If you were invited to a lecture entitled: "Business Strategy: The Upside of Turbulence", what images would flash through your mind? Death by Powerpoint? Unintelligible graphs? Abstruse concepts rendered devoid of meaning by the monotonous delivery? Me too!
That's why I want to tell you about Don Sull. Last week, I was lucky enough to hear him talk about this subject - and it was a great fifty minutes. He had some fascinating ideas, and he spoke about them in a way which made them easy to understand - and great fun to listen to. If you ever get the chance to hear him, take it.
Very briefly, this is what Don told us. He's researched pairs of similar companies (think Tesco and Sainsbury, Continental and Goodyear) to find out why some companies thrive in difficult times, and others don't.
Now you need to know that Don is a boxing fan - because he chose that sport to illustrate what he found. As he explained some successful companies are like Muhammad Ali - they're agile, they can see the blows coming, and they're quick to exploit any unexpected opportunities to get a punch in. The other successful companies are like George Foreman - they've got what Don called "absorption". They can just stand there, take all the blows, and then when their opponent is exhausted they can land the knockout punch.
I thought this was great way for Don to explain his research. And it got me thinking about what that means for us when we're managing our logistics.
Let's look at absorption. Can your supply chain help you take the blows? Can it help you weather the storms for longer than your competitors? We don't usually think about our supply chains in this way - but once Don started explaining what was important, some things I've noticed fell into place.
If you want staying power, then the most important thing is cash. If you've got cash in the bank it's a lot easier to deal with any problem that comes along. So how can the way we manage our supply chain can make a difference to this?
First of all, keep stock as low as possible. Remember, every time you put a pallet into stock you take cash out of your bank.
Second, cut your costs, and then cut them again. You've got to keep looking for ways to reduce your costs. One of Don's findings is that, while all companies cut their costs in bad times, successful companies cut their costs all the time - good or bad.
And of course this makes sense, doesn't it? Lower operating costs means more cash in the bank - and you're ahead of your competitors when times get hard.
So there are two actions you can take to make you the George Foreman of the supply chain world. What about being Muhammad Ali - what does being agile actually mean?
You need to know that Don isn't talking about short lead times, high stock availability, efficient customer service, and all those things we have to work at every day.
No, an agile company is one that can identify new opportunities early, adopt them quickly - and then get out again if they don't work.
Can your supply chain make you more - or less - agile? Yes it can. You need a supply chain that can adapt rapidly to new products, new markets and new supply channels.
What's likely to slow you down? What will stop you adapting to change? Almost certainly it's your assets - mainly warehouses - and your systems. These are least likely to be adaptable and easy to change.
So think about this need for agility when you're investing in your supply chain. Now, I'm not suggesting you shouldn't have your own assets - but remember to ask yourself these questions:
· how easy will it be to change the product I handle in this warehouse?
· how easy will it be to serve a different market from this warehouse?
So this month, I'm passing on the message from Don Sull. Business is volatile, you can't get away from that fact. But you can benefit if you remember: train yourself to stay agile like Muhammad Ali, and take the punches like George Foreman.
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