Posted by Mark Brousseau
The U.S. economy is finally on an uptick. According to Federal Reserve Chief Ben Bernanke, the economy is set to grow by 3-4 percent in 2011. That’s great news for businesses that have been seeing decreasing or stagnant numbers on their revenue reports for the last couple of years. But now that more growth is possible, Dan Adams warns that it’s time to make sure your company is poised to get its share of the economic recovery.
"The best way to shape your company’s economic recovery into the most profitable form possible is to deliver more than your share of customer value,” says Adams, author of New Product Blueprinting: The Handbook for B2B Organic Growth. "Specifically, you need to develop differentiated products that provide benefits your customers crave. Products they can’t get anywhere else at a comparable cost. Doing so will accelerate your growth in the upturn and insulate you from the worst of the next downturn.”
Adams notes that you must keep in mind that your competition won’t be standing idly by while you innovate and grow during the improving economy. To stay ahead of your competition, you should keep a targeted focus on what sets your company apart in your industry.
“There could be any number of marketable differences,” explains Adams. “Are your scientists smarter? Do you spend more on R&D? Do you have a longer time horizon? These things can give you an incremental edge, but the best way to deliver substantial new customer value is this: Don’t approach the problem the same way your competitors do.”
Adams recommends using a differentiated approach for differentiated products. He says most competitors approach product development with a supplier-centric mentality, meaning they develop new products based on what they think their customers need. Instead, suppliers should use a customer-centric view, focusing on what their customers know they need.
To avoid this trap, he suggests following the five tips below:
Implement your customers’ ideas, not yours. Do you have a new product development process, perhaps with stages and gates? Is the first stage labeled “New Idea”? If so, that’s fine, but here’s the question: Whose ideas are listed in this stage—yours or your customers’?
“I’ve trained clients in hundreds of B2B industries and find suppliers nearly always begin product development with their ideas rather than their customers’,” says Adams. “The result is that they don’t know if they are truly meeting their customers’ needs until they can watch the sales results of their new product!
“Most companies make the critical mistake of starting with the supplier solution and ending with market needs,” he continues. “But what if they inverted their process by starting with market needs and ending with supplier solutions? Actually, two things would happen. First, because B2B customers are more insightful, rational, and interested than their B2C counterparts, suppliers would learn much more about customer needs than their competitors. Second, they’d prime those B2B customers to buy their new product by engaging them with highly interactive interviews.”
Conduct B2B-optimized interviews. Of all the ways to learn about customer needs—telephone, mail survey, Internet—nothing comes close in effectiveness to face-to-face customer interviews. If the information being sought is new, complex, or ambiguous—as with B2B product design—the advantages of interviews become even greater. So is the customer interview a key fixture in most new product development processes? For many producers, the answer is no.
Perhaps with so many routine customer interactions, it’s assumed much of it must be interviewing. But if you examine the call frequency of your sales and technical service staff, you will likely find that over 90 percent of face-to-face customer communication is of the “tell-and-sell” variety. Some might protest, “But we get lots of input from our customers on what they want in new products.” The reality, though, is that most new product discussions are actually customer-reactive meetings, not market-proactive interviews.
“You’ll know a market-proactive interview when you see it,” says Adams. “First, a team targets an attractive market segment. Then it schedules interviews with customers, prospects, and their customers’ customers. Two-or-three-person technical-commercial teams prepare their questions and interviewing roles in advance. During the interviews, these teams use advanced listening, probing, and interviewing skills to plumb incredible depths…and the customers love it!”
Get everyone listening to the voice of the customer. Some large firms keep a small staff of highly trained VOC (voice of the customer) experts poised for action. These folks parachute into a project as dawn streaks the morning sky, interview your customers for you, and hand you a report of “what the customer wants.” This is a flawed model, says Adams. Most businesses chalk up thousands of face-to-face customer meetings during the course of a year, as sales reps, technical service reps, and others go about their normal duties—so why not train these people to become VOC experts?
“They’ve already gained the customer’s trust, they know the customer’s language, and there’s no extra travel cost,” he points out. “Best of all, you’ll develop a reputation among customers as ‘that supplier who really listens to us.’ Now that’s how to protect today and position for tomorrow. So keep that handful of experts…but let them become trainers and coaches for the masses, not primary interviewers.”
Get quantitative. After you perform great qualitative customer interviews, you’ll have dozens and dozens of customer ideas you could work on. But which ideas do you target in your new product design? At this point in the process, it’s time to get quantitative.
“You need to understand which customer outcomes are most important and least satisfied today,” explains Adams. “The metric I’ve developed for this is called the Market Satisfaction Gap. It tells you precisely which ideas the customer is eager for you to pursue. The Market Satisfaction Gap prevents a fortune from being spent on developing supplier-centric products that will make customers yawn. Skip this step if you’ve got extra R&D resources you’re trying to keep busy. But make this a priority if you want everyone working on projects that will catapult you out of the recession faster than competitors.”
Research your customers’ alternatives. We often talk about competitive products. That’s okay, but it’s actually healthier to think in terms of customers’ alternatives. For example, if your company makes structural adhesives, alternatives for you might be other adhesives, but they could also be welding or mechanical fasteners.
“In my experience, suppliers don’t look at customers’ alternatives rigorously or early enough during product development,” says Adams. “Proper side-by-side testing requires answers to four key questions:
1) Which attributes should I test?
2) What test procedures should I use?
3) What test result is barely acceptable?
4) What test result leads to total satisfaction?
“The good news for the B2B supplier is that your customers are smart enough to answer all of these questions. Well-designed, customer-centric side-by-side testing will help you properly price your product and avoid getting blindsided by competitors’ products.”
“Research shows that only one in four new products succeeds once a project enters the costly product development stage,” says Adams. “I doubt there is any other function within your company where this level of failure and waste is tolerated. And supplier-centric product development is at the heart of the problem. The key to taking advantage of the recovering economy is in changing the way your company approaches offering new products. Start now and you’ll be well on your way to shaping a truly great economic recovery at your company.”
What do you think?
Showing posts with label business process management. Show all posts
Showing posts with label business process management. Show all posts
Thursday, February 17, 2011
Thursday, January 6, 2011
7 Deadly Sins that Stunt Organic Growth
Posted by Mark Brousseau
You already know that organic growth makes for a stronger company. It just makes sense to grow from within by developing outstanding products and services that win over new customers and keep current ones coming back. (The alternatives are to grow via debt financing or an army of flush-with-cash buyers on a spending spree—and recovery or no recovery, neither is easy to come by these days!) Problem is, your competitors are playing by the same rules. But according to Dan Adams, you can outwit them…simply by putting a halt to the mistakes you (and they) are making right now.
"Unless your company has smarter employees, some inherent unassailable advantage, or a markedly different approach to satisfying customers, those competitors always seem to throttle your growth,” notes the author of New Product Blueprinting: The Handbook for B2B Organic Growth. “But what if you and your competitors were committing some serious mistakes that stunt organic growth—and you corrected them? Wouldn’t that be enough to propel you to the front of the line?”
It makes sense. And Adams should know: He has spent his career helping some of the largest business-to-business companies in the world overcome the obstacles that clog up their organic growth engines—the ability to develop new “stuff” that customers want to buy. Through New Product Blueprinting (the process described in his book), his company helps clients bring clarity to the “fuzzy front end” of product development.
“In 20 years the common mistakes B2B companies make will be as glaring as trying to improve quality with inspectors rather than statistics,” he says. “Correct them now and you’ll enjoy a substantial head start on years of healthy organic growth.”
Adams identifies the seven deadly sins that too many B2B companies commit:
Sin #1. Imagining customers’ needs in your conference rooms. Does your new product process begin with the word “idea,” perhaps with a light bulb next to it? So whose idea is it: yours or your customers? Unfortunately, says Adams, most suppliers start with their solution, “validate” it by showing it to some customers, and measure market needs by watching sales results…after the product launch!
“Companies should invert this process: Begin with customer needs and end with supplier solutions,” asserts Adams. “While doing things in the wrong order may ‘feel’ better to you, it is far less likely to result in sales and customer satisfaction. Besides, intelligent B2B customers can detect your ‘validation’ a mile away. They correctly sense you are more interested in your idea than in them…and that doesn’t do much for the long-term relationships you need to build.”
Sin #2. Relying on sales reps to capture customer needs. A salesperson is unlikely to uncover a full set of market needs if he is a) rewarded for near-term selling, b) unable to reach true decision makers, or c) not calling on most of the customers in your target market segment. But put a good salesperson on a team with marketing and technical colleagues, train all in advanced B2B interviewing methods, and you’ll run circles around your competitors.
Be wary of VOC (voice-of-the-customer) consultants who want to exclude your sales force from interviews because “they can sell but not listen,” warns Adams. In the long run, your company will fall behind competitors that have taken steps to develop a team of engaged and enlightened salespeople.
Sin #3. Counting on just a few VOC experts. Some companies rely on a handful of internal VOC experts to interview customers. You’ll do far better training a critical mass of employees—who routinely interact with customers—to gather customer needs. Keep your VOC experts as coaches and trainers, but implement “VOC for the masses.” You’ll overwhelm competitors by turning a trickle of customer feedback into a torrent.
Sin #4. Using hand-me-down consumer goods methods. “Traditional VOC methods rely on questionnaires, tape recorders, and post-interview analyses,” says Adams. “That’s fine for consumer goods, but your B2B customers are insightful, rational, interested, and fewer in number. They’re smart and will make you smarter if you engage them in a peer- to-peer dialogue. Use a digital projector, let them lead you to their areas of interest, probe with skill, and you’ll be shocked at how much you’ll learn you never knew.”
Sin #5. Gathering only qualitative customer feedback. “I once had a new client who came to me extremely frustrated,” recalls Adams. “He had spent months interviewing customers, only to hear his boss say, ‘Nah, I don’t think they want that; they want this.’ Unfortunately, interviewers often hear want they want to hear... and then parade some customer quotes for support.”
What you need, adds Adams, is quantitative data, which measure customer importance and satisfaction on key outcomes. Skip quantification and your new product will be based on assumptions, bias, and wishful thinking.
Sin #6. Listening only to immediate customers. Unlike B2C producers, your product might be part of your customers’ products, your customers’ customers’ products, and so on. It’s a mistake to interview only your direct customers, because they are usually unable or unwilling to disclose downstream customers’ deepest needs. Also, B2C producers assign “one vote” per consumer...while you need to weight the buying power and value chain position of downstream customers.
Sin #7. Ignoring competitors when you design your product. “I find most product development processes are far too casual—and late—in assessing competitive offerings,” says Adams. “Your new product makes a lot of money only if two conditions are satisfied: a) it offers significant value to customers, and b) customers cannot get this value elsewhere. Interviews tell you only about Condition A. You need side-by-side testing to learn about Condition B. This allows you to attack competitive weak spots, avoid getting blind-sided, and optimize pricing.”
What do you think?
You already know that organic growth makes for a stronger company. It just makes sense to grow from within by developing outstanding products and services that win over new customers and keep current ones coming back. (The alternatives are to grow via debt financing or an army of flush-with-cash buyers on a spending spree—and recovery or no recovery, neither is easy to come by these days!) Problem is, your competitors are playing by the same rules. But according to Dan Adams, you can outwit them…simply by putting a halt to the mistakes you (and they) are making right now.
"Unless your company has smarter employees, some inherent unassailable advantage, or a markedly different approach to satisfying customers, those competitors always seem to throttle your growth,” notes the author of New Product Blueprinting: The Handbook for B2B Organic Growth. “But what if you and your competitors were committing some serious mistakes that stunt organic growth—and you corrected them? Wouldn’t that be enough to propel you to the front of the line?”
It makes sense. And Adams should know: He has spent his career helping some of the largest business-to-business companies in the world overcome the obstacles that clog up their organic growth engines—the ability to develop new “stuff” that customers want to buy. Through New Product Blueprinting (the process described in his book), his company helps clients bring clarity to the “fuzzy front end” of product development.
“In 20 years the common mistakes B2B companies make will be as glaring as trying to improve quality with inspectors rather than statistics,” he says. “Correct them now and you’ll enjoy a substantial head start on years of healthy organic growth.”
Adams identifies the seven deadly sins that too many B2B companies commit:
Sin #1. Imagining customers’ needs in your conference rooms. Does your new product process begin with the word “idea,” perhaps with a light bulb next to it? So whose idea is it: yours or your customers? Unfortunately, says Adams, most suppliers start with their solution, “validate” it by showing it to some customers, and measure market needs by watching sales results…after the product launch!
“Companies should invert this process: Begin with customer needs and end with supplier solutions,” asserts Adams. “While doing things in the wrong order may ‘feel’ better to you, it is far less likely to result in sales and customer satisfaction. Besides, intelligent B2B customers can detect your ‘validation’ a mile away. They correctly sense you are more interested in your idea than in them…and that doesn’t do much for the long-term relationships you need to build.”
Sin #2. Relying on sales reps to capture customer needs. A salesperson is unlikely to uncover a full set of market needs if he is a) rewarded for near-term selling, b) unable to reach true decision makers, or c) not calling on most of the customers in your target market segment. But put a good salesperson on a team with marketing and technical colleagues, train all in advanced B2B interviewing methods, and you’ll run circles around your competitors.
Be wary of VOC (voice-of-the-customer) consultants who want to exclude your sales force from interviews because “they can sell but not listen,” warns Adams. In the long run, your company will fall behind competitors that have taken steps to develop a team of engaged and enlightened salespeople.
Sin #3. Counting on just a few VOC experts. Some companies rely on a handful of internal VOC experts to interview customers. You’ll do far better training a critical mass of employees—who routinely interact with customers—to gather customer needs. Keep your VOC experts as coaches and trainers, but implement “VOC for the masses.” You’ll overwhelm competitors by turning a trickle of customer feedback into a torrent.
Sin #4. Using hand-me-down consumer goods methods. “Traditional VOC methods rely on questionnaires, tape recorders, and post-interview analyses,” says Adams. “That’s fine for consumer goods, but your B2B customers are insightful, rational, interested, and fewer in number. They’re smart and will make you smarter if you engage them in a peer- to-peer dialogue. Use a digital projector, let them lead you to their areas of interest, probe with skill, and you’ll be shocked at how much you’ll learn you never knew.”
Sin #5. Gathering only qualitative customer feedback. “I once had a new client who came to me extremely frustrated,” recalls Adams. “He had spent months interviewing customers, only to hear his boss say, ‘Nah, I don’t think they want that; they want this.’ Unfortunately, interviewers often hear want they want to hear... and then parade some customer quotes for support.”
What you need, adds Adams, is quantitative data, which measure customer importance and satisfaction on key outcomes. Skip quantification and your new product will be based on assumptions, bias, and wishful thinking.
Sin #6. Listening only to immediate customers. Unlike B2C producers, your product might be part of your customers’ products, your customers’ customers’ products, and so on. It’s a mistake to interview only your direct customers, because they are usually unable or unwilling to disclose downstream customers’ deepest needs. Also, B2C producers assign “one vote” per consumer...while you need to weight the buying power and value chain position of downstream customers.
Sin #7. Ignoring competitors when you design your product. “I find most product development processes are far too casual—and late—in assessing competitive offerings,” says Adams. “Your new product makes a lot of money only if two conditions are satisfied: a) it offers significant value to customers, and b) customers cannot get this value elsewhere. Interviews tell you only about Condition A. You need side-by-side testing to learn about Condition B. This allows you to attack competitive weak spots, avoid getting blind-sided, and optimize pricing.”
What do you think?
Wednesday, October 27, 2010
7 Leadership Skills CIOs Need
Posted by Mark Brousseau
Technology is the single most powerful enabling force available in business today, but as executives and boards of directors recognize its potential, CIOs must have the right leadership skills in place to deliver on heightened expectations, warns Gartner, Inc. and Korn/Ferry.
There has never been a more energizing time to be a CIO, the analysts say. However, the flip side to this is that today’s most successful CIOs must deliver exceptional results.
In the recently published book “The CIO Edge – Seven Leadership Skills You Need To Drive Results”, (Harvard Business Review Press November, 2010, $29.95), Graham Waller vice president and executive partner with Gartner Executive Programs; George Hallenbeck director, intellectual property development, for Korn/Ferry Leadership and Talent Consulting; and Karen Rubenstrunk, formerly with Korn/Ferry’s CIO practice, examine the key skills CIOs need and how to develop them.
“CIOs understand they need to manage IT processes in order to deliver results and to meet key expectations. They also understand the need to lead people in order to deliver on those goals. However, what many don’t understand is the incredibly important interplay between the two,” says Waller. “Focusing on leadership and people skills - the ‘soft’ things that many CIOs tend to minimize in their quest to keep up with their day-to-day responsibilities of managing IT - is in fact the biggest determinate of their success, or failure.”
IT executives who have the best relationships and can earn ‘followership’, not only with their employees, but more importantly with their business partners within and outside the organization, tend to make the most effective business technology executives.
“During the course of our research, we observed the CIOs with the best people skills used these soft skills to influence expectations well ahead of when priorities were set or a project began,” Hallenbeck says. “Before a dime was budgeted, or staff time allocated, they were meeting with their colleagues and engaging in candid two-way conversations that defined what success would look like. Then they delivered against the expectations they helped set and as a result, the organization felt the investment of time and money in IT was worth it. Soft skills produced hard results.”
Rubenstrunk says, “Cynics might argue that CIOs who excel at soft skills might deliver soft results. However, a clear pattern from our interviews showed that the best CIOs, the ones who excel at people leadership, also set the most aggressive goals and hold their people accountable to the highest performance standards.”
Following three years of data-driven research, Waller, Hallenbeck and Rubenstrunk distilled their findings down to the behavioral patterns and key skills they believe to be the most critical to success. Specifically, high-performing CIOs distinguish themselves by mastering the following seven skills:
1. Commit to Leadership First and Everything Else Second.
Gartner and Korn/Ferry’s research reveals that the highest performing CIOs are effective because they embrace the idea that everything they need to accomplish will be achieved through people, by people, and with people. They don’t pay lip service to that idea. They live it. They lead.
2. Lead Differently than You Think.
A high-performing CIO is an incredibly complex and creative thinker. Yet when the time comes to lead, they don’t rely on their superior ‘smarts’ and analytical skills to come up with the best possible solution. They act collaboratively.
3. Embrace Your Softer Side.
Effective CIOs manage the paradox of gaining more influence by letting go of control and allowing themselves to be vulnerable. In turn, that vulnerability enables them to create deep, personal connections — connections that provide the ability to inspire people both inside and outside their organization.
4. Forge the Right Relationships to Drive the Right Results.
This skill may not be surprising. High performing CIOs spend a greater percentage of their time and energy managing relationships that exist sideways: with internal peers, external suppliers, and customers. They purposely invest in horizontal relationships which form the foundation to drive extraordinary results.
5. Master Communication.
The best CIOs know that their colleagues - especially the people who work for them - are always watching. These executives understand they are always on stage. They take advantage of that situation by constantly reiterating core messages and values. Through their focus on clarity, consistency, authenticity, and passion, they make sure their message is not only understood but also felt. They want to communicate a feeling that compels people to take the right actions.
6. Inspire Others.
In exchange for a regular paycheck, most people will give an adequate performance. But they will only give their best work if they believe they are involved in something greater than themselves. The best CIOs provide a compelling vision that connects people to how their enterprise wins in the marketplace and that their contributions are meaningful and valued.
7. Build People, Not Systems.
By developing people all around them, these CIOs increase their capability and capacity to deliver results. They also know that leaving behind the next generation of leaders is the best thing they can do for the organization—it will be their lasting legacy.
The three authors warn CIOs that mastering soft skills can never be a replacement for the key management aspects of the job. It is instead a powerful enabler and an amplifying force that allows individuals to exceed expectations and maximize the value from IT.
“All CIOs must deliver results. What distinguishes the best is how they do it: through people, by people, and with people,” Waller concludes.
Technology is the single most powerful enabling force available in business today, but as executives and boards of directors recognize its potential, CIOs must have the right leadership skills in place to deliver on heightened expectations, warns Gartner, Inc. and Korn/Ferry.
There has never been a more energizing time to be a CIO, the analysts say. However, the flip side to this is that today’s most successful CIOs must deliver exceptional results.
In the recently published book “The CIO Edge – Seven Leadership Skills You Need To Drive Results”, (Harvard Business Review Press November, 2010, $29.95), Graham Waller vice president and executive partner with Gartner Executive Programs; George Hallenbeck director, intellectual property development, for Korn/Ferry Leadership and Talent Consulting; and Karen Rubenstrunk, formerly with Korn/Ferry’s CIO practice, examine the key skills CIOs need and how to develop them.
“CIOs understand they need to manage IT processes in order to deliver results and to meet key expectations. They also understand the need to lead people in order to deliver on those goals. However, what many don’t understand is the incredibly important interplay between the two,” says Waller. “Focusing on leadership and people skills - the ‘soft’ things that many CIOs tend to minimize in their quest to keep up with their day-to-day responsibilities of managing IT - is in fact the biggest determinate of their success, or failure.”
IT executives who have the best relationships and can earn ‘followership’, not only with their employees, but more importantly with their business partners within and outside the organization, tend to make the most effective business technology executives.
“During the course of our research, we observed the CIOs with the best people skills used these soft skills to influence expectations well ahead of when priorities were set or a project began,” Hallenbeck says. “Before a dime was budgeted, or staff time allocated, they were meeting with their colleagues and engaging in candid two-way conversations that defined what success would look like. Then they delivered against the expectations they helped set and as a result, the organization felt the investment of time and money in IT was worth it. Soft skills produced hard results.”
Rubenstrunk says, “Cynics might argue that CIOs who excel at soft skills might deliver soft results. However, a clear pattern from our interviews showed that the best CIOs, the ones who excel at people leadership, also set the most aggressive goals and hold their people accountable to the highest performance standards.”
Following three years of data-driven research, Waller, Hallenbeck and Rubenstrunk distilled their findings down to the behavioral patterns and key skills they believe to be the most critical to success. Specifically, high-performing CIOs distinguish themselves by mastering the following seven skills:
1. Commit to Leadership First and Everything Else Second.
Gartner and Korn/Ferry’s research reveals that the highest performing CIOs are effective because they embrace the idea that everything they need to accomplish will be achieved through people, by people, and with people. They don’t pay lip service to that idea. They live it. They lead.
2. Lead Differently than You Think.
A high-performing CIO is an incredibly complex and creative thinker. Yet when the time comes to lead, they don’t rely on their superior ‘smarts’ and analytical skills to come up with the best possible solution. They act collaboratively.
3. Embrace Your Softer Side.
Effective CIOs manage the paradox of gaining more influence by letting go of control and allowing themselves to be vulnerable. In turn, that vulnerability enables them to create deep, personal connections — connections that provide the ability to inspire people both inside and outside their organization.
4. Forge the Right Relationships to Drive the Right Results.
This skill may not be surprising. High performing CIOs spend a greater percentage of their time and energy managing relationships that exist sideways: with internal peers, external suppliers, and customers. They purposely invest in horizontal relationships which form the foundation to drive extraordinary results.
5. Master Communication.
The best CIOs know that their colleagues - especially the people who work for them - are always watching. These executives understand they are always on stage. They take advantage of that situation by constantly reiterating core messages and values. Through their focus on clarity, consistency, authenticity, and passion, they make sure their message is not only understood but also felt. They want to communicate a feeling that compels people to take the right actions.
6. Inspire Others.
In exchange for a regular paycheck, most people will give an adequate performance. But they will only give their best work if they believe they are involved in something greater than themselves. The best CIOs provide a compelling vision that connects people to how their enterprise wins in the marketplace and that their contributions are meaningful and valued.
7. Build People, Not Systems.
By developing people all around them, these CIOs increase their capability and capacity to deliver results. They also know that leaving behind the next generation of leaders is the best thing they can do for the organization—it will be their lasting legacy.
The three authors warn CIOs that mastering soft skills can never be a replacement for the key management aspects of the job. It is instead a powerful enabler and an amplifying force that allows individuals to exceed expectations and maximize the value from IT.
“All CIOs must deliver results. What distinguishes the best is how they do it: through people, by people, and with people,” Waller concludes.
Wednesday, September 23, 2009
Companies Eye Supply Chains
Posted by Mark Brousseau
Economic pressures are forcing companies to employ their supply chains, primarily the sourcing and procurement functions, to contain costs and boost revenue, according to the 2009 Global Survey of Supply Chain Progress from CSC, Supply Chain Management Review, the Council of Supply Chain Management Professionals (CSCMP) and Michigan State University (MSU).
The survey, completed by supply chain executives representing more than 20 industries and every major geographical segment of the world, shows the extent to which the economy has impacted the supply management function. Survey respondents cited an immediate need to cut costs as the top economic pressure on their supply chains. An overwhelming 88 percent of respondents have set objectives for purchasing to generate cost savings in the next 12 months.
This enhanced focus on supply chain management (SCM) demonstrates its use as a counter-cyclical tool for improved business performance.
"The global economic downturn has impacted every aspect of business operations, and supply chain is no exception," said Chuck Poirier, author of several books on SCM and a partner in CSC's Global Business Solutions and Services group. "In the face of a renewed focus on cost reduction, supply chain management continues to show a positive impact on business performance. During the past year companies have turned to their supply chains to cut costs and grow revenues. To a large degree, the supply chain has delivered, helping companies get through some tough times."
The survey shows 33 percent of respondents indicate they leveraged supply chain initiatives to reduce costs between one to five percent in the last three years. Twenty-seven percent report realizing even higher cost reductions, ranging from six to 10 percent. "These results were comparable to last year's," said Poirier. "However, the most significant improvement over 2008 was in the number of respondents who reported no impact - or did not know the impact - of supply chain initiatives on costs. That number dropped significantly, from 22 percent in 2008 to 13 percent in this year's survey."
In spite of the difficult economy, 32 percent of respondents saw their revenues increase between one to five percent in the past three years as a result of supply chain initiatives, while another 24 percent identified revenue increases in the six to 10 percent range.
"That's a total of 56 percent, a significant number given the current downturn," noted Poirier. "We see this trend as evidence of the fact that supply chain is finally becoming entrenched as a company-wide improvement effort. Leaders are implementing strategic supply chain efforts to transform business processes to achieve near-optimum operating conditions. At the same time, most firms identified as followers and laggards have not reached the limit of what can be done to enhance financial performance with their supply chains."
While a majority of respondents indicate they are already using their supply chain to trim logistics costs, source more strategically and generate additional savings by leveraging the purchasing function, companies that are considered supply chain leaders are going a step further: accelerating revenue generation by integrating the supply chain organization with key internal groups such as finance, IT and product development. "The leaders, in short, understand the central role supply chain management can play in the company's business success and are playing that role to the fullest," said Poirier.
What do you think? Post your comment below.
Economic pressures are forcing companies to employ their supply chains, primarily the sourcing and procurement functions, to contain costs and boost revenue, according to the 2009 Global Survey of Supply Chain Progress from CSC, Supply Chain Management Review, the Council of Supply Chain Management Professionals (CSCMP) and Michigan State University (MSU).
The survey, completed by supply chain executives representing more than 20 industries and every major geographical segment of the world, shows the extent to which the economy has impacted the supply management function. Survey respondents cited an immediate need to cut costs as the top economic pressure on their supply chains. An overwhelming 88 percent of respondents have set objectives for purchasing to generate cost savings in the next 12 months.
This enhanced focus on supply chain management (SCM) demonstrates its use as a counter-cyclical tool for improved business performance.
"The global economic downturn has impacted every aspect of business operations, and supply chain is no exception," said Chuck Poirier, author of several books on SCM and a partner in CSC's Global Business Solutions and Services group. "In the face of a renewed focus on cost reduction, supply chain management continues to show a positive impact on business performance. During the past year companies have turned to their supply chains to cut costs and grow revenues. To a large degree, the supply chain has delivered, helping companies get through some tough times."
The survey shows 33 percent of respondents indicate they leveraged supply chain initiatives to reduce costs between one to five percent in the last three years. Twenty-seven percent report realizing even higher cost reductions, ranging from six to 10 percent. "These results were comparable to last year's," said Poirier. "However, the most significant improvement over 2008 was in the number of respondents who reported no impact - or did not know the impact - of supply chain initiatives on costs. That number dropped significantly, from 22 percent in 2008 to 13 percent in this year's survey."
In spite of the difficult economy, 32 percent of respondents saw their revenues increase between one to five percent in the past three years as a result of supply chain initiatives, while another 24 percent identified revenue increases in the six to 10 percent range.
"That's a total of 56 percent, a significant number given the current downturn," noted Poirier. "We see this trend as evidence of the fact that supply chain is finally becoming entrenched as a company-wide improvement effort. Leaders are implementing strategic supply chain efforts to transform business processes to achieve near-optimum operating conditions. At the same time, most firms identified as followers and laggards have not reached the limit of what can be done to enhance financial performance with their supply chains."
While a majority of respondents indicate they are already using their supply chain to trim logistics costs, source more strategically and generate additional savings by leveraging the purchasing function, companies that are considered supply chain leaders are going a step further: accelerating revenue generation by integrating the supply chain organization with key internal groups such as finance, IT and product development. "The leaders, in short, understand the central role supply chain management can play in the company's business success and are playing that role to the fullest," said Poirier.
What do you think? Post your comment below.
Monday, March 9, 2009
The Business Intelligence Market
By Mark Brousseau
When Colleen Graham, research director at Gartner, looks at trends in the business intelligence market, she sees two 800 pound gorillas for organizations to consider: business intelligence mega-vendors (the result of vendor consolidation over the past few years) and the weakening economy.
“Besides figuring out how to deal with the mega-vendors, you also have to figure out how your organization is going to deal with the economy. Organizations had to turn on a dime as a result of the economy,” Graham told attendees at the Gartner Business Intelligence Summit 2009 in Washington, D.C. The good news: “We’re seeing more organizations looking at business intelligence as a life line; a way to run the business smarter, to use existing resources better, to do more marketing, to gain market share and beat their competition. There is a growing realization that information is an asset that organizations need to leverage,” she said.
“For many organizations, business intelligence is like a lot of new projects: it is under pressure,” Graham told attendees. “But the market is still growing. Business intelligence is not a commodity yet. Business intelligence can make every dollar count. It can help organizations drive toward strategic goals while meeting near-term needs.”
Graham expects business intelligence to enjoy continued growth as a result of lower technology prices and the fact that business intelligence functionality such as reporting and analytics is being embedded in other products, such as predictive modeling, workflow and virtualization. “Business intelligence is becoming more available. It used to be only in the hands of mega users. Now, business intelligence is spreading to more users in the organization and reaching beyond the firewall to partners and customers.” Graham sees the highest growth rates for business intelligence in operations; users are becoming more sophisticated and more accustomed to using analytics in their day-to-day lives, Graham said. She expects business intelligence usage to double by 2013.
Against this backdrop, Graham thinks there are few things to watch for from vendors:
... Creative financing deals
... Maintenance revenue becoming increasingly important for vendors
... Pricing pressures and bundling
... Infrastructure-light business intelligence
... Users looking to leverage what they already have
... Open source and SaaS solutions getting a push
... More departmental-level business intelligence
What do you think? Post your comments below.
When Colleen Graham, research director at Gartner, looks at trends in the business intelligence market, she sees two 800 pound gorillas for organizations to consider: business intelligence mega-vendors (the result of vendor consolidation over the past few years) and the weakening economy.
“Besides figuring out how to deal with the mega-vendors, you also have to figure out how your organization is going to deal with the economy. Organizations had to turn on a dime as a result of the economy,” Graham told attendees at the Gartner Business Intelligence Summit 2009 in Washington, D.C. The good news: “We’re seeing more organizations looking at business intelligence as a life line; a way to run the business smarter, to use existing resources better, to do more marketing, to gain market share and beat their competition. There is a growing realization that information is an asset that organizations need to leverage,” she said.
“For many organizations, business intelligence is like a lot of new projects: it is under pressure,” Graham told attendees. “But the market is still growing. Business intelligence is not a commodity yet. Business intelligence can make every dollar count. It can help organizations drive toward strategic goals while meeting near-term needs.”
Graham expects business intelligence to enjoy continued growth as a result of lower technology prices and the fact that business intelligence functionality such as reporting and analytics is being embedded in other products, such as predictive modeling, workflow and virtualization. “Business intelligence is becoming more available. It used to be only in the hands of mega users. Now, business intelligence is spreading to more users in the organization and reaching beyond the firewall to partners and customers.” Graham sees the highest growth rates for business intelligence in operations; users are becoming more sophisticated and more accustomed to using analytics in their day-to-day lives, Graham said. She expects business intelligence usage to double by 2013.
Against this backdrop, Graham thinks there are few things to watch for from vendors:
... Creative financing deals
... Maintenance revenue becoming increasingly important for vendors
... Pricing pressures and bundling
... Infrastructure-light business intelligence
... Users looking to leverage what they already have
... Open source and SaaS solutions getting a push
... More departmental-level business intelligence
What do you think? Post your comments below.
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