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Item Upon - Achieving Competitive Advantage through Collaboration with Key Customers and Suppliers
You know how it is, you believe something for so long, everyone agrees with you, all the books tell you it's true and then suddenly you have a blinding revelation - we've all been duped! You know like my gorilla mates were? (If you're not sure about my gorilla mates then you really need to read the book - we've got a great offer on at the moment!)And you feel such a chump - how did I ever fall for that - the logic just isn't there - I must have been a fool. Let me explain."Under Promise & Over Deliver"You know the old saying "Under Promise & Over Deliver"? - well, here's the idea behind it.Buyers these days are ever more ready to complain when something isn't to their liking (yes, even in the UK!) Customers are prepared to walk if you don't deliver when you said you would. Clients are mobile and promiscuous and will change supplier if they can get better service.So in order to meet these demands, for the last 20 years or so, we've all been applying the mantra "Under Promise & Over Deliver" - for example, tell them the job that'll take 10 days wil
Costs can also be reduced dramatically through simple operational coordination between suppliers and customers. Systems, processes, and organizations can be joined up much more effectively to eliminate unnecessary duplication and increase the through-put and flexibility of both supplier and customer organizations.
The interfaces of goods delivery/goods-receipt, invoicing/invoice-processing
Companies must take certain issues into perspective before franchising a company. The first would be to get the franchise registered with the U.S. Trade Mark office. A Trade Mark attorney would be able to take care of this process. The company needs to register the names of all the states where the franchisees are most likely to be opened. They must register for multiple units if relating to more than one franchise operation.The company must have all the regulations, rules, and other procedures ready as manuals for the franchisees. This manual must cover all the financial, administrative, accounting, and legal aspects concerning the successful opening and running of a franchise. All the training that is to be provided to the franchise employees must be available as and when required. New strategies being implemented into the business must be available for the franchisee’s perusal. The training must be scheduled as per the training manuals provided and the manuals must also contain updated training procedures for existing employees. Advertising and promotional related aspec
In the past when companies pondered corporate strategy, operations had been peripheral to the discussion. Operations were considered a technical matter with one way of doing things and therefore not, strategic. Strategy is about products, markets, and competitive advantage with divergent possibilities.
Operations were seen as a series of puzzles with single best solutions. The realization that optimization of parts did not optimize the whole led to new focus - operational management went up a level from looking at individual tasks to looking at whole processes. During the 1960s, Japanese manufactures obtained competitive advantage by optimizing operational efficiency, which meant lower prices, flexible production capabilities and a reduction in lead times. Operational considerations became a key theme in strategic discussions.
During the 1990s, companies like Dell took this further. The computer market was changing faster than any other market had done in history. Dell began managing operations by synchronizing functional activity into a single corporate heartbeat. An order instantly drove procurement, which drove production and then distribution. The result was a further drop in lead times, inventory requirements, and operating costs along with flexibility. Operational efficiency was Dell’s sole source of competitive advantage and it reaped enormous market share gains.
Collaboration – The Next Step
The historical trend is clear. The impact that one activity has on the next means they cannot be optimized in isolation. The result is that operations have become the key corporate strategic consideration. Yet the nature of competitive advantage is to elapse as competitors replicate it, which places a continual onus on companies to find new differentials. This begs the question - what next?
The answer lies in another step up in the way we view corporate operations. We need to look beyond the borders of the firm in our search for operational efficiency. Optimized company operations can only be achieved through alignment and coordination with the agents up and down stream. Collaboration with suppliers and customers is the essential vehicle of the 21st century for achieving competitive advantage from operations.
The benefits of Collaboration
1. Sharing demand signals
The first step to collaboration comes through information sharing. Across nearly all industries, companies play a guessing game (called forecasting) to estimate the products and quantities that their customers will demand across different markets. Even if a company gets it just right it still needs large inventory buffers to cope with demand variability, thus dramatically reducing its capital efficiency. It is imperative to compress lead times to meet demand rapidly and lessen these negative effects - this can negate the production-cost benefits of today’s off-shoring vogue in China. The butterfly’s wing effect on forecasting and ordering means the end demand signal gets wildly distorted as it echoes up the supply chain being reinterpreted and exaggerated at each turn. Inaccuracies are amplified at each stage, leaving suppliers facing high-stake production gambles.
The answer is simple - relaying end user demand signals and likely future order quantities to suppliers up the chain. This is the single biggest benefit of collaboration and it comes at virtually no cost reducing much of the variability from the forecasting calculation. A supplier’s response will be a much closer fit to market demand if information about likely order quantities is shared. Typically, inventory levels can be reduced by two thirds, service levels sky-rocket while lost revenues evaporate, and supply costs are cut by a quarter when demand information sharing is implemented correctly.
2. Efficiency through alignment
The next step is operational coordination. Working capital naturally collects at the borders of the firm. Finished Goods nearly always account for much more inventory than Work in Process, mainly because of the typical inadequacy in coordination between supply chain entities. Accounts receivable tend to be swelled by disputes and billing problems, which would be ironed out instantly if they were internal issues. Most companies currently allow working capital to accumulate at the point where their processes meet those of their customers and suppliers, which provides a great opportunity for freed cash flow and increased capital efficiency.
Costs can also be reduced dramatically through simple operational coordination between suppliers and customers. Systems, processes, and organizations can be joined up much more effectively to eliminate unnecessary duplication and increase the through-put and flexibility of both supplier and customer organizations.
The interfaces of goods delivery/goods-receipt, invoicing/invoice-processing
Every company whether large or small should develop a press kit for distribution to media outlets and other news sources. The digital age is here and the greater number of sources that will publish your press releases online the greater your web presence will be in the future, as search engines index these sites and picks up the content. Your press release should contain keywords that you use to promote your product or service to your customers and words that will help you rise to the top of the search engines. Your pr program is another channel for branding your company as well.Some basic information about your company, products, or services should be contained in your press kit. A press kit allows for easy distribution of company news to media outlets and other news sources. The following is a list of items you should have in your media kit.Press Kit:• Catalogs or Brochures• Management Biographies• Photos of your products or service• Testimonials• Company logos• News Worthy Press Releases• Photos of key employees
Collaboration – The Next Step
The historical trend is clear. The impact that one activity has on the next means they cannot be optimized in isolation. The result is that operations have become the key corporate strategic consideration. Yet the nature of competitive advantage is to elapse as competitors replicate it, which places a continual onus on companies to find new differentials. This begs the question - what next?
The answer lies in another step up in the way we view corporate operations. We need to look beyond the borders of the firm in our search for operational efficiency. Optimized company operations can only be achieved through alignment and coordination with the agents up and down stream. Collaboration with suppliers and customers is the essential vehicle of the 21st century for achieving competitive advantage from operations.
The benefits of Collaboration
1. Sharing demand signals
The first step to collaboration comes through information sharing. Across nearly all industries, companies play a guessing game (called forecasting) to estimate the products and quantities that their customers will demand across different markets. Even if a company gets it just right it still needs large inventory buffers to cope with demand variability, thus dramatically reducing its capital efficiency. It is imperative to compress lead times to meet demand rapidly and lessen these negative effects - this can negate the production-cost benefits of today’s off-shoring vogue in China. The butterfly’s wing effect on forecasting and ordering means the end demand signal gets wildly distorted as it echoes up the supply chain being reinterpreted and exaggerated at each turn. Inaccuracies are amplified at each stage, leaving suppliers facing high-stake production gambles.
The answer is simple - relaying end user demand signals and likely future order quantities to suppliers up the chain. This is the single biggest benefit of collaboration and it comes at virtually no cost reducing much of the variability from the forecasting calculation. A supplier’s response will be a much closer fit to market demand if information about likely order quantities is shared. Typically, inventory levels can be reduced by two thirds, service levels sky-rocket while lost revenues evaporate, and supply costs are cut by a quarter when demand information sharing is implemented correctly.
2. Efficiency through alignment
The next step is operational coordination. Working capital naturally collects at the borders of the firm. Finished Goods nearly always account for much more inventory than Work in Process, mainly because of the typical inadequacy in coordination between supply chain entities. Accounts receivable tend to be swelled by disputes and billing problems, which would be ironed out instantly if they were internal issues. Most companies currently allow working capital to accumulate at the point where their processes meet those of their customers and suppliers, which provides a great opportunity for freed cash flow and increased capital efficiency.
Costs can also be reduced dramatically through simple operational coordination between suppliers and customers. Systems, processes, and organizations can be joined up much more effectively to eliminate unnecessary duplication and increase the through-put and flexibility of both supplier and customer organizations.
The interfaces of goods delivery/goods-receipt, invoicing/invoice-processing
Do you sometimes get frustrated that others cannot see the relevance or importance of the kind of business changes you would like to make in your operation? Maybe you had great success in a previous business, developing your team, or you've done some reading and are sold on the value of doing some work on the strategy and vision of your current business.Or is it sometimes the other way round? Do you feel frustration about people advocating change that doesn't seem appropriate for the business; like insisting on an inspiring vision statement when what's needed first is delivering a profitable quarter, or a basic reporting system?The perspective that is missing is that businesses go through states in their development; at any given state of development, paying attention to issues beyond that state is irrelevant. It's not that the concern to introduce work on key business issues is wrong in itself, only that those issues are irrelevantto the current state of the business. The Three States of a Business
The benefits of Collaboration
1. Sharing demand signals
The first step to collaboration comes through information sharing. Across nearly all industries, companies play a guessing game (called forecasting) to estimate the products and quantities that their customers will demand across different markets. Even if a company gets it just right it still needs large inventory buffers to cope with demand variability, thus dramatically reducing its capital efficiency. It is imperative to compress lead times to meet demand rapidly and lessen these negative effects - this can negate the production-cost benefits of today’s off-shoring vogue in China. The butterfly’s wing effect on forecasting and ordering means the end demand signal gets wildly distorted as it echoes up the supply chain being reinterpreted and exaggerated at each turn. Inaccuracies are amplified at each stage, leaving suppliers facing high-stake production gambles.
The answer is simple - relaying end user demand signals and likely future order quantities to suppliers up the chain. This is the single biggest benefit of collaboration and it comes at virtually no cost reducing much of the variability from the forecasting calculation. A supplier’s response will be a much closer fit to market demand if information about likely order quantities is shared. Typically, inventory levels can be reduced by two thirds, service levels sky-rocket while lost revenues evaporate, and supply costs are cut by a quarter when demand information sharing is implemented correctly.
2. Efficiency through alignment
The next step is operational coordination. Working capital naturally collects at the borders of the firm. Finished Goods nearly always account for much more inventory than Work in Process, mainly because of the typical inadequacy in coordination between supply chain entities. Accounts receivable tend to be swelled by disputes and billing problems, which would be ironed out instantly if they were internal issues. Most companies currently allow working capital to accumulate at the point where their processes meet those of their customers and suppliers, which provides a great opportunity for freed cash flow and increased capital efficiency.
Costs can also be reduced dramatically through simple operational coordination between suppliers and customers. Systems, processes, and organizations can be joined up much more effectively to eliminate unnecessary duplication and increase the through-put and flexibility of both supplier and customer organizations.
The interfaces of goods delivery/goods-receipt, invoicing/invoice-processing
There is an often misunderstood part of pricing that can seriously damage the profit potential. It is the effects of the costs of marketing a product or service. As an example, many manufacturers commit 20% of price to marketing; certain consumer products which are quite competitive (e.g. laundry soap) may use up to 65% of price towards advertising to stimulate the marketplace. Contractors allocate generally from nothing to 10% of their pricing to marketing (media ads).Marketing costs can consist of:1. Generating stimulus to end-users (leads)2. Commissions on direct sales (sales professional compensation)3. Commissions on sales to distribution.I once stumbled upon a sale, quite by accident. All I had to do was find a contractor to install what I had sold, once a price was negotiated and agreed upon. The contractor commented, "I pay my own sales people 10%," as an offer to me. My reply was, "I generated the lead and the sale and I should get 20%, or I'll find another contractor who wants the business." The point is, he didn
The answer is simple - relaying end user demand signals and likely future order quantities to suppliers up the chain. This is the single biggest benefit of collaboration and it comes at virtually no cost reducing much of the variability from the forecasting calculation. A supplier’s response will be a much closer fit to market demand if information about likely order quantities is shared. Typically, inventory levels can be reduced by two thirds, service levels sky-rocket while lost revenues evaporate, and supply costs are cut by a quarter when demand information sharing is implemented correctly.
2. Efficiency through alignment
The next step is operational coordination. Working capital naturally collects at the borders of the firm. Finished Goods nearly always account for much more inventory than Work in Process, mainly because of the typical inadequacy in coordination between supply chain entities. Accounts receivable tend to be swelled by disputes and billing problems, which would be ironed out instantly if they were internal issues. Most companies currently allow working capital to accumulate at the point where their processes meet those of their customers and suppliers, which provides a great opportunity for freed cash flow and increased capital efficiency.
Costs can also be reduced dramatically through simple operational coordination between suppliers and customers. Systems, processes, and organizations can be joined up much more effectively to eliminate unnecessary duplication and increase the through-put and flexibility of both supplier and customer organizations.
The interfaces of goods delivery/goods-receipt, invoicing/invoice-processing
After all, the most common reason for people to start their own businesses is to allow them to take control of their lives and find a better work-life balance.How much Much is your Your Time Worth?Let's say you want to earn ?30,000 / $50,000 per year from your business. After weekends and holidays, you work 200 days of the year and you do 10-hour days. That means your time is worth ?15 / $25 per hour. Remember that when deciding how you are going to spend it.Definition of Time ManagementTime management is the organisation and execution of work and leisure activities based on always prioritising what needs to get done.Advantages• Achieve control over your life • Balance work, rest and play • Be pro-active rather than reactive • Relieve pressure and stress • Stop working on time • Increase your personal sense of achievementAction ChecklistPlan your year first and your day last1) Enter key yearly planning dates in your diary: • Regular Meetings • Known one-off events – trade fairs
Costs can also be reduced dramatically through simple operational coordination between suppliers and customers. Systems, processes, and organizations can be joined up much more effectively to eliminate unnecessary duplication and increase the through-put and flexibility of both supplier and customer organizations.
The interfaces of goods delivery/goods-receipt, invoicing/invoice-processing and collection/payment all exhibit the same misalignment and duplication. The painstaking effort spent on internal efficiency is negated by a clumsy operational weld between suppliers and customers. Functions get managed to performance metrics, which encourage activity that runs, counter to the efficiency of the organization, let alone the total supply mechanism. Firms should optimise their impact on their key customers’ total cost of supply. Configuring and managing the organization to better align with key customers and suppliers facilitates a more fluid transfer of goods, cash and information up and down the supply chain. This provides a win/win of capital and cost reduction at the same time as enhanced revenue levers for all organizations involved.
3. Joint exploration of strategic options
The final step is a strategic coordination-unlocking new market development and product development possibilities based on co-exploring avenues to competitive advantage. This is only attainable once trust has been built through information share and some steps in operational integration. With the foundation of operational collaboration set, customers and suppliers can combine in entering new markets, coordinated off-shoring and shared selected R&D to explore exciting product development opportunities and condense launch times.
Overcoming the Zero Sum Mindset
The greatest barrier to successful collaboration is the conventional mindset of a combative relationship with suppliers. Negotiations are perceived as a zero-sum margin tug-of-war, with the relative power balance determining the result. This precludes a focus on win-win value driving activity. Suppliers and customers end up perpetually wasting and reworking because they see opening a constructive dialogue as weakness or even as surrender. Many executives fear a loss of flexibility through higher switching costs from greater collaboration. The truth is that most firms’ key supplier base has not changed dramatically over the last 2 years, so collaborative activity would have been massively beneficial as the payback period can be. Still, this does not irreversibly affix firms together - competitive pressures still work to drive down prices and provide the incentive to offer the best value.
Another fear is that companies would give away their competitive advantage to customers or suppliers if they collaborate. The reality is that core competencies do not vanish through sharing demand information, or through bridging operational rifts. The reason that there are few truly vertically integrated industries is testament to this - core competencies dilute and effective organization is impossible over too lengthy a chain. Such anxiety may be unfounded, but the fear is real and debilitating. This is why companies should commit progressively and in parallel, reaching a point acceptable to both parties; from information share, to operational alignment, through to symbiotic strategic planning. As a further development, (depending on the concentration of the end user markets for a product), a company can then extend its collaborative relationships further up and down the supply chain to suppliers’ suppliers, customers’ customers and beyond.
As with preceding operational evolutions, collaboration will doubtless be pioneered by some companies and shunned by others. Far from the micro/technical operational thinking of the past, collaboration offers a strategic perspective, divergent options and colossal profit, and capital efficiency benefits. Until it becomes universally adopted, collaboration is the most promising source of competitive advantage from operations available today.
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