7. Communication, Communication, Communication!
The leader must effectively communicate, because this how the delivery of organizational values, expectations/direction (alignment), and compelling vision is cascaded throughout the ranks. The leader must ensure proper strategic planning of vision and goals; the deployment of tactical plans that implement goals and objectives; and an information system that collects, analyzes, and reports data foe continuous improvement of the organization. Barriers to optimal performance within organizations primarily have their root communication ability or lack of. Communication is the primary way to engage, motivate and align people toward a compelling vision. Feedback loops ensure that senior management are fully informed and actively listen to all levels, which guards against hubris, and other destructive behaviors. One way to help launch an effective communication strategy is to use the basics of an Integrated Marketing Communication Planning. What are we trying to achieve – well we are marketing concepts and building a powerful brand – the compelling vision. Also the path way is described through strategic planning, which ensures that goal and objectives are clearly identified and the followers or stakeholders fully understand their part in the whole of achieving the vision. This can only be done with clear and careful communications.
Aristotle acknowledged 3 dimensions of communication – Ethos, Logos, and Pathos. All three are tied together in an inseparable interactive matrix of communicating a message. Communication is interactive and requires give and take to occur. To be effective in communication, one must be creditable, logical, and emotional. Only a coherent blend of all dimensions allow the message to be accepted, which results in the compelling vision to be shared and realized by the listeners/followers.
Why is it important? Gaps in communication result in misunderstanding or the stretching of present understanding to false/improper conclusions. People by nature hate gaps and will fill them with what ever suits them or what is close to them. This where fear, bias, personal agendas, etc start to creep in and becomes destructive. Let’s bring in Maslow’s third law of hierarchy – Socialization. People wish to be accepted and heard – being part of a group is very important to people. Communication achieves this powerful need and can dissipate fear and selfish agendas by properly communicating how each individual fits into the success of the big picture. Communication should help people understand what is being said and then why it is important to them on a personal level – invokes emotion. In turn, to facilitate this understanding – communication must be open so people can share their values and assumptions, which clarifies their understanding of the message.
Communication is highly interactive, it must become a process where everyone listens and everyone has a chance to voice their view. Titles must not matter as well as no attacking or vengeance on what is voiced by an individual. This goes to Deming’s principle to “drive out the fear.” Care must be taken so powerful agendas do not dominate and quell the less forceful voices. It may be these quiet and soft voices in the still wind that carry the optimal solution.
Sunday, December 28, 2008
Friday, December 26, 2008
Fifth Level Leadership Needed
5. Develop comprehensive solutions for your opportunities that include people, process, and technology
9. Measure results, learn and refine approaches
10. Keep an attitude of experimentation - we do not have "right answers" we have hypotheses to be tested and refined
To address these 3 statements, I have decided to comment on the financial crisis that affects us all and how fifth level leadership coupled with system/integral thinking would have forecasted this crisis and mitigated the severity of it all globally.
What does the future hold? Can we competently forecast the future? The use of trend analysis and scouring the various environments globally will take higher levels of thinking and selfless visions. The current financial crisis has devastated all forecasts, corporately and across all government budgets. Alan Greenspan made an admission that he and the fed did not foresee the impact of securitizing and selling mortgages. No one saw the consequences of the inactions of government regulators, public rating agencies, etc. Alan Greenspan claims ignorance in his statement, “We’re not smart enough as people…. We just cannot see events that far in advance. There are always a lot of people raising issues, and half the time they’re wrong.”
So are these statements just ignorance and the inability to see that far in advance or just greed coupled with selfish egotistical pride and self-righteous? Alan Greenspan and the Fed chose to view these actions with only one lens and only narrow perspectives of self service. If they would have listened to the nay sayers and truly took the view that no one understood the risks of these securitized mortgages using integral and system thinking, the severity may have been avoided or at least mitigated to minimum damage. It has been said that if Alan Greenspan would have taken an integral approach and used risk assessment on a global scale, he may have been able to predict the future. There were numerous warning signs pointed out by futurist and other higher level thinkers in the financial community. Politicians and CEOs with large ego may conscious decisions to ignore these scenarios. Not knowing that you have blind spots, is that you responsibility? I would say yes! One must use higher levels of thinking – critical and system thinking – to acknowledge ones ignorance and blind spots. This takes a selfless and humble approach, which is fifth level leadership. So we could use simple cause and effect analysis to come up with a logical conclusion that our country as well as global environments severely lacks fifth level leadership among the ranks of financial and government institutions. Leadership is driven by selfish egos, pride and greed for power and money. The securitizing of mortgages was a pure choice of greed of money above integral thinking of the consequences that would occur if the mystical cornerstone evaporated into digital fantasy world created by the innovations of financial engineers of these products.
Some say that forecasting and predicting results if only feasible 3 to 4 months out, beyond that is only silly. Is this true? Or do we just not have the ability to think critically enough to take into account the complexity of the global interactions between the developed countries, emerging countries, and environmental disruptions? Will developing more fifth level leaders, which will be able to develop higher levels of integral thinking, create this necessary forecasting wisdom? Scenario planning appears to be increasing in popularity, which requires deep levels of integral thinking and a vey open mind (whole brain thinking – multiple lens/perspective approach).
What else is needed? Fifth level leaders should also be able to humbly listen to all and not be in denial or numb to inactions and undesirable results. Embracing and acting on decisions through PDSA cycles and other tools will facilitate a culture of continual learning and discovery. This will in turn eliminate blind spots and discover further knowledge that was not even known that was not known. It has been said that in the whole of knowledge we know about 1/10 of what we know we know. There is probably another 1/10 to 1/5 that we known that we do not know. So that leaves about 7/10 or 70% of the knowledge that is out there to be discovered that we do not even know exists yet.
So how do we start to get there? It is a journey and not a destination that will take cross-functional and selfless communication. Open discussion with active listening, humility, and no judgment, just civil debate that is respectful – full of conflict and discovery. It is also embracing that there is no right and there is no wrong – there just is. Beliefs and assumptions are the same – they are predicated on what is known at the time to help people understand why something happened, but may not be true at all. A superstition is just a belief so ingrained in a person mind or a culture that it is actual fact. One must have an open enough mind to accept new ideas and concepts, even if they are counter to current beliefs and assumptions. This allows for nimbleness and flexibility in planning and forecasting. As one becomes further enlightened or different scenario develop, one can then go back and change the forecast via reallocating resources and changing direction to support the end goal – the vision. Enlightenment will occur if one travels outside of current circle and embraces conflicting ideas from others. Hubris and ego must be guarded against, because they are barriers to this embracement. One must also accept that uncertainty and ambiguity will be normal companions in this journey. People, communication, technology (to facilitate knowledge transfer), and processes that integrate all of the functions and science together in order to increase the velocity of discovery will be needed for future survival. Remember to be nimble – for it is not the strongest that survive changes in the environments that we all live in, but the ones that are able to adapt and be flexible that survive as well as thrive in the ever-changing world.
9. Measure results, learn and refine approaches
10. Keep an attitude of experimentation - we do not have "right answers" we have hypotheses to be tested and refined
To address these 3 statements, I have decided to comment on the financial crisis that affects us all and how fifth level leadership coupled with system/integral thinking would have forecasted this crisis and mitigated the severity of it all globally.
What does the future hold? Can we competently forecast the future? The use of trend analysis and scouring the various environments globally will take higher levels of thinking and selfless visions. The current financial crisis has devastated all forecasts, corporately and across all government budgets. Alan Greenspan made an admission that he and the fed did not foresee the impact of securitizing and selling mortgages. No one saw the consequences of the inactions of government regulators, public rating agencies, etc. Alan Greenspan claims ignorance in his statement, “We’re not smart enough as people…. We just cannot see events that far in advance. There are always a lot of people raising issues, and half the time they’re wrong.”
So are these statements just ignorance and the inability to see that far in advance or just greed coupled with selfish egotistical pride and self-righteous? Alan Greenspan and the Fed chose to view these actions with only one lens and only narrow perspectives of self service. If they would have listened to the nay sayers and truly took the view that no one understood the risks of these securitized mortgages using integral and system thinking, the severity may have been avoided or at least mitigated to minimum damage. It has been said that if Alan Greenspan would have taken an integral approach and used risk assessment on a global scale, he may have been able to predict the future. There were numerous warning signs pointed out by futurist and other higher level thinkers in the financial community. Politicians and CEOs with large ego may conscious decisions to ignore these scenarios. Not knowing that you have blind spots, is that you responsibility? I would say yes! One must use higher levels of thinking – critical and system thinking – to acknowledge ones ignorance and blind spots. This takes a selfless and humble approach, which is fifth level leadership. So we could use simple cause and effect analysis to come up with a logical conclusion that our country as well as global environments severely lacks fifth level leadership among the ranks of financial and government institutions. Leadership is driven by selfish egos, pride and greed for power and money. The securitizing of mortgages was a pure choice of greed of money above integral thinking of the consequences that would occur if the mystical cornerstone evaporated into digital fantasy world created by the innovations of financial engineers of these products.
Some say that forecasting and predicting results if only feasible 3 to 4 months out, beyond that is only silly. Is this true? Or do we just not have the ability to think critically enough to take into account the complexity of the global interactions between the developed countries, emerging countries, and environmental disruptions? Will developing more fifth level leaders, which will be able to develop higher levels of integral thinking, create this necessary forecasting wisdom? Scenario planning appears to be increasing in popularity, which requires deep levels of integral thinking and a vey open mind (whole brain thinking – multiple lens/perspective approach).
What else is needed? Fifth level leaders should also be able to humbly listen to all and not be in denial or numb to inactions and undesirable results. Embracing and acting on decisions through PDSA cycles and other tools will facilitate a culture of continual learning and discovery. This will in turn eliminate blind spots and discover further knowledge that was not even known that was not known. It has been said that in the whole of knowledge we know about 1/10 of what we know we know. There is probably another 1/10 to 1/5 that we known that we do not know. So that leaves about 7/10 or 70% of the knowledge that is out there to be discovered that we do not even know exists yet.
So how do we start to get there? It is a journey and not a destination that will take cross-functional and selfless communication. Open discussion with active listening, humility, and no judgment, just civil debate that is respectful – full of conflict and discovery. It is also embracing that there is no right and there is no wrong – there just is. Beliefs and assumptions are the same – they are predicated on what is known at the time to help people understand why something happened, but may not be true at all. A superstition is just a belief so ingrained in a person mind or a culture that it is actual fact. One must have an open enough mind to accept new ideas and concepts, even if they are counter to current beliefs and assumptions. This allows for nimbleness and flexibility in planning and forecasting. As one becomes further enlightened or different scenario develop, one can then go back and change the forecast via reallocating resources and changing direction to support the end goal – the vision. Enlightenment will occur if one travels outside of current circle and embraces conflicting ideas from others. Hubris and ego must be guarded against, because they are barriers to this embracement. One must also accept that uncertainty and ambiguity will be normal companions in this journey. People, communication, technology (to facilitate knowledge transfer), and processes that integrate all of the functions and science together in order to increase the velocity of discovery will be needed for future survival. Remember to be nimble – for it is not the strongest that survive changes in the environments that we all live in, but the ones that are able to adapt and be flexible that survive as well as thrive in the ever-changing world.
Friday, December 12, 2008
Systems Thinking Converging with QMS/LSS through Leadership
After reading the 12 comments to the proposed question, I have decided to weigh with my opinion. The comments appear to be dancing around what system thinking really is and where it originated, etc. Also the misconceptions of what lean is and what six sigma is and the combination of Lean Six Sigma or LSS. So lets define lean as the elimination of all non-value added actions (waste has too narrow of a connotation). Six Sigma is defines as an organized way to leverage decade old tools in order to eliminate variability in processes. Lean DOES NOT improve quality or excellence of a product, service or organization. Six Sigma DOES NOT improve throughput or cycle time. LSS starts to go toward system thinking by combining the two together in order to derive synergistic effects not feasible with each set of tools individually in isolation.
Now let’s dive into Systems Thinking and the convergence with QMS and LSS. Systems’ thinking has been around since the beginning in time. Aristotle was one of the first to put into a philosophical dialogue. What is the ultimate synergy of system working in perfection? Well look at Earth’s ecological systems and also the human body. Systems’ thinking is man’s philosophical approach to try and understand these complex systems and how they interact with great positive value generation with effortless ease. Now let’s get back to how this relates to value generation for organization and mankind. Remember that organizations were created by man for the sole purpose to benefit man – not for the exploitations of man. Also there is symbiotic relationship that not exists between man and the environment – earth’s ecological systems – but also between each other the communities. Here is quote from an article I just read by Tito Conti, “Quality and Value: Convergence of Quality Management and Systems Thinking”. “Systems thinking is a way of thinking that STRIVES to UNDERSTAND the complexity of the reality we are immersed in, in the particular the reality of socio-cultural systems. … ever increasing complexity of man-made systems, the dynamics imposed by exponential growth of technology … we cannot escape the systems thinking challenge.’
Very humbling to reflect. LSS can be a tool to create simplicity and then co-operations between departments, business units and thus human. Synergetic effects of social systems (which is work people!) has value generated that, if positive and aligned, is greater than the sum of the values individual units could generate in isolation. Quality is neutral and excellence is not quality, but has been misused often enough o be widely accepted by professionals. Excellence is just a product of the interactions among systems and not the sum of the actions of individual parts. We all understand that excellence of one individual unit does not translate into excellence for the entire organization, right? An organization culture and structure must be designed with system and integral thinking, which takes higher levels of critical thinking. LSS should only used for the sake of aligning the workforce toward a common goal and drive out fear and selfish agendas – ONLY LEADERSHIP can bring this together. Last thing – pay attention to Maslow’s laws on human, social interaction and behavior. The perceived gratification received by people, through motivation and engagement, is directly proportional to the value generated for the organization. This is leadership at the fifth level, which sees the interaction of systems through whole brain – 4-lens perspective of the global whole and breaks it down in simple forms for the alignment of people toward a common vision!
Now let’s dive into Systems Thinking and the convergence with QMS and LSS. Systems’ thinking has been around since the beginning in time. Aristotle was one of the first to put into a philosophical dialogue. What is the ultimate synergy of system working in perfection? Well look at Earth’s ecological systems and also the human body. Systems’ thinking is man’s philosophical approach to try and understand these complex systems and how they interact with great positive value generation with effortless ease. Now let’s get back to how this relates to value generation for organization and mankind. Remember that organizations were created by man for the sole purpose to benefit man – not for the exploitations of man. Also there is symbiotic relationship that not exists between man and the environment – earth’s ecological systems – but also between each other the communities. Here is quote from an article I just read by Tito Conti, “Quality and Value: Convergence of Quality Management and Systems Thinking”. “Systems thinking is a way of thinking that STRIVES to UNDERSTAND the complexity of the reality we are immersed in, in the particular the reality of socio-cultural systems. … ever increasing complexity of man-made systems, the dynamics imposed by exponential growth of technology … we cannot escape the systems thinking challenge.’
Very humbling to reflect. LSS can be a tool to create simplicity and then co-operations between departments, business units and thus human. Synergetic effects of social systems (which is work people!) has value generated that, if positive and aligned, is greater than the sum of the values individual units could generate in isolation. Quality is neutral and excellence is not quality, but has been misused often enough o be widely accepted by professionals. Excellence is just a product of the interactions among systems and not the sum of the actions of individual parts. We all understand that excellence of one individual unit does not translate into excellence for the entire organization, right? An organization culture and structure must be designed with system and integral thinking, which takes higher levels of critical thinking. LSS should only used for the sake of aligning the workforce toward a common goal and drive out fear and selfish agendas – ONLY LEADERSHIP can bring this together. Last thing – pay attention to Maslow’s laws on human, social interaction and behavior. The perceived gratification received by people, through motivation and engagement, is directly proportional to the value generated for the organization. This is leadership at the fifth level, which sees the interaction of systems through whole brain – 4-lens perspective of the global whole and breaks it down in simple forms for the alignment of people toward a common vision!
Wednesday, January 23, 2008
Business Continuity and Sustainability: The Convergence of QMS, SCM, and CRM
Tactical deployment of initiatives must be aligned with strategic targets and corporate goals in order to attain sustainability and continuity of a business in this emerging and dynamic global environment. Key performance indicators (KPIs) and balanced scorecards are tools that can effectively and proactively align customers (CRM), operations (QMS and MES), finance (SCF), and human capital (QMS and CRM) into sharp focus that supports continuity. Six Sigma is also a tool and is ever evolving and changing to meet the demands of global processes and systems. Six Sigma can not improve processes speed, but does ensure focus on doing the right activities correctly. Lean manufacturing (part of the six sigma tool belt) can not bring processes under statistical control or improve capabilities, but does ensure that the focus is on working on the right activities.
These tools support and allow a company to build a structure of sustainability. Business sustainability and continuity only truly happens when best practices (established through management’s commitment and dedication to Quality) becomes best habits of the entire workforce. This can be facilitated by
Making continuous improvement the way of conducting business.
Identifying primary inhibitors to process and system flows.
Exploiting optimization actions to forecast non-value added activities (wasteful steps and activities) and eliminating them.
Balancing top speed and efficiency in operations with the highest quality feasible with present process/system through strong focus on revenue generation, cost structures, and customer satisfaction.
Includes in all of the processes the necessity for receiving inspection, quality planning, and supplier surveillance (even internal suppliers).
Develop training programs and succession plans that are proactive and have the foresight to aggressively address future market demands and needs of customers.
Proactively addressing emerging trends on a strategic level will prepare a company for tomorrow’s tactical issues.
Product recalls negatively impact shareholder value (SHV) and erode the company’s and product branding efforts. This can be minimized by implementing continual improvements of Quality Management Systems (QMS), Manufacturing Execution Systems (MES), Supply Chain Management systems (SCM), and Customer Relationship Management systems (CRM) through
Reducing/eliminating the cost of poor quality.
Mitigating risks of recalls through aggressive risk assessments.
Ensuring compliance to regulatory and quality standards.
Dedication to improving consumer safety and satisfaction.
This brings what are the required actions and activities to achieve the means of sustainability, which include
Develop, establish, implement, and execute an effective Corrective Action Board (CAB) that has cross functional representation responsibilities for continuous process improvement as well as manage quality, tractability, and risk mitigation assessments at all levels and across all boundaries. Adopt and drive a QMS that facilitates a culture change.
Establish continual improvement QMS actions into real time reporting in order to increase visibility of product, process, and system information across all of the value chains. Eliminating silos of information and knowledge is a necessity of visibility, which supports business sustainability.
Ensure that traceability and threshold levels for non-conformance incidents are intertwined within every process and system. Automate collection of quality data from the manufacturing floor and suppliers.
Develop, establish, Implement, and execute and effective Continuous Improvement Team (CIT) that focuses on process traceability and non-conformance root causes across all boundaries.
Establish quality dashboards and supplier scorecards that ensure process data is exploited into actionable intelligence and knowledge for quicker decision-making.
Integrate process traceability data across all value chains that support visibility and performance across all boundaries.
Ensure all supply chains have integrated traceability and commitment of suppliers to traceability, especially the global suppliers.
This leads to the need to start measuring and improving on the metrics of
Percentage of Product in compliance, which is the percentage of product produced, that is in compliance to processes against total products is greater than 98 percent.
First Pass Yield, which is the share of finished product that goes through the process the first time without defects, is greater than 95 percent.
Response time to non-conforming shipments, which is product discovered to be out of compliance and the average time needed to locate and quarantined is less than one hour.
On-Time delivery, which is the ration of product delivered on-time (not early or late) to the total product delivered is greater than 95 percent.
Benchmark and improve performance in these key categories, which include
Process – through the standardization of processes across the organization.
Organization – through establishing ownership of executive management for the traceability and risk mitigation initiatives.
Knowledge Management – through delivery of process and system data into information that is turned into actionable intelligence for quicker decision making. Action intelligence is defined as delivering the right data to the right person in a usable format in real time so appropriate actions (decisions/judgments) are taken with a minimum of intermediaries or pushing the decision-making process down to the lowest level (establishing intent).
Technology – through exploiting technology that supports and drives compliance and traceability programs.
Performance Management – through abilities to measure business performance that drives continuous improvements proactively.
Traceability and genealogy programs are supported by QMS, SCM, CRM, and ERP systems. It is the use and exploitation of these tools that improve the visibility and functionality of processes and systems. This drives accessibility to relevant employees in real time – eliminating lag time – which increases responsiveness and focus on working on the right activities. The effectiveness of the structures implemented will be based on the existing technology. The benefit of continuous improvement programs will be aided by new technology adoption and integration into QMS, SCM, and CRM systems.
These tools support and allow a company to build a structure of sustainability. Business sustainability and continuity only truly happens when best practices (established through management’s commitment and dedication to Quality) becomes best habits of the entire workforce. This can be facilitated by
Making continuous improvement the way of conducting business.
Identifying primary inhibitors to process and system flows.
Exploiting optimization actions to forecast non-value added activities (wasteful steps and activities) and eliminating them.
Balancing top speed and efficiency in operations with the highest quality feasible with present process/system through strong focus on revenue generation, cost structures, and customer satisfaction.
Includes in all of the processes the necessity for receiving inspection, quality planning, and supplier surveillance (even internal suppliers).
Develop training programs and succession plans that are proactive and have the foresight to aggressively address future market demands and needs of customers.
Proactively addressing emerging trends on a strategic level will prepare a company for tomorrow’s tactical issues.
Product recalls negatively impact shareholder value (SHV) and erode the company’s and product branding efforts. This can be minimized by implementing continual improvements of Quality Management Systems (QMS), Manufacturing Execution Systems (MES), Supply Chain Management systems (SCM), and Customer Relationship Management systems (CRM) through
Reducing/eliminating the cost of poor quality.
Mitigating risks of recalls through aggressive risk assessments.
Ensuring compliance to regulatory and quality standards.
Dedication to improving consumer safety and satisfaction.
This brings what are the required actions and activities to achieve the means of sustainability, which include
Develop, establish, implement, and execute an effective Corrective Action Board (CAB) that has cross functional representation responsibilities for continuous process improvement as well as manage quality, tractability, and risk mitigation assessments at all levels and across all boundaries. Adopt and drive a QMS that facilitates a culture change.
Establish continual improvement QMS actions into real time reporting in order to increase visibility of product, process, and system information across all of the value chains. Eliminating silos of information and knowledge is a necessity of visibility, which supports business sustainability.
Ensure that traceability and threshold levels for non-conformance incidents are intertwined within every process and system. Automate collection of quality data from the manufacturing floor and suppliers.
Develop, establish, Implement, and execute and effective Continuous Improvement Team (CIT) that focuses on process traceability and non-conformance root causes across all boundaries.
Establish quality dashboards and supplier scorecards that ensure process data is exploited into actionable intelligence and knowledge for quicker decision-making.
Integrate process traceability data across all value chains that support visibility and performance across all boundaries.
Ensure all supply chains have integrated traceability and commitment of suppliers to traceability, especially the global suppliers.
This leads to the need to start measuring and improving on the metrics of
Percentage of Product in compliance, which is the percentage of product produced, that is in compliance to processes against total products is greater than 98 percent.
First Pass Yield, which is the share of finished product that goes through the process the first time without defects, is greater than 95 percent.
Response time to non-conforming shipments, which is product discovered to be out of compliance and the average time needed to locate and quarantined is less than one hour.
On-Time delivery, which is the ration of product delivered on-time (not early or late) to the total product delivered is greater than 95 percent.
Benchmark and improve performance in these key categories, which include
Process – through the standardization of processes across the organization.
Organization – through establishing ownership of executive management for the traceability and risk mitigation initiatives.
Knowledge Management – through delivery of process and system data into information that is turned into actionable intelligence for quicker decision making. Action intelligence is defined as delivering the right data to the right person in a usable format in real time so appropriate actions (decisions/judgments) are taken with a minimum of intermediaries or pushing the decision-making process down to the lowest level (establishing intent).
Technology – through exploiting technology that supports and drives compliance and traceability programs.
Performance Management – through abilities to measure business performance that drives continuous improvements proactively.
Traceability and genealogy programs are supported by QMS, SCM, CRM, and ERP systems. It is the use and exploitation of these tools that improve the visibility and functionality of processes and systems. This drives accessibility to relevant employees in real time – eliminating lag time – which increases responsiveness and focus on working on the right activities. The effectiveness of the structures implemented will be based on the existing technology. The benefit of continuous improvement programs will be aided by new technology adoption and integration into QMS, SCM, and CRM systems.
Monday, January 21, 2008
Leadership for the Future, A Supply Chain Management perspective
Future leadership will not only require, but demand higher levels of thinking. It will be necessary for combating the competitive and uncertain landscape of evolving business. Integrity coupled with the ability to learn and execute compelling business strategies will be needed to achieve success. Business agility to lead ahead of customer’s lifestyles and expectations through customer-enabling and engaging resources will allow this achievement and stay ahead of the competition. The accuracy of anticipation of the customer’s expectation will be essential to success. Additionally, embracing more inherent risk and uncertainty will allow innovations and the ability to stay calmly focused toward the end result.
Human capital will no longer exist as an asset, but as an essential tool for survival in the new world of global business. Customer and knowledge management systems will not only improve interactions and engagement, but allow opportunities to be exploited effectively. Real-time value between suppliers and customers (value chains) as well as corporate accountability and governance will be demanded by customers. Social responsibility will govern and direct innovations and sales. This will take planning, education, implementation, and execution of various initiatives. One vital aspect will be planning for risk and ensuring business continuity. Leadership must understand the interlocking and dependence of technology, processes, systems, security, energy sources, supply chains, customer logistics, and people for seamless business continuity.
The key to this interlocking dependence of interactions is the human capital residing within a company. The success of these interactions is directly related to the discipline of intent established and reinforced by the leadership of the company. Decision, made by people, make or break any situation. Slow decision-making causes handicaps in favor of your competition. The quicker and more effective decision-making processes are, then the less disruption occurs. People ensure business continuity, not machines. Business systems and strategies need to be flexible, agile, and adaptable to disruptive events of uncertainty created in the global business landscape.
One suggestion is to adjust to listening and focusing on the customer’s needs and expectations and to stop marketing in order to shape the customer to what the company wants the customer to want. Listening skills must be dramatically improved among all the employees and needs to start at the top and work down to the lowest level. Develop this skill throughout and disrupt the present and create the future. This is because there is a continuing of convergence of technologies occurring, which will include nanotechnologies, biotechnologies, information technology, cognitive science, and all other technologies.
There will be a great future demand for fluid markets, which rely on technology to provide a seamless flow of communication and money in a virtual creation that services the real world. This will create the need and opportunities for:
v Virtual Supply Chain Networks
o Super efficient and fluid
o Establishment of digital currency as the norm to increase market interactions
o Establish relationships and drive commerce for specific projects and timeframes
v Knowledge-Value Engineering Processes and Systems
o Virtual supply chains leveraging positions globally
o CRM and KM exploitation in a virtual interactive environment
v Security and Risk Management
o Business continuity
o Energy terrorism
o Leverage and exploit green technologies
v Food Production and Distribution
o Focusing on local suppliers
o Logistics used to maximum sourcing
o Virtual supply chain management
v Nanoenergy and Nanotechnology
Future business environment will have a much greater degree of complexity, fierce competition, and accelerated change. Innovations will be across all boundaries and will be disruptive technologies to the present norm. It will technology and peoples ability to exploit emerging technologies that will enable companies to increase their market share, profitability, competitive advantage, and survival rates. This will encompass supply chain management (SCM), supplier relationship management (SRM), and supply chain execution (SCE) interacting with manufacturing execution systems (MES) and transforming entire processes and systems through human assets. These supply chain transformations will be the beginning of virtual engagement. This evolution will include the convergence of finance, economics, manufacturing and procurement tasks into one fluid engagement, which will be essential for business. The movement of goods, services, transactions, and interactions from the manufacturer and the end customer must occur instantaneously or very fluid. Distribution channels currently driven by physical distribution will have to become virtual and digitized, which will drive these value chains into automatic engagements.
Economic dominance of a company or industry will depend on the degree of sophistication and complexity achievable in the SCM realm. The power and value of the supply chain vale chain will be the continuity proactive approach to inventory management and procurement. Processes and systems must become derived from models that have been developed for predicting the emergence of proactive actions that must be seized and executed in real-time. This will be facilitated by virtual cooperation and collaboration between companies and all of their values chains. This includes the reduction of inventories (improvement in the company’s cash flow) without worrying about delivery and price increases and an overall improvement in workflow. Information technology (IT) processes and systems (eProcurement and eLogistic) will be leveraged and exploited in order for a company to differentiate themselves in the future market from their competitors.
Paradigmatic shifts of supply chains must provide smart solutions and support real-time decision-making, which will facilitate the speed and accuracy of deliveries will be essential for the next generation. Companies will have to embrace and understand the limitless web-centric technologies, present and emerging, because these systems will become the foundations SCM. On-demand supply chains, business intelligence, and transparency will be the only way to develop, seize, and exploit opportunities. Companies must be able to leverage
v Proactive Predictive Forecasting
o Data mining for niche markets
o Anticipation of customer needs
o On-demand for customer demands
o Transforming information into the ability to drive on-demand decision-making into a business asset.
v Knowledge Management Systems
o Instantaneous cooperation and collaboration of human capital
o On-demand information and knowledge about competition, customers, value chains.
v On-Demand Service
o Driven by customer expectations and not cost or efficiency
o Flexible and agile where the customer’s wishes are anticipated with efficiency and low cost (defines the leader).
v Interconnection of Networks
o Interacting of knowledge across all systems via advanced IT systems.
o Value chain efficiency driven
v Electronic Markets
o Systems that allow all systems, networks to communicate – regardless of company, IT structure, or country.
o Elimination of manual or paper Accounts Payable (AP) systems and development of an electronic instantaneous transaction system.
o An interactive structure that allows customers to customize their degree of engagement.
v Smart IT Systems and Collaborative IT infrastructures
o Drilling down to transparency in transactions, communications, confirmations, and validation.
o Decision support structures with customers, suppliers, partners, and competitors.
This will be supported by the development and execution of artificial intelligence and knowledge management systems, which have embedded decision-support structures for improving the algorithms for predictive modeling and automatic logistics management.
Finance and banking infrastructure will be the tie in, but invisible to the value chain system. The strategic influence of procurement and its relationship with finance is needed for future success. The collaboration and alignment gap that currently exists needs to be closed in order to capitalized on present and future opportunities. On-demand and real-time data mining will drive decision making and the maximization of resources. Continual optimization through continual updating and improvements in data mining will fluidize the flow of the value chains. This will develop the futures and options markets, which will be based on virtual supply chain systems. This will consist of customer relationship forecasting and anticipating the customer needs. Purchasing interests in supplies before the customer realizes they even need them will be the measure of success. Eliminating lead times due to options trading of customers and hedging for investors. Inventory futures will be a portion of the supply chain and a means to earn money on residual cash or cash in transit.
There will be a reshaping or paradigm shifts in the value chains that include supportive linkages, alliances, and channels of distribution. Strategic planning must incorporate and take in consideration future business objectives, landscapes, and the evolving customer needs and demands. Transformations in education, training, financial systems, and manufacturing will occur and lead to their eventual convergence. The world will become reshaped through disruptive innovation where the irrational presence becomes the rational future and the reality of tomorrow.
Fierce battles for talent, intellectual property, capital expertise, and technical expertise will be waged in the near future. Proactive companies with strong leadership will stride through these times effortlessly and become the global leaders. Leaders will have to create order in the mist of chaos and provide fulfillment to the demands of employees and customers. Leaders will have to simultaneously plan for today and tomorrow. They will be the glue that holds the organization together. The most valuable asset will be the leader that has the ability to adapt and remain nimble throughout chaotic environments.
Supply chain relationships will need to be a strong focus. Sustainable competitive advantage in the global market will be through continuously innovating with supply chain partners. The partnership will have to be not only dynamic, but multifaceted and acknowledgement of the
v Benefits of a close-knit collaboration
v Supply chain processes and their improvements
v Technologies underlying in them and the emerging technologies
This will take global vision and focus will consist of
v Instantaneous expectations of delivery
v Necessity of quicker speed to market
v Continuous innovation of disruptive technologies
v Flexibility, agility, and nimbleness to react to change
This will be supported by a collaborative network which provides
v Strategic relationship focus on goals
v Supportive IT portals and visual platforms
v Forward thinking toward the end customer with a focus on outdated and cumbersome intermediate distribution channels.
v Demand-driven value chains which will become a must and not a nice to have.
v Real-time management of operations, inventory, finance, suppliers, and customers where decision making processes deliver instantaneous results that feedback into a continual loop.
v The convergence of sales, marketing, procurement, operations, and finance through interactive and supportive processes that move swiftly to proactively meet the customer’s demands.
These collaborative networks will be leveraged and designed to improve responsiveness and to reduce uncertainty. This allows engagement into collaborative efforts to become fluid and transparent. The key that allows any of this to function and operate is people and their interactive skills and talent. This will be facilitated by a standardization of IT structures and platforms. The interlinking of customer responses and reactions into scheduling, inventory and operational management systems will result in a powerfully effective knowledge management network. Standardization will be aided by an intermediate step of a web-centric platform, which will support various IT structures and allow them to freely interact. Financial planning and forecasting as well as value chain execution will help drive this end. Poor forecasting and excessive inventories will become a huge handicap in the SCM system. Proactive and predictive modeling through these knowledge management systems will support JIT inventories and eliminate these inefficiencies. This is all facilitated by supply chain intelligence (SCI), which is driven by
v Continual, focused, and disciplined evaluations
v Plan-Do-Act cycles
v Access to real-time data about global responses within the value chains
v Development of security plans that support business continuity and recovery plans
Inventories are money not earning interest and a waste of working capital’s potential, which is drain on net profits, shareholder value creation, and liquidity. Radio frequency identification device (RFID) is a growing technology that facilitates automatically and transparently receiving, storing, and shipping goods with minimal human interaction. This eliminates human error and speeds up the transactions. RFID allows for real-time interaction to occur between multiple parties simultaneously. The supply chain needs to be designed to
v Ensure continuous availability of goods and services.
v Provide the uninterrupted supply of materials at the highest quality (feasible).
v Allow for real-time engagement of Sales/Marketing data and information and customer trends.
Focusing in on working capital optimization helps improve financial performance as well as maintain and even improve customer satisfaction. This can be achieved through supply chain finance perspective and paradigm shifts in inventory management practices. Working capital improvement metrics include
v Reducing inventories (finished products, raw material, and work-in-process)
v Days Sales Outstanding (DSO)
v Measuring the effectiveness of the use of short-term financing
v Measuring the effectiveness of investing cash in the short-term
This can be driven by improving the accuracy of operational budgets, which reduces the need for cash-on-hand and increases the investment opportunities in the short-term. Improvement in cash management are driven by
v Accuracy of Operational budgets (including RM, Finished goods, etc.).
v Active and interactive cash management strategies.
v Improve the accuracy and functionality of cash flow forecasting and strive toward real-time cash flow balances.
v Active engagements of the Sales force to reduce DSOs.
Facilitating accurate real-time cash flow balances will allow for better cash management, lead to a reduction in costs of transactions (eInvoicing and A/P), and elimination of finance charges within the supply chain structure. You will not get extended payment terms from your suppliers. Actually to strengthen the supply chain and reduce your inventories and improve supplier reaction times is counter intuitive. Need to strive to reduce the payment terms and then demand JIT and other strategies from the supply chain in return. This will help drive all of the efficiencies out of the supply chain.
Corporate risk management also needs to be a strong focus. The complexity, uncertainty, and inherent risk in the global markets require continual monitoring of emerging problems and issues. Risk management involves
v Re-evaluating global strategies
v Strengthening of core competencies
v Becoming more risk-adverse by guarding against over-extension of resources.
This includes focusing and developing a strong SCM program that fully integrates the operational aspects of the business. These programs must be developed, implemented, and executed from a strategic and tactical perspective instead of the current basic operational perspective of today. This is because to do so may lead to
v Poorly engineered products and processes
v Products recalls
v Excess inventory costs, thus a drain on cash flows
v Unsellable inventory that must be reworked or scrapped
v Diminished levels of customer satisfaction
v Loss or erosion of market share and profitability
Long distance suppliers may have multiple intermediaries or steps which include
v Manufacturer to port and warehouses
v Transport and logistics providers
v Forwarders, stevedores, etc.
v Customs brokers, etc.
These are all information intensive transactions and include various complexities that must be recognized and dealt with, which include
v Dealing with custom agents and forwarders
v Monitoring of long distance suppliers
v Planning and forecasting for long transit times
v Addressing and adapting to cultural differences
v Financial issues such as currency exchange issues
There are means that companies can work with the US customs department to minimize some of these complexities and thus potential delays in deliveries to facilities. One program is the Customs – Trade Partnership Against Terrorism (C-TPAT). Companies bringing in goods from outside the US can register and become responsible for the security aspects of their supply chain. This allows goods to be quickly processed through customs and reduces the transit time as compared to competitors. Global trade will be dominated by those companies which can navigate the ever-changing custom requirements and regulations the best. Companies must focus and map out global transport and demand further efficiencies. Inefficiencies include poor port clearance documentation and poor duty payment coordination. Systems and processes must create a responsible and knowledgeable environment about containers and various shipments from cradle to grave. Companies will be required at any given time and step to
v Know the shipments contents
v What is in the container, packages, etc?
v Who has opened it?
v Who has moved it, loaded it, etc.?
Actively and proactively managing the supply chain has financial aspects that directly impact inventories and working capital. There are balance sheet implications include goods in-transit inventory, which start with purchase order issuances or master POs. This works further back into the chain and the development of Vendor Managed Inventory (VMI). There needs to be a trigger for the financing or payment when inventories are pulled and used in Production. This will be further facilitated by the trend to move away from traditional methods of payments (letters of credit, banker’s agreements, etc.) and move to more innovative open account SCM finance structures and systems.
Human capital will no longer exist as an asset, but as an essential tool for survival in the new world of global business. Customer and knowledge management systems will not only improve interactions and engagement, but allow opportunities to be exploited effectively. Real-time value between suppliers and customers (value chains) as well as corporate accountability and governance will be demanded by customers. Social responsibility will govern and direct innovations and sales. This will take planning, education, implementation, and execution of various initiatives. One vital aspect will be planning for risk and ensuring business continuity. Leadership must understand the interlocking and dependence of technology, processes, systems, security, energy sources, supply chains, customer logistics, and people for seamless business continuity.
The key to this interlocking dependence of interactions is the human capital residing within a company. The success of these interactions is directly related to the discipline of intent established and reinforced by the leadership of the company. Decision, made by people, make or break any situation. Slow decision-making causes handicaps in favor of your competition. The quicker and more effective decision-making processes are, then the less disruption occurs. People ensure business continuity, not machines. Business systems and strategies need to be flexible, agile, and adaptable to disruptive events of uncertainty created in the global business landscape.
One suggestion is to adjust to listening and focusing on the customer’s needs and expectations and to stop marketing in order to shape the customer to what the company wants the customer to want. Listening skills must be dramatically improved among all the employees and needs to start at the top and work down to the lowest level. Develop this skill throughout and disrupt the present and create the future. This is because there is a continuing of convergence of technologies occurring, which will include nanotechnologies, biotechnologies, information technology, cognitive science, and all other technologies.
There will be a great future demand for fluid markets, which rely on technology to provide a seamless flow of communication and money in a virtual creation that services the real world. This will create the need and opportunities for:
v Virtual Supply Chain Networks
o Super efficient and fluid
o Establishment of digital currency as the norm to increase market interactions
o Establish relationships and drive commerce for specific projects and timeframes
v Knowledge-Value Engineering Processes and Systems
o Virtual supply chains leveraging positions globally
o CRM and KM exploitation in a virtual interactive environment
v Security and Risk Management
o Business continuity
o Energy terrorism
o Leverage and exploit green technologies
v Food Production and Distribution
o Focusing on local suppliers
o Logistics used to maximum sourcing
o Virtual supply chain management
v Nanoenergy and Nanotechnology
Future business environment will have a much greater degree of complexity, fierce competition, and accelerated change. Innovations will be across all boundaries and will be disruptive technologies to the present norm. It will technology and peoples ability to exploit emerging technologies that will enable companies to increase their market share, profitability, competitive advantage, and survival rates. This will encompass supply chain management (SCM), supplier relationship management (SRM), and supply chain execution (SCE) interacting with manufacturing execution systems (MES) and transforming entire processes and systems through human assets. These supply chain transformations will be the beginning of virtual engagement. This evolution will include the convergence of finance, economics, manufacturing and procurement tasks into one fluid engagement, which will be essential for business. The movement of goods, services, transactions, and interactions from the manufacturer and the end customer must occur instantaneously or very fluid. Distribution channels currently driven by physical distribution will have to become virtual and digitized, which will drive these value chains into automatic engagements.
Economic dominance of a company or industry will depend on the degree of sophistication and complexity achievable in the SCM realm. The power and value of the supply chain vale chain will be the continuity proactive approach to inventory management and procurement. Processes and systems must become derived from models that have been developed for predicting the emergence of proactive actions that must be seized and executed in real-time. This will be facilitated by virtual cooperation and collaboration between companies and all of their values chains. This includes the reduction of inventories (improvement in the company’s cash flow) without worrying about delivery and price increases and an overall improvement in workflow. Information technology (IT) processes and systems (eProcurement and eLogistic) will be leveraged and exploited in order for a company to differentiate themselves in the future market from their competitors.
Paradigmatic shifts of supply chains must provide smart solutions and support real-time decision-making, which will facilitate the speed and accuracy of deliveries will be essential for the next generation. Companies will have to embrace and understand the limitless web-centric technologies, present and emerging, because these systems will become the foundations SCM. On-demand supply chains, business intelligence, and transparency will be the only way to develop, seize, and exploit opportunities. Companies must be able to leverage
v Proactive Predictive Forecasting
o Data mining for niche markets
o Anticipation of customer needs
o On-demand for customer demands
o Transforming information into the ability to drive on-demand decision-making into a business asset.
v Knowledge Management Systems
o Instantaneous cooperation and collaboration of human capital
o On-demand information and knowledge about competition, customers, value chains.
v On-Demand Service
o Driven by customer expectations and not cost or efficiency
o Flexible and agile where the customer’s wishes are anticipated with efficiency and low cost (defines the leader).
v Interconnection of Networks
o Interacting of knowledge across all systems via advanced IT systems.
o Value chain efficiency driven
v Electronic Markets
o Systems that allow all systems, networks to communicate – regardless of company, IT structure, or country.
o Elimination of manual or paper Accounts Payable (AP) systems and development of an electronic instantaneous transaction system.
o An interactive structure that allows customers to customize their degree of engagement.
v Smart IT Systems and Collaborative IT infrastructures
o Drilling down to transparency in transactions, communications, confirmations, and validation.
o Decision support structures with customers, suppliers, partners, and competitors.
This will be supported by the development and execution of artificial intelligence and knowledge management systems, which have embedded decision-support structures for improving the algorithms for predictive modeling and automatic logistics management.
Finance and banking infrastructure will be the tie in, but invisible to the value chain system. The strategic influence of procurement and its relationship with finance is needed for future success. The collaboration and alignment gap that currently exists needs to be closed in order to capitalized on present and future opportunities. On-demand and real-time data mining will drive decision making and the maximization of resources. Continual optimization through continual updating and improvements in data mining will fluidize the flow of the value chains. This will develop the futures and options markets, which will be based on virtual supply chain systems. This will consist of customer relationship forecasting and anticipating the customer needs. Purchasing interests in supplies before the customer realizes they even need them will be the measure of success. Eliminating lead times due to options trading of customers and hedging for investors. Inventory futures will be a portion of the supply chain and a means to earn money on residual cash or cash in transit.
There will be a reshaping or paradigm shifts in the value chains that include supportive linkages, alliances, and channels of distribution. Strategic planning must incorporate and take in consideration future business objectives, landscapes, and the evolving customer needs and demands. Transformations in education, training, financial systems, and manufacturing will occur and lead to their eventual convergence. The world will become reshaped through disruptive innovation where the irrational presence becomes the rational future and the reality of tomorrow.
Fierce battles for talent, intellectual property, capital expertise, and technical expertise will be waged in the near future. Proactive companies with strong leadership will stride through these times effortlessly and become the global leaders. Leaders will have to create order in the mist of chaos and provide fulfillment to the demands of employees and customers. Leaders will have to simultaneously plan for today and tomorrow. They will be the glue that holds the organization together. The most valuable asset will be the leader that has the ability to adapt and remain nimble throughout chaotic environments.
Supply chain relationships will need to be a strong focus. Sustainable competitive advantage in the global market will be through continuously innovating with supply chain partners. The partnership will have to be not only dynamic, but multifaceted and acknowledgement of the
v Benefits of a close-knit collaboration
v Supply chain processes and their improvements
v Technologies underlying in them and the emerging technologies
This will take global vision and focus will consist of
v Instantaneous expectations of delivery
v Necessity of quicker speed to market
v Continuous innovation of disruptive technologies
v Flexibility, agility, and nimbleness to react to change
This will be supported by a collaborative network which provides
v Strategic relationship focus on goals
v Supportive IT portals and visual platforms
v Forward thinking toward the end customer with a focus on outdated and cumbersome intermediate distribution channels.
v Demand-driven value chains which will become a must and not a nice to have.
v Real-time management of operations, inventory, finance, suppliers, and customers where decision making processes deliver instantaneous results that feedback into a continual loop.
v The convergence of sales, marketing, procurement, operations, and finance through interactive and supportive processes that move swiftly to proactively meet the customer’s demands.
These collaborative networks will be leveraged and designed to improve responsiveness and to reduce uncertainty. This allows engagement into collaborative efforts to become fluid and transparent. The key that allows any of this to function and operate is people and their interactive skills and talent. This will be facilitated by a standardization of IT structures and platforms. The interlinking of customer responses and reactions into scheduling, inventory and operational management systems will result in a powerfully effective knowledge management network. Standardization will be aided by an intermediate step of a web-centric platform, which will support various IT structures and allow them to freely interact. Financial planning and forecasting as well as value chain execution will help drive this end. Poor forecasting and excessive inventories will become a huge handicap in the SCM system. Proactive and predictive modeling through these knowledge management systems will support JIT inventories and eliminate these inefficiencies. This is all facilitated by supply chain intelligence (SCI), which is driven by
v Continual, focused, and disciplined evaluations
v Plan-Do-Act cycles
v Access to real-time data about global responses within the value chains
v Development of security plans that support business continuity and recovery plans
Inventories are money not earning interest and a waste of working capital’s potential, which is drain on net profits, shareholder value creation, and liquidity. Radio frequency identification device (RFID) is a growing technology that facilitates automatically and transparently receiving, storing, and shipping goods with minimal human interaction. This eliminates human error and speeds up the transactions. RFID allows for real-time interaction to occur between multiple parties simultaneously. The supply chain needs to be designed to
v Ensure continuous availability of goods and services.
v Provide the uninterrupted supply of materials at the highest quality (feasible).
v Allow for real-time engagement of Sales/Marketing data and information and customer trends.
Focusing in on working capital optimization helps improve financial performance as well as maintain and even improve customer satisfaction. This can be achieved through supply chain finance perspective and paradigm shifts in inventory management practices. Working capital improvement metrics include
v Reducing inventories (finished products, raw material, and work-in-process)
v Days Sales Outstanding (DSO)
v Measuring the effectiveness of the use of short-term financing
v Measuring the effectiveness of investing cash in the short-term
This can be driven by improving the accuracy of operational budgets, which reduces the need for cash-on-hand and increases the investment opportunities in the short-term. Improvement in cash management are driven by
v Accuracy of Operational budgets (including RM, Finished goods, etc.).
v Active and interactive cash management strategies.
v Improve the accuracy and functionality of cash flow forecasting and strive toward real-time cash flow balances.
v Active engagements of the Sales force to reduce DSOs.
Facilitating accurate real-time cash flow balances will allow for better cash management, lead to a reduction in costs of transactions (eInvoicing and A/P), and elimination of finance charges within the supply chain structure. You will not get extended payment terms from your suppliers. Actually to strengthen the supply chain and reduce your inventories and improve supplier reaction times is counter intuitive. Need to strive to reduce the payment terms and then demand JIT and other strategies from the supply chain in return. This will help drive all of the efficiencies out of the supply chain.
Corporate risk management also needs to be a strong focus. The complexity, uncertainty, and inherent risk in the global markets require continual monitoring of emerging problems and issues. Risk management involves
v Re-evaluating global strategies
v Strengthening of core competencies
v Becoming more risk-adverse by guarding against over-extension of resources.
This includes focusing and developing a strong SCM program that fully integrates the operational aspects of the business. These programs must be developed, implemented, and executed from a strategic and tactical perspective instead of the current basic operational perspective of today. This is because to do so may lead to
v Poorly engineered products and processes
v Products recalls
v Excess inventory costs, thus a drain on cash flows
v Unsellable inventory that must be reworked or scrapped
v Diminished levels of customer satisfaction
v Loss or erosion of market share and profitability
Long distance suppliers may have multiple intermediaries or steps which include
v Manufacturer to port and warehouses
v Transport and logistics providers
v Forwarders, stevedores, etc.
v Customs brokers, etc.
These are all information intensive transactions and include various complexities that must be recognized and dealt with, which include
v Dealing with custom agents and forwarders
v Monitoring of long distance suppliers
v Planning and forecasting for long transit times
v Addressing and adapting to cultural differences
v Financial issues such as currency exchange issues
There are means that companies can work with the US customs department to minimize some of these complexities and thus potential delays in deliveries to facilities. One program is the Customs – Trade Partnership Against Terrorism (C-TPAT). Companies bringing in goods from outside the US can register and become responsible for the security aspects of their supply chain. This allows goods to be quickly processed through customs and reduces the transit time as compared to competitors. Global trade will be dominated by those companies which can navigate the ever-changing custom requirements and regulations the best. Companies must focus and map out global transport and demand further efficiencies. Inefficiencies include poor port clearance documentation and poor duty payment coordination. Systems and processes must create a responsible and knowledgeable environment about containers and various shipments from cradle to grave. Companies will be required at any given time and step to
v Know the shipments contents
v What is in the container, packages, etc?
v Who has opened it?
v Who has moved it, loaded it, etc.?
Actively and proactively managing the supply chain has financial aspects that directly impact inventories and working capital. There are balance sheet implications include goods in-transit inventory, which start with purchase order issuances or master POs. This works further back into the chain and the development of Vendor Managed Inventory (VMI). There needs to be a trigger for the financing or payment when inventories are pulled and used in Production. This will be further facilitated by the trend to move away from traditional methods of payments (letters of credit, banker’s agreements, etc.) and move to more innovative open account SCM finance structures and systems.
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