About Business Logistics

I speak to individuals about the companies they work for, and they refer to different departments, such as Planning, Purchasing, Warehousing, Inventory Control, and Transportation. These are many of the roles within the scope of Business Logistics, yet their companies have not realized they are all intertwined and can be banked against each other; traded and bartered for better company discounts. Additionally, they mention Returns, which is actually referred to as Reverse Logistics.

All of these roles are components of the Supply Chain in every industry. Logisticians help companies realize cost savings throughout the Supply Chain. Speaking with Logisticians about the Supply Chain encourages businesses to locate and differentiate the savings their companies could reap. This leads to new profit opportunities for their organizations.

Once I speak to individuals about the scope of Business Logistics and what it entails, they are fascinated by it. They tell me I should speak to their Management about the cost savings they can make through tradeoffs of services. There should be more high profile papers and articles on Business Logistics to educate the business world. It’s not just something students should learn about in college.

Supply Chain assists organizations with cost savings by streamlining the Planning and Purchasing roles so that the right materials are at the right place at the right time, so manufacturing can continue in order to exceed Customer expectations. No manufacturing down time is the goal of many businesses, in order to achieve just in time advantages. JIT can either reduce or eliminate inventory carrying costs of the organization, and can promote lean manufacturing processes. Lean manufacturing processes initiate cost savings throughout the Supply Chain, and savings can be transferred to Customers.

Benefits of Balanced Content

This may seem like a counterintuitive concept but let me explain. In my global work with leading speakers, authors, and thought leaders, I’ve noticed that most content is out of balance. Authors and thought leaders have a tendency or a bias. They are either incredibly academic or hyper focused on business, and this makes sense, given that many thought leaders come from either the hallowed halls of academia or the shining towers of the corporate world. Their world view and perspectives are shaped by their experiences.

Now there’s nothing inherently wrong with leaning towards business or academia. The content market admires, appreciates, and consumes content that leans in either direction. That being said, the best content I’ve seen is balanced. It has hard data to support the theories and it is peppered with stories and anecdotes based on the content’s real world business application. All too often I’ve heard academics snobbishly dismiss a business book written by a world renowned CEO because it doesn’t have an academic underpinning or data. I’ve also heard many C level execs discount the potential value of content that comes from academia as they claim that it wouldn’t work in “the real world” of business.

I’d use the Switzerland strategy. Be neutral and open to the needs and concerns of both sides and respect them both. For example, if you’re a less academic thought leader, put the effort in to finding some academic research to validate your concepts and theories. Chances are there is academic work that has been done that you can cite and it will neutralize the darts that academics may toss at you. Conversely, if you’re an academic you need to get out into the field and talk to business leaders and run experiments in the real world to validate your claims. Oftentimes things that should work just don’t for a variety of reasons; the lab is not the same as the market place.

Now you have one more thing to keep balanced in your life, however, the benefits of cross pollinating your work will make it stronger and reduce the resistance as it spreads across an organization.

Importance of Business Systems

Business systems are documented procedures setting out how your organisation operates. They are processes, usually combining actions taken by people and some form of automated application, organised in such a way so as to meet a given set of business objectives. Such systems can generally take place without the business founder / owner’s direct action, over and over again, as efficiently as possible.

Examples of processes may include how your staff should answer the telephone, how they take and pass on messages; the procedure for raising, approving, placing and receiving orders; the process for generating, checking and sending out client invoices, as well as receiving payments and following up on outstanding bills etc.

Regardless of the size or type of your business, it is likely that you already have set procedures in place covering many functions within your organisation, which employees follow out of habit or as directed by their supervisor / manager.

Business systems are the manual for your business; the “know-how” of any business that many business founders / owners usually hold in their head, and have not got round to putting onto paper.

There are many reasons and just as many benefits for having established and documented systems in your business, some of which include the following:

  • They provide a framework for your operations and an effective structure to support your business.
  • They improve consistency: production, delivery, customer service, after-sales care etc.
  • They improve results and/or productivity, because you and your employees don’t have to re-invent the wheel every time.
  • They provide a better work environment for your employees, as an effective system will contribute to clarifying roles and responsibilities as well as providing staff with some guidelines to refer to.
  • They ensure compliance with legislation, safety regulations or any other legal requirement specific to your type of business operations.
  • They give your business the ability to expand and they facilitate business growth, as they will make your business more attractive to any potential investor or buyer.

Although there are similarities across many functions, such as Accounts, Human Resources, Sales, Stores, Logistics etc., unfortunately there is no one perfect, one size fits all system that works for all companies. Any system will need to integrate the company’s business objectives, its people and the way it provides its products or services.

It is important to have a well-designed system, customised to your type of operation, and thought out by people at all levels within the organisation.

Such a system will be more likely to be followed by all employees, because they have been involved in its design, and they understand the value that having a system in place brings to the quality of their work and the service they provide to customers.

One point to keep in mind is that having great people working with poorly designed systems – or no systems – is likely to lead to an under-performing business. On the other hand, great systems without good people won’t work either, hence the additional benefit of involving employees in designing a system, or simply in documenting the processes they are following.

Equally so, employees who have been trained in your business systems should also feel empowered enough so that they don’t feel they just have to follow a given script without using their head.

For this reason, it is important to encourage feedback not just from your customers, but also from your employees and to use such comments to review and to continuously improve and develop your business systems.

About Integrated Talent Management Strategy

Talent Management involves several practices linked together and propelled by organizational infrastructure. It begins by having a firm written understanding of the core capabilities needed to perform tasks meshed with the actual business intelligence for the industry. For this article’s example we will be using the financial services industry, but we must remember that support functions like IT, Human Resource, Accounting, and Purchasing have unique business intelligence issues that need to be included any industry strategy.

While banking business intelligence is similar from one institution to another, your market, choice of products and services and unique culture make for a different plan and approach. The clarity of goal for talent management is essential before assembling the pieces.

One of the most complete models for a Talent Management Strategy I have found includes the following nine practices:

  1. Recruiting & Staffing
  2. Performance Management
  3. Rewards & Recognition
  4. Workforce Planning
  5. Talent Review
  6. Succession Management
  7. High Potential Development
  8. Leadership Development
  9. Employee Development

These practices are not in any particular order or priority because they all must be in place, and integrated for the strategy to be effective. Rolling out one at a time is a waste of energy and leads to minimal impact. This is probably the main reason many companies have hired a Director of Talent Management to design, implement and monitor the strategy. To be effective, no other function can add all this to their existing workload.

Now while it is more effective to put talent management under the responsibility of a single leader, the practice responsibilities are spread throughout human resources, training, and selected management sponsors. This initiative may begin with the Board of Directors and/or Senior Management; but it eventually is a process that involves every single employee if it is to be successful in achieving a lasting effect.

As you review the list of practices, it becomes clear that the focus is on your employees (the talent) and the conscience attention to setting and achieving desired outcomes to function in today’s economy as well as being prepared for changes in your workforce and working environment. Banks often promote their technologies to clients, and yet it is our human capital that makes the bank possible. Let’s face it, years ago we did it without as much technology, but we still need the human factor to make it happen today.

Now while you might hire someone to management this whole process for you, by the very nature of this much change all at once you would be wise to bring in an external consultant to guide the creation of the strategy. Someone who fully understands what integration means and how it is applied to each of the practices. This consultant acts in many ways as someone who can act without emotional attachment to ancient practices, and is skilled in bringing consensus between processes and people. Yet consensus is not everything. The consultant is not going to be with you forever, so part of their job is to make sure your management team comprehends what integration means, and a year later can identify issues in your strategy, and how to make tweaks to close the loop holes.

Eagle’s Dynamic Strategy

The problem is that we no longer do business in a bubble. Therefore, your competitive advantage can be enjoyed only for a short period of time. Modern business strategy must be a continuous process evolving with new competitive advantages. One must build their business on the basis of moving from one competitive advantage to another as smoothly as possible. This is a continuous process and one that is critically important to long-term success.

In general, you can only depend on new innovations giving you an edge for a year or two. For example, lower cost of base elements and new configurations can last a short period of time, sometimes as little as one-quarter of a year. These are tangibles that will impact your current edge. There are intangibles that must be paid attention to as well including how you are perceived by your customer base. This includes issues like how satisfied your customers are, how strong your brand is nationally and in some cases, internationally, how strong your distribution channels are and whether they can be expanded. The best part of the intangibles is they are far more challenging for your competition to duplicate without a significant investment in time, energy and in some cases, money.

In short: your overall business strategy and the competitive advantages you develop and nurture have to be more dynamic than ever. You have to identify a business strategy that works for you, analyze your competition’s responses to your advances and work out your next steps. Stop and think about it like an eagle on a migration route: The eagle already knows where he is going and how he is going to get there. However, his decisions remain dynamic, responding to altitude, air currents and stops. There may be other factors that come into play including the weather and his need for food and shelter. Simply put: The eagle is always on the lookout for a new competitive advantage and he has developed a dynamic strategy to ensure he reaches his destination regardless of the circumstances he is facing. Without this type of dynamic strategy, the eagle would quickly exhaust himself; he must always be ready to adapt to changing conditions along his route.

While this may seem like an oversimplification of the problem, business strategies must have a competitive advantage roadmap. This means determining early on how long we will have a competitive edge once we have a new innovation and being able to jump to the next area that will provide us that competitive advantage once again.

One of the biggest obstacles that a company has with maintaining a competitive edge is internal issues. One has to be poised to extract maximum value from each advantage and have the flexibility to adapt to new advantages nearly immediately. For most companies, this means having a continuous process of innovation and research and development.

Competition within the industry is not always the main competitive threat; in fact, there are far more significant threats that most businesses face like new business models, new technologies or new companies. You might be surprised to find out that the least of your problems is current competitors; there may be others waiting in the wings to pounce at an opportunity. These “nonobvious players” may be a more significant threat than your current competition.

This means you have to be constantly looking out for ways to keep your brand in a competitive model and be prepared to address changes nearly immediately. This is why businesses are now dealing with what we identify as “transitory competitive advantages”. If your strategy for staying on top is not flexible and easily maintained through a dynamic strategy, you will lose any competitive advantage you have quickly and may not have an opportunity to regain your position.

Organize for Growth and New Business

New products, services, programs, and business can be systematically created within one department where the responsibility for knowledge and communication is managed and produced, specifically:

  • current capacity,
  • past experience,
  • future vision, and
  • the benefits people can realize with the organization’s solution.

New business arises from proposals (knowledge products), and those organizations with efficient systems of converting their experience, processes, quality control, and financial systems into articulate documents that address marketplace needs will win new business and provide superior service in comparison to the competition.

The idea is to have the capacity to strategically plan to grow revenue even though growth often means bumping against the organization’s time and capacity.

In complement to the development of proposals, the efficient collection, summarization, and storage of information is required. Organizations require current information to understand and respond to the needs of stakeholders. Data collection tools for the gathering of this type of information include:

  • interview surveys and questionnaires,
  • expert reports and white papers, and
  • intelligence about clients from other various sources.

Summaries can then be communicated verbally or in short memos to decision-makers.

Since organizations prosper or die from the delivery of messages to internal and external stakeholders, it is vital to maintain a consistency about who you are, where you were, what you represent, and where you will go in the near future. Communication staff therefore maintain the responsibility for:

  • program descriptions,
  • models,
  • visualizations,
  • videos,
  • web pages,
  • trainings, and
  • presentations.

Organizations that develop a structure for new business will ultimately succeed better than those organizations that operate as if growth happens by luck and personal connections.

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Process Strategic Planning

Having witnessed this lack of positive plans or programs created, far too often, during my over three decades of identifying, qualifying, developing, training and consulting, to over a thousand individuals in positions of leadership, as well as facilitated Board and organizational strategic planning sessions, I feel a simplified process, with checks and balances, and quality reviews, is a needed understanding. Here is a some step process to improve the results of strategic plans.

  • Historic/heritage review and consideration: This must not be done as a one-plan-fits-all, but rather must be based on the specific heritage, mission, and vision of the specific group. Begin by understanding the history, and the perceptions of existing members. Understand why the group may, or may not be, considered as relevant, as it once was. Review opportunities taken, as well as missed, and clearly see the ramifications of each action. While great organizations evolve, they know who and why they are, and tweak, as necessary, but focus on their vital vision and mission.
  • Objective analysis-strengths and weaknesses, and ramifications: Every group has both strengths, as well as weaknesses. Part of quality planning must commence with knowing where the group presently is, and how to best utilize the strongest areas, while addressing and improving upon areas of weakness. Whether action is taken, either timely or not, or even if it is avoided (procrastination, or burying one’s head in the sand), there are always significant ramifications.
  • Vision; mission; needs; priorities; relevance; sustainability: Embrace the vision and mission, or tweak it, and evolve it! Focus on the direction the group needs to go in! Only when priorities are focused upon, will any group be considered relevant, and without relevance, no organization will sustain.
  • Gather input – Stakeholders concerns, wants, needs, priorities, and expectations: Never assume you know what your stakeholders seek, nor that a small group’s views should shape the strategy! Proceed to do broad interviewing and discussions, using several methods, including mail, face-to-face, email, surveys, etc.
  • Develop immediate, intermediate, and longer-term plans: Know and address current needs in a timely, comprehensive manner, because if you don’t fix what’s wrong now, it will affect the future adversely! However, avoid the myopic approach, and create a plan that carefully considers present, and future needs.
  • Implement plan: The greatest plan, unless implemented, goes nowhere and achieves little positive momentum! Carefully go through the process, but proceed forward with an action plan, prepared with the ability to tweak, based on prepared-for contingencies.

Growth Strategy in Action

China’s market is very competitive. A wave of consolidation has reduced the number of breweries from 800 in the mid-1990s (when having their own local brewery was a matter of prestige for local party officials) to today’s 300 foreign and domestic brands. As a result, the top five breweries – China Resources Enterprise (whose popular Snow beer is a joint-venture with multinational SABMiller), Tsingtao Brewery, Belgium-headquartered Anheuser-Busch InBev (which makes Budweiser), Beijing Yanjing Brewery and Danish Carlsberg – increased their share of total volume from 55% in 2008 to 70%. The resulting cut-throat competition has slimmed down operating margins across the board to less than 10% in some cases.

In such growing but competitive market, generating profitable growth becomes an imperative. It often implies going on the offensive, it being looking for new markets, inventing new products, teaming up with adversaries, innovating or investing to connect with customers while closely managing the cost base. Faced with normalising growth, one of China’s top five beer makers, Tsingtao Brewery Co. Ltd (pronounced ‘Ching Dow’) is trying to move beyond its traditional low-cost provider play, and presents a good example of a profitable growth strategy:

  • Looking for new markets. For Tsingtao, this means moving in the fast-growing premium market (currently only 5% of the market versus 30% in the US, but it offers bigger margins despite higher costs of production) with high-end products such as Tsingtao Gold beer or Tsingtao Pure Draft beer, aimed at satisfying demand from city dwellers (and their ability to pay and willingness to trade up) for taste, quality and freshness, as well as for dining out and night-clubbing.

Overseas, where it has been available since the 1950s in the UK and 1972 in the US, Tsingtao is now trying to move beyond Chinatowns and into downtown areas with its lighter products, to be enjoyed either with Asia-inspired foods, or even without food. It has also signed a multi-year agreement with the Cleveland Cavaliers basketball team, the first such agreement signed by a Chinese beer brand in the USA.

  • Inventing new products. For a single product company, this can represent a challenge but it often takes the form of product extension such as fruit-enhanced, low-calorie or non-alcoholic brews to respond to customers’ quest for healthy living, or of diversification into beers that match Chinese regional tastes e.g. a roundly type of beer in the north, a gentler taste for the South, and higher alcohol content and a bitter taste for the Guangdong and Fujian coastal areas. It is also experimenting with event-related designs, such as a canned beer and aluminium-bottled beer with a football theme for the FIFA World Cup, an aluminium-bottled beer designed after its beer festival, or a “Tsingtao Beer Classic 1903”.
  • Teaming up with adversaries. Tsingtao’s part Japanese-ownership through Asahi Breweries’ 19.9% stake has brought best-in-class practices such as stock management. Its joint-venture with Suntory to produce and distribute beer in Shanghai and Jiangsu province will give it access to new markets. In Mexico, it has signed a distribution contract with Grupo Modelo, the country’s largest brewer and producer of Corona.
  • Innovating – in the case of Tsingtao, towards more environmentally responsive brewing. Through a partnership with a local university in Qingdao, it explores ways to re-use brewery wastewater and other waste through techniques such as bio-contact oxidation. It not only treats high volumes of bio-solids efficiently by adding live cultures to the wastewater, but also allows methane generated in the process to be piped to households for cooking, while the remaining waste is used in fertilizers and animal feed. Tsingtao beer topped its rival on the 2014 list of top 100 China Green companies.
  • Investing to connect with customers. Access to different markets, it being on-trade channels (such as hotels, restaurants, etc) or off-trade channels (supermarkets, malls, convenience stores, etc) is dependent on distributors who often put the their own interests above those of the beer companies’. Tsingtao is the first brewer to reduce this reliance and to develop its online sales channels including with branded flagship stores on third-party e-commerce platforms such as Jingdong, Amazon, or WeChat. Being perceived as a Northern beer, Tsingtao has also developed a social network strategy to communicate frequently and directly with its customers, taking the opportunity to educate them about its products e.g. offering advice for food pairing with regional cuisine.

It is also investing to optimise and consolidate its portfolio of brands, using its strong national brand image as a quality beer (Tsingtao beer) to supplement the regional brand’s perceived value brands including Laoshan, Hans, Shanshui and Yinmai.

  • Managing a lean cost base. As raw materials such as barley are mostly imported, Tsingtao tries to forge long-term strategic partnerships with local barley producers. It invites them to its annual global suppliers’ conference and has named Mogao Industrial Development Company as its sole strategic malt supplier in Gansu Province.

Tips Help Business Survive and Thrive

  • Communication is King: Uncertainty can often breed fear; so if times are tough, keep the lines of communication open with clients, team members and those connected to your business. When in doubt, talk it out.
  • Fire Bad Customers: This tip may seem edgy or counterproductive, but the reality is that customers who are not a good fit for your business will only drain your time, resources and mental energy. Take a hard look at overly needy, overly “frugal” or chronically slow responding customers and replace them with clients who will help your business grow.
  • Be Innovative: Though “innovate” may seem like an overly-used buzz word, being innovative in your business is the key to continued success. Look for opportunities to expand into new markets or partner with complimenting businesses. “If you don’t like change, you will hate extinction”- Ross Shaffer
  • Keep Your Chin Up: Attitude is critically important in maintaining and growing your business and brand. A positive attitude and outlook spreads throughout your team and will ultimately be transferred to your customers and clients. A bad attitude or bleak outlook will do exactly the same – but faster.
  • Keep Tabs on Your Market: Know your market in-and-out, and endeavor to keep tabs on industry changes or updates that could affect your business and your client base.
  • Manage Consistently: When times get tough in business is not the time to “put the hammer down” and micromanage staff or business expenses. Intimately knowing your monthly expenses, income and even which team members are performing well will avoid surprises and moments of panic.
  • Avoid Fear: Fear can be as crippling to a business as a downward turn in the economy. Understand your business’ situation at all times by keeping the lines of communication open with suppliers, peers, customers and your team. Separate what you know from what you “think” you know to avoid pushing the panic button unnecessarily.

Business Planning With Sigma

  • Define. During this phase it is necessary to consider VOC (Voice of Customer). In this instance the customer is not necessarily the people to whom you sell products and services. In this process you are the major customer. If you are the business owner then the business plan is to serve you. What is it that you want to achieve with the business in the year(s) ahead. Of course it will be necessary to also consider the needs of other customers such as other shareholders, partners and government since they can have an interest in your business.
  • Measure. In this phase, for business planning purposes, the best place to start would be your last set of accounts and last year’s budget. Here we have a baseline. Typically, we look at last year’s profit result both in dollar terms and gross margin and from that we are able to determine the target that is to be achieved.
  • Analyze. At this point it is necessary to start to breakdown the process into more discrete activities since the overall business objective is to be achieved through a variety of different actions. Of course this, what these activities are will depend on what your business actually does but there are some common ones that will help explain the process.

Say you that your objective is to deliver an EBIT profit of $1mil with gross margin of 15%. In order to achieve this it is going to be necessary to map out the activities that can support this. A great tool for doing this is a fishbone diagram. It’s a simple graphical tool that will provide a structure for you to consider the interrelationship of the various aspects of your business. This chart will then allow you to methodically review the different aspects and analyze the information to determine what to improve. You may have to use some other analysis techniques to help you delve deeper into certain aspects but the fishbone diagram should be the main place of reference to keep the analysis plan on track.

Most effort goes into this stage since it is where you begin to look at your business critically to examine areas for improvement by analyzing different aspects in detail.

  • Improve. After carrying out some analysis it is then necessary to put in some actions to improve. For example you may have decided that you need to improve your sales revenue by conducting a marketing campaign. The improve stage is where you determine how you are going to do this. These activities become smaller improvement activities but as you can see they are all tied back to the fishbone diagram and this in turn is supporting your overall objective. Having this reference document helps keep you focused. In our example we would then begin to detail exactly how the direct marketing campaign would be structured. Identify the targets, the message and the vehicle and timing. That is who, what, how and when.
  • Control. This step is about monitoring and is where you would list the activities that you will undertake to ensure that you are tracking your progress and taking the necessary corrective action if things are going off course. Normally this involves some form of monthly reporting of factors such as sales, lead/prospects conversion, production, service delivery or cost reporting. The key factor is to have a review mechanism that works for you!