Supply Chains: Are You Managing Your Risk?
There are many challenges to moving material within the continental United States. Yet it seems that everyone takes it for granted that it will occur. UPS, FedEx and DHL all have their operations moving materials all day and night. Yet they only manage a fraction of all the material that moves across the U.S. everyday. And it is going to keep growing. The Department of Transportation estimates that the volume of domestic truck freight will likely top 15 million tons in about three years. This is nearly a 50% increase from 1998. When this happens, the competition to secure cargo containers will be fierce, especially during the peak holiday seasons.
One major challenge is our own U.S. infrastructure. It is typical to think that the U.S. infrastructure is top notch, among the best in the world. But a review of the 2005 report card provided by the America Society of Civil Engineers shows that our Aviation rates a ‘D+’, Rail a ‘C-‘ and Roads a ‘D’. The scores are mediocre at best. Our infrastructure enables the movement of material in a timely fashion. However, it is not too timely anymore.
Adding to the challenge are the many mergers and acquisitions that are occurring in the trucking industry. As these continue to grow, the amount of national carriers continues to diminish. “Over the past three years, demand has clearly out-stripped supply”, notes Tim Coats, vice president, supply-chain logistics, at General Mills. “Many companies have been caught short.” Capacity constraints have enabled trucking operators to become selective about the routes and customers that they will support. Trucking operators have shut down marginally profitable routes or lines that no longer fit with their strategic goal. Today, carriers have the advantage, and its not likely to change anytime soon.
Today’s situation has lead many companies to initiate supply-chain risk-management initiatives. They must assess and mitigate risks in their supply chain in order to ensure that they can deliver to their Customers. For example, at General Mills, the cereal-maker’s management team identified the company’s busiest delivery routes. On arteries where the volume is consistently high, the company is negotiating dedicated service from cargo haulers. “We want trucks on those lanes available to General Mills 100 percent,” says Coats.
 Today’s carriers find themselves in a unique position, they have an advantage when negotiating with customers. Beth Enslow, Supply-Chain Service Director at the Aberdeen Group consultancy stated, “The situation has completely shifted. Manufacturers and distributors used to have the upper hand in setting prices.”
With the grass so green, what should today’s carriers do? Now is the time to invest in their own infrastructure to make sure they are ready for the new challenges of the future. Fuel costs, road construction, driver availability, equipment maintenance, these challenges will always be there. The carriers who look to the future, continue to invest and introduce new technology in order to scale to future demands are the ones who will hold a competitive advantage. Business is good. But it still comes down to managing cost, operating efficiently and keeping your customer satisfied. Don’t sit back and wait until the competition drives you to improve. Instead, be a change agent and take the calculated risks in order to drive continuous improvement and profitability. The right steps now can lead to continued profits down the road.
contributed by Michael Vigil
Co-Author of Driving Complex Change
Spotlight: Growing the Top Line
The recent business successes can be seen everywhere. The most visible indicator being the stock market's strongest performance ever. Companies are beginning to release the tightened purse strings and the spending machines are fueling top line growth.
Stimulating top line growth entails many aspects including having stronger economies, solid products and services, and being able to seize the window of opportunity. Too often much time is lost trying to determine how to administer or enable the change needed to drive the top line. Thoroughness is required, yet getting folks on board and up to speed seems to take forever.
Along with this new economic upswing comes the powerful reminder of not falling to the excesses of the past. The wounds are still fresh from the workforce cuts, program stoppages, and general chaos from the past four years. So how do you keep the team focused and yet respectful of the past? During this new business revival you should focus on increasing your ability to support your changing needs.
Just a quick look at the recent mergers of major companies and it is easy to see the negative impact of poor change management practices. The overall joint company valuations are a fraction of what was expected. Hence the need to reinvent yourself during times of prosperity in order to create a competitive springboard into the future. Developing skills to facilitate organizational acceptance, adoption, and advancement of any proposition is powerful. Doing it routinely is a competitive advantage.
So why is this still a major challenge today? Perhaps it’s because the many pieces of change management are fragmented. The secret sauce more likely is an integrated blend of activities that bring all the pieces of change management together. The next generation change management solutions are helping companies to institutionalize their new competencies and practices to accelerate their change efforts. This new approach is receiving much attention. Perhaps it's time to understand if it can make a difference for your team.
contributed by Pete Pazmany
Industry
Trends
Improving Strategic Planning
According to a recent McKinsey survey of nearly 800 executives worldwide,, the respondents believe that critical to the success of any organization is strategic planning, however less than half of the respondents were satisfied with their company’s approach to planning and implementing strategy.
When asked who makes the important strategic decisions in their company, more than half of all respondents said by a small senior group, including CEO or equivalent. Regardless of whom leads the decision making, executives that make good use of a formal process are more satisfied with strategic planning. Among those with a formal process, more than half say its plays a significant role in developing corporate strategy.
The top two key concerns of the respondents expressed towards executing strategy were:
Reflecting on these concerns, monitoring progress was the primary area many executives could see for improvement. Only 56 percent of respondents say that their company currently tracks the execution of its strategic initiatives. Secondly, the need for integration between the company’s strategic planning group and its human resources group. Lastly, companies need to focus their strategic planning on new growth opportunities.
To read the full summary on the survey, go to:
http://www.bettermanagement.com/library/library.aspx?pagetype=1&libraryid=14229
contributed by Deborah LeBaker
Product
Highlight
Common terminology within an organization is key to effective communications. MAX Partnering™ software has a built-in glossary of industry standard terms that is accessible by all system users. In addition, the glossary function allows each company to add their own terminology, acronyms, and definitions to augment the built in system glossary. This allows your company to customize definitions that may be unique to your organization or group in order to accelerate the adoption of those unique terms.
ASIL’s MAX Partnering™ Software application delivers this and much more. For a full feature description of the MAX Partnering™ software application, click here. (http://www.asil-inc.com/Products/Products.html
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