Perils of Re-org

The most dreaded word in any organisation is Re-org. It sends shivers down the organisation pyramid. Usually a few select senior leaders with the help of an external consulting firm gets into this exercise and the outcome is either a great hit or a damn squib.

It may be noted that a business reorg due to a merger or acquisition is different from a structural & operational reorg of a running business.

There are multiple reasons why re-org is attempted by a CEO or the Board of Directors.

the organisation’s top line is not growing enough to keep pace with the industry growth. New opportunities are not pursued.
the CEO himself had just taken over with a mandate that a double digit growth needs to be assured. The first thing he attempts to do is an re-org.
there are too many senior leaders in the same role for many years and a sort of complacency or duplication of responsibilities has set-in that impacts the organisation’s performance.
the organisation is drifting away from
being customer centric and long time customers are parting ways.
a new acquisition or merger has happened and a new org needs to be created to accommodate the executives of the acquired / merged entity.
the organisation has turned into a behemoth and is no longer nimble to absorb the changing technological trends and show consistent growth and profitability across all revenue streams.
a recent dent in the brand image of the business due to an internal operational issue or a market reaction or increasing customer complaints compels CEO to shuffle leaders.

If the re-org doesn’t produce the desired results, chaos sets in, leaders lose focus and the employees become a confused lot. Attrition happens fast and new hires are not on-boarding. The old org’s hang over and hierarchy still rule the day to day operations and the new org is unable to take complete control. Conflicts happen at all levels and customer interests are compromised. Revenue streams are juggled and sales teams are demotivated.

Reorg is mostly an organisation’s internal matter and when it fails, skeletons are out in the open and the blame game starts. A successful reorg exercise should clearly consider:

communicate, why reorg is needed
get the buy-in from all stake holders
define new responsibility matrix
name unit and sub-unit owners
lines of business to be dropped/added
new revenue streams
expected increase in top/bottom lines
customer retention strategy
internal and external threats to org
employee retention
revised competitive strategy
finally be empathetic to employees

A reorg helps some and disappoints many. So due care must be exercised before it is conceived and implemented.

#reorganisation #customerretention #employeeretention

Better planning and execution in Supply chain results in profits

Managing the constituents of a supply chain in a business is vital for achieving incremental profits. We usually focus on managing cost reduction in supply chain but never look at it as profit that could be measured at every stage – parts sourcing, conversion, value addition, packaging, logistics, inventory management and distribution. Each component contributes to incremental profit and the business owners of these components need to align with the overall objective of the organisation. If we think cost reduction in supply chain helps in keeping sale price constant to retain customers, then we don’t think of it as a profit. Is cost cut a holier word than profit? Not at all.

In a competitive market, it is an art to keep the sale price of a product constant to hold onto market share but keep increasing the profit as far as possible, in-spite of variations in input and conversion costs. The job of the cost accountant plays an important role in achieving this objective. How many companies have this dedicated role, especially smaller organisation where this responsibility still lies with the promoter. The costing team takes the feedback from sales team, sourcing team and manufacturing / subcontracting team to arrive at the optimum sale price of a product that can be sold in high volumes during both on-season and off-season. The cost accountant also keeps a tab on the operations running costs like energy, fuel, salaries, infra maintenance etc.

Sourcing – every business has more than one vendor for a part or service . Spreading the supply risk among them and helping them to manage their input costs is important to keep the purchase costs within limits. Low cost alternate materials in parts or assemblies help to keep the production cost in check. Making short term and long term forecasts using machine learning algorithms is vital for the business.

Conversion – at the manufacturing plant, parts get converted or assembled to make the final product. Any savings in operational steps or routing or reducing maintenance down time or value additions go a long way to reduce the cost of conversions.

Value addition – a specially made tool or machine at the suppliers’ place can be replaced with an in-house tool modified to do the same operation helps to negotiate better price from the supplier.

Inventory Management- Maximising profits by managing material holding cost, planning for surge in customer orders is an art. How much buffer is necessary for each raw material and each finished product is statistically analysed and planned.

Packaging – since the advent JIT concept, sub– assemblies or parts do not get packed if the supplier and buyer are situated close by. Re-usable packaging or Returnable packaging as in the case of barrels or moulded trays or wooden crates substantially reduce the packaging cost that results in incremental profit.

Logistics – it constitutes a good percentage of final price of the product and it is important to control this cost by deploying a fleet management system ( either own or sourced outside) that offers the lowest transportation cost per piece or tonne or Kg. Again JIT concept helped in increasing the efficiency of logistics. The 3rd party logistics companies are a boon as part loads of parts or final products are shipped at reduced cost.

Distribution – the most horrendous part of supply chain and distribution is making available the products at the retailers’ shelves or meeting JIT deadlines. There needs to be a logical method of distribution based on past consumption history, prior knowledge of principals’ production quantities, planning for weather uncertainties and social disturbances. Demand forecast at the retail end is again done using supply chain planning softwares and analysing volumes of data to know the purchasing pattern and peak demand points in distribution network.

Today we have many softwares that help in integrated business planning, sales & operations planning, demand forecasts, inventory optimisation and response / lead time calculations. Choose a software that fits your business needs for the best supply chain planning and execution strategies.

#sapibp

#netsuite

#oraclescm

#precoro

#anaplan

#sapscm

#netstock

#microsoft365scm

Is Digital still a buzz word ?

‘Digital’ continues to be a buzz word for both IT and non IT companies for more than 5-6 decades. In fact when the first semi conductor chip was invented ( in 1958), we had also transitioned from analog to digital in every sphere of our life – in appliances, electronic instruments, computers, space vehicles, automobiles ( remember your first Casio digital watch?) etc.

We still talk about digital revolution in business and in our day to day life and haven’t yet found an alternate word. Frankly speaking, Digital experience has seemlessly merged with our life long ago and it is not a differentiator today. It is no longer fancy to brag that we do digital transformations.

It is good to note AI and ChatGPT are taking the world by storm but these are not new either. They are surely huge improvements of previous inventions that are already in use.

Today the challenge lies in how we integrate different technologies and platforms and what new use cases we could develop that will make our lives much easier. As we make our lives easier we get more time to invent newer technologies and that’s how the cycle of inventions and deployment goes on.

Human intelligence makes Artificial Intelligence more powerful. Our responsibility lies in limiting its use and not harm humans and the mother nature.

#digitalbusinesstransformation #artificial-intelligence #human-intelligence

Transforming a team …

We read a lot of posts about effective leadership, transformational leadership, autocratic leadership, participative leadership etc but they all focus only on a leader.

The men and the women they lead are never discussed about by any leadership guru and we know how they need to transform themselves to be a part of the team that is successful.

A successful leader is partly made by his or her team members too and we forget this fact and gives credit to only the leader.

A team needs to be participative, creative and undergo a transformation process to orient towards a leader and his or her vision. Success may be a result but the process to achieve it, is equally important. That process is not a one person’s effort.

An individual can be a successful person – a doctor, a sportsperson, a writer, a musician etc – but they are so because others have helped or motivated them to bring out their individual brilliance to the world. Their followers or admirers push them to secure that status for a long time to be remembered by all.

Let us spend some time how do we create such people in a team. Change in attitude of individuals bring about change in willingness to work for a cause or objective. Skills do matter but it is again a change in attitude to learn newer skills is essential.

A man creates his own destiny by his willingness or unwillingness to accept change that determines the course towards a successful outcome. That’s mindset every individual should ideally possess.

Let us debate 😊

leadership #teamculture #successmindset

It’s all about me…

We want to be loved, valued or appreciated. That’s a common nature of a human.

We always expect appreciations or likes for what we do or say. Because they keep us happy. The more we expect such accolades, the more we tend to be egoistic and there is a haughtiness that sets in us leading to total disregard of how we want to see others around us. We feel angry when those surrounding us don’t appreciate us.

We feel elated to be surrounded by people, who believe that as long as they keep praising our actions and words, they will get our favours. This sycophancy over a period, assumes a larger proportion to make us feel arrogant and disrespectful.

Good and long time friends leave us the moment we fail to recognise their value and appreciate them. When we always think about us, we don’t notice the good things in people around us. Relationships are built on mutual trust, love and appreciation. They are broken when we fail to see these virtues in other people. An egoist breaks the relationships due to his selfish attitude and soon he becomes s lonely person.

In every conversation we have with others, we talk about us, our family or what we have achieved. We never enquire about them or their family or their problems. People stay glued to each other through ups and downs only when they share their joys and sorrows.

Care, compassion and empathy towards others go a long way to nurture relationships that will stay rock solid for many years.

So, it’s not all about me but everyone around us. That will keep us and others happy and smiling.

It is not the destination that is important but the journey is.

What a fascinating statement by Gaur Gopal Das, the International Life Coach!

A journey is full of learnings that goes through rough paths, some tough people, some nice people, some failures, nice opportunities and is a long one towards a goal. If the destination is reaching that goal, then what one would do after reaching there? Rest up and stay contended?

On the other side, a journey throws up many challenges and one gets the will power and determination to overcome the challenges as he moves along. Challenges are not show stoppers but makes one tougher and seasoned. The journey also presents you with some beautiful moments that make you enjoy with the people that are also part of those moments. There are by-standers or co-travellers in a journey that may not add value to the journey but they help you to see a different perspective of people, their attitudes , their preferences and views.

A journey helps us to chisel our views on how we think about others, how we care for others and how we take responsibility for our actions. We define our own journey, the pace, the paths and the stops and no one can change it.

Do compliments make people weak?

We have seen people expecting compliments ( including some of those who post here) at the work place or in the family. A post or a share on social media page garners huge likes for some and not so for many. For the latter, they think that friends, buddies, siblings and parents are there to profusely offer you compliments to a level that spoil them and to feel crest fallen when they don’t regularly get them. They remain sullen and remorse and don’t attempt anything new and shy away from even doing their normal routine.

Some managers, mentors, teachers, professors or even parents consciously desist from complimenting team members, mentees, students or children when they perform their tasks that are well within their capabilities. They feel that compliments do make performers not to aim bigger in work or life and they keep expecting appreciations all the time . But the same mentors and teachers do pat people on the back when jobs that needed efforts and skills beyond what they possess.

In short, leaders appreciate people when they excellently perform more than what is expected of them but not when they perform within their ability.

A debate on this topic will be an interesting one. What is your view? Feel free to share it.

#compliments #capabilitydevelopment

Do friends make good business partners?

When people want to be entrepreneurs, they look at friends or buddies to be their business partners. They think that they could hit off well in business too. All is hunky dory in the initial months but the relationship over time breaks and the start-up turns into a big failure. Many of them fail in the first year itself.

Have we ever wondered the friendship that was nurtured over many years suddenly becomes acrimonious?

Let us look at a few reasons that we commonly observe in partnership business failures:

1. The aspiring entrepreneurs never ask these questions – what value my friend brings in? How it is going to help achieve my vision? If the value the friend brings in is substantial, then the focus needs to be on how the inter-personal relations are to be dealt as they move forward so that the close friends become successful business partners too? Never assume that they will not be any issues between friends.

2. The role clarity is never defined for the friends turned into business partners. A start-up needs to have people who are good at matters related to technology, finance and marketing. It so happens that either all of them are good at only one aspect or on all the the aspects. But a clear responsibility matrix has to be in place at the very start of the business. An overlap of responsibilities hinders the decision making process. The team that is working under them gets confused with more than one direction to execute tasks.

3. Vision setting, policy formation and issue resolution must have alternate views to choose the right one for the start-up. Friends tend to carry the personal differences deep into the venture that ultimately become a huge issue to be resolved. They start questioning their loyalty to each other due to their alternate views on matters.

4. The ownership pattern determines the hierarchy of the enterprise for the regulators and the employees. They don’t see it as a major issue in the beginning but over the years it becomes a thorn in their relationship and it becomes a question of who is No.1 or No.2 etc. Cracks start to develop at this stage and that’s the beginning of the slide of the business.

5. Every partner has a need for a remuneration that befits the experience, social status, family size and life style. If they are to be factored in a start-up then the business is on the wrong footing. These are never considered in an equally funded partnership that is founded solely on expertise of each one of them and the remuneration has to be the same, at least in the initial years.

6. The involvement other family members is strictly a No-Go, unless that family member is being hired as a paid employee based on the job skills. A family member having no ownership and also is not an employee should not be allowed to run or help the business. There needs to be a formal arrangement that gets respect from everyone in the organisation.

We have seen some start-ups turning into a huge successes in the last few decades and they are the shining examples of entrepreneurship to every aspiring entrepreneur.

A Good Business Plan gets the investors

Entrepreneurs have brilliant ideas that need to translate into successful ventures. but not all of them turn into successful businessmen. Many of them fail to get the required funds even to kick start their businesses for the simple reason that the business plans don’t speak for them. The depth of the plans don’t convince the investors as they think the plans are not unique or they do not take care of market corrections. They don’t detail the risks to the business due to shift in technology, local laws, regulations, macro – micro environmental factors and how to mitigate them.

A Business Plan is an internal document of an enterprise and it does undergo changes to reflect the change in strategy to achieve the top / bottom lines and customer acquisition. It is not to be shared with the larger entrepreneurial community but the founders of successful organisations have articulated their success formula in public. These have immensely benefited budding entrepreneurs to help redefining their business plans.

The purpose of a business plan is not only to raise funds but the essence of it is focussed on attracting customers, partners and key people to the organisation. The investors know that plans do change but they are more interested in how the founders have thought through and foreseen the risks and included the mitigating measures. Their unstinted commitment to that plan would comfort them to stay invested in the ventures.

There are many components in a business plan. Some of the important aspects are: – the mission and vision of the organisation – details of the product or service on offer. – the competitors and their offerings. – the differentiators of the product or service when compared with that of competitors. – the customer segments that is going to buy the product or service. – How do we reach the market? – what is the structure of the marketing organisation? – what is the pricing and cost structure of the product? – what would be the cash flow for the first 3 years? – what is the capital required – Own investments Vs external investments? – the break even point – year & month? – the staffing plan – the anticipated Organisational risks, how to mitigate them, work around plan ……….

Every point has to be written with details and the business plan needs to be a word document that runs into pages depending on how elaborate the promoters are able to articulate. A power point presentation will never work for a Business plan. Anybody who joins the leadership team should be able to get a complete understanding of the business by reading that document. Over the first few quarters or years, the business may run into rough weathers due to unforeseen road blocks and the plan would need further iterations for course correction and execution.

In short, a good business plan not only gets the funds but a good document to review at periodical intervals to ascertain how the business stays focussed on the growth of the enterprise.

What bananas can tell us about supply chains | MIT Sloan

How complex it is to move the bananas to the stores in the least possible time and least cost ?

A seemingly inconsequential logistics problem is indeed a complex supply chain example.

Interesting read 👏

In a new book, MIT professor Yossi Sheffi examines supply chain complexity, artificial intelligence, and the future of work.
— Read on mitsloan.mit.edu/ideas-made-to-matter/what-bananas-can-tell-us-about-supply-chains