Wednesday, December 17, 2008


Strategic plan for 2009 and beyond

The year 2008 is coming to a close already and there have been many turmoil and turbulence along the way over the entire year. 2009 is not going to be better if we do not re-strategise now and change the business direction if necessary.

If the demand for the existing products and services are going to be lower the year ahead, something needs to be done now in order to mitigate the anticipated downturn.

Intel’s corporate strategy of building the US$33 Atom CPU to complement the matured US$100 Core-2 or Duo Core CPU, months ahead of the expected cyclic slowdown in demand for PC’s and electronics products, is able to sustain the growth in a trying economy. Now we can see a lot of ATOM based mini notebook or netbook from all sorts of brands.

Toyota’s corporate strategy of providing affordable mid-range saloon, Camry, is definitely creating a nice niche market. Its small car market is doing very well too. Its high end Lexus is also doing well competing with other up-market cars.

Core competence and NPI

I have the opportunity to share my knowledge and experience with some of the multi-national corporations (MNC’s) and local enterprises on supply chain management for global as well as local operations. The good news is that some of the MNC’s are still forecast a less than average growth for 2009 in spite of the imminent global recession in the horizon. Almost all of them ride on their core competence and outsource the rest, as well as having new product introduction (NPI) as a strategy to maintain or surpass the current organic growth

Dell’s corporate strategy to sell the production facilities in order to outsource production is a testimony of the adoption of the emerging virtual corporation, in order to focus on the brand power. Dell is very much in line with HP, Apple, Sony, and other computer manufacturers. Foxconn and Hon Hai are the major beneficiaries for the PC, notebook and mobile phone contract manufacturing in China and Taiwan having an annual sales of US$80 billion or so.

Toyota has perfected the Toyota Production System that is being adopted as the fundamentals for Lean Manufacturing. While the big three automakers in the USA are waiting for the US$25 billion government bailout, Toyota continues to be profitable with the subtle philosophy of simplification and standardization. Toyota has a very effective mass customization strategy that leverage with powerful customer and supplier relationships to deliver high quality cars at affordable prices.

Changing corporate and supply chain strategies for competitiveness and survival

Some of the movers and shakers of global supply chain management are redefining the conceptual framework, corporate and supply chain strategies, as well as operations management. All of them are customer focus and demand driven in order to provide perfect on time and complete delivery performance to ensure total customer satisfaction.

Foxconn has emerged as a global leader in contract manufacturing by supporting the clients’ supply chain strategies of low cost, high quality and delivery reliability. Its ODM (Original Design Manufacturer) strategy is years ahead of the competitors. It has aligned the corporate and supply chain strategies effectively.

IT-enabled Supply Chain Management

Many of the corporate IT projects have gone awry and failed to be effective because of the fundamental flaws of not addressing the business process and people first prior to IT implementation. This cart before the horse approach has been proven to be the root cause to implementation failure throughout the world.

Education and training can save the corporation millions of dollars that can go into consulting, implementation and customization without any real benefits and results.

Once the management and staff are properly educated and trained to develop and refine business processes and practices. The processes can then be clearly mapped with simplification in mind, making the configuration of an ERP/SCM system will be much easier and less time consuming and costs.

Human capital development

In a turbulent economy and marketplace, it is strategic to develop the human capital so that the best employees can be retained to ensure continuity during the recovery and upturn. It is also the best time to improve on the current processes, fine tune the effectiveness, and perfecting the on-time and complete (OTC) performance.

The way ahead

It is time for the enterprise to sharpen the supply chain thinking and invest in the human capital to become more innovative and competitive to cope with the turbulent economy and marketplace.

Source: Cicie Chin

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