Future of Sourcing - Manufacturing https://www.futureofsourcing.com/topic/manufacturing en How Tech Companies Can Support the Green Economy https://www.futureofsourcing.com/how-tech-companies-can-support-the-green-economy <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://www.futureofsourcing.com/sites/default/files/articles/How-Tech-Companies-Can-Support-the-Green-Economy.jpg"><a href="https://www.futureofsourcing.com/sites/default/files/articles/How-Tech-Companies-Can-Support-the-Green-Economy.jpg" title="Environmental concerns are rapidly becoming business concerns and many clients are looking for sustainable solutions." class="colorbox" rel="gallery-node-2177-2f2yvYb9fRo"><img typeof="foaf:Image" src="https://www.futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/How-Tech-Companies-Can-Support-the-Green-Economy.jpg?itok=J-5sY39T" width="624" height="325" alt="Environmental concerns are rapidly becoming business concerns and many clients are looking for sustainable solutions." title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <p><em>Environmental concerns are rapidly becoming business concerns and many clients are looking for sustainable solutions says Nick Stapleton, Managing Director at ETB Technologies. With the U.K. government (and other governments worldwide) focused on tackling climate change and becoming carbon neutral, businesses need to balance finding suppliers that have green credentials with maintaining profit margins. This article looks at how businesses can support the green economy while still making good business decisions, and how governments can incentivize businesses in this endeavor.</em></p> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/addressing-carbon-emissions-in-the-supply-chain-through-a-circular-economy">Addressing Carbon Emissions in the Supply Chain Through a Circular Economy</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>In October 2021, the U.K. government published its &ldquo;Build Back Greener&rdquo; <a href="https://www.gov.uk/government/publications/net-zero-strategy" target="_blank">strategy</a> with the goal of tackling climate change by decarbonizing all sectors of the economy and meeting its net zero target by 2050.</p> <p>As part of its strategy, the government sought to encourage individuals and organizations to recycle, reuse, or refurbish to reduce the amount of waste generated and sent to landfills &ndash; a key tenet in creating a circular economy. Currently landfills have a significant amount of e-waste &ndash; computers, tablets and other electronic equipment &ndash; that could have been either recycled or made good as new with a little work.</p> <h1>How IT and Technology E-Waste Impacts the Environment</h1> <p>In addition to e-waste in landfills, IT equipment produces a significant amount of waste and emissions during production. Much of the IT equipment we use is built with rare materials &ndash; the extraction of which is fueling climate change and creating pollution. As a result, the IT sector has historically been a negative contributor to the environment. But we can change this.</p> <p>On the surface it might seem that the simplest solution to improving IT&rsquo;s impact on the environment is to encourage people to recycle or reuse their equipment to reduce waste. From an IT perspective, however, recycling is an energy intensive process, and reusing equipment can mean sacrificing quality, speed, and reliability.</p> <p>We must, therefore, look to prioritize the refurbished market to support the green economy. This could have a massive influence on our industry&rsquo;s impact on the environment. In fact, one <a href="https://www.edie.net/news/5/Report--Circular-economy-could-deliver-80--of-UK-s-next-carbon-budget/" target="_blank">report</a> found the circular economy could deliver 80% of the emissions reductions the U.K. needs to meet its goals for 2028-2032. Aiding this should be our goal.</p> <h2>Business Reasons to Support Circular</h2> <p>While the environmental benefits could be huge, there are other reasons for businesses to choose refurbished hardware. For example, due to world-wide supply chain issues, some enterprise manufacturers are quoting lead times of over 100 days to fulfill orders, leading to huge delays for businesses that depend on technology for their day-to-day operations. Refurbished equipment vendors, on the other hand, have items readily available, in some cases being delivered within 24 hours of placing the order.</p> <p>Businesses can also get more for their money by choosing refurbished equipment: a business planning to buy a new server may be able to get a refurbished one with the same specs for half the price &ndash; or one with more capacity for the same price.</p> <h2>Refurbished and the End User</h2> <p>There is little downside for the end user in using refurbished equipment; over the past two decades, the industry has matured and there are far higher professional standards than when it was in its relative infancy at the turn of the millennium, including warranties as good as buying new. In many cases, refurbished products are comparable to new ones in terms of their performance, too.</p> <p>The challenge lies in changing perceptions among businesses, to encourage them to think of refurbished first when choosing new or upgrading IT equipment.</p> <p>The move to remote working coupled with a global shortage of semi-conductors and supply chain challenges has undoubtedly made the circular economy more attractive to businesses looking to invest and stay ahead during the difficulties of the past few years. But offices throughout the UK are reopening. Delays across the supply chain are ending. And as an industry, we can&rsquo;t rely on these alone to drive forward the green economy.</p> <h2>The Government&rsquo;s Role</h2> <p>Government incentives and other subsidies will be key to ensuring businesses continue considering refurbished hardware. In the December budget the Scottish Government allocated &pound;43m toward supporting this sector; the wider U.K. government needs to also consider how to incentivize companies to reduce or remove emissions from their supply chain.</p> <p>A good place to start would be for the U.K. government to update the super-deduction allowance, which lets British businesses claim back up to 25p for every &pound;1 they invest in &ldquo;qualifying&rdquo; machinery and equipment, before it ends in April 2023.</p> <p>Refurbished machinery isn&rsquo;t currently included in this allowance but &ndash; given the crucial role it has played in helping businesses access lower-cost, quality machinery while supporting carbon-friendly business decisions &ndash; it should be. VAT was taken off renewable energy purchases in the March 2022 budget announcement; surely a similar measure could be introduced to encourage refurbished purchases?</p> <h2>Looking Ahead</h2> <p>In the face of widespread price increases across the economy, businesses everywhere are looking at how to reduce their spend, while governments look to reduce waste and carbon emissions. The circular economy is the ideal marriage of these two goals.</p> <p>The U.K. government has already recognized in its strategy that the circular economy can play a key role in driving down emissions and positively contributing to the global climate setting agenda. But if the government wants to show it is serious about meeting its net zero target by 2050, refurbished equipment needs to be prioritized and support given to businesses to enable more carbon-friendly investment decisions.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/circular-economy" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Circular Economy</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/circularity" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Circularity</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/information-technology-it" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Information Technology (IT)</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="How Tech Companies Can Support the Green Economy - Future of Sourcing" addthis:url="https://www.futureofsourcing.com/how-tech-companies-can-support-the-green-economy"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Sun, 15 May 2022 17:00:00 +0000 Nick Stapleton 2177 at https://www.futureofsourcing.com https://www.futureofsourcing.com/how-tech-companies-can-support-the-green-economy#comments John W. Henke Jr. and Chun Zhang: Increasing Supplier Trust and Innovation https://www.futureofsourcing.com/john-w-henke-jr-and-chun-zhang-increasing-supplier-trust-and-innovation <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://www.futureofsourcing.com/sites/default/files/articles/John%20W.%20Henke%20Jr.%20and%20Chun%20Zhang%3A%20Increasing%20Supplier%20Trust%20and%20Innovation.png"><a href="https://www.futureofsourcing.com/sites/default/files/articles/John%20W.%20Henke%20Jr.%20and%20Chun%20Zhang%3A%20Increasing%20Supplier%20Trust%20and%20Innovation.png" title="John W. Henke Jr. and Chun Zhang: Increasing Supplier Trust and Innovation" class="colorbox" rel="gallery-node-1108-2f2yvYb9fRo"><img typeof="foaf:Image" src="https://www.futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/John%20W.%20Henke%20Jr.%20and%20Chun%20Zhang%3A%20Increasing%20Supplier%20Trust%20and%20Innovation.png?itok=Kx_k4AnV" width="624" height="325" alt="John W. Henke Jr. and Chun Zhang: Increasing Supplier Trust and Innovation" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <h1>Increasing Supplier Trust and Innovation</h1> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/libby-weber-the-importance-of-framing-your-contracts">Libby Weber: The Importance of Framing Your Contracts</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>The tricky question that most if not all companies face on a constant basis is how to get their suppliers fully engaged and committed to &ndash; and even be instrumental in driving &ndash; innovation.</p> <p>While the importance of innovation is a given that dates back more than 50 years to the teachings of Peter Drucker in&nbsp;<em>The Practice of Management</em>&nbsp;(1954), it has only been fairly recently that academics and organizations have been studying how to make innovation go from idea to reality.</p> <p>John W. Henke Jr. and Chun Zhang are two such academics.</p> <p>Over a six-year period, Henke, a professor of Marketing in the School of Business Administration at Oakland University (Rochester, MI), and Zhang, an assistant professor at the University of Vermont, analyzed the working relationships between 37 companies and their suppliers in five manufacturing and service industries. Their goal was to study supplier innovation behaviour and to learn how companies can encourage suppliers increasingly to invest in innovative technologies, and to share those technologies. This research, which was presented in a paper, &quot;Increasing Supplier-Driven Innovation,&quot; for the MIT Sloan Management Review, focused on the North American automotive industry.</p> <p>The basic question they addressed was this: How can a customer effectively collaborate with a supplier more, while competing with it less in order to increase the supplier&rsquo;s innovation related activities. And related to that question: Even if there are ways that suppliers might transfer innovation to their customers, how does one get them to do so?</p> <p>Well, if you have followed my articles for any length of time you know what my next words will be: Trust and forging highly collaborative relationships. &ldquo;Customer activities that are collaborative tend to build trust and subsequently foster supplier innovation transfer,&rdquo; Henke and Zhang wrote.</p> <p>But the problem that can and often does emerge is that there is a &ldquo;competitive side&rdquo; to collaboration, and &ldquo;competitive activities in every customer/supplier relationship that result in distrust, which negatively affects such transfers.&rdquo;</p> <p>Take for example a case where a company and its supplier work together to provide a high-quality product &ndash;- which strengthens mutual trust &ndash;- only to see that trust come under stress when the company asks the supplier for price reductions.</p> <p>&ldquo;It is this relational stress and its accompanying distrust that cause suppliers to limit the extent to which they will transfer innovations to the customer.&rdquo;</p> <p>So how to reduce or eliminate this &ldquo;relational stress&rdquo; and make the leap to high collaboration, trust and innovation? Henke and Zhang identified three areas of collaborative activities, which they call the &ldquo;Increasing Supplier Innovation Model&rdquo;, that a company can take to mitigate supplier stress and increase supplier innovation activities:</p> <ul style="list-style-type:square;"> <li>Involve suppliers in the company&rsquo;s processes, especially product development</li> <li>Demonstrate openness and share information in a timely manner</li> <li>Work with suppliers to help them improve their competitiveness in both cost and quality</li> </ul> <p>In other words, don&rsquo;t insist on innovation and then browbeat the supplier on costs!</p> <p>&ldquo;Trust in the relationship is especially important to the supplier, and that trust must originate with the customer,&rdquo; say Henke and Zhang. That&rsquo;s because it is the supplier that is at the greatest risk, especially in taking the initial steps of sharing propriety information, for example.</p> <p>It works both ways, of course: the company also has to trust the supplier. If the company gains access to proprietary knowledge of one of its competitors through a mutual supplier it will probably be difficult to trust that supplier with its own proprietary information.</p> <p>I believe Henke and Zhang take a very Vested stance by stressing the importance of win-win collaboration and maximizing alignment with innovative suppliers.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/automotive" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Automotive</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/collaboration" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Collaboration</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/increasing-supplier-innovation-model" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Increasing Supplier Innovation Model</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/innovation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Innovation</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/relationship-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Relationship Management</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="John W. Henke Jr. and Chun Zhang: Increasing Supplier Trust and Innovation - Future of Sourcing" addthis:url="https://www.futureofsourcing.com/john-w-henke-jr-and-chun-zhang-increasing-supplier-trust-and-innovation"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Mon, 11 Oct 2021 02:00:00 +0000 Kate Vitasek 1108 at https://www.futureofsourcing.com https://www.futureofsourcing.com/john-w-henke-jr-and-chun-zhang-increasing-supplier-trust-and-innovation#comments Onshoring vs. Offshoring: 4 Indications the Tide is Turning in Manufacturing https://www.futureofsourcing.com/onshoring-vs-offshoring-4-indications-the-tide-is-turning-in-manufacturing <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://www.futureofsourcing.com/sites/default/files/articles/Plethora_Manufacturing.jpg"><a href="https://www.futureofsourcing.com/sites/default/files/articles/Plethora_Manufacturing.jpg" title="Onshoring vs. Offshoring: 4 Indications the Tide is Turning in Manufacturing" class="colorbox" rel="gallery-node-1632-2f2yvYb9fRo"><img typeof="foaf:Image" src="https://www.futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Plethora_Manufacturing.jpg?itok=pKnwgAjT" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <div>Uncertainty over the future of the ongoing trade war between the U.S. and China continues to take its toll on supply chains worldwide. While some companies and manufacturers are setting their sights on alternative foreign factories, such as Vietnam and Thailand, others are looking to make parts closer to home.&nbsp;</div> <div>&nbsp;</div> <div>In fact, one <a href="https://www.foxbusiness.com/economy/trade-war-companies-fleeing-china" target="_blank">report</a> claims more than 50 manufacturers have already left China, most of which are technology hardware suppliers. <a href="https://www.forbes.com/sites/sap/2019/08/07/the-long-term-impact-of-us-tariffs-on-china/#6785bd452759" target="_blank">Another</a> indicates that <a href="https://www.uschamber.com/sites/default/files/final_assessing_the_costs_of_tariffs_on_the_u.s._ict_industry.pdf" target="_blank">two in five</a> American companies with manufacturing arms in China have either relocated or are planning to relocate their production to other offshore sites. Analysts say these are not simply short-term departures nor knee-jerk reactions to the rising tariffs, but more mid-term diversions to mitigate future risks. With the <a href="https://edition.cnn.com/2019/08/23/politics/donald-trump-china-tariffs/index.html" target="_blank">threat of more tariff increases</a> coming in October, companies are considering more durable &ldquo;Plan B&rsquo;s&rdquo; for their supply chains. As such, two things are clear -- the tide is turning for traditional outsourcing, and manufacturing&rsquo;s role is evolving.</div> <div>&nbsp;</div> <div> <h2>Changing Generational Workforce and Rising Costs</h2> </div> <p>In the years I worked with both onshore and offshore sourcing teams for large corporations, including Applied Materials (2000-2004), Apple (2004-2007), Gap (2007-2011) and Fitbit (2011-2014), I experienced firsthand the complex sourcing challenges B2C and B2B companies face on an ongoing basis. When I started nearly 20 years ago, sourcing costs were much lower. Companies chose to offshore because they had more affordable access to a 24-hour employee base. They could make a change in the U.S. and have their teams overseas work on them overnight, so they could iterate faster. Companies had more flexibility and didn&rsquo;t have to invest in the capital to do the manufacturing themselves.</p> <div><a href="https://www.futureofsourcing.com/how-millennials-are-changing-the-procurement-landscape" target="_blank">Millennials are now changing the workforce</a> in China. Previously, first generational workers were coming from smaller villages to major cities and were sending their paychecks back home to their families. Now, they are second and third generation employees who have more disposable income. They can get trained at one company and choose to work at a different company with better pay. The changing face -- and age -- of the Chinese workforce is also causing a factory employee shortage. According to one recent <a href="https://www.latimes.com/world/la-fg-china-millennials-jobs-20190512-story.html" target="_blank">statistic</a>, the aging population in China is expected to cause the workforce to dwindle by 100 million every 15 years starting in 2020.&nbsp;</div> <div>&nbsp;</div> <div>The evolving workforce overseas means continued pay increases. Per the <a href="https://www2.deloitte.com/global/en/pages/manufacturing/articles/global-manufacturing-competitiveness-index.html" target="_blank">Deloitte 2016 Global Manufacturing Competitiveness Index</a>, wages around the world have risen fivefold since 2005. That, of course, drives up costs. Higher costs, combined with increased freight charges and tariff threats, are the major downsides companies currently face with offshore sourcing.</div> <div>&nbsp;</div> <div> <h2>Escalating the Speed of Innovation</h2> </div> <div>Innovation drives businesses forward. When it comes to hardware, bringing quality products to market quickly depends on fast iterations all the way from prototyping through to production. Typically, onshoring allows companies to innovate more quickly in a few key ways.</div> <div>&nbsp;</div> <div>First, there&rsquo;s less time spent with parts in transit. Today, it&rsquo;s common for high-resolution prototypes to be produced and delivered within 48 hours, which was unheard of just a few years ago. Compare this to offshore options, which can take weeks.&nbsp;</div> <div>&nbsp;</div> <div>Additionally, more than ever, manufacturers are partnering with product engineers to help problem-solve earlier in the design process. A Product Engineer can get design feedback, resolve any manufacturability issues with a supplier, and get parts into production all in the same day. Manufacturers like my current company, Plethora, are able to hit shorter lead times, in addition to the added benefit of testing it and either getting it into production or scrapping it and allowing a client to look for solutions faster, resulting in a higher quality product.&nbsp;</div> <div>&nbsp;</div> <div> <h2>Controlling Overhead Costs</h2> </div> <div>Onshoring offers companies several favorable ways of reducing overhead.</div> <div>&nbsp;</div> <ul> <li><strong>Less safety stock</strong>. The faster lead times of onshoring allow companies to reduce the amount of safety stock they must carry.</li> <li><strong>Less inventory tied up in transit</strong>. Offshore orders are typically in the tens of thousands of pieces, which leads to a significant amount of capital tied up in inventory that may not be available for weeks.</li> <li><strong>Lower E&amp;O costs</strong>. Onshoring supports smaller order quantities, paired with just-in-time delivery. Companies adopting an onshoring strategy see significant reductions in their Excess and Obsolete costs since they&rsquo;re able to order only what they need when they need it.</li> </ul> <div>When considering these reduced risks and costs, in addition to the closing wage gap with overseas production, it&rsquo;s easy to understand how companies are finding ways to compete by onshoring. It all depends on their particular margin range and the size of their production rooms.&nbsp;</div> <div>&nbsp;</div> <div>For example, a consumer electronics company could mass-produce products in the U.S. if they could set up production in a favorable economic environment with low taxes and low space costs. In order to make onshoring work, businesses must develop effective management structures to oversee the infrastructure and human capital required to run these types of facilities. And, as we continue to develop more technology in both the manufacturing sector and the consumer sector, companies can hit those costs margins they would achieve overseas here in the U.S.&nbsp;</div> <div>&nbsp;</div> <div> <h2>Manufacturing&rsquo;s Changing Role</h2> </div> <div>Ultimately, a critical key to empowering companies to diversify their supply chains and weather the current and future trade wars will also be found in manufacturing&rsquo;s changing role, specifically in Manufacturing as a Service (MaaS). This game-changer solves some of the biggest problems innovative companies face today and helps companies reduce costs, improve efficiency and make better products. Through the rise of Artificial Intelligence and smart(er) factories, companies can reduce the amount of time it takes to procure a custom and complex part, allowing them to innovate their products faster and stay ahead of the competition. This is vital for those in fields such as aerospace, robotics, electronics and health care.&nbsp;</div> <div>&nbsp;</div> <div>MaaS also reduces a company&rsquo;s manufacturing risk and cost. It provides a one-stop-shop opportunity for the full lifecycle of a part or product and diminishes or eliminates overhead -- i.e. the capital investment and salaries -- for in-house machining. By also onshoring MaaS, companies can further reduce delay risks and shipping costs, as well as ensure more efficient designs.&nbsp;</div> <div>&nbsp;</div> <div>As the trade war rages on, both MaaS and onshoring are becoming more attractive options for companies looking to navigate the uncertainty of what&rsquo;s next. The future of shifting global supply chains will most definitely include both and are a necessary reality.</div> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/onshoring" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Onshoring</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/offshoring" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Offshoring</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/millennials" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Millennials</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/manufacturing-as-a-service-maas" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Manufacturing as a Service (MaaS)</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/trade" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Trade</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/cost" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Cost</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Onshoring vs. Offshoring: 4 Indications the Tide is Turning in Manufacturing - Future of Sourcing" addthis:url="https://www.futureofsourcing.com/onshoring-vs-offshoring-4-indications-the-tide-is-turning-in-manufacturing"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Wed, 06 Nov 2019 00:18:52 +0000 Jim Quinn 1632 at https://www.futureofsourcing.com https://www.futureofsourcing.com/onshoring-vs-offshoring-4-indications-the-tide-is-turning-in-manufacturing#comments Can a Cracked Smartphone Shed Light on the Future of Procurement? https://www.futureofsourcing.com/can-a-cracked-smartphone-shed-light-on-the-future-of-procurement <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://www.futureofsourcing.com/sites/default/files/articles/cracked_phone_screen_624x325.jpg"><a href="https://www.futureofsourcing.com/sites/default/files/articles/cracked_phone_screen_624x325.jpg" title="Can a Cracked Smartphone Shed Light on the Future of Procurement?" class="colorbox" rel="gallery-node-1230-2f2yvYb9fRo"><img typeof="foaf:Image" src="https://www.futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/cracked_phone_screen_624x325.jpg?itok=ggPhJUSU" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>If a broken mirror&nbsp;<span xml:lang="EN">causes</span><span xml:lang="EN">&nbsp;seven years of&nbsp;</span><a href="http://www.mirrorhistory.com/mirror-facts/broken-mirror/" rel="noreferrer" target="_blank"><span xml:lang="EN">bad luck</span></a><span xml:lang="EN">, then what&nbsp;</span><span xml:lang="EN">does</span><span xml:lang="EN">&nbsp;it mean when your</span><span xml:lang="EN">&nbsp;smartphone screen</span><span xml:lang="EN">&nbsp;shatters</span><span xml:lang="EN">?</span>&nbsp;<span xml:lang="EN">Uncertain of t</span><span xml:lang="EN">he answer,&nbsp;</span><span xml:lang="EN">I</span><span xml:lang="EN">&nbsp;really</span>&nbsp;<span xml:lang="EN">did</span><span xml:lang="EN">n&rsquo;t</span><span xml:lang="EN">&nbsp;want to&nbsp;</span><span xml:lang="EN">find out.</span><span xml:lang="EN">&nbsp;So the other day</span><span xml:lang="EN">, facing this fateful&nbsp;</span><span xml:lang="EN">predicament</span><span xml:lang="EN">, I&nbsp;</span><span xml:lang="EN">hurried</span><span xml:lang="EN">&nbsp;to the store for a replacement.</span>&nbsp;<span xml:lang="EN">Unfortunately, the&nbsp;</span><span xml:lang="EN">retailer</span><span xml:lang="EN">&nbsp;was out of stock.</span><span xml:lang="EN">&nbsp;I needed to back-</span><span xml:lang="EN">order&nbsp;</span><span xml:lang="EN">a new</span>&nbsp;<span xml:lang="EN">glassy portal</span>&nbsp;<span xml:lang="EN">into my online existence</span></p> <div style="clear:both;"> <p paraeid="{6ba0167a-75dd-4701-b381-126b8af63fbd}{55}" paraid="1581436138"><span xml:lang="EN">But&nbsp;</span><span xml:lang="EN">did</span><span xml:lang="EN">&nbsp;the store&rsquo;</span><span xml:lang="EN">s depleted inventory&nbsp;</span><span xml:lang="EN">signal&nbsp;</span><span xml:lang="EN">bad luck</span><span xml:lang="EN">&hellip;o</span><span xml:lang="EN">r merely</span><span xml:lang="EN">&nbsp;a lack of imagination in</span><span xml:lang="EN">&nbsp;procurement execution?</span>&nbsp;<span xml:lang="EN">What if behind the counter</span>&nbsp;<span xml:lang="EN">sat a 3D printer linked to the retailer&rsquo;s supply chain? Maybe I could have walked right out with my smartphone repaired and my&nbsp;</span><span xml:lang="EN">insatiable need to check social media</span>&nbsp;<span xml:lang="EN">every five minutes&nbsp;</span><span xml:lang="EN">renewed</span><span xml:lang="EN">.</span></p> </div> <div style="clear:both;"> <p paraeid="{6ba0167a-75dd-4701-b381-126b8af63fbd}{97}" paraid="523151028"><span xml:lang="EN">Does it sound futuristic to extend the supply chain to&nbsp;</span><span xml:lang="EN">the point of purchase</span><span xml:lang="EN">?</span>&nbsp;<span xml:lang="EN">The future</span><span xml:lang="EN">&nbsp;&ndash;&nbsp;</span><span xml:lang="EN">in which</span><span xml:lang="EN">&nbsp;procurement networks and digital manufacturing meet</span><span xml:lang="EN">&nbsp;consumers where they shop</span><span xml:lang="EN">&nbsp;&ndash;&nbsp;</span><span xml:lang="EN">may be&nbsp;</span><span xml:lang="EN">closer</span>&nbsp;<span xml:lang="EN">than we&nbsp;</span><span xml:lang="EN">realize</span><span xml:lang="EN">.</span></p> </div> <div style="clear:both;"> <p paraeid="{6ba0167a-75dd-4701-b381-126b8af63fbd}{133}" paraid="1539185180"><span xml:lang="EN">Through cloud-based platforms, companies and their suppliers gain broad visibility into each other&rsquo;s interconnected operations and, with it, the ability to collaborate</span><span xml:lang="EN">&nbsp;on design,&nbsp;</span><span xml:lang="EN">production</span><span xml:lang="EN">&nbsp;and innovation.</span>&nbsp;<span xml:lang="EN">Out of these digital networks have emerged new operating models&nbsp;</span><span xml:lang="EN">in which&nbsp;</span><a href="http://www.outsourcemag.com/node/677" target="_blank"><span xml:lang="EN">3D printing&nbsp;</span></a><span xml:lang="EN">can bring</span><span xml:lang="EN">&nbsp;the supply chain right to a retailer&rsquo;s doorstep.</span></p> </div> <div> <div style="clear:both;"> <p paraeid="{6ba0167a-75dd-4701-b381-126b8af63fbd}{157}" paraid="654086757"><span xml:lang="EN">This&nbsp;</span><span xml:lang="EN">was</span>&nbsp;<span xml:lang="EN">welcome</span><span xml:lang="EN">&nbsp;news because the&nbsp;</span><span xml:lang="EN">effects&nbsp;</span><span xml:lang="EN">of smartphone withdrawal&nbsp;</span><span xml:lang="EN">were beginning to bear down on me</span><span xml:lang="EN">&nbsp;while waiting for the replacement screen to arrive</span><span xml:lang="EN">.</span><span xml:lang="EN">&nbsp;Of course, the possibiliti</span><span xml:lang="EN">es go well beyond&nbsp;</span><span xml:lang="EN">handheld devices</span><span xml:lang="EN">.&nbsp;</span><span xml:lang="EN">Think of the food&nbsp;</span><span xml:lang="EN">pantry that needs a sp</span><span xml:lang="EN">are part</span>&nbsp;<span xml:lang="EN">to&nbsp;</span><span xml:lang="EN">restore</span><span xml:lang="EN">&nbsp;its&nbsp;</span><span xml:lang="EN">refrigeration system.&nbsp;</span><span xml:lang="EN">Or the nursing home in search of&nbsp;</span><span xml:lang="EN">a valve to repair its malfunctioning boiler in wintertime.&nbsp;</span><span xml:lang="EN">Or the local emergency services&nbsp;</span><span xml:lang="EN">corps</span><span xml:lang="EN">&nbsp;that needs to replace a worn-out</span><span xml:lang="EN">&nbsp;component in its only fire engine</span><span xml:lang="EN">.&nbsp;</span><span xml:lang="EN">Or the</span><span xml:lang="EN">&nbsp;rural health</span><span xml:lang="EN">&nbsp;clinic on a quest</span>&nbsp;<span xml:lang="EN">to procure</span><span xml:lang="EN">&nbsp;a</span><span xml:lang="EN">&nbsp;hard-to-find</span><span xml:lang="EN">&nbsp;prosth</span><span xml:lang="EN">etic device</span><span xml:lang="EN">.</span>&nbsp;<span xml:lang="EN">When the&nbsp;</span><span xml:lang="EN">situation</span><span xml:lang="EN">&nbsp;is urgent, even the</span>&nbsp;<span xml:lang="EN">most efficiently&nbsp;</span><span xml:lang="EN">designed supply chain can fall short. But when integrated with cloud-based procurement networks, digital manufacturing&nbsp;</span><span xml:lang="EN">capabilities&nbsp;</span><span xml:lang="EN">can&nbsp;</span><span xml:lang="EN">respond to acute nee</span><span xml:lang="EN">ds with immediacy and precision &mdash; not&nbsp;</span><span xml:lang="EN">only&nbsp;</span><span xml:lang="EN">when</span><span xml:lang="EN">&nbsp;they&rsquo;re</span><span xml:lang="EN">&nbsp;needed, but&nbsp;</span><span xml:lang="EN">where</span><span xml:lang="EN">.</span></p> </div> <div style="clear:both;"> <p paraeid="{1912d2a5-a76e-45a5-9275-004ecff5cd44}{19}" paraid="1116268438"><span xml:lang="EN">Using a network that combines procurement&nbsp;</span><span xml:lang="EN">processes</span><span xml:lang="EN">&nbsp;with&nbsp;</span><span xml:lang="EN">3D printing functionality</span><span xml:lang="EN">,&nbsp;</span><span xml:lang="EN">manufacturers</span><span xml:lang="EN">&nbsp;can connect their</span><span xml:lang="EN">&nbsp;design, sourcing, production and procurement processes and manage them jointly to:</span></p> <ul> <li paraeid="{1912d2a5-a76e-45a5-9275-004ecff5cd44}{19}" paraid="1116268438">Collaborate on production decisions, highlight changes and suggest alternatives</li> <li paraeid="{1912d2a5-a76e-45a5-9275-004ecff5cd44}{19}" paraid="1116268438">Link design discussions and data to requests for quotation</li> <li paraeid="{1912d2a5-a76e-45a5-9275-004ecff5cd44}{19}" paraid="1116268438">Obtain pricing from one or more suppliers for parts and initiate the buying process</li> <li paraeid="{1912d2a5-a76e-45a5-9275-004ecff5cd44}{19}" paraid="1116268438">Share data and key performance indicators with all relevant parties</li> <li paraeid="{1912d2a5-a76e-45a5-9275-004ecff5cd44}{19}" paraid="1116268438">Coordinate with suppliers on manufacturing changes</li> </ul> </div> </div> <div> <div style="clear:both;"> <p paraeid="{1912d2a5-a76e-45a5-9275-004ecff5cd44}{74}" paraid="884026301"><span xml:lang="EN">Meanwhile,&nbsp;</span><span xml:lang="EN">suppliers can forge n</span><span xml:lang="EN">ew models for operating and expand their businesses by using such a platform to:</span></p> <ul> <li paraeid="{1912d2a5-a76e-45a5-9275-004ecff5cd44}{74}" paraid="884026301">Differentiate themselves through technical skills and capabilities</li> <li paraeid="{1912d2a5-a76e-45a5-9275-004ecff5cd44}{74}" paraid="884026301">Gain a clear understanding of customer needs</li> <li paraeid="{1912d2a5-a76e-45a5-9275-004ecff5cd44}{74}" paraid="884026301">Work together on early design to enable manufacturing of parts at optimized cost</li> <li paraeid="{1912d2a5-a76e-45a5-9275-004ecff5cd44}{74}" paraid="884026301"><span xml:lang="EN">Provide manufact</span><span xml:lang="EN">uring capabilities as a service</span></li> </ul> </div> </div> <div> <div style="clear:both;"> <p paraeid="{1912d2a5-a76e-45a5-9275-004ecff5cd44}{114}" paraid="561573114"><span xml:lang="EN">But while the convergence of procurement and digital manufacturing holds a great deal of promise for businesses and their trading partners, perhaps the greatest advantage accrues to consumers when a&nbsp;</span><span xml:lang="EN">trip to the local store becomes&nbsp;</span><span xml:lang="EN">tantamount to a visit with all of its suppliers.</span></p> </div> </div> <p>&nbsp;</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/procurement" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Procurement</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/3d-printing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">3D Printing</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/supply-chain-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supply Chain Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/digital-manufacturing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Digital Manufacturing</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/future" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Future</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Can a Cracked Smartphone Shed Light on the Future of Procurement? - Future of Sourcing" addthis:url="https://www.futureofsourcing.com/can-a-cracked-smartphone-shed-light-on-the-future-of-procurement"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Sun, 29 Jul 2018 22:09:26 +0000 Marcell Vollmer 1230 at https://www.futureofsourcing.com https://www.futureofsourcing.com/can-a-cracked-smartphone-shed-light-on-the-future-of-procurement#comments Opportunism: the other side of trust (Part 1) https://www.futureofsourcing.com/node/751 <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>We often hear stories of business relationships that appeared strong suddenly turning sour. These relationships may even have existed for some time. So what is going on? It is likely acts of opportunism.</p> <p>Here&rsquo;s an example. A client of mine awarded a multimillion-dollar, multi-year deal to the lowest bidder. The bid was characterised as &ldquo;too good to be true&rdquo;; and, indeed it was too good to be true. Over 18 months, the supplier has run over budget, been late on scheduled delivery of services, and both companies are in a dispute about whether the supplier actually performed work for which it invoiced my client more than 12 months ago. The supplier has increased its back office staff from five to 15, lost its performance bonus and feels the pressure that its head is on the chopping block. My client is way over budget, had to staff up to meet deadlines and feels quite a bit of buyer&rsquo;s remorse.</p> <p>Why would the supplier bid so low? Why would the buying company award the business? Could this situation be explained by acts of opportunism on both sides of the relationship? To understand opportunism we first have to understand trust, because without some level of trust, there can be no opportunism.</p> <p><strong>Trust Is the Other Side of Opportunism</strong></p> <p>Trust is the core quality of any collaborative partnership. Trust lowers transaction costs, fosters innovation and provides the necessary space for the flexibility and agility needed in today&rsquo;s business relationships.</p> <p>Trust is a choice. Individuals can choose to trust each other and choose to act in a trustworthy manner. Or, they choose not to. It is that simple. Business relationships with high degrees of trust can spend their energies leveraging each other&rsquo;s core strengths and creating value, rather than on compliance, enforcement, or worse, fighting metaphorical fires as a result of poor performance.</p> <p>Trust, however, creates the opportunity for one party to take advantage of the other. This ability to take advantage of the other party is often called &ldquo;opportunism&rdquo;. Oliver Williamson, the Nobel Prize-winning economist described it as &ldquo;self-interest seeking with guile&rdquo;.</p> <p>Opportunism in today&rsquo;s pressured environments can be very attractive to decision-makers who are expected to continually improve results. Unfortunately, people don&rsquo;t get how opportunistic actions are driven by their own desires and not the other party&rsquo;s actions. In effect, when one party acts opportunistically, they justify their actions by blaming the other party for their own actions.</p> <p>In the situation above, the supplier chose to submit a ridiculously low bid and my client chose to accept it. Now, mind you they blame outside influences for those choices. The supplier claims it felt economic pressure in the industry to lower prices to stay competitive, and my client also feeling economic pressures to reduce costs awarded the work based on unusually low pricing. Nonetheless, each acted of their own accord. Each was acting out their own form of opportunism.</p> <p><strong>Why Choose Opportunism?</strong></p> <p>Trust and the threat of opportunism are two opposing forces fighting for the negotiator&rsquo;s attention. Commentators have suggested that opportunistic behavior is the default position in many business relationships. In fact, Dan Airley in his book&nbsp;<em>The (Honest) Truth About Dishonesty: How We Lie to Everyone &ndash; Especially Ourselves</em>&nbsp;may shed some light on this subject. He suggests that opportunism may well be inevitable. Airley proposes that we are all in a delicate balance between our desire for gain by whatever means and our need to see ourselves as a &lsquo;good person&rsquo;. This is the balance between being opportunistic and being trustworthy.</p> <p>Much of the prevailing thinking in the area of contract law is built around the concept that without controls embedded into contracts all arrangements would be subject to opportunism. It is often tempting to write contracts that make the consequences of opportunistic behaviour so extreme that it will make any attempt to seek unfair advantage uneconomically feasible. This approach to contracting assumes that negotiators will detect opportunistic behavior, which might be difficult.</p> <p><strong>Active and Passive Forms of Opportunism</strong></p> <p>Opportunism comes in many forms. Researchers in Norway and the US identified that it could be either active or passive. Active opportunism is usually employed by the powerful party. It can involve activities ranging from pushing out payment terms to arbitrarily taking discounts on invoices. Passive opportunism is of course more subtle; it can include actions such as not providing innovative ideas to the other party or letting quality standards slide.</p> <p>It is extremely likely that where there is active opportunism from one party there will be passive opportunism from the other. Perhaps the most recognised case of passive opportunism is the&nbsp;<em>General Motors (GM) v. Fisher Body</em>&nbsp;case. This relationship sparked vigorous debate between leading economists. Many years ago, GM offered Fisher Body an exclusive contact for a number of years to ensure a consistent supply of vehicle bodies. To attract Fisher Body, GM offered a pricing structure where GM would pay Fisher Body cost plus 17.5% margin. This payment approach did not incentivise performance but rather created a perverse incentive in that the more inefficient Fisher Body was the more money they got paid (in cost reimbursement).</p> <p>The issue came to a head when GM asked Fisher Body to move their factories closer to the GM vehicle production facilities (which would lower freight costs and reduce lead time) and to invest in higher levels of automation in producing bodies (which would replace expensive labour with more efficient methods). Since there was a financial incentive for Fisher Body to maintain inefficient production methods and to locate factories where they could service other vehicle production companies at no penalty, they refused. To solve its need for cost savings and production efficiencies, GM bought Fisher Body and made it a 100%-owned subsidiary.</p> <p><strong>Personal and Corporate Forms of Opportunism&nbsp;</strong></p> <p>Opportunistic behaviour can come from the decisions of an individual or from corporate policy. Personal ethics, or the lack thereof, can have an impact on contract negotiations. The attitudes of senior management can have a very significant effect on the degree to which staff may undertake opportunistic actions with their counterparts.</p> <p>Research in the US found that senior leadership influenced the degree of opportunism directly when they acted opportunistically themselves, but also indirectly when their staff noted and followed the same opportunistic behaviour patterns.</p> <p>In the case of corporate opportunism the firm may, as part of a larger strategy, decide to use (misuse) its market power to improve its position vis-a-vis its suppliers. A common example happening today is that of powerful customers arbitrarily pushing out payment terms from 30 to 60 days or beyond throughout the supply chain. Those payment terms often hit the smallest companies in the supply chain the hardest (also a form of active opportunism).</p> <p><strong>Establishing Enough Trust to Subdue Opportunism&nbsp;</strong></p> <p>Because trust is so fundamental to success and opportunism is such a real threat to success, companies (and the negotiators who architect the agreements) should establish their business relationship around six social norms. The norms outlined below are the same ones that govern successful societies.</p> <p>In my book&nbsp;<em>Getting to We: Negotiating Agreements for Highly Collaborative Relationships</em>, I describe six social norms, referred to as guiding principles. These social norms serve as the foundation for developing trust. They are reciprocity, autonomy, honesty, equity, loyalty and integrity. These principles, so important in our personal endeavours and interactions, also drive collaborative business behaviours and sustainable business partnerships.</p> <p>Business people really must accept the precept of abiding by social norms. If negotiators don&rsquo;t actively establish them, then the parties&rsquo; will passively work from their organisation&rsquo;s unwritten social norms. If those unwritten social norms conflict, there are enormous problems.</p> <p>On the other hand, with a commonly agreed to set of social norms for the relationship, opportunism will wane because the chosen norms will guide the behaviours of individuals and organisations alike to help them make the right decisions for the benefit of the relationship.</p> <p>To maintain trust, each company is responsible for always following the principles. For example, if both companies take seriously the principles of loyalty and integrity, the buying company will not disingenuously threaten suppliers with re-bidding work, and suppliers do not sell the &ldquo;A&rdquo; team just to substitute the less expensive &ldquo;C&rdquo; team to make a hefty profit.</p> <p><em>To continue reading this article,&nbsp;<a href="http://outsourcemag.com/opportunism-the-other-side-of-trust-part-2/" target="_blank">click here</a>&hellip;</em></p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/relationship-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Relationship Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/partnership" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Partnership</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/procurement" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Procurement</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/innovation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Innovation</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/ethics" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Ethics</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Opportunism: the other side of trust (Part 1) - Future of Sourcing" addthis:url="https://www.futureofsourcing.com/node/751"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Mon, 01 Aug 2016 13:01:17 +0000 Jeanette Nyden 751 at https://www.futureofsourcing.com Contracting for multi-supplier DevOps https://www.futureofsourcing.com/node/748 <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p><em>Just when multi-supplier (also known as SIAM) contracting is starting to get under control, DevOps emerges. This article looks at the interaction of the two for the design of retained and sourced IT operations. The implications for service contracts are profound and largely un-tested.</em></p> <p>The pages of management journals have been liberally sprinkled with fads for many decades. Some react with naive credulity; instantly tacking from one to another as each article appears in the press. Others ignore all trends and emerging thought, dismissing all as fluff and yesterday&rsquo;s news. The smart look for the essence of new tools, seeking to understand which are applicable where to deliver what. If these match their strategies and visions, they are pursued. If not, they are passed over. In this spirit, this article regards multi-supplier operations and DevOps as approaches that are serious, fundamental and useful for some but not all organisations.</p> <p>In the period between the 1970s and 2010 contracts may generally be characterised as &ldquo;monolithic&rdquo;. A customer would have few, large, long-duration (10-15 year) contracts. Each would address a large element of their service requirement or even contract a whole class. There may be one IT supplier, a second buildings facility manager, a third processing Finance &amp; Accounting with HR. The interactions between these were light and few. The mode that the supplier chose to operate their service was its own internal affair, minimally disclosed to the customer and jealously guarded. The retained organisation withered and was ruthlessly cut to permit little beyond the approval of change and periodic performance review, which senior managers delegated wherever possible.</p> <p><strong>Multi-Supplier So Far</strong></p> <p>The growth of the cloud and the arrival of new service providers contributed to the emergence of a new model that engaged multiple suppliers and fragmented services between them. There needs to be a unifying function for services to operate effectively end-to-end and across suppliers, so the &ldquo;Service Integration and Management&rdquo; function (SIAM) was defined and implemented. This replaced the integrative function that had previously been supplied by the monolith. Sometimes elements of service integration are sourced, sometimes provided in-house: part of the skill is in drawing the boundary in a manner that is appropriate to the strategy and circumstance. The demands on the retained organisation were inevitably heavier than under monolithic contracting.</p> <p>Whilst the high-level model has many attractions, contractual and operational difficulties quickly emerged. Multiple modes of collaboration agreement, incentives and cross-supplier obligations were tested. Customers found it difficult to staff their functions and differentiate between dispensable overhead and essential oversight. The result has too often been a dog with rubber teeth. The CIO ordered a highly-trained Alsatian; the organisation delivered a Chihuahua with a high-pitched yap and nasty suck. Impotence flows not from a weakness of the model, but from neglect of critical factors. These include robust and attentive governance; clear and enforced architectural standards; consistent and applied operating processes and roles; attentive financial, service and contractual management. These are a part of the price for making SIAM work. If you are not prepared to attend to these, you may do better with a monolithic contract. Do not even think of in-sourcing if the ability to divert management attention is your driver.</p> <p>It has long been known that multi-supplier operation is heavily dependent upon effective collaboration between suppliers. In years gone by, the UK trades unions practiced &ldquo;work to rule&rdquo; as a superbly effective way of inflicting destructive effect. Customers did not have to mediate in the days of monolithic contracts, or were trained over years of glacial performance to expect months and multiple revisions to effect the simplest of changes across organisational boundaries. In these times of digital clock-speed and fickle customers, such practice is incompatible with market success. There are well-established service providers who have grown wizened and ugly in protected markets. Some such providers cannot be trusted to cooperate. This is so central to effective performance that it has to be weighted heavily in supplier selection, including assessment of incumbent performance. Get this wrong and marketing will simply continue to ignore IT in buying shadow services without any control or economy.</p> <p>The leading customers and suppliers are just now getting to grips with multi-supplier operations and service integration. Some of the contracts formed appear to be sensible and if the operational difficulties and critical factors are not yet performing, there is some hope that eventually they will. Attempts to define what should be done to support integration have diminished, sometimes being no more than obligations to exchange data, work to common process and sign up to non-contractual Operating Level Agreements. What then is this DevOps fad?</p> <p><strong>What is DevOps?</strong></p> <p>&ldquo;DevOps (a clipped compound of &lsquo;development&rsquo; and &lsquo;operations&rsquo;) is a culture, movement or practice that emphasises the collaboration and communication of both software developers and other information technology (IT) professionals while automating the process of software delivery and infrastructure changes. It aims at establishing a culture and environment where building, testing, and releasing software can happen rapidly, frequently, and more reliably.&rdquo;&nbsp;<em>(Source:&nbsp;<a href="https://en.wikipedia.org/wiki/DevOps" target="_blank">https://en.wikipedia.org/wiki/DevOps</a>)</em></p> <p>DevOps is a perspective, an approach. You cannot buy it, but you can do things in a DevOps way. Some describe it as the application of lean and quality techniques to IT. DevOps proponents hold that IT suffers from many of the failings that bedevilled engineering and manufacturing; ineffective hand-overs between design and production; repeated re-work; testing in unrepresentative environments; bottlenecks that are overloaded whilst other resources lie idle; inconsistent manual operations where automation could be applied. Many similar techniques can be brought to IT that were first developed for manufacturing/engineering.</p> <p>DevOps seeks to accelerate the capture of value across the end-to-end delivery lifecycle. As such, it roots-out delay, ineffectiveness and waste. A strong feature is unceasing and energetic focus on operational analytics and the application of automation. There are few that would object to such a proposition. What has changed to make it possible is the widespread availability of tools and environments that allow the dream to be realised in action. The warning that all readers should heed is that practice is evolving at such a pace that everything should be regarded as unstable. If you seek to draft reliable contracts in such an environment, this is a nightmare. As in any emerging market, there is real insight and progress, there is also re-branding the old with a dusting of creative terminology. Beware the charlatan.</p> <p><strong>Contracting for DevOps Delivery</strong></p> <p>There has been little written on this subject that has come to my attention. If you have examples, please share.</p> <p>At the time of the emergence of the SIAM model, it was notable that the leading outsource suppliers studiously avoided the role of Service Integrator. The fear was that as the SIAM had to hold tower suppliers to account, demanding independence, this left the SIAM supplier with the integration risk (and associated penalty) without the juicy revenues that come from the much larger towers. With DevOps the picture moves on. Several large integrators have developed cloud brokerage services and have packaged associated tooling as a service. They will host the marketplace for your infrastructure, allowing you to fulfil from multiple cloud providers. You can also engage multiple applications development and maintenance suppliers, all of whom use the same cloud brokerage services. The contracts for services are simple, being pass-through of associated infrastructure charges with a defined mark-up and a fairly short minimal engagement. The real prize for the supplier is often capturing Applications Development &amp; Maintenance work.</p> <p>For some customers, engaging such a supplier is an answer to prayer. Having looked at the tooling required, stitching it together rapidly emerges as a very difficult, time-consuming and expensive activity. Those who have got as far as exploring the ability to resource the delivery project find it desperately difficult. Tool developers with relevant experience, let alone the architects and service developers are rare and expensive. It would seem to make sense to use a portion of a tried and tested platform under a SaaS contract, rather than build one. Where is the catch? For some, particularly seeking to avoid vendor lock-in, the role of cloud broker and DevOps integrator is so strategic that they would never outsource it. The early and famous proponents of DevOps (Google, Facebook, Amazon) regard their systems development capability as a source of competitive advantage to be controlled and owned in its entirety. They may consider a build-operate-transfer contract whereby a service provider is engaged to construct a captive (in-sourced) operation faster than it could be built.</p> <p>The effective application of DevOps demands the tight integration of many elements over multiple organisations, spanning the service lifecycle and every party involved in delivery. Such tight integration is hard to achieve, harder to maintain, and immensely disruptive to replace. Integration is hard to do, harder to measure and difficult to contract for. It requires an effective working environment and set of relationships. Trust is essential. DevOps is currently changing so rapidly that if you have contractual certainty on the day of signature, you have an inoperable straight-jacket a week later. Think Agile without a well-developed Scrum approach. Getting the governance and coordination model right will be challenging and will require a contractual annex defining the current architectural, tooling, data interchange and operational methods. This will change frequently and sometimes fundamentally. This can only ever be done under revision control, accepting that there will be costs of change. The salvation is that if you have multiple suppliers, the costs of change should be broadly similar for all within a category. Those seeking to exploit change will therefore be quickly identifiable.</p> <p>The implementation of DevOps requires an extensive range of skills and disciplines all at once. Such transformation is challenging to achieve in any environment. Some start with tooling, only to discover that whilst necessary, this is far from sufficient and can lead to some dangerous weaknesses. You should be led by your strategy and business requirements, assembling services to support them and deliver these through tooling, contracts, processes, skills and staff. Get a good guide!</p> <p>The prizes that make the application of DevOps worth pursuing include:</p> <ul style="list-style-type:square;"> <li>The ability to accelerate the introduction of new functionality (combined with Agile, expect release schedules to go from months to days or even hours)</li> <li>Reduced operation support costs from automation (NoOps is an emerging line of practice)</li> <li>Increased application availability resulting from higher quality automated service testing and migration</li> <li>Increased commercial effectiveness from the ability to switch suppliers.</li> </ul> <p>Of these, the key element is that of competing on time. The greatest take-up is seen in digital-driven strategies where there is the requirement to make frequent and rapid releases to test and exploit consumer preference. Some CIOs pursue it to exploit the cost advantages of automating work that requires highly paid systems administrators to do repetitive tasks.</p> <p>DevOps is not the one source of all IT truth. It does have much to offer. Building it is difficult, costly, time-consuming. It does however offer radical improvement in the time to deliver new functionality that is&nbsp;valuable&nbsp;for anyone who competes in a time-critical market. It may not immediately be cheaper, but ultimately the elimination of delay and rework should pay dividends on the cost and revenue side too.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/multi-sourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Multi sourcing</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/contract" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Contract</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/advisory" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Advisory</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Management</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/consulting" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Consulting</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/strategy" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Strategy</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/transformation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Transformation</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Contracting for multi-supplier DevOps - Future of Sourcing" addthis:url="https://www.futureofsourcing.com/node/748"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Wed, 27 Jul 2016 14:44:32 +0000 William Hooper 748 at https://www.futureofsourcing.com Partners or pawns? (Part 2) https://www.futureofsourcing.com/node/746 <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p><em>(To read the first part of this article,&nbsp;<a href="http://outsourcemag.com/partners-or-pawns/" target="_blank">click here</a>.)</em></p> <p>Almost a week had passed since my meeting with Jeanette and her team, and I was still reeling from the conversation. It was just so hard to comprehend how a large company can afford to alienate its supplier community. Just as I was about to hit replay on the entire situation, the phone rang.</p> <p>&ldquo;Good morning,&rdquo; I said.</p> <p>&ldquo;Hey there, Dean. It&rsquo;s Tino. How have you been?&rdquo;</p> <p>&ldquo;Doing well. I was up visiting your colleague Jeanette last week.&rdquo;</p> <p>&ldquo;That&rsquo;s a very sad situation. I spoke to her several weeks back, and she wasn&rsquo;t doing very well,&rdquo; Tino said.</p> <p>&ldquo;I don&rsquo;t think she&rsquo;s doing much better at the moment either.&rdquo;</p> <p>Tino and Jeanette both worked for Wilkinson Solutions as site managers. Jeanette&rsquo;s customer was one of the big three out of Detroit, whereas Tino&rsquo;s customer was one of the Japanese transplants.</p> <p>&ldquo;I&rsquo;m calling to see if you are going to be in the neighborhood anytime soon,&rdquo; Tino said.</p> <p>&ldquo;I&rsquo;ll be in your area the week after next. What&rsquo;s up?&rdquo; I asked.</p> <p>&ldquo;I&rsquo;ve got a great story to share with you, or better yet to show you, if you can spare me an hour or so on your next trip,&rdquo; Tino responded.</p> <p>&ldquo;That&rsquo;d be great. From the sound of your voice, it must be pretty exciting.&rdquo;</p> <p>&ldquo;Very exciting. My team and I have become true believers in the 3Ps that you continually preach,&rdquo; Tino stated.</p> <p>&ldquo;Preach? I prefer the words &lsquo;convey passionately,&rsquo; if you don&rsquo;t mind, Tino.&rdquo;</p> <p>&ldquo;Keep your shirt on, Dean. You know what I mean,&rdquo; Tino exclaimed.</p> <p>I did know what he meant. Tino and his team had been following the 3P Principles, focusing on understanding the purpose for why his customer outsourced their work, then aligning their processes to that purpose, and engaging their people to deliver on the purpose through those processes. Hence the 3Ps: a simple method to ensure an inside-outsourcing service provider is aligned with its customer&rsquo;s needs. Something else also struck me as I thought about Jeanette, as she was also a huge proponent of using the 3Ps. In order for the 3P principle to work, you need to be a partner with your customer and not a pawn of your customer.</p> <p>&ldquo;Tino, I will see you the week after next.&rdquo;</p> <p>&ldquo;Sound goods. I will inform the team you&rsquo;re dropping by,&rdquo; Tino replied, and the call ended.</p> <p>Tino met me in the lobby of the plant with Steve, the area manager for paint. Tino and his team provided services in the paint shop, weld shop, general assembly, and plastic shops. The services included general cleaning, industrial cleaning, technical cleaning and some light maintenance. Tino and his team&rsquo;s services were absolutely critical to plant production. Any misstep, and the plant lost production time.</p> <p>&ldquo;Dean, we know you are tight on time, so we&rsquo;re going to head directly to the paint shop,&rdquo; Steve said.</p> <p>&ldquo;What are we going to see?&rdquo; I asked.</p> <p>&ldquo;Last year we met with the plant management team after our annual review to better understand some of their issues and concerns, and to see where we could be of support. Our customer&rsquo;s paint shop team was struggling with their jig program,&rdquo; Tino explained.</p> <p>&ldquo;Jig program?&rdquo; I asked.</p> <p>&ldquo;You remember. All of the metal devices they use to hold open doors, trunk lids, hoods, and gas lids during the painting process,&rdquo; Steve replied.</p> <p>&ldquo;Yes, and if I recall correctly, the jigs are a major source of contamination if they are not cleaned well and frequently,&rdquo; I said.</p> <p>&ldquo;The plant had been spending north of four million dollars on the program, and the jigs had to be sent offsite for cleaning,&rdquo; Steve stated.</p> <p>&ldquo;And that resulted in damage to many of the jigs and a loss of inventory,&rdquo; Tino added.</p> <p>&ldquo;So here is the exciting part,&rdquo; Steve said, pointing to a production line with a dip tank.</p> <p>&ldquo;We&rsquo;d been experimenting with a chemical which actually melts the old paint off the jig, and, with a low pressure rinse, restores the jig to a like-new condition,&rdquo; Tino explained.</p> <p>&ldquo;Look at these two jigs before and after,&rdquo; Steve said, pointing to two jigs on the quality inspection table.</p> <p>&ldquo;Impressive,&rdquo; I said.</p> <p>Tino and Steve went on to share how they had approached their customer with this new idea. Hand-in-hand with the customer&rsquo;s engineering group, a plan was put together and a cost analysis was done. This idea, as presented by Tino and Steve, was going to save the plant two million dollars a year while increasing the frequency of cleaning &ndash; higher performance at a lower cost.</p> <p>&ldquo;Great story, and also a great example of what happens when you implement the 3Ps,&rdquo; I said, looking over the cleaned jigs.</p> <p>&ldquo;The paint shop guys are ecstatic,&rdquo; Steve said.</p> <p>&ldquo;How did purchasing react?&rdquo; I asked curiously, still troubled by what Jeanette had faced over the past 12 months.</p> <p>&ldquo;We prepared a proposal to provide the services and presented it to them, along with a timeline for implementing and ramping up the services,&rdquo; Tino said.</p> <p>&ldquo;After the presentation they told us to go ahead, thanked us numerous times for bringing them the idea, and asked us to provide a quarterly update of our progress,&rdquo; Steve added.</p> <p>&ldquo;So you were given the work without going out for bid?&rdquo; I asked.</p> <p>&ldquo;Absolutely. Purchasing saw it as a way to increase our revenue and allow us to move some of our team into these newer higher-paid positions,&rdquo; Tino explained.</p> <p>&ldquo;Amazing,&rdquo; I said.</p> <p>&ldquo;It is a win/win for both us and them,&rdquo; Tino stated.</p> <p>&ldquo;Even better, it is a win/win/win for the paint shop, purchasing, and you guys,&rdquo; I said.</p> <p>&ldquo;Well?&rdquo; Tino asked.</p> <p>&ldquo;Guys, very impressive. A great story of what happens when you abide by the 3Ps, and your customer treats you like a partner,&rdquo; I said.</p> <p>As I drove from the plant, my mind wandered to Dickens&rsquo; story&nbsp;<em>A Tale of Two Cities</em>. In this situation, the story could be called &lsquo;A Tale of Two Customers&rsquo;, where one group treats their inside-outsourcing service providers with gratitude and dignity, and the other treats their providers like pawns. It doesn&rsquo;t take a genius to understand which is the better route to go.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/facilities-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Facilities Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/service-provider-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Service Provider Management</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/manufacturing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Manufacturing</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/strategy" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Strategy</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/workforce-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Workforce Management</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Partners or pawns? (Part 2) - Future of Sourcing" addthis:url="https://www.futureofsourcing.com/node/746"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Mon, 25 Jul 2016 16:38:49 +0000 Damian Scallon 746 at https://www.futureofsourcing.com Is the UK's government doing enough to promote SME exports ahead of the EU referendum? https://www.futureofsourcing.com/is-the-uks-government-doing-enough-to-promote-sme-exports-ahead-of-the-eu-referendum <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://www.futureofsourcing.com/sites/default/files/articles/xBen-Moore-Mar-2016-1-420x215.jpg.pagespeed.ic_.52nA5X4IFr.jpg"><a href="https://www.futureofsourcing.com/sites/default/files/articles/xBen-Moore-Mar-2016-1-420x215.jpg.pagespeed.ic_.52nA5X4IFr.jpg" title="Is the UK&#039;s government doing enough to promote SME exports ahead of the EU referendum?" class="colorbox" rel="gallery-node-892-2f2yvYb9fRo"><img typeof="foaf:Image" src="https://www.futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/xBen-Moore-Mar-2016-1-420x215.jpg.pagespeed.ic_.52nA5X4IFr.jpg?itok=FBVj49M5" width="420" height="215" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>With the EU referendum just a few months away, David Cameron and his pro-EU peers need to do everything they can to remind businesses of the outsourcing and trade benefits that come with remaining in Europe.</p> <p>However, a recent YouGov&nbsp;<a href="https://www.quotesearcher.co.uk/sme-exports-study/" target="_blank">survey conducted by QuoteSearcher</a>&nbsp;has shown that current efforts to encourage SMEs to export their products and/or services may not be as successful as hoped. In fact, 69% of respondents said that they had never heard of the government&rsquo;s &lsquo;Exporting is Great&rsquo; campaign before, a campaign which aims to promote the benefits of exporting products across the world.</p> <p>At the same time, the survey shows that generally, SMEs have a positive view on trade both within the EU and worldwide. Some 64% of respondents claimed that out of every region worldwide, Europe is the most profitable potential partner, with 31% also stating that the EU offers &ldquo;a lot&rdquo; of trade opportunity. Furthermore, 78% of SMEs said that exporting worldwide is either &ldquo;fairly&rdquo; or &ldquo;very&rdquo; important.</p> <p>&ldquo;I have to admit I also hadn&rsquo;t previously heard of the government&rsquo;s &lsquo;Exporting is Great&rsquo; campaign,&rdquo; explains Professor Simon Down, Deputy Dean for Research and Enterprise at The Lord Ashcroft Business School, Anglia Ruskin University. &ldquo;One of the reasons why this campaign may not be as successful as the government had hoped is because with these types of campaigns and initiatives there are often things that companies have to do to in order to take part.</p> <p>&ldquo;For example, they often have to fill out forms, divulge sensitive information about the company, or agree to marketing etc. In my experience, government initiatives can sometimes be rather intrusive and time consuming, and those that take part in them often don&rsquo;t get as much back as they&rsquo;d hoped.&rdquo;</p> <p>Along with the government&rsquo;s campaign not appealing to its target audience, 30% of SME decision-makers claimed that legal/regulation issues are the biggest barriers to exporting products abroad. Unfortunately, if Britain does vote to leave the EU in June it&rsquo;s likely that these barriers may become even tougher.</p> <p>The question is, would SMEs vote differently in the upcoming referendum if they knew the exporting and outsourcing opportunities that they could potentially lose out on? &ldquo;Probably yes,&rdquo; said Professor Down, &ldquo;If the government&rsquo;s &lsquo;Exporting is Great&rsquo; campaign was more successful, there may well be a greater willingness from SME decision-makers to think about staying within the EU.</p> <p>&ldquo;If the government really deepens their campaign in terms of the benefits of staying in the EU and potentially even subsidising the cost of businesses exporting to not just Europe but also the rest of the world, one might think it could change.&rdquo;</p> <p>At the point of writing, there is still time for David Cameron to properly exhibit the trade, outsourcing and general economic benefits for SMEs should they choose to remain within the EU; however the challenge will be speaking louder than his pro-&ldquo;Brexit&rdquo; counterparts.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/european-union" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">European Union</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/politics" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Politics</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/united-kingdom" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">United Kingdom</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/small-and-medium-sized-enterprises-smes-export" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Small and medium-sized enterprises (SMEs) Export</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/import" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Import</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Is the UK&#039;s government doing enough to promote SME exports ahead of the EU referendum? - Future of Sourcing" addthis:url="https://www.futureofsourcing.com/is-the-uks-government-doing-enough-to-promote-sme-exports-ahead-of-the-eu-referendum"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div> Fri, 18 Mar 2016 14:02:32 +0000 Ben Moore 892 at https://www.futureofsourcing.com https://www.futureofsourcing.com/is-the-uks-government-doing-enough-to-promote-sme-exports-ahead-of-the-eu-referendum#comments Change your story to change your culture... https://www.futureofsourcing.com/node/862 <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://www.futureofsourcing.com/sites/default/files/articles/Robin-Schlee-X-Oct-2015-1-420x215.jpg"><a href="https://www.futureofsourcing.com/sites/default/files/articles/Robin-Schlee-X-Oct-2015-1-420x215.jpg" title="Change your story to change your culture..." class="colorbox" rel="gallery-node-862-2f2yvYb9fRo"><img typeof="foaf:Image" src="https://www.futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Robin-Schlee-X-Oct-2015-1-420x215.jpg?itok=S_f9HXqK" width="420" height="215" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Pulling into the snowy parking lot and contemplating today&rsquo;s meeting, my mind wandered to a line from Michael Margolis, the CEO of Get Storied, &ldquo;If you want to understand the culture, listen to the stories; if you want to change the culture, change the stories.&rdquo; Carl, the site manager of Excel, the inside-outsourcing service provider at this motorcycle plant, had called a few weeks back and enticed me to visit by stating, &ldquo;I have a great story for you.&rdquo;</p> <p>It was 5 a.m. as I stepped out of my car and headed to the employee entrance. I fell in line with dozens of others, all bundled up and walking in the same direction. As the groups passed through the door, more than half headed to a bank of time clocks for the plant&rsquo;s hourly employees on the left of the aisle, while the balance headed for time clocks on the right where Carl was posted, greeting his team members.</p> <p>&ldquo;Good morning, Dean. It&rsquo;s great to see you again,&rdquo; Carl said, shaking my hand.</p> <p>&ldquo;Same to you, Carl. I apologise for being early. I was not sure how the driving would be, so I set out early,&rdquo; I said. Carl smiled warmly, and asked if I wouldn&rsquo;t mind waiting for about fifteen minutes until he finished up.</p> <p>&ldquo;Be glad to,&rdquo; I responded, and stepped down the aisle a few feet to a large white board entitled &ldquo;Site Operating Plan,&rdquo; and bearing Excel&rsquo;s logo in the top right hand corner. I started looking over the board, but found my attention drawn back to Carl as he continued to greet everyone on his team as they clocked in. What struck me was how many of the team members lit up when they saw him, asking him how he was doing and how the plant ran last night. In turn, he responded to each using their name. With each brief interaction, Carl let the team member know he&rsquo;d be sure to catch up with them later during his plant tour or over lunch. What really struck me was the genuine level of connectivity between Carl and his team. I was also amazed how he knew each person by name. Some were easy like Bill and Mary, while others more complex like Guadalupe and Alejandro. I am guessing he greeted better than 80 to 100 people, his entire first shift team.</p> <p>As the last of Carl&rsquo;s team arrived, he finished up and headed towards me. &ldquo;Dean, sorry for the delay. Let&rsquo;s get some coffee and make our way back here to the board,&rdquo; Carl stated, pointing towards the canteen.</p> <p>&ldquo;That was a very intriguing event for me to witness,&rdquo; I said to Carl.</p> <p>&ldquo;Actually, the fact you got her early and saw our start of shift ritual will really help our discussion this morning,&rdquo; Carl said.</p> <p>As we drank our coffee standing by the Site Operating Plan board, Carl reflected back to my last visit some two and a half years earlier. Carl, his team, and his contract had been in trouble. His customer, who was initially thrilled with their services, was viewing them as run of the mill. Carl had done a great job of getting things like schedules, standardised work, layered inspections and counter-measures all in place, and routinely performed contracted services. Like many customers who forget the past, his customer was more interested in what had been done lately.</p> <p>&ldquo;When you were here two and a half years ago, you facilitated my management team through a change in mindset. You walked us through purpose, and had us identify reasons for our customer&rsquo;s desire to outsource by having us define their needs. You then held up a mirror, forcing us to assess our operating processes and their alignment with our customer&rsquo;s needs, followed by a deep dive into our people only to discover how disengaged and misaligned our team was with our customer&rsquo;s needs,&rdquo; Carl stated matter-of-factly.</p> <p>&ldquo;Yes, I recall the sessions well. From there we developed strategic action items your team needed to undertake to reposition yourselves in the eyes of your customer, and to re-engage the team,&rdquo; I said, hoping he would agree.</p> <p>&ldquo;Absolutely, and we hit the ground running. Within three months the plant manager, production manager, and personnel manager all commented on the positive changes,&rdquo; Carl said to my relief. The one thing I detested in life was wasting my time.</p> <p>&ldquo;That&rsquo;s a relief. I was a bit worried we&rsquo;d wasted our time,&rdquo; I said, sipping my coffee.</p> <p>&ldquo;Absolutely not, but the story gets even better. Wait until I show you the results.&rdquo;</p> <p>As I turned to look at the board, Carl pointed out that the data on the board was set up on a rolling monthly basis, allowing teams to see how they progressed on a month-to-month basis. What he wanted to show me was data trends going back two and a half years, to just before our sessions.</p> <p>As we walked towards the team conference room, I pointed out to Carl that his performance data was impressive, and his team and customer should be feeling very good.</p> <p>&ldquo;They are. Everyone is very pleased, but the reason I talked you into the trip is to show you something we discovered,&rdquo; Carl said, opening the door of the conference room.</p> <p>&ldquo;Good morning, Miguel. How have you been?&rdquo; I asked, walking over to shake his hand. Miguel was the onsite business analyst, a very sharp guy with a great affection for turning data into useful information.</p> <p>&ldquo;Great to see you as well. I&rsquo;m glad Carl convinced you to make the trip north. We have a very interesting story for you,&rdquo; Miguel said, striking the keyboard on his tablet, making the wall screen behind him come to life.</p> <p>For the next forty-five minutes, Miguel and Carl walked through their key performance indicators, starting from the month prior to our sessions some two and a half years ago up to the current month. The results were impressive. Safety, morale, participation, absenteeism, turnover, idea generation, profit, cost savings, elimination of redundant non-valued activities, and so on, were all in a steady positive trend.</p> <p>&ldquo;Do you notice anything?&rdquo; Miguel asked with a knowing smile.</p> <p>&ldquo;Actually two things. The first is the uptick a couple of months after we completed the sessions setting the direction for the site to follow. The second is extremely obvious, but I can&rsquo;t figure it out.&rdquo;</p> <p>&ldquo;It&rsquo;s the second uptick that has you confused isn&rsquo;t it?&rdquo; Carl excitedly blurted out.</p> <p>&ldquo;Definitely, and the size of the uptick,&rdquo; I stated with a puzzled look.</p> <p>&ldquo;The second uptick began around 30 days after we adopted the start of shift ritual you witnessed this morning,&rdquo; Miguel said.</p> <p>&ldquo;What you witnessed this morning we do at the start of every shift, including weekends,&rdquo; Carl said with a broad smile.</p> <p>&ldquo;Okay. I am guessing now is when you tell me the story?&rdquo; I asked.</p> <p>Miguel and Carl walked me though a series of &ldquo;aha&rdquo; moments that led them to adopt the start of shift ritual. Carl, on one of his routine floor walks, had checked in on Ann, a team member cleaning the women&rsquo;s restroom. He congratulated Ann on the work and asked for any ideas to improve how the work was done. Ann gave Carl some feedback, resulting in Carl spending more time with Ann to discuss implementing her ideas. This type of interaction for Carl was pretty normal. He was an excellent leader who always sought ideas from his people. What made this interaction unique was Ann telling Carl how great it was to finally get to know him. During their discussions, Carl shared with Ann a bit about his family, and it turned out both Carl and Ann had seniors at the same high school in town. Over lunch, Carl shared the interaction with Miguel, who commented on how great it would be if they could achieve that same level of interaction with all of their team members.</p> <p>The following week, Miguel read an article on how we individually process 50,000 thoughts a day, many of which are replayed over and over. The article stated that thoughts lead us to how we think about the day and how we will act. Again over lunch, Miguel shared the article with Carl who was still percolating on his interaction with Ann. Miguel and Carl, both of whom enjoy philosophising, brought Abraham Maslow into the lunch conversation, recalling and discussing the hierarchy of needs &ndash; our collective need for love and belonging, our need for self-esteem, and our need for self-actualisation.</p> <p>&ldquo;At that point, the light bulb turned on for us,&rdquo; Miguel said.</p> <p>&ldquo;How so?&rdquo; I asked, completely enticed with the story and trying to predict where it was going.</p> <p>&ldquo;As we spoke, the discussion about Ann came up, as did a dozen or so other team member interactions. Taking notes as we talked, we discovered a thread woven through each that Ann had pointed out. In each interaction, we allowed our team member to really get to know us, and we in turn got to know them,&rdquo; Carl said, the smile not leaving his face even for an instant.</p> <p>&ldquo;Armed with this mini-epiphany, our management team met over beer one Saturday, and within a few hours put together the start of shift ritual. The uptick you see in those graphs is a direct result of that initiative. Did you note how the uptick spanned about two and half months?&rdquo; Miguel inquired, flipping back to a few previous charts.</p> <p>&ldquo;Yes, now you point it out, it is very obvious.&rdquo;</p> <p>&ldquo;That was how long it took for us to get comfortable standing at the time clocks, and, I&rsquo;m embarrassed to admit, to know each team member by name. It was extremely difficult at the start, but thanks to Miguel who monitored the KPIs that told us we were gaining ground, we all stuck to it. Today, some sixteen months later, it&rsquo;s just who we are,&rdquo; Carl declared, this time with a very serious look on his face.</p> <p>&ldquo;Dean, when you left, we quickly implemented strategic actions and made measurable progress, but something was always missing: a genuine feeling of being one team, all 300 of us,&rdquo; Miguel stated.</p> <p>&ldquo;As a result of our lunch conversations and happy hour meetings, we realised our team recognition was overly formal. It needed to become more genuine. We felt by greeting each team member we were saying, &lsquo;you are important, you are an individual, and your contribution counts&rsquo;. The thirty-second interaction each day shows each team member how they belong to something and are appreciated. It triggers how they view their day and how they act,&rdquo; Carl said, the smile returning to his face.</p> <p>&ldquo;So simple to grasp, but I must applaud your discipline to stick with it. I can only imagine the first few weeks as your team viewed you with skepticism,&rdquo; I said.</p> <p>&ldquo;Actually, the first month was tough. The logistics, getting in earlier, making sure each shift&rsquo;s start was covered by one our site management team, the embarrassment of not knowing names, and further embarrassment of not remembering them day after day. All of a sudden, though, it just clicked,&rdquo; said Carl, refilling everyone&rsquo;s cup with coffee.</p> <p>&ldquo;Let me show you this graph. To me it&rsquo;s the clincher,&rdquo; Miguel said, flipping through his charts. &ldquo;Our site has grown by 23% as a result of our teams&rsquo; efforts. Our customer also abandoned its plan to dual source our work and use our competition to motivate us.&rdquo;</p> <p>&ldquo;That is excellent, Miguel. What a great story. By feeding the minds of your team with genuine thoughts of respect and appreciation, you trigger your team members&rsquo; actions, and, due to your persistence and discipline, those actions become habits, and those habits become your brand.&rdquo;</p> <p>&ldquo;Eloquently put, Dean,&rdquo; Carl said, again smiling ear to ear.</p> <p>&ldquo;Now our finale,&rdquo; Miguel said, also smiling ear to ear.</p> <p>With that Miguel popped up the final slide that showed how the team organisation was flatter even with the increased revenue because the ratio of team member to management personnel had improved by over 37%. The team members with their newly attained attitude towards work allowed them greater autonomy and self-esteem.</p> <p>Driving back to the airport, the words from Michael Margolis once again ran through my mind, &ldquo;If you want to understand the culture, listen to the stories; if you want to change the culture, change the stories.&rdquo; Carl and Miguel changed the stories in the minds of each team member. Simply by greeting them at the start of each shift with a tone of genuine concern and appreciation, team members stopped seeing themselves as low-cost labour. They knew they were important and valuable members of the team.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/strategy" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Strategy</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/workforce-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Workforce Management</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/manufacturing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Manufacturing</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/leadership" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Leadership</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/business-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Business Management</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Change your story to change your culture... - Future of Sourcing" addthis:url="https://www.futureofsourcing.com/node/862"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/europemiddle-eastafrica" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Europe/Middle East/Africa</a></div></div></div> Mon, 01 Feb 2016 17:40:10 +0000 Damian Scallon 862 at https://www.futureofsourcing.com