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Value Unchained is Upgrading Our Blog Platform

  
  
  
We will be migrating to a new blog platform in the coming weeks to accommodate the growth of Value Unchained.  Look for the addition of new authors to the blog and an expanded scope of value chain topics.  After the move to the new platform is complete, you may notice some small changes in the layout of Value Unchained.  If you have any questions regarding the changes to Value Unchained, or suggestions on topics you want to see our team write about, please contact me. We look forward to continuing the great discussions that have been started.

 

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Beyond the Research Part Four: Green, Lean and Global Supply Chain Strategies

  
  
  

In the fourth and final installment of Beyond the Research, Diane Mollenkopf and Wendy Tate talk about risk management.

To download a PDF of the entire interview, use this link.

Interview with the Authors

Question 4: In your view, how important did risk management elements play into decision making among the study participants?


Diane Mollenkopf: Risk management was not a concept we had originally expected to hear about in our focus group and case-study discussions with managers.  But it came up early and often in the conversations.  Risk management is increasingly on the supply chain executive’s agenda, and green issues are definitely part of that discussion now.  Certainly from a regulatory compliance perspective, managers are aware of the risks of not complying with environmental requirements.  Many firms seem to be developing green initiatives as part of their risk-mitigation strategies.  By getting on board with green initiatives now they feel they can minimize potential risk related to non-compliance, but also with respect to market acceptance and market share issues.  As customers (consumers and industrial customers alike) increasingly demand greener products, getting in front of the wave is clearly ideal from a market positioning perspective (sorry, I’m in Australia as I write this, and surfing analogies just seem natural here).

We also saw much emphasis on managing risk through these challenging economic times.  Managing the supply base to ensure viability of suppliers, availability of supply, and managing internal processes to minimize waste and related costs were of great importance as part of many firms’ supply chain risk management strategies.


Wendy Tate: The only thing that I will add to Diane’s comments is that managing and mitigating environmental risk is key for organizational success.  From a supply chain perspective this means more attention to resources, materials, transportation channels, etc.  Organizations have developed elaborate supplier evaluation systems that rank or prioritize the potential risk associated with doing business in a particular area, with a particular supplier or using particular methods of transportation.  The goal of all supply chain managers is to avoid a disruption in the supply chain.

Environmental risk management is one of the next areas of focus for our research.  We are already in the initial stages of preparing a managerial focused article that uses the results of our focus groups and case studies to assess environmental supply chain risk management strategies.


About the Authors:

University of TennesseeDr. Diane Mollenkopf is an Associate Professor in the Department of Marketing and Logistics at the University of Tennessee, Knoxville. Dr. Wendy L. Tate is an Assistant Professor in the Department of Marketing and Logistics at the University of Tennessee, Knoxville.

Download and read the entire 53-page study "Green, Lean and Global Supply Chain Strategies

 

Customer Experience Management

  
  
  

Customer Relationship ManagementA positive customer experience that is also sustainable ensures brand loyalty – and in very successful cases – converts a customer into a brand evangelist. Some thought leaders have actually argued that “experience” is the new economy that has supplanted the product and service economy. In their definitive book, “The Experience Economy,” B. Joseph Pine II and James H. Gilmore draw on Walt Disney, Nordstrom, Starbucks, Saturn and IBM as examples of brands leading the experience economy. They even make the case that “experience” is the “product” that the customer is buying.

Any company, whether product-centric, service-centric or experience-centric, that has an existing economic model that works, should still re-evaluate how you can be better poised to manage customer experience.  It is still a critical source of competitive advantage for your company.

While the case for customer experience management sounds compelling, many companies still put ONLY numbers and statistics at the heart of customer experience management when in reality it should be the customer that should take centre-stage. Numbers are great BUT what about the qualitative aspect of the human experience?

Customer satisfaction is often erroneously driven by the measurement and management of quantitative statistics only. It ignores the actual customer perception and drives a tool box called customer service delivery which is often seen by customers as mechanic and not related to their actual satisfaction.

Generally speaking, for customer experience to be a competitive advantage, companies have to ensure that the winning formula can be sustainable and replicated. There has to be a science behind the art of making the customer experience memorable.

According to the Disney Institute, in its book aptly titled “Be Our Guest”, the 'Nuts & Bolts' of making customer experience a winning and sustainable loop has five key tenets:

1. The “Theme” – A shared vision of the driving force behind a company’s service. It’s typically articulated as a simple statement.

2. The “Cast” – Having the right recruitment, acclimatization, training and retention practices for employees so that they act and breathe with accordance to the shared vision of the service theme and service standards.

3. The “Setting” – The Disney Institute argues that SETTING DELIVERS SERVICE. In short, any “stimulants” that would stimulate the five senses (sight, sound, smell, touch and taste!!!) should be orchestrated and no details spared to give customers a distinctive and memorable experience that is uniquely yours.

4. The “Process” – A flow that intricately involves both Cast & Setting and includes the most key service delivery process for most organizations.

5. “Integration” – “The whole is greater than the sum of its parts”. This is the balancing act of integrating all the elements in this service loop to create a complete operating system.

What are the challenges you encounter in ensuring that excellent customer experience remains sustainable within your company or team? How are you addressing these challenges?

Looking forward to your views and insights.

 

Beyond the Research Part Three: Green, Lean and Global Supply Chain Strategies

  
  
  

In this third installment of Beyond the Research, Diane Mollenkopf and Wendy Tate talk about green versus lean strategies in an organization. Don’t forget to check back tomorrow for the fourth and final interview question as well as a downloadable version of the entire interview.

Interview With the Authors:

Question 3: Did any of the focus group participants state that “Green” strategies came before “Lean” strategies?  If yes, can you elaborate on the circumstances?  If no, what do you think that means?

Diane Mollenkopf: Very few participants said that “green” strategies were more important than “lean” strategies.  This is not terribly surprising, because “lean” has been the language of supply chain managers for many years.  “Green” is not yet mainstream thinking or language for many supply chain managers.  One participant said that he knew what it meant to have a “lean supply chain,” but didn’t know what it meant to have a “green supply chain.”  This sentiment seemed to be shared by many participants.

However, given the interest level that was demonstrated on green issues, it was very encouraging to hear that most of the participants agreed with the concept that “lean equals green.”  Those who had never thought about “green” before are now recognizing that many of their firm’s lean initiatives also have favorable green outcomes.  Reducing waste from a lean perspective often has a positive green impact in the form of reduced landfill, reduced transport miles and related emissions, etc.  So, the synergy between “lean” and “green” is definitely being recognized, many firms are trying to capitalize on the joint benefits of “leaning and greening” their supply chains.

Wendy Tate: There are some organizations that participated in our focus groups/case studies that now have “green” as an overarching organizational strategy – however, these organizations also had well-established lean programs. These organizations typically used green as a means to market their products and services, or as a market differentiator.  We discovered that top management plays a key role in the “greenness” of an organization and therefore, top management’s level of commitment to green is really the organizations level of commitment to green.

The concepts of lean (reducing waste and continuous improvement) are well-established supply chain management principles.  Being “green” is still relatively new in supply chain management thought and green is perceived as a cost driver.  For most organizations spend management is critical and green projects are seen as being in conflict with the reduction of spend whereas the purpose of a lean project is to reduce cost through improved efficiency


About the Authors:

University of TennesseeDr. Diane Mollenkopf is an Associate Professor in the Department of Marketing and Logistics at the University of Tennessee, Knoxville. Dr. Wendy L. Tate is an Assistant Professor in the Department of Marketing and Logistics at the University of Tennessee, Knoxville.

If you want to download and read the entire 53-page study, use this link.

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What do you think about these responses?

In the final installment of this interview, which will be posted tomorrow, you will learn about how research participants viewed risk management in relation to green and lean initiatives.

 

Are You Ready For the Big ‘C’?

  
  
  

You know deep inside what is required to bring your customer relationships to the next level.   People have been telling you for years about customer lifetime value, but in the past you could get away with one-off transactions with little customer intimacy.   It’s not that you don’t want to c..c..commit to a long term customer relationship; Maybe you are just not ready!

The big C is of course, ‘Content’ and it is rapidly changing the rules of customer relationships for electronics device OEMs forever.   It started pretty innocently when we introduced calendar applications and Internet access but now customers are accessing news, maps, blogs, books, movies, applications (apps) and services through their devices.  While this drives increasing demand for products, the question is whether companies are ready to take these relationships beyond a one-off transaction?

Traditional ERP and financial systems are the lifeblood of many organizations but they are inherently designed around the management of a physical transaction as a driver of revenue.  Even our CRM systems manage customer profile and contact history but do not adequately manage the content and service rights of customers into the future.  While the industry has yet to settle on a universal term for this requirement, ‘Entitlement management’ seems to be gaining momentum and is indeed the one which we have settled upon (see Exploring the Potential of Access Rights and Licensing.)

Customers are already starting to ask the difficult ‘second date’ questions:

  • I bought my device 12 months ago – how can I get an upgrade for my maps and apps?
  • I now have multiple devices – how can I gain access to my content across these devices?
  • I want to upgrade to my device - can I port my content to the new one?
  • My device has gone in for repair – can I transfer my content and service rights to a new device?
  • I have bought your product through retail or distribution – can I update or upgrade my content preferences?

The answers to these questions come from a structured approach to the management of how content is delivered and the relationships between customers, content and their devices.  The true content champions are not waiting for customers to ask these questions.  They recognize the revenue opportunities from proactively managing these relationships and providing customers with options to manage, upgrade and renew their ‘entitlements.’

ModusLInk announced a new set of On-Demand Entitlement Mangement Solutions today, which includes prepackaged tools and functionality for B2C companies to start monetizing access to content, features and services.  As our economy adapts to the new world order of subscriptions and apps versus single-transactions for a tangible product, the customer, and your relationship with her, will become more important than ever.

Are you ready for the big ‘C’?  What are the other challenges that you see companies face in managing the parallel physical and digital value chains?  We would love to hear from you.

 

Beyond the Research Part Two: Green, Lean and Global Supply Chain Strategies

  
  
  

Last week I shared with you the first installment of an interview I conducted with Dr. Diane Mollenkopf and Dr. Wendy Tate, from the University of Tennessee. In this second installment, Diane and Wendy share their thoughts on collaboration and relationships throughout the supply chain. 


Interview With the Authors


Question 2: As it relates to “Green, Lean and Global Supply Chain Strategies” how important did you deem the aspect of “Collaboration and Relationships” throughout the supply chain?

Diane Mollenkopf: Collaboration and relationships are very important throughout the supply chain.  Lean policies have historically been factory-level or firm-level concepts.  Many participants spoke about their efforts to extend lean practices across their supply chain—most were focused on upstream supply relationships. Being leaner across multiple firms requires a much higher level of coordination, and thus more integrated relationships.  This seems to be a challenging, yet important frontier for many companies that participated in the research.  It becomes particularly challenging when suppliers are overseas, but definitely seems to be an area of increasing importance for many companies.

Wendy Tate: As the organizations started to realize that being lean is both an intra- and an inter-organizational concept they learned that they needed to look outside of their own facilities and work with both suppliers and customers.  There are many inter-organizational “lean” decisions that must be made, especially related to inventory and the transportation of that inventory.  It is becoming more common to have suppliers located at the manufacturing site in order to optimize or minimize waste.  This type of business relationship involves a significant amount of trust and collaboration.

Diane Mollenkopf: On the green front, many participants are responding to customer demands for greener products and greener processes.  This requires a higher level of collaboration to ensure that customers understand the green attributes and related value outcomes as suppliers initiate greener practices.  It also requires management of tradeoffs because customers can’t always get the green attributes at an acceptable price point (due to technological constraints, for example), thus collaboration is needed to determine the acceptable solutions.  The discussions highlighted very clearly that the drive towards greener products and processes is very much a journey that customers and their suppliers must travel together.  This suggests high levels of collaboration and strong relationships with key supply chain partners will be necessary.

Wendy Tate: An interesting insight for me was the number of suppliers that are initiating green projects or innovating in the environmental area.  Some of the push to be more environmentally sustainable is actually being driven by suppliers that are beginning to use green initiatives as a differentiator.  By focusing on green as a core competency or innovating in the environmental arena, these suppliers are strengthening the relationship with the buying organization.  As purchase orders change from being green as a suggestion or qualifier, to being green as a mandate or order winner for the suppliers, those poised and proactively pursuing excellence in this area will achieve greater success.

About the Authors:

University of TennesseeDr. Diane Mollenkopf is an Associate Professor in the Department of Marketing and Logistics at the University of Tennessee, Knoxville. Dr. Wendy L. Tate is an Assistant Professor in the Department of Marketing and Logistics at the University of Tennessee, Knoxville.

By the way, if you want to download and read the entire 53-page study, use this link.

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What are your thoughts on these responses? Do you have any collaboration success stories you can share with our readers?

In tomorrow’s installment we will hear about how participants viewed the intersection of green and lean in their organizations.

 

Beyond the Research Part One: Green, Lean and Global Supply Chain Strategies

  
  
  

In May I introduced you to a research study conducted at the University of Tennessee entitled “Green, Lean and Global Supply Chain Strategies.” The authors of this research, Dr. Diane Mollenkopf and Dr. Wendy Tate, recently answered some questions that I had regarding their findings.  Over the next couple of days, I will share their responses with you in a series of blog posts.

By the way, if you want to download and read the entire 53-page study, use this link.

Interview With the Authors

Question 1: During all of your research, if you have to pick the one item or response to a topic that surprised you most, what would it be?

Diane Mollenkopf: One of the most surprising aspects of the research discussions related to the level of discussion around “green” versus “lean”.  Discussions around green topics were animated, full of examples of how the participating companies were becoming greener.  We heard repeatedly how important “green” was to each company.  In contrast, the discussions around “lean” were not quite so animated, there wasn’t quite so much ‘newness’ to the lean discussions.  Therefore, I was continually surprised when respondents reported lean to be a more important supply chain strategy than the green initiatives that everyone had just spent so much time discussing so vociferously.

Wendy Tate: Like Diane, I was also surprised by the difference in interest levels on the “lean” versus “green” initiatives and strategies.  Related to this was the participant’s surprise that lean and green initiatives were not always synergistic with one another.  The perspective was usually that “lean” takes waste out of the system making it obviously a “green” initiative.  However, not all lean initiatives have a positive environmental impact.  Think for example of the increased transportation (and therefore environmental impact) required to operate in a just-in-time model.

There were a couple of other areas that I found very interesting.  The first was that there was a very strong linkage between “green” and supply chain risk management strategies.  The subject of risk was brought up in our very first focus group, and it was brought up often in all of the other focus groups/case studies. This focus on green was even more surprising because the economy had just taken a turn for the worse when we started conducting our research.  I personally would have thought that any discussion of “green” would be pushed on the back burner and efficiency or “lean” moved to the front. Even though times were difficult, the level of attendance and participation in our focus groups and case studies was always very high and especially lively with regard to the topic of green.

Another surprise to me was how extensive the network of involved stakeholders was for any green initiatives. It appears that “green” initiatives have a much larger and more complex network of interested and involved parties.

Diane Mollenkopf: I think this speaks to the challenges of leadership and language around green supply chain initiatives.  When green projects belong to someone in a corporate function, green doesn’t belong to the managers and employees who actually do the supply chain work, whether it be sourcing, producing, or distributing products.  The concept of a ‘green supply chain’ as opposed to a ‘green company’ was foreign to many participants.  The language of green also creates a significant barrier to developing green supply chains.  Green language has to be developed throughout the organization.  As one participant said about his corporate ‘green team’, when they talk in terms of ‘pounds of carbon’ that doesn’t mean anything to his team that thinks in terms of ‘miles per gallon.’  This suggests that leaders have a responsibility to instill a language of green that everyone within the organization (including supply chain personnel) can relate to so that supply chain people can start to develop green supply chain strategy.

Wendy Tate: The language issue can also open the door for some functions to play a larger role in “greening” the organization.  There is very often a silo mentality within organizations surrounding the different organizational functions.  Part of this is driven by the metrics and measures used to assess that particular function.  “Green” has not really become part of the personal performance metrics at any organization.  Therefore, green is not the main priority for success.

Learning to speak the language of others is key to further growth of green strategies.  The environmental, health, and safety organization (EHS) is usually responsible for monitoring regulations and disseminating that information through organizational channels.  They speak in regulatory terms (such as pounds of CO2 emitted as Diane discussed).  EHS is typically an internally focused function, whereas there are other functions that might play a more SCM oriented or boundary-spanning role. These functions could help to perform environmental scanning for relevance to ensure that impending regulations are addressed, and existing regulations are maintained across the supply chain.  Procurement and logistics both come to mind because they are dealing with different countries, different types of commodities, many different supply chain partners and a much broader network of stakeholders. Using the relationship and communication skills that are already established, these functions could help the EHS department in its efforts to mitigate risk in this area.  So, learning to “walk the talk” or “speak the language” of others in the organization might offer some opportunities that are currently unavailable.

About the Authors:

University of TennesseeDr. Diane Mollenkopf is an Associate Professor in the Department of Marketing and Logistics at the University of Tennessee, Knoxville. Dr. Wendy L. Tate is an Assistant Professor in the Department of Marketing and Logistics at the University of Tennessee, Knoxville.

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What are your thoughts on these responses? How do you see “green” and “lean” intersecting in your company?

Don’t forget to check back early next week for the next installment in this series where I will share Diane and Wendy’s perspectives on collaboration and relationships throughout the supply chain.

 

BRIC-ing It!

  
  
  

BRIC CountriesI was reading an article in the June 26th edition of the Financial Times related to Brazil’s transformation into an economic powerhouse. One of the key challenges to Brazil’s growth is its logistics infrastructure, which relates to simple things like getting ore from mines and crops from the fields to the market in a fast and efficient way.

This made me think about BRIC countries in general:  Brazil, Russia, India and China, and some of the challenges companies face in these regions. 

Many countries, such as Russia, have infrastructure issues with a large proportion of roads in need of repair. This challenging infrastructure means that market penetration for products is only in the key cities in each of the countries. The distribution networks in the countries are completely different, and centralized distribution is still a few years away. For example, in India, organized selling only accounts for 3-5% of the market. There is little integration between logistics companies, and systems that provide visibility to inventory and demand are not widely available. 

For most consumer electronics companies,  strategies in BRIC countries range from straightforward exporting arrangements to distributor relationships, to licensing agreements for the manufacture of products and full ownership of a subsidiary in that country. Here are some examples of how consumer electronics companies can grow market share in BRIC countries:

  • Work with partners in the respective country to develop inexpensive, technology-based solutions to improve the value chain. This can range from using smart phones as a method for tracking deliveries or sharing information, to making payments. (See the Business Week article about how mobile phones are used in Africa to make payments.)
  • Consider carefully the products to be distributed in the market and the price point. In some markets, discounted end-of-life products may compete better with low-cost brands.
  • Inventory strategies will vary, since lead times for end customer inventories would need to be much higher than normal.

Have you had any experiences with market growth in BRIC countries? What other challenges do they present? Please share your experiences.

 

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It Isn't Easy Being Green

  
  
  

Sustainability - Green FrogIf only Kermit knew 40 years ago just how relevant this phrase would be to corporations in 2010.  Although neither corporate social responsibility (CSR) nor sustainability are new concepts (some firms have had formal programs for decades), the green tidal wave has crashed upon the marketplace over the past few years in an unprecedented scale - and has left a lot of businesses dizzied in their attempt to not only catch up, but scramble and try to lead in their respective industries.

For the business community, green is a multidimensional and broad reaching concept, ranging from an architectural philosophy to an insincere sales gimmick for just about every consumer product sold.
 
I strive to refrain from using the term green and prefer something a bit more quantifiable.  For example, I spend a good amount of time coaching clients in regards to packaging strategy, and as a member of the Sustainable Packaging Coalition (SPC), and I use the term “sustainable packaging” in lieu of “green packaging.”  Sustainable packaging is clearly defined by the SPC and thus packaging can be measured quantifiably by the definition set.

The terminology landscape is perpetually changing and awareness of what terms to avoid and adopt is challenging enough.  One example is the term CSR. For some firms, CSR is charitable expenditures and blood drive support.  For others, CSR includes the prior mentioned initiatives, but more, including carbon footprint monitoring, mitigation and disclosure, corporate ethics and transparency, workforce equality, health and safety, etc.  The international standards organization (ISO) is attempting to standardize CSR reporting via a new standard in development with the nomenclature ISO 26000.  This, no doubt, will go a long way in helping firms negotiate the myriad of hurdles in the marketplace as their customers and customer’s customers place more of an emphasis on their supply chain partner’s ability to complement their existing CSR program.

I recently served as technical advisor to the ISO as part of the TC122/SC4 U.S. delegation for the environmental packaging standard development meetings in Beijing in May and June.  Experts in sustainable packaging from over a dozen countries made their way to the meetings to partake in the effort to harmonize the slew of regulations throughout the world, specifically around organic, chemical and energy recovery, source reduction, recycling and reuse.  It was obvious that we had our work cut out for us, and although it will take some time, we will eventually publish a sustainable packaging standard that will help companies in their endeavor to build sustainable solutions within their supply chains.  With over 30 eco-label programs, over a dozen different paper and plastic labeling schemes and the slew of government regulations and guidelines in play around the world, this standard will go a long way in helping companies dial in on this specific dimension of their corporate social responsibility program.

Of course, while CSR reporting and environmental packaging standardization will help firms in their endeavor to ride the green wave, it won’t be enough.  Huge disparities exist in other areas, such as lifecycle analysis (LCA) methodologies and data sets.  For example, in the U.S. and Europe the relative government agencies publish the greenhouse gas (GHG) footprint of a megawatt hour of electricity across multiple regions and even grids to help firms with their GHG footprint monitoring, mitigation and disclosure initiatives.  But, firms with multinational supply chains operating in Africa, the Middle East, East Asia or South America will find the comparable data sets lacking, if available at all.

Even with the help of the best minds and global standards organizations, the challenge is quite clear: it indeed isn’t easy being green.

What challenges has your company faced in implementing sustainable practices in your supply chain?

 

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