Having just blogged about Bain & Company’s insights into how supply chains are changing, I came across this article on the McKinsey & Company website. This was based on a survey and in-depth discussions with 29 Chief Procurement Officers of the world’s largest apparel companies. The headlines are:
- despite concerns about employee health and safety, Bangladesh will remain a major source of clothing. But companies are being very much more proactive in monitoring employee welfare and environmental impacts in this country.
- due to rising labour costs, many manufacturers are no longer sourcing in China.
- as well as higher labour costs, rising energy cost are also putting pressure on margins.
- some operators are beginning to source in South-East Asia (vietnam, Myanmar, Cambodia) and sub-Saharan Africa.
- however, longer term operators are seeking to shorten their supply chains. So European countries are exploring Eastern Europe and the Middle East as possible source markets; whilst American firms are investigating manufacture in Central and South America.
- each source market has advantages and disadvantages.
Rolls Royce have just released this insightful video. It provides a guided tour of the Mechanical Test Operation Centre, Rolls-Royce Deutschland, to explain how they test their engine components.
Bain & Company have an interesting infographic that identifies seven trends digitally-driven trends in the supply chain (here). I list them here:
- Hyper segmentation – using analytics to indentify individual customer needs
- Additive manufacturing – 3D printing, automation, etc
- Focus on local sourcing
- Connected customers – expecting speedy delivery and updates
- End-to-end visibility – for the operator and the customer
- Digital talent – new kind of expertise needed?
A what? Just in case you did not know a chatbot is “a digital service that can hold natural sounding conversations with human beings with the aim of accomplishing particular tasks, such as answering questions or enabling product purchases”. This is all explained in this Accenture article. The travel industry in particular is embracing this technology. Phone up the airline Avianca and you’ll probably speak to ‘Carla’ – ‘she’ sounds like a person but she’s not. Accenture go on to propose five “simple’ ways you can develop a chatbot strategy… just in case you need to.
This is KLM’s chatbot, as explained here.
Came across this interesting strategy+business article that identifies the difference between organisational culture and employee engagement. I could not quite understand why it mentioned “free snacks” Then came across this USA Today article headlined “The key to happiness at work is free snacks”. So let’s be clear, free snacks may improve employee engagement and they may be part of the organisational culture, but they are not the “key to happiness at work”.
All too often, engagement and culture get used interchangeably. The strategy+business article makes it clear how they are different. They define employee engagement as “a measure go how satisfied employees are with their experience within the company”. Whereas organisational culture is “the self-sustaining patterns of behaving, feeling, thinking and believing that determines how things are done within a company”. This is slightly different to how we define culture in our book – “the way things get done in an organisation through the shared values, behaviours and traditions of the employees” – but I am not going to quibble about that.
What I am going to quibble about is the extent to which external agents can come into an organisation as consultants and change the culture – which is what the strategy+business article goes on to articulate. Now I tend to bang on about culture all the time, largely because I believe it is incredibly important and powerful in the operations context. Get the culture right and great things can happen. But as we say in our book “culture arises out of the natural interactions and behaviours of the people within the organisation”. So directing it or changing it is pretty hard to do – because you are trying to change not just behaviour and thoughts, but also often deeply held organisational values and beliefs. So I’m a sceptic when it comes to the idea of “managing culture” – but I could be wrong…
IHG (Intercontinental Hotels Group) launched their new hotel brand two days ago, as their webpage explains. They plan to open the first such property in 2018, and state that they have 150 potential franchisees lined up to adopt the brand. We shall see…
(If I sound somewhat sceptical, I’ll just quote IHG – “This brand is designed for travelers who want a hotel stay that finally meets their expectations for the type of hospitality they value most – the basics done exceptionally well – at a price point expected to be about $10-15 less than IHG’s industry-leading Holiday Inn Express brand”. Mmmmm?)
Great article on Bain & Company website that explains everything you need to know about Agile Innovation. Plus this handy infographic…
This article on the bcg.com website discusses the implications of managing in an increasingly complex world. Management tends to be thought of as oversight of an ‘ordered‘ system. Reeves et al (2017) describe it thus – “factory production, which can be engineered and scaled up or down through hierarchical directives…[whilst] managerial instinct is still often mechanical and deterministic”. But there are many aspects of management that are not ‘ordered’, in particular organisational culture. “Culture is an emergent outcome of the behaviors and interactions of employees—their actions and words, and the way they treat one another—rather than what leaders and managers declare it to be. Executives are able to influence culture only indirectly by setting an example, providing incentives, and selecting and amplifying the right behaviours”.
Reeves et al argue that “a mechanical approach works well in situations with high stability and low complexity”. One of the drivers of digital transformation is that these technologies increase stability and reduce complexity, making management more ‘ordered’. But there are still many industry sectors and many organisations operating in unpredictable and complex environments. In this context, managers need to manage ‘adaptive‘ systems.
Reeves et al then advocate six practices that enable adaptive management, as follows:
1. “Understand and exploit the link between local behaviors and macro-outcomes
2. Find and use the right leverage point in the system
3. Manage conflicting interests between levels or agents
4. Maintain robustness in a changing environment
5. Avoid unfavorable basins of attraction
6. Adapt approaches in response to changing circumstances”.
Having recently blogged about digital transformation (i.e. IoT and AI), it begs the question how data analysts fit into the typical organisation. Piva (2016), on his blog, suggests that there are four ways this is happening:
- “Centralised” – analytics is run from the centre by a specialist team of data scientists;
- “Business Driven” – each division or function of the organisation has its own team of data scientists;
- “Matrix” – each division or function has a team of data scientists but they report directly to the centre;
- “Mixed” – in large organisations, a combination of centralised and matrix models.
There is nothing surprising about this. Many functional areas have been organised in this way, determined by factors such as the size of the firm, industry sector, influence of the founder and/or CEO, and how the function originated within the firm.
What is more interesting is whether there is any sign that one organisational form enables firms to be more effective in digital transformation than any other….. I’m on the look out for research into this.
A free copy of this PLCM infographic is available at the product focus.com website.