From the Lionesses of Africa Operations Dept
About to start our usual writing session for the Lioness Weekender and discussing all the fascinating topics we have been lucky enough to experience in business, and our Head of Finance pops into the room, sits down, hands over a nicely typed warning for our readers, plus a lovely picture of a Grizzly Bear tapping his fingers and patiently waiting!
“For all those watching the equity markets and wondering what's going on. A Bear market is very patient, the rallies suck everyone in and then when we least expect it, drops like a stone. Businesses cannot be run on the back of what is happening in the equity markets otherwise they may start thinking this will be a 'V' shaped recovery. At the very best this will be a 'U' shaped one, so businesses must continue to ensure their supply chain is as efficient as possible, clear their warehouses of stock (which is just a wasting asset sitting on their shelves) and protect cash.”
So there you have it, we have at least one Bear in the office and on those calming words(!), we indeed take a look this week at your warehouse and supply chain. Get this wrong and in a disaster situation (such as the Coronavirus shutdown) it’s like a Grizzly Bear with a serious hangover running through your office/factory/warehouse. Everyone runs for the exits.
So how do we prepare so that we are not caught off guard the next time one appears?
Just how well did your supply chain manage this Coronavirus attack? If you are part of a supply chain for a larger organisation, how well did you and your team do and were you the one well oiled part that enabled success for your customer? Or were you caught frozen in fear as the Grizzly Bear reared up and loomed over you? If you are part of a larger supply chain, then this look at overall supply chain planning and processes, will (we hope) be very useful. If you can understand what the Head of Unilever or VW or Siemens or other such great supporters of female business around the globe is thinking, then you can take a load off their worry list if you understand and therefore work to deliver your part of what they are trying to achieve within their supply chains. If you have your own large supply chain with many manufacturers supplying, then sit back and just feel smug as you tick off (we hope!) the following essential parts as we mention them!
We recently watched a webinar with the great Richard Cook who is a guru in the supply chain world (and one of the most knowledgable and humble people we have had the privilege of listening to). In charge of multi-million US$ supply budgets for global companies, he talked about his 7 pillars and invariably the companies mentioned above will have something that looks like this as part of their supply chain plan.
So should we!
Pillar 1 - Road Map
What does your supply chain look like now and in the future. How will you get from here to there? Create a 3 year plan (we recently spoke to someone who boasted about having a 10 year plan - good luck with that - let’s try to keep it simple, 3 years is complex enough!).
Pillar 2 - Investment in Infrastructure
Do you have:
The right people in place? We previously mentioned (here) that the people you have in leadership roles during the good times may not be the right ones to take you through this current dark swamp.
The right processes in place?
The right tools and technology? Those companies that had large technology components in their business reacted far better as Coronavirus hit, than those companies where there was a person yelling orders whilst slumped on their desk with their head in their hands. Indeed some semi-conductor plants in Wuhan simply continued producing with the minimal amount of human intervention as they were so automated. Try to find someway in which you can have automation in your factory, in times of chaos, manual changes made in a panic often waste people’s time, and time is certainly not your friend in these situations.
Pillar 3 - Monitor
Keep up to date with the key challenges and ensure that your data collection is tight so that your forecasting is as accurate as possible. Remember if you want to drive from ‘A’ to ‘B’, you do have to know where ‘A’ actually is before you start driving. Knowing where you are at the start is essential to future planning, especially when we are talking years ahead. Please ensure your Bookkeeper and Accountant recognize this importance. If necessary buy your Bookkeeper a ‘Lab’ Coat to emphasize the Science (not Art) aspect of their role. One decimal place out and ‘B’ might as well be on the moon. For those of you who think that their numbers are perfect: “This is the number I get from my excel spreadsheet, so it must be right.” is one of the most frightening statements in business. Data must be checked and checked again, especially if it comes from an Excel Spreadsheet. Don’t get us wrong, we are huge fans of Excel, but please just give it the fear and respect it deserves.
Pillar 4 - Operational Excellence
Easy to say, but very difficult to do if you do not have the right people in charge and a team that understands where you are driving the company and the rhythm of the business. Operational Excellence relates not only to what is going on in your company and also to what is happening at your suppliers. If they have a problem that affects their operational excellence, this will be reflected in the supply to you, either in time or quality, both of which cost money if they go wrong!
How do you manage this risk?
Followers of our blogs will know that we are huge supporters of great communication.
For your Team?
It is all about 2-way communication. You need to know what the potential problems are and the potential bottlenecks so they can be solved, and they need to know where you are taking the company, how they will get there and what is required for this journey to be successful. Don’t hide in your office, go out and chat to your employees on the shop floor - they will certainly know and may even have a solution.
For your suppliers?
To us your suppliers are not just someone you have found in the Yellow Pages and called up out of the blue. This is a partnership. Talk, work and celebrate together, that way, if for whatever reason there is a problem, you will know early and together this can usually be solved.
Pillar 5 - Strategic Sourcing
This is not about the cheapest pricing (unless you are in that market - but then as we have previously said “Good luck competing against Walmart”), this is about strategy. What do I want from my suppliers?
Communicate, Collaborate and Commit to create Confidence.
Work together and you will be amazed at how good it feels and how great the process flows.
Pillar 6 - Crisis Management
Here is our ‘Having a plan’!
It is so important to have a plan for when the lights go out and there is panic, chaos and mayhem around you. What happened on Apollo 13? Tom Hanks and Kevin Bacon reached for the manual when things went wrong. You would have thought that they knew how to fly the spacecraft (certainly on their Hollywood wages!), but the same thing happens in planes when things don’t go according to plan, the pilots reach for the manual. Why? Because when stressed the brain can’t concentrate on too many things at once. A plan or manual allows for those under stress to go down the list ticking the boxes as each part is done. It is used because it has been proven to work, time and time and time again. Major international companies have these manuals as well (and often an emergency team that springs into action). Not every business can have such a Team, but it can at least have a manager who is designated and who can co-ordinate the process, and the production of such a manual.
Training for such situations is essential as well. Easy to say, hard to do, but even a basic training session, such as an instant test as to who has access to the manual, who has (secure please!) access to the essential contact details of the customers and suppliers, are laptops configured for the necessary firewalls for a sudden working from home and so on, will prove invaluable.
Richard Cook said that in his 17 years at the top, he has had 7 big events that caused some (think Foot and Mouth, SARS and so on) or (in the case of Coronavirus) complete breakdown of his supply chain and the processes and plans he had put in place kept things flowing. Think about that, here is someone who manages multi million US$ supply chains for some of the biggest retail companies in the world saying he had 7 heart stopping events in a 17 year period. Crazy! Do you think that the way the world is going that we shall have more or less such events in the next 17 years? Yes, we thought so too!
Pillar 7 - Evolving and Improving
Never rest!
What went well.
What went wrong.
How to build for the future.
Document these and build into your processes for future events. Discuss as soon as possible after the event, memories fade fast. Remember, every great team has a good set of people with different skills and backgrounds. Create that diversity and of course (as always) celebrate that. All the same type of people have the same type of thinking and in a disaster event this multiplies and becomes terrible. Even having a Grizzly Bear in the Finance office (such as we do) has its uses!
Stay safe.