Many companies are looking at Supply Chain Risk Management as a result of the Japanese earthquake, hurricanes and tornadoes in the US, and recent financial upheaval in Europe. Most consideration is being given to having multiple suppliers, dispersed geographic location of suppliers, partnerships with suppliers, and even insuring the supply chain, all of which are useful approaches to supply chain risk management.
I ran across a very unique and powerful approach in a recent issue of Harvard Business Review that uses process innovation as a foundation for Supply Chain Risk Management. The article sites Zara, the global women’s fashion retailer, Dell, Caterpillar, Rolls Royce, MyFab, a European internet-based furniture retailer, and LiveOps, a company that provides customer service call support from the US, among others.
To help reduce supply risk, these companies do three things:
- Delay production commitments until the last possible moment
- Rewrite contracts to redefine revenue as an outcome rather than a deliverable
- Improve the quality of information
By moving from problem solving to innovation in supply chains, these companies have not only mitigated their risk, but they have created a significant competitive advantage. Working together with your suppliers and customers can help you manage the risks in your business is ways you might never have thought of.
Source: Girotra, Karan and Serguei Netessine. “How to Build Risk Into Your Business Model,” Harvard Business Review, May 2011, pp 100 – 105
© Rick Pay 2011, All Rights Reserved
Recent trends toward smaller, more intimate retail stores suggest that the era of large-scale one-stop shopping is on the decline. As consumers grow more focused in their spending, stores are adapting by taking a more streamlined approach to their product offerings – hopefully in line with what their consumers want next. Some large retailers, like Cabellas, actually have small stores within their large stores to provide an intimate, focused shopping experience.
This brings up two issues: flexibility and brand identity. Flexibility allows a company to rapidly change product offerings in response to sales, and even change the layout of a brick and mortar store thanks to clever design innovations like cash registers mounted on movable counters, modular display systems, and one of my favorites: the highly mobile sales staff at the Apple Store.
Change is an essential ingredient in Continuous Improvement, and part of getting better is being prepared for (and being enthusiastic about) change. A flexible environment in a retail store is just one example; others include altering the layout of a manufacturing shop floor to better suit improved processes, or using temporary labor to satisfy a spike in consumer demand.
Who Are We?
Choosing to go smaller requires an intensive examination of brand identity – what products do you keep, which do you discontinue as you downsize, and how does the public perceive you based on these choices? Of course there is more to brand than just product lines, but there are some serious decisions to be made about which products to emphasize and which to discontinue.
The place to begin puzzling out the answers is the company’s vision. Who are you as a company, and where do you want to be next? Using the vision as a guideline, each company can make decisions that support their overarching business goals – and that keep them in tune with their customers’ ever-evolving needs.
© 2011 – Rick Pay – All Rights Reserved
Authors: Rick Pay, Paige McKinney