Category: Collaboration

Memo to the Chief Executive – Have you looked at this Critical Collaboration as you prepare for growth?

To The Chief Executive, Dynamic Startup,

The tide is turning. Channel partners and key customers are moving fast to your products..

Just as you were preparing to hear the beautiful humming sound of a well-oiled Operating machine shipping products out – you hear some ugly, jarring noises –

‘Hot-selling product has gone on allocation’

‘Big Channel partners are getting frustrated, as lead times start creeping up’

What happened? The Critical ‘O’-Zone

First, the good news – You have reached a major inflection point in your development cycle. You are no longer a small, obscure supplier waiting for the next large order. Orders are now waiting for you. Congratulations!

The not-so-good news – these orders will not wait long before they jump ship to a competitor.. Channel partners may divert attention to these competitors too.. So, what happened?

You just entered what we call the ‘O’ Zone (the “Operating” Zone). This is that part of your lifecycle (“zone”) when customers want to see you Operate like clockwork– shipping out 10x, 100x or more volume than before, yet meeting delivery dates globally, at attractive price points.

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What happens in this vital phase of your Company’s development cycle is going to be determined in a big way by a critical collaboration – Near Real-time Collaboration between your Sales and Manufacturing/ Supply Chain Operations (Ops) team.

What’s causing these pains? No ‘growing pains’ is not a good label. Here is a critical one–

Divergent metrics & its impact on Sales & Operations

Your Sales team is focused on hyper-growth – signing up new Channel partners, winning new deals with end customers despite tough competition.

They are totally focused on order volume (Revenue) metrics, and compensated appropriately. So, they make sure they open up the gates and get more customers, more partners and more orders in. But hold on!

Do they have enough time to pivot to their Ops partners – give them a heads up about new customers, what product forecasts will be like?

Your Ops team, on the other hand, has an increasingly complex balancing act as demand takes off. They can grow their Supply Networks – to an extent (signing up new sources – new CM/ ODMs, new suppliers, etc.) to gain extra capacity, but then they hit the brick wall – of ‘Cost’ centered metrics.

The strains start to show in interactions between Sales & Ops.

The offshoot  of all this is not pretty – As orders increase, Ops fulfillment can be in lock step only for a little while, after which demand and supply diverge. For Ops, it becomes a guessing game –

Q. What will Sales sell? How much buffer stock should we keep?

For Sales it becomes a hand-wringing exercise, as they field questions from customers –

Q. When will our orders ship? Why can’t you deliver it sooner?

With ‘Keep cost down’ as the guiding principle for Ops, it becomes a crazy dash to expedite when demand swings up with little notice, flying goods over instead of the more inexpensive modes (sea, rail or road) – depleting margins.

The human costs are bigger – anxieties mount as Sales & Ops try to play a game which looks somewhat like – catch the ball ‘blindfolded’.

Key to growth – A Vital, Systematic collaboration

In the O-Zone (operating zone) we need to play carefully – Pay special heed to the needs of this collaboration which is vital for growth –

Between Sales & Supply Chain Operations

To start off – Metrics need to be aligned.

How about rallying both Sales & Ops around ‘Profitable Growth’ metrics?

Let’s discuss it as a team at the leadership levels first. At a minimum – Sales, Supply Chain Operations, Operational Finance and you, should participate. The dividends of playing smart in the O-Zone are huge – Growth with Profitability – A distinct Operating Advantage. We, at Zyom, will be glad to help and explain further.

Collaboration – One small step.. A big operating advantage

Collaboration is powerful! Dan Tapscott, in his TED talk, explains how starlings, small birds, can take on larger predators when they fly in formation with hundreds or thousands of other starlings[1].

To date, the word ‘collaboration’ has been used profusely in business text and talk. However, we have barely moved the needle in product innovation, production and distribution that smart collaboration can result in. This is surprising given the transformation that has taken place in the technology world – from a ‘desktop centered’ to an ‘internet-enabled’ consumption, creation and distribution of information –that is fairly ubiquitous world-wide.

Poor responsiveness of far-flung supply-chains

A recent Economist Special Report[2] highlights how poor responsiveness becomes a big Achilles heel in extended supply chains with offshored or outsourced manufacturing. It points out how GE home appliances and Chesapeake Bay Candle have decided to ‘reshore’ manufacturing operations back to the US (from manufacturing sites in China and Mexico), to become “more responsive”.

In 1999, I had the opportunity of designing supply chain collaboration software for companies such as HP and Dell. However, the promise remained unfulfilled, due, in big part to the relative immaturity of internet technologies. That has completely changed in the last 8-10 years. As a part of a startup – Zyom – we have been hard at work trying to realize this dream of internet enabled smart collaboration.

At a recent webinar hosted by Zyom, Fred Harried, VP of Operations at Ruckus Wireless, explained – how collaboration was one of the key factors that enabled him to scale his Operations several X in the last 4 years, and how Zyom’s MozartCC system was a key collaboration enabler. Attached is a brief 6 minutes overview of some of the Q&A highlights from the webinar[3].

This example highlights how a small step – the innovative use of internet for collaboration across partners provided a boost to a startup in handling changes much faster, ensuring low inventory exposure for all supply network partners – a true Win-Win.

We are at the very early stages of utilizing the huge untapped potential of the internet for connected enterprises, their value chains and beyond – Collaboration may indeed be a disruptive advantage for Operations… more on that in the next blog.

Drop a line – Do you think collaboration could provide a competitive advantage? Fuel growth? Be a Disruptor? Or, none of the above.

[1] Don Tapscott: Four principles for the open world; POSTED JUN 2012; TEDGlobal 2012

http://www.ted.com/talks/don_tapscott_four_principles_for_the_open_world_1.html

[2] The Economist, Special Report – Outsourcing & Offshoring, Jan 19th, 2013

http://www.economist.com/blogs/schumpeter/2013/01/special-report-outsourcing-and-offshoring

[3] ZyomTV – Scaling Operations-Zyom Webinar Q&A Highlights (Dec 7, 2012)

http://youtu.be/GvSTb2nmoq0