delivery, especially across international borders, can be reduced significantly, cutting the cycle time by more than 90 percent.

Customer service Customer service can be greatly enhanced by enabling customers to find detailed information online. Also, intelligent agents can answer standard e-mail questions in seconds and human experts' services can be expedited using help-desk software.
Corporate image On the Web, newcomers can establish corporate images very quickly. Corporate image means trust, which is necessary for direct sales. Traditional companies such as Intel, Disney, Dell, and Cisco use their Web activities to affirm their corporate identity and brand image.

Other Marketing Impacts

Customization E-commerce provides for customization of products and services, in contrast to buying in a store or ordering from a television, which is usually limited to standard products. Dell Computers Inc. is a success story of customization. Today, we can configure not only computers but also cars, jewellery, gifts, and hundreds of other products and services. If properly done, one can achieve mass customization. It provides a competitive advantage as well as increases the overall demand for certain products and services.

Advertisement With direct marketing and customization comes as one-to-one or direct advertisement, which is much more effective than mass advertisement. This creates a fundamental change in the manner in which advertisement is conducted not only for online trades but also for products and services that are ordered in traditional ways.

Ordering System Taking orders from customers can drastically be improved if it is done online. When taken electronically, orders can be quickly routed to the appropriate order-processing site. This saves time and reduces expenses. So sales -people have more time to sell. Also, customers can compute the cost of their orders, saving time for all parties involved.

Markets The physical market disappears as does the need to deliver the goods to the marketplace. In a market space, which is an electronic market, goods are delivered directly to buyers when purchasing is completed making markets much more efficient. For those products that are digitally based-software, music and information-the changes will be dramatic. Already, small but powerful software packages are delivered over the Internet. This fundamentally affects packaging and greatly reduces the need for historical distribution.

New selling models such as shareware, freeware are emerging to maximize the potential of the Internet. New forms of marketing will also emerge, such as Web-based advertising, linked advertising, direct e-mail, and an increased emphasis on relationship marketing. Customer’s convenience is greatly enhanced, availability of products and services is much greater, and cheaper products are offered. All these provide EC with a competitive advantage over the traditional direct sales methods. Some people predict the "fall of the shopping malls," and many retail stores and brokers of services are labelled by some as "soon to be endangered species."

Impacts on Organizations

Technology and Organizational Learning Rapid progress in E-Commerce will force companies to adapt quickly to the new technology and offer them an opportunity to experiment with new products, services, and processes. New technologies require new organizational approaches. For instance, the structure of the organizational unit dealing with E-Commerce might have to be different from the conventional sales and marketing departments. To be more flexible and responsive to the market, new processes must be put in place. This type of corporate change must be planned and managed.

Changing Nature of Work The nature of work and employment will be transformed in the Digital Age; it is already happening before our eyes. Driven by increased competition in the global marketplace, firms are reducing the number of employees down to a core of essential staff and outsourcing whatever work they can to countries where wages are significantly less expensive. The upheaval brought on by these changes is creating new opportunities and new risks and forcing us into new ways of thinking about jobs, careers, and salaries.
The Digital Age workers will have to become very flexible. Few of them will have truly secure jobs in the traditional sense, and all of them will have to be willing and able to constantly learn, adapt, make decisions, and stand by them.

New product capabilities E-commerce allows for new products to be created and existing products to be customized in innovative ways. Such changes may redefine organizations' missions and the manner in which they operate. E-Commerce also allows suppliers to gather personalized data on customers. Building customer profiles as well as collecting data on certain groups of customers, can be used as a source of information for improving products or designing new ones.
Mass customization, as described earlier, enables manufacturers to create specific products for each customer, based on his or her exact needs. For example, Motorola gathers customer needs for a pager or a cellular phone, transmits them electronically to the manufacturing plant where they are manufactured, along with the customer's specifications and then sends the product to the customer within a day.

Impacts on Manufacturing
E-Commerce is changing manufacturing systems from mass production to demand-driven and possibly customized, just-in-time manufacturing. Furthermore, the production systems are integrated with finance, marketing, and other functional systems, as well as with business partners and customers. Using Web-based ERP systems, orders that are taken from customers can be directed to designers and to the production floor, within seconds. Production cycle time is cut by 50 percent or more in many cases, especially when production is done in a different country from where the designers and engineers are located.

Companies like IBM, General Motors, are assembling products for which the components are manufactured in many locations. Sub-assemblers gather materials and parts from their vendors, and they may use one or more tiers of manufacturers. Communication, collaboration, and coordination become critical in such multitier systems. Using electronic bidding, assemblers get sub-assemblies 15 percent to 20 percent cheaper than before and 80 percent faster.

Impacts on Finance
E-commerce requires special finance and accounting systems. Traditional payment systems are ineffective or inefficient for electronic trade. The use of the new payment systems such as electronic cash is complicated because it involves legal issues and agreements on international standards. Nevertheless, electronic cash is certain to come soon and it will change the manner in which payments are being made. In many ways, electronic cash, which can be backed by currency or other assets, represents the biggest revolution in currency since gold replaced cowry shells. Its diversity and pluralism is perfectly suited to the Internet. It could change consumers' financial lives and shake the foundations of financial systems and even governments.

Author: Dr.L.Lakshmi
Source: Link

Supply Chain Maturity

Supply Chain Maturity

Managing the supply chain and finances are the core factors that determine the success of any organization. For ages, executives keep on experimenting with different approaches to optimize their supply chain and cash flow. Supply chain management is one of the most important strategic aspects of any business enterprise. Decisions must be made about how to coordinate the production of goods and services, how and where to store inventory, whom to buy materials from and how to distribute them in the most cost-effective, timely manner.

What are those Critical Dimensions or Key Performance Indicators that drive the agility and maturity of a supply chain? Most of them are quite obvious and most of the organizations keep a religious watch on this but even then those companies make only the 10% of all those organizations that can benefit much more if they streamline their processes, capabilities and compliance related stuff connected with SCM. Let us look at some of the critical dimensions in this respect:

Supply Chain Visibility: End to end supply chain visibility is the first major need to make it more agile and mature. It is highly recommended to use a commercially available best of breed (or ERP) solution to monitor line level statuses in orders, on hand inventory and those assets that are not stationary and this includes field inventory, service equipment, containers etc. Certain visibility initiatives like financing triggers, warning alerts on events that drive inventory stocking, tracking actual total landed cost as sales order progresses etc. are the hot initiatives in this area

Automation Level: It is not just automation of order entry to picking to shipping and from forecasting to demand to plan to build/procure but also end to automation of all systems that complements your main system of reporting and transactions. It includes systems like PLM or B2C order capturing portals that are input systems as well as Business Intelligence tools that act as the output systems to your main transaction system. The more the automation, more mature and agile is supply chain

Logistics Agility: Processes such as using nearest warehouse to the customer, supplier drop ship, transit order re-direction or grouping shipments in same route play a major role in streamlining the supply chain. Organizations need to keep on thinking on new actions in this space and plan to execute them frequently.

Business to Business Collaboration: Customers and Suppliers are to businesses that one must collaborate with. This will not only keep the inventory to the minimum level but also will help in improving fill rates and reduce stock-outs. Identify the processes where collaboration will help the organization most and take actions accordingly.

Risk Management: Supply chain resiliency is one of the most critical factors in maintaining the agility of supply chain and it is seen that though most of the organizations are worried about this but do not take substantial actions in this area. It is important to manage supply chain resiliency to risk related events. Also, employ network design and inventory optimization tools to quantify supply chain risk and create short-term and long-term crisis response plans.

Compliance in Trade: The more manual hand-offs are present in the processes, more are the chances of inconsistency in compliance of trade laws. Also, not having a single source of truth and independent databases for import and export data per country will also contribute to non compliance ultimately impacting the supply chain processes. It is high time to have one single enterprise wide trade compliance platform that is automated and integrated with all the related processes.

Competitive Resourcing:The times of in-house resourcing are now ripe and the success of outsourcing story has proven that while the in-house resources in certain areas are more costly, they also are less efficient that their BPO counterparts. Need is to evaluate carefully, where exactly this initiative is required and what are the tangible or non tangible benefits expected and take an informed decision. The good part is that most BPO's come with their own collaboration and visibility techniques and also share their best practices that they picked from their customer across the globe and this makes move a "check and mate" move to improve the supply chain maturity.

Author: Puneesh Lamba
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