The Edge

Top 5 Do's and Don'ts for Developing a Bullet-Proof Business Case

2012-02-24T11:24:00.001-06:00

Ian Hood

Some business units spend years trying to make the case for initiatives they believe will propel performance within their organizations. Even with ample evidence in their favor, and in most instances logic on their side, most requests for resources and projects are unsuccessful.

The next time you find yourself presenting a solution for an upcoming initiative, remember these Top 5 “Do's and Don'ts” to help build a bullet-proof business case:

1. Making Clear Connections

Do understand how the various dimensions of your business work and how all of the components interact. Develop a performance model or strategy map that ties all of the actions to specific strategies. Then link those strategies across measurable dimensions to assemble a clearly defined grid. Providing this type of model to those who will be evaluating your business case will clearly show the consequences of failing to act, along with the benefits if implemented.

2. Speaking Management's Language

Don't assume the management team you're presenting your business case to will automatically see the organizational pains even the simplest of problems presents. They are often not close enough to these issues to realize the burdens created. Remember, management is concerned with efficiency, which equates to less cost in the long run, so your problem should be framed accordingly.

3. Welcoming New Ideas

Don't be opposed to new perspectives. Sometimes, you may not be solving the right problem, or you may be approaching the right problem in the wrong way. For example, a business case that was originally developed to champion a new technology solution might better be approached as a case for improving an entire process within the business. Technology then becomes a part of the business process, rather than the sole focus of the solution.

4. Using Systems Thinking

Do use a process called "Systems Thinking" to rationalize what may otherwise become an emotionally-charged discussion and decision process. This essentially means thinking about the business problem you’re trying to solve as part of the entire business ecosystem. For your business case to be bullet-proof, you must rely on thorough data collection and sound current/future-state forecasts. In short, the best business case is one that is architected from facts. This will ultimately remove the emotional opinions and political landscapes that may cloud the judgment of decision makers within your organization.

5. Collaborating

Don't underestimate the importance of collaboration, both within your teams and across the business system. Additionally, limitations on time, resources and expertise can require bringing in outside support to help develop your business case. It's a great opportunity to leverage a third party, which will deliver a factual business case built on unbiased information. When a potential initiative has stalled in approval process, securing a third party vendor to collect the data and deliver the business case from a non-biased point of view may be all that is needed to finally receive the endorsement to move forward.

All initiatives have degrees of importance in one way or another. Your objective is to identify and communicate them effectively so that the management within your organization can make actionable decisions.

Blackwell recently helped an industry-leading global insurance provider create a business case securing support for much-needed improvements to the company's claims process. The recommended initiatives posed significant economic benefits for the insurer, including a net present value of $385.7 million over the eight-year planning horizon and improved retention rates. Done right, your business case can bring about much needed change with minimal conflict and maximum gain.

-Ian Hood, Managing Principal, Blackwell Global Consulting

Supplier Collaboration Podcast Series - Part 2: Fostering Relationships

2012-02-17T15:06:00.002-06:00

Jim Tarabori

Building on the first podcast in this series, ("Engaging Key Suppliers" in which we introduced the concept of collaboration, the status of the collaboration in manufacturing, and some obstacles to collaboration), our second podcast from the Institute of Supplier Collaboration is one in which I discuss "Fostering Relationships." In it, I describe in detail CGN's "5C" approach to collaboration, including the BTI (Business Transformation Initiative) process.

I also explain where OEMs struggle in implementing Supplier Collaboration and why more OEMs are not engaging suppliers more effectively. These first two podcasts are the foundation of the Institute's message. Building on this foundation, we will next present the third podcast "Competing Globally," which describes how collaboration fits into a company's global sourcing program. All three podcasts can be found on the ISC website, www.suppliercollaboration.org.

NOTE: At CGN, our consultants are encouraged to point their clients to the ISC website, where they can view material and take the survey to understand where they stand relative to a world-class collaboration program.

-Jim Tarabori, Director, Institute for Supplier Collaboration

Win-Win Relationships Spur Innovation

2012-02-14T12:37:00.000-06:00

In today's technological age, manufacturers can't possibly be at the cutting-edge of every aspect of their complex products. Automotive companies, for example, now rely more and more on suppliers to assure the best experience for their customers and to keep them one step ahead of the competition. Take the car interior example in this IndustryWeek article.

Only a supplier who eats, drinks and dreams car seats would discover a way to incorporate the consumers' love affair with their smartphones and car seat adjustments. Multiply this car seat example with the myriad of systems and components in any complex product, and you see how encompassing advanced supplier technology is an absolute requirement for a manufacturer to stay in the game. And the company with the supplier ecosystem that promotes, encourages and rewards supplier innovation (not just solving problems but uncovering unique product technology) will win the game.

Read the entire IndustryWeek article, and visit the Institute for Supplier Collaboration to learn more about managing important relationships with your key suppliers.

-Jim Tarabori, Director, Institute for Supplier Collaboration

Managing Emerging Markets Growth - Q&A With Harsh Koppula

2012-02-09T09:40:00.001-06:00

Harsh Koppula

Studies have shown that only about 5 percent of companies can master the complexity of emerging markets, but those that do are 75 percent more profitable than every other company in their competitive set. If your company can successfully navigate the challenges, focus on the market and grow in an intelligent manner, the opportunities are tremendous.

In a recent interview, Managing Partner Harsh Koppula talked on the challenges organizations face as they attempt to expand business into today's dynamic emerging markets.

Interviewer: What factors make growth in emerging markets most challenging today?

Harsh: One of the biggest challenges facing foreign companies in emerging markets today is the complexity of demand. In these markets, demand is often highly volatile, which can be confusing to foreign organizations. Leaders in these companies are accustomed to their own markets, where they understand demand patterns; they can predict economic cycles; they have a better grasp on consumer behavior. Their forecasting models in those markets are relatively mature and developed.

But in emerging markets, everything changes. Supply and demand shape is not easily understood. Foreign companies often get rattled by this uncertainty and this new set of variables. Their management teams have trouble processing all of the new information, and that tends to ripple through their entire value chain.

Companies also must consider the significant variability of several important economic drivers in emerging markets. For example, currency fluctuation can be significant. the volatility of demand can impact commodity prices, which rise and fall with demand. And, because wages in emerging markets are rising substantially, labor may not be as cost-effective as expected. When organizations struggle with this variability, they begin to lose their pricing power in the market and their costs begin to rise. This might cause them to shrink in order to become profitable - or, in some cases, to pull out of the market altogether.

Another challenge to growth is increased competition from local companies. These local organizations may not be as sophisticated, but they understand the market and they have cost-structure advantages. They don't have much overhead, and they're able to sell products at a very reasonable cost, which presents a big challenge to foreign companies.

Over the last eight to 10 years, the landscape has become very different. Demand volatility, commodity price fluctuation - all of these factors have accelerated, and it is very difficult for companies to deal with them.

Interviewer: What advice would you give organizations that are looking to expand in emerging markets?

Harsh: I would say you need to fully commit yourself to the market. You need to deploy the necessary talent, both in terms of quality and quantity. If you don't have a highly-motivated team that is going to work hard to lay out a strategy and then execute it quickly, you will certainly not succeed.

But, you also need a solid business structure that ties the organization together. Every part of your company needs to be running optimally, because as you're executing your strategy, you will need to be able to synchronize and maneuver all of your moving pieces with precision and speed. In effect, you're really running a war room. You must constantly be asking: "Where is talent short? Where is supply short? Where is information short?"

And if flexibility is still important in developed markets, where fluctuation is relatively tame, it is absolutely vital in emerging markets. All aspects of your entire enterprise must be designed to turn on a dime in response to market and environment changes. Your business strategies can, and likely will, transform very quickly, so you need to be able to detect changing trends and then adjust to them rapidly...

To read more of Harsh's insights on emerging market entry, download the full interview report Global Emerging Markets: Managing Emerging Markets Growth.

Supplier Collaboration Podcast Series - Part 1: Engaging Key Suppliers

2012-02-07T12:25:00.000-06:00

Jim Tarabori

The Institute of Supplier Collaboration has produced a series of three podcasts, which you can find on the Institute's website here. The first podcast, featured below, is "Engaging Key Suppliers" with Sundeep Maini. In it, he defines "supplier collaboration," describes how manufacturers can benefit from taking a collaborative approach, speaks to the status of collaboration and obstacles to instituting, and provides guidance starting a supplier collaboration program. Among other topics, Sundeep explains how engaging key suppliers is completely dependent on the relationships you make with them. Without a base of trust, you can never fully engage your suppliers.

Stay tuned for our post on the next podcast, discussing key benefits and strategies for "Fostering Relationships," which goes into more detail describing a supplier collaboration process developed after months of benchmarking leading corporations and consultancies. I think you'll learn a lot! The podcast series completes with part three "Competing Globally," which describes how collaboration fits into a company's global sourcing program.

Webinar - Supplier Collaboration and Vendor Scorecards for Retail and Distribution Industry

2012-01-30T10:34:00.001-06:00

This Supply Chain Digest webinar/discussion shows the dramatic difference between Supplier Performance Management in the retail and distribution industry versus the manufacturing sector [watch: "The What, Why and How of Vendor Scorecards"]. Fill-rate, on-time delivery and PO/ASN accuracy dominate conversations in the retail sector. The “maturity model,” even at the highest level of maturity, has no mention of collaboration as a key metric.

Contrast this to the manufacturing sector, where quality, cost and delivery alone describe the scorecard for only the most transactional suppliers. For more strategic suppliers, these metrics are only the start of the performance discussion.

In the QCLDM process [Quality-Cost-Logistics-Development-Management] that CGN subscribes to, the development and management segments are where the real value of the relationship is revealed. Being first-to-market with the latest supplier technology [development] helps put distance between manufacturers and their competitors. Likewise, having aligned corporate goals, having key suppliers who are willing to invest in one’s business, and having suppliers with sound financial and leadership strength [management], assures that a stable, strong supply base is “pulling on the rope” in the same direction, helping one achieve corporate strategies with significantly reduced resource expenditure and effort.

When dealing with key suppliers, especially in the manufacturing sector, getting bogged down arguing delivery data during the SPM process prevents companies from getting the greatest value from their relationships and achieving truly great performance.

View the webinar online at the Supply Chain Television Channel. For more information on improving your relationship with key suppliers, visit CGN's Institute for Supplier Collaboration.

-Jim Tarabori, Director, Institute for Supplier Collaboration

Insurance Industry Outlook – A Summary Perspective

2012-01-27T09:54:00.001-06:00

Alex Bell

What a year it has been for the global insurance market! Households' and businesses' lack of confidence stemming from the US and global economies, global regulatory mandates, fluctuation in the stock markets and the historic number of catastrophes worldwide that ultimately increased claims, all had significant impact on company profits and growth. All of these factors are putting the insurance market in a transitional state with regard to rates.

We are seeing continued focus on lowering expenses and heightened emphasis on developing new revenue streams through product innovation and other channels, expanding market footprint and enhancing customer service. Many insurers we work with or spoke to are focusing on transformational work such as updating core operational systems like claims and policy. However, their transformational efforts are less about technology and more about operational efficiency and ease of doing business.

We are also seeing a greater demand for annuities, which is good news for the life companies. According to a recent study I read, “many of the leading providers of annuities reported double-digit growth in sales in Q311 relative to Q310.” It is clear that given the market volatility, many investors are seeing annuities as a way to save.

Insurers are also trying to capitalize on the potential of emerging markets such as China, Africa, Latin America. It will be interesting to see how this impacts the industry over the next few years.

The dynamic and volatile market continues to make this a wonderful industry to serve and operate in, and I continue to look for opportunities to leverage our expertise in the space to accelerate change and growth for our customers.

-Alex Bell, Insurance Industry Associate Partner, Blackwell Global Consulting

Corporate culture does matter... especially for Supplier Collaboration

2012-01-19T15:02:00.004-06:00

Jim Tarabori

We recently discussed the impact of culture on an organization’s effectiveness, a topic that has been debated for years. Current research shows empirical evidence that culture does matter. The area where culture impacts a company’s effectiveness most may be the area of supplier collaboration.

The importance of the supply base is well understood. However, if the culture of a company says they play a “win/lose” game with suppliers, that suppliers should be ridden hard/ not coddled, or that supplier margins are profit opportunities to go after, then no Supplier Collaboration program can be effective.

Creating a culture of aligned goals and win/win interactions with the supply base is the only way to gain the significant benefits that key suppliers in one’s base can provide… benefits like new technology, being first to market with new products, consistent on-time shipments of high-quality product, having first choice of cost-reduction ideas and supplier investments in areas that will benefit a client’s business.

These benefits can separate a company from its competition, as has been seen many times with companies like Toyota, Honda and Deere. Their collaborative culture is what helped them reap the benefits. It’s not magic, it’s culture!

-Jim Tarabori, Director, Institute for Supplier Collaboration

Investing In Culture: Does it deliver value?

2012-01-17T13:01:00.006-06:00

Anjali Pais

The concept of “corporate culture” has often been a paradoxical experience for me. On the one hand, it has always interested me, and I have spent many an hour researching how it can enhance organizational effectiveness. On the other hand, it has been the most difficult concept to discuss with clients heading important functions such as operations or supply chain, because many believe that it is an important “HR” function driven by leadership.

However, as per the Innovation 1000 Study conducted by Booz & Company in 2011, the success of a company (or a function within a company) is not a matter of how much these companies spend on research and development, but rather how they spend it. This study took into consideration two particular qualities:

Strategic alignment and
a culture that supports innovation that truly innovative companies have put in place that allow them to outperform the competition.

As per this study, culture is key to innovation success, and its impact on performance is measurable. Specifically, the 44 percent of companies who reported that their innovation strategies are clearly aligned with their business goals (and that their cultures strongly support those innovation goals) delivered 33 percent higher enterprise value growth and 17 percent higher profit growth on five-year measures than those lacking such tight alignment.

This report is a must-read for business leaders across industries. For more information, read the report in its entirety here.

-Anjali Pais

Supply chain challenges in a world of uncertain commodity prices

2012-01-13T10:06:00.003-06:00

Alagu Balaraman

A recent article in the McKinsey Quarterly shows how the past eight years have cancelled the steady decline in commodity prices over the previous century. The decline in prices over the past century was achieved despite demand jumping by 600 to 2,000 percent, through dramatic improvements in exploration, extraction and cultivation techniques. As a result, over the 20th century, we coped with a 20-fold increase in the world economy while prices fell.

The situation going forward will not be the same. The three factors that are causing the change are:

climate change and the need to curtail temperature rise to under 2° C,
increasing difficulty in expanding supply of commodities in the short run as marginal costs are rapidly rising, and
linkages between resources are surfacing like a shortage of water leading to escalating energy prices, in turn leading deforestation as poorer sections of the population seek more wood for fuel.

How can this be tackled? The article points out that better resource productivity (reducing waste, improving yields) will account for 20 percent of the increased demand between now and 2030. The rest will have to be bridged by higher pricing that will make new breakthroughs worthwhile.

This will be very disruptive for existing companies and existing ways of working. Preparing for this by making operations as lean, flexible and robust will make the difference between companies that survive and those that wither away. Starting now and looking for ways to build these characteristics into supply chains, and even business models, is a wise move for businesses that seek to survive in the uncertain times of the future.

-Alagu Balaraman

Cultural celebration supports the children of Easter Seals

2012-01-03T16:06:00.006-06:00

This year will be the sixth annual Passage to India, an annual fundraiser for Easter Seals, a non-profit organization helping people with disabilities gain greater independence. CGN has been involved since the beginning of this event, which is always a celebration of those who make dreams come true for the children of Easter Seals!

Passage to India 2012 will be held on February 3rd at the Peoria Civic Center. The evening includes cuisine prepared by the local Indian community, a silent auction and Bollywood disco and dancing. The highlight of the event is a fashion show including Easter Seals children. Passage to India is attended by major donors, sponsors and guests in a relaxed, sophisticated atmosphere.

Below is a list of money raised for Easter Seals since the first event in 2007:

2007 - $25,000
2008 - $50,000
2009 - $70,000
2010 - $106,000
2011 - $160,000
2012 - $200,000 is our goal!

If you would like to learn more about Passage to India and attend the event, please check out www.es-passagetoindia.com or find us on Facebook!

Want to Succeed in Asian Markets? Supplier Collaboration is Key.

2011-12-16T15:41:00.005-06:00

Jim Tarabori

A 2009 global study by Vantage Partners of customer supplier negotiations and contracts “found that suppliers in Asia report that they are only able to deliver, on average, 59 percent of the total potential value of their contracts with customers. (Supplier Collaboration in Asian Markets, My Purchasing Center)

“Suppliers laid much of the responsibility at the feet of their customers, citing unclear requirements, frequent changes to specifications, inaccurate and late forecasts, and failure to provide adequate staff access and support as primary explanations for under-delivery.

“Research and experience working with companies on global and low cost region sourcing initiatives indicate that structural challenges of working with Asian suppliers [geographic distance, problematic communications and infrastructure, etc.] are tractable, and that the root causes of failure have a great deal to do with the manner in which companies build and manage (or fail to) relationships with their Asia-based suppliers.”

These findings are proof, once again, that western manufacturers are leaving tons of money on the table by not effectively supporting their Global Sourcing strategy with a disciplined Supplier Collaboration or Supplier Relationship Management strategy. Surprisingly, the study also found that even with domestic suppliers, who understand the western customers needs more clearly and have a longer, better established relationship with them, that less that 70 percent of the potential value of these contracts are making it to the customer. So whether sourcing in India or Indiana, the message is the same! A strong Supplier Collaboration program is necessary to deliver maximum value from the supply base to dramatically improve the bottom line.

To implement a successful Supplier Collaboration program requires extensive benchmarking and a culture change in the organization. To help with this journey, the Institute for Supplier Collaboration was founded. The ISC helps corporations see the value in establishing a collaborative ecosystem with their supply base both domestically and abroad and provides them the tools to be successful in their endeavors.

-Jim Tarabori

ISC Hosts Advanced Manufacturing and Logistics Event

2011-12-08T15:01:00.000-06:00

The Institute for Supplier Collaboration (ISC) conducted its first event in conjunction with the Advanced Manufacturing and Logistics Network of the Greater Louisville Chamber of Commerce on Nov. 30, 2011. Approximately 25 individuals attended the event. Two Fortune 500 companies [Manpower and CBRE] and one automotive supplier [Katayama America] joined a diverse group of companies in attendance.

ISC Director Jim Tarabori presented a 25 minute overview on “The Case for Supplier Collaboration” followed by brief comments by Mike Render, CAT Product Manager of Aftertreatment & Cooling Products, and Michael Hesketh, President of Superb IPC. A panel discussion followed. The audience demonstrated great interest in the topic by note taking and asking numerous questions of the panel.

Similar events are being considered in conjunction with manufacturing groups in the area to generate interest in the subject of Supplier Collaboration, the Institute, and possible support from CGN.

For more information, visit the ISC website or view Jim's conference presentation.

Beware of Supply Chain Risks Where you May Not Be Looking

2011-12-05T14:34:00.000-06:00

I recently came across an insightful article (Beware of Risk at Low-Tier Suppliers, Nov. 2011) that points to a growing need for procurement departments to increase their focus on sub contractors from main suppliers.

Referencing a global survey by the Business Continuity Institute, the article notes that about 85 percent of companies suffered at least one disruption in their supply chain, and 40 percent of those disruptions result from issues below immediate vendors.

Some of my other key takeaways from the article:

The survey found far-reaching and long-term consequences of these supply chain disruptions, including concern from shareholders (19 percent of respondents), reputational damage (17 percent) and increased regulatory scrutiny (11 percent).
CIPS CEO had a great quote on the prevalence of these often-overlooked problems, noting that disruptions to supply chains are becoming increasingly common, with a high proportion happening further along the supply chain (second or third-tier suppliers), where many companies just aren't looking for issues.
It highlights the need to create a balance between costs savings and the need to address disruptions and risk exposure so the cost savings aren't driven out in the process.

With so much at stake, it's important to take a comprehensive view of your entire supply-chain network. Remember, any player can become a key player, especially when it comes to potential risk of costly disruptions!

- L Srinivasan

The Great Indian Retail Debate

2011-12-02T13:29:00.000-06:00


Suresh Sethuraghavan

Last weekend, most major US retailers reveled in the Thanksgiving sales that saw a record growth of 16.4% over last year ($52 Billion in sales according to US National Retail Federation). For retail giants like Wal-Mart, there was more good news from across the globe as India’s policy makers took the decision to allow 51% Foreign Direct Investment(FDI) in multi-brand outlets. So, for companies like Wal-Mart, Tesco, and Carrefour that have been operating only wholesale stores in India, they can now open their modern, big-box format supermarkets. Obviously that should fuel the $ 400 Bn Indian retail sector and serve the aspirations of the young and booming middle class consumer segment. The Indian government is also optimistic that their new FDI policy will create millions of direct and indirect jobs.

But, predictably, this executive decision by the ruling party’s cabinet is being strongly opposed by other parties, certain state governments and local traders associations who fear a ‘wipe-out’ of small mom-and-pop shops and result in foreign MNC domination. This debate is not new. However, as always, the truth is likely to lie in between! It is inevitable that the Indian retail sector will witness pain and churn in short to mid-term yet it is very much the ‘Darwinian’ theory at work in the evolution of a fast growing economy such as India. While some of the inefficient and the old elements will have to give way, there will also be many ‘survivors’ who will either reinvent themselves or continue to be relevant to certain segments and therefore co-exist with the new.

I don’t know if Business Monitor International’s estimate of Indian retail sector to be $785 Bn by 2015 accounted for this new FDI policy but it is very much possible given the incredible multiplier effect that such a retail revolution would have on the entire retail ecosystem of India. Compared to about 45 sqft per capita in the US, currently India has only about 3 sqft per capita in retail. It will not just be the big stores that will be built to deliver on the convenience & value factors sought by the shoppers but also the warehouses, Re-distribution centers, cold storage facilities and the entire sales, supply chain , logistics & distribution and aftermarket services to support these chain of stores. Let’s not forget the need for technology applications to efficiently manage the humongous amount of transactions across the entire network, from the farmers, producers to the stores and beyond.

The timing couldn’t have been better with all the positive developments going on in the Infrastructure, Power, Telecom and Manufacturing sectors in India. Clearly there is so much to gain for many at this point in time. Hence the current political stance should shift from protectionism to participation and the debate should move from ‘Why’ to ‘How’ to make it happen. More importantly, the discussions ought to be about getting ready for the show time – defining the rules, getting the right players & supporting cast, setting the stage et al. Let’s hope this debate ends and the show begins soon…There are many players waiting in the wings to get on the great Indian retail stage!

- Suresh Sethuraghavan

Just how good IS your supplier management program?

2011-10-07T10:54:00.000-05:00

If you're interested in knowing more about the current state of your firm's supplier management program, our quick, 5-part Supplier Collaboration Survey can help get you started. It only takes about 15 minutes. Answer the multiple choice questions as accurately as possible, and we will get back to you with an assessment.

This survey is conducted through our Institute for Supplier Collaboration. The ISC was founded by CGN to provide a forum for sharing insights on key business challenges, case studies on what’s really working, and practical tips that manufacturers can easily implement to improve their supplier relationships. For information, visit the ISC site.

Engaging Key Suppliers (Podcast)

2011-10-07T09:26:00.000-05:00

Suppliers and OEMs have an important stake in each others' success. Often, suppliers have deep expertise in cost drivers and new technologies relevant to the OEM's products. Leveraging this relationship through collaboration can help spur innovation and drive gains for both parties.

In this Executive Insight Podcast, Sundeep Maini, Principle, describes how suppliers have worked very closely and collaboratively with OEMs to design efficiencies in their product development, helping them launch industry-leading products.

This podcast is part of the Institute for Supplier Collaboration, founded by CGN to provide a forum for sharing insights on key business challenges, case studies on what’s really working, and practical tips that manufacturers can easily implement to improve their supplier relationships. For information, podcasts and white papers on the subject, visit the ISC site.

Are you up to the challenge? (Webinar)

2011-10-06T13:45:00.001-05:00

If you're interested in expanding your business to (or in) an emerging market, there are multiple dimensions that will impact your market-entry plan. CGN's Suresh Sethuraghavan and Ray Goodearl, VP of International Sales for Superior Battery Manufacturing Company, came together to speak on the challenges and opportunities of doing business in emerging markets.

In this webinar sponsored by the Kentucky World Trade Association, they describe their experiences abroad and explain a proven methodology to help guide your planning process and maximize your success in a chosen market. It's not always a smooth ride, but as Suresh and Ray make clear, with the right preparation, there are many exciting opportunities to be found.

Listen now - Emerging Markets: Is Your Company Up to the Challenge?