Picture: Niklas Hedin, CEO Centiro Solutions.

Worth reading: Here´s another blog post I´d like you to read:

Source: http://www.centiro.se/2013/02/13/re-imagine-re-mobilize?utm_source=apsis-anp-3&utm_medium=email&utm_content=newsletter&utm_campaign=syrihop_TRP_SE#.UY3xGMsaySM

Niklas Hedin: «RE-imagine. RE-mobilize.»

Feb 13, 2013

Some observe that the pressure on companies and supply chains to improve and perform has never been higher, post-World War II, that is. The requirements for lower costs, better service and more agility is now simultaneous, and relentless. Some economic observers say that we live with structural challenges that have never been greater. Some of us may agree.

Some economic observers state that chaos and economic pressure is actually more normal than we tend to think. This all depends on the lens, context and timescale you choose when looking.

When I look across the landscape, I see a mixture of new and old thinking, a variety of really good companies and supply chains, and some that truly struggle.

Some that used to be well-performing and profitable supply chains, are now dragged out in the light of a new dawn, that reveals structural flaws when put in the context of today’s markets, where global and enlightened consumer pressure is driving new behaviors into industrial environments. Is this the end of the world as we know it? Is it time to shut the blinds and go back to sleep, hoping for some bad weather to blow past? No! This is a time of great opportunity. This, dear reader, is a great time to induce and mobilize change.

How do you make your customer feel?

When working with some of my own house gods and now dear friends Professor Dag Ericsson and Doctor John Gattorna, with sprinkles from Martin Christopher, the mix of thoughts for a new world starts to come together. I prefer to take the lens of an architect. Any supply chain is composed of a set of functions, and when I listen to many supply chain decision makers – most often – silos. But too often, using a house analogy, the bathroom was optimized for a family of two, but the kitchen was designed to cater for a football team having lunch. And no one had an overarching thought as to what the whole house would look like, or even less, how it should feel to live in it. No single thought is wrong on its own, but combined they are not harmonized to work together.

What is true for my analogy is true for many supply chains. Suboptimization is one of the true threats to supply-chain performance. Organizational structures, processes and IT systems are siloed to solve functional needs of an ever more distant past. And customers demand something else.

Structural flexibility – why not eat the cake and keep it?

The breadth of innovations that are available today changes the game in many fields and enable any company to advance in terms of process efficiency, service levels and cost reduction. New ways to think about organizational design (say goodbye to stale hierarchies), supply-chain design (goodbye, one-way supplier pressure, hello co-created innovations and shared value) and technology, where cloud-based IT architectures and mobility are two strategic and important enablers to mention for supply chain development.

One core idea with structural flexibility (Martin Christopher) and alignment (Gattorna) is to have the ability to use your different supply-chain capabilities more appropriately to the context. Strategists need to realize that a supply chain has to be able to change between a certain set of modes from one day to the other – and back again with no friction. Lean meets agile.

Old functions seen through a new lens is becoming the new Black

In particular, I see huge potentials in the field of transportation. Globalized supply patterns now need to be balanced with regional ones, new ways to fulfill customer promises with final mile services, or take control over inbound processes are enabled when own-fleet style transportation is blended with commercial networks. Good things happen when end-to-end measurements are applied.

In well-performing supply chains, I have not only seen cost reduction at levels of 20–40% becoming reality, I have seen changes to the degree where new business models are enabled, with a whole new level of customer satisfaction as a result. And based on recent research published in Harvard Business Review, we now know that low-friction service to customers is the best way to get customers to come back, and to buy more when they do.

New ways to utilize what used to be old, cost-centric functions is becoming a strategic capability when customer satisfaction and end-to-end thinking is applied. Welcome to the land where consumer insight (Ericsson) is blended with marketing, new IT tools and traditional supply-chain skills.

So where is your customer?

Well-trimmed supply chains and logistic functions are often great at measuring things. The one question you could take away from this blog and ask your colleagues is how each metric relates to customer satisfaction. Using my analogy – how does your house feel to live in for your customer? Do you have a holistic view, or do you have sub-optimized bathrooms, kitchens and bedrooms? In my experience, metrics are both used and more often abused. They often focus on doing things right, rather than doing the right things. Right that is when looking at context and customer.

Earlier in the summer of 2012 at a supply-chain summit in Singapore, I met some truly amazing people, so I thought I’d share quotes. Among others, I met Genevieve O’Sullivan, a senior supply chain leader for National Defence in Canada. She shared her insight that “To learn to live on the edge of knowledge is a critical skill.” These days, nothing could be truer. So how do you apply this in practice?

There are generations just around the corner, or even already in your customer base, or in your organization that have a good nose for what “good” looks like, and that have a well-developed allergy towards complexity. Listen carefully to them, blend in your vast experience and apply new thinking in terms of IT-tools, processes and measurements. Break your silos open, and let the happiness flow. That’s what the best do. Why shouldn’t you? I hope this blog spawned some new thoughts, and welcome you to contact me to continue the conversation.

Borås, February 2013

Niklas Hedin, CEO, Centiro Solutions