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Pharmaceutical Supply Chain Reinvention

15 Jan

Majority of pharmaceutical companies are persisting with decade old processes and routines.  They have transactional relationships with suppliers, lack of concerted efforts to progress ahead, and no vision to reap productivity rewards.  The reasons for continuing with these traditional practices include tax regimes, regulatory hurdles, and stable revenues from customers dependent on existing industry offerings.

Disruption—spurred by technological Innovation, fluctuating customer demand patterns, and more agile and creative competitors—has forced the pharmaceutical sector to think of ways to face these challenges, survive, and thrive.  One of the strategic response to this competitive disruption—by leading manufacturers—is to reexamine their manufacturing operations, embracing agile principles, reducing costs, revolutionizing procurement and distribution functions, and striving to achieve Operational Excellence.  Above all, they view their supply chain not as a cost center, but as a source of Competitive Advantage.

The increasing influence of generic drugs is another challenge for large multinational pharmaceuticals.  In the past, multinational companies (MNCs) dominated the market owing to possessing a number of high-market drugs protected under patents.  Patent protection afforded them the leverage to set high prices on each product.  The scenario is fast changing.  Expiry of high-market drugs patents is creating a huge opening for generic competitors and the space is widening compared to the past.

In the past, pharma manufacturers were able to counter the threat to generic competitors by developing new drugs.  However, this is becoming difficult and the new drugs pipeline is shrinking with time.  R&D expenditure has continuously gone up, however, drug approval from the authorities has not kept paced with it.  It has rather declined, straining the MNCs further.

Other disruptive factors include newer distribution methods, public health plans favoring generic drugs over proprietary ones due to cost effectiveness, the newer internet / mail delivery options displacing traditional pharmacy dispensing options.  Pharmacy chains—e.g. Walgreens—have given a leverage to the retailers to negotiate reduction in medicine prices where again generics have an edge over MNCs.

Moreover, the trend of drugs purchased through a formal tender process is increasingly gaining acceptance, adding to the difficulties of large pharma manufacturers.  Additionally, strict regulations are minimizing the cost benefits that MNCs traditionally enjoyed in the past.

All these factors have forced the pharma companies to reorganize their Supply Chains in a more flexible manner to manage complexities, bring in efficiency, and contain costs to compete in off-patent segment with generics.

Reorganization of a conventional pharmaceutical Supply Chain into an Agile, flexible, and inexpensive Supply Chain warrants developing Operational Excellence and Cost Reduction competencies.  This necessitates 5 strategic steps (phases):

  1. Avoid a one-size-fits-all approach to SCM
  2. Develop Agile product design and packaging capabilities
  3. Restructure the Supply Chain footprint
  4. Establish partnerships with 3rd party suppliers
  5. Enhance planning capabilities

Let’s discuss these steps in detail.

Step 1 – Avoid a One-size-fits-all Approach to SCM

Large pharma MNCs typically maintain the Supply Chain of all of their drugs with a single strategy of retaining high inventory and service levels.  Such a strategy can only work for products having a high profit margin, in a static environment.  It is not suitable for low-margin products, contrasting environments, and does not take into account fluctuations in demand patterns.  An appropriate approach is to implement a multiple Supply Chains model based on individual products and markets.

Step 2 – Develop Agile Product Design and Packaging Capabilities

The 2nd step in Pharma Supply Chain Reinvention involves quick distribution of different versions of products to markets based on demand. For low-margin products with high demand volatility, the Supply Chain Management Strategy should be to employ Pack-to-Order system.  The Pack-to-Order approach involves developing a version of a product that could be timely dispatched to several markets of varying demand across the globe.  This approach coupled with Postponement Strategy—where products are packed to order during later stages of production based on regional demand—assists in trimming down the inventory, reducing complicatedness, and enhancing Supply Chain nimbleness to demand volatility.

Interested in learning more about how to reinvent your Pharmaceutical Supply Chain?  You can download an editable PowerPoint on Pharmaceutical Supply Chain Reinvention here on the Flevy documents marketplace.

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“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

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– Roderick Cameron, Founding Partner at SGFE Ltd

3 Types of Capabilities-driven Mergers and Acquisitions

12 Jan

Editor’s Note:  If you are interested in becoming an expert on Post-merger Integration (PMI), take a look at Flevy’s Post-merger Integration (PMI) Frameworks offering here.  This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts.  By learning and applying these concepts, you can stay ahead of the curve.  Full details here.

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Mergers and Acquisitions (M&A) generally do not produce the outstanding results that they are envisioned and purported to provide.  Some companies in certain industries, however, demonstrate consistent success when it comes to M&A.

A constant question across all industries, as far as M&As are concerned, pertains to the factors that differentiate organizations with successful histories.  The magic ingredient in the success of these companies is their Corporate Strategy that utilizes Capabilities as the source for inorganic Growth.  Capabilities-driven M&A have managed to raise shareholder value for the acquirer despite the tough years since the economic crisis of the 2000s.  The majority of other inorganic Growth attempts produced a loss of value.

Companies employing the Capabilities-driven Strategy were recompensed with deals that had a Compound Annual Growth Rate (CAGR) average of 12 percentage points greater in shareholder return compared to M&A deals by other acquirers in that very industry and region.

Particular industries, for instance Information Technology and Retail, demonstrated a bigger effect. However, all industries displayed a steady, noticeable, Capabilities Premium in M&A.  Capabilities-driven Strategy is exceptionally beneficial in M&A transactions where, frequently, time window is narrow and the risks elevated.

Capabilities Systems are defined as 3 to 6 reciprocally strengthening, distinguished Capabilities that are structured to hold up and drive Organizational Strategy, integrating people, processes, and technologies to create something of value for customers.

Setting apart likely M&A success factors is accomplished more easily by separating successful deals by their declared Intent consequently, capturing the dominant view regarding purpose of each deal.

Intent can be classified into 5 categories: Capability Access Deals, Product and Category Adjacency DealsGeographic Adjacency Deals, Consolidation Deals, and Diversification Deals.

There is a lot of talk about Fit during M&A discussions.  Fit does not mean introducing an ostensibly linked product or service, plugging a gap in a category, or moving in a new geography—such sorts of acquisitions are frequently unsuccessful.

Fit relates to unity, the benefit that ensues when Capabilities of a company fit mutually into a system, lining up to its market position, and employed to its complete array of products and services.

Deals when cross-categorized by their Capabilities System Fit, fall into following 3 categories:

  1. Enhancement Deals
  2. Leverage Deals
  3. Limited-Fit Deals

Let us delve a little deeper into the 3 categories.

Enhancement Deals

Enhancement deals enable the acquiring company to include new Capabilities so as to close gaps in its present Capabilities System or counter an alteration in its market.

Nearly 2/3rd of the deals studied—in a 2011 study spanning 8 sectors—used Capabilities to good effect, either by way of Enhancement or Leverage.

Leverage Deals

Leverage deals are where the acquirer makes use of prevailing Capabilities System in their company to handle incoming products and services, customarily augmenting the acquired company’s performance.

Leverage deal are frequently low-risk deals that may not require the acquirer to alter anything concerning its inhouse Capabilities System to make it work.

Limited Fit Deals

Limited-fit deals are deals where the purchasing company generally ignores Capabilities.  Normally such deals provide a purchaser with product or service that need new Capabilities.

Interested in learning more about Capabilities-driven M&A?  You can download an editable PowerPoint on Capabilities-driven M&A here on the Flevy documents marketplace

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M&A is an extremely common strategy for growth.  M&A transactions always look great on paper.  This is why the buyer typically pays a 10-35% premium over the of the target company’s market value. 

However, when it comes time for the Post-merger Integration (PMI), are we really able to capture the expected value?  Studies show only 20% of organizations capture projected revenue synergies and only 40% capture cost synergies.  Not to mention, the PMI process is typically very painful, drawn out, and politically charged, often resulting in the loss of key personnel.

Learn about our Post-merger Integration (PMI) Best Practice Frameworks here.

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You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

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– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

4-Phase Customer-centric Segmentation

11 Jan

Editor’s Note:  If you are interested in becoming an expert on Strategy Development, take a look at Flevy’s Strategy Development Frameworks offering here.  This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts.  By learning and applying these concepts, you can stay ahead of the curve.  Full details here.

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Rising competition and introduction of new ways of capturing large amounts of customer data has necessitated advancement in capabilities of organizations to foresee and fulfill customer needs and wants.

Ever more B2C concerns are going all-out to Design Customer-centric organizations.  Organizations pursuing Customer-centricity depend on some type of Market Segmentation.  Market Segmentations assist in understanding the customer more intimately.

This understanding has to be based on solid data.  Even though the collection of customer data is at its highest of all time, organizations are still finding it difficult to apply the insights being offered by Customer Segmentation to propel Change and enhance Performance.  This is the Customer Data Paradox.  With more customer data, it has ironically become more difficult to derive useful insights from the data.

Data-driven enterprises are sensing that their Segmentation endeavors have been unable to provide anything near the extent of benefit they should.  Cause for such failure is development of Segmentations founded on contradictory Business Purpose; purposes that are not widely comprehended or communicated or cannot be immediately acted upon.

Segmentation is indispensable to the process of dealing with the intricacies of constantly evolving and dividing customer clusters and their diverse demands.  Need for developing a company-wide Operating Model that is able to transform this extensive data into valuable information so as to enable improved Go-to-Market decisions is essential.

This intricate Segmentation process can be handled more effectively by following the 4-phase approach to Customer-centric Segmentation:

  1. Delineate Purpose
  2. Plan around Purpose
  3. Functionalize Segmentation
  4. Control Implementation

Segmentation offers clarity and insights regarding customer behavior, tendencies, and proclivities.

Customer Segmentation also amplifies the chances of effectiveness of Marketing and Customer Experience management campaigns, and impelling Brand Positioning and Product Development.

Let us look at the 4 phases in detail.

Delineate Purpose

Clearly defining and understanding the Purpose of Segmentation is necessary to set the base for the type of Segmentation effort that is required to be undertaken—i.e., Strategic or Tactical or both.

Strategic Segmentation is applied for all-embracing, enterprise-wide purposes.  Tactical Segmentation is adopted for a far more precise purpose.

Goal is to guarantee that Segmentation results in distinct processes and actions that augment Performance.

Plan around Purpose

Segmentation research needs to be meticulously planned to manifest the Purpose decided, and to make certain that the outcomes are insightful, practicable, and discernable.

Segmentation research has to encompass several dimensions such as behaviors, outlooks, demographics, channel use, inclinations, and profitability.

Functionalize Segmentation

This phase involves determining changes that will take place in the decision processes and communicating them to the concerned business partners so as to deliberate on and devise adjusted metrics that reflect the new capabilities.

Control Implementation

Means for administering change—directed and customized communications arranged to stimulate understanding, interaction, and approval—are required to be utilized completely.

Interested in learning more about Customer-centric Segmentation?  You can download an editable PowerPoint on Customer-centric Segmentation here on the Flevy documents marketplace

Want to Achieve Excellence in Strategy Development?

Gain the knowledge and develop the expertise to become an expert in Strategy Development.  Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.

“Strategy without Tactics is the slowest route to victory.  Tactics without Strategy is the noise before defeat.” – Sun Tzu 

For effective Strategy Development and Strategic Planning, we must master both Strategy and Tactics.  Our frameworks cover all phases of Strategy, from Strategy Design and Formulation to Strategy Deployment and Execution; as well as all levels of Strategy, from Corporate Strategy to Business Strategy to “Tactical” Strategy.  Many of these methodologies are authored by global strategy consulting firms and have been successfully implemented at their Fortune 100 client organizations. 

These frameworks include Porter’s Five Forces, BCG Growth-Share Matrix, Greiner’s Growth Model, Capabilities-driven Strategy (CDS), Business Model Innovation (BMI), Value Chain Analysis (VCA), Endgame Niche Strategies, Value Patterns, Integrated Strategy Model for Value Creation, Scenario Planning, to name a few.

Learn about our Strategy Development Best Practice Frameworks here. 

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You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

10 Hidden Strategic Opportunities

25 Dec

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Potential opportunities always surround leaders.  It is up to them to pounce on those or regret overlooking them, when someone else takes advantage of them.

Leaders’ personal beliefs and assumptions often clash reality.  The trait is categorized as “confirmation bias” in Psychology, where individuals pick the data that supports their existing opinions and approaches and doubt information which defies their mindsets.  Leadership needs to develop themselves to the level to consider the slight hints of the opportunities surrounding them.

There are 10 hidden strategic opportunities that—exist in all businesses and geographies but—are often overlooked by the leadership due to personal biases.  These opportunities go unnoticed because they are often disguised in the form of anomalies and contradictions to leaders’ existing beliefs and assumptions.  It’s up to the leaders to control personal bias; explore anomalies; and develop capabilities to uncover and seize these 10 Hidden Strategic Opportunities before rivals do.

In this article, we will discuss the first 3 strategic opportunities.

Opportunity 1: Assuming a product already exists, but actually it doesn’t.

Most people assume that a certain product already exists.  Its only when an organization ventures into that segment—with a new value proposition—that people realize that there was a void there.  Such gaps are there in almost all industries, but only visionaries are able to recognize and capitalize on them—through innovation and creative product development.  A number of well-known inventions—e.g., tablet computers—were thought to have already existed, but actually didn’t.

For instance, Kate Brosnahan, accessories editor for Mademoiselle magazine, realized in the 1990s that the handbag market lacked stylish yet economical functional bags.  The market at the time was replete with expensive but impractical bags from top designers and functional bags deficient in style.  Kate left her job and founded Kate Spade LLC, with her partner Andy Spade.  Together they began creating fabric handbags which were practical as well as trendy.  Soon, their products started getting appreciation from customers, including media icons.

Opportunity 2: Customer Experience should be anything but strenuous, costly, or irritating (but most of the time it is).

Fragmented and delayed customer experience results in customer churn.  Annoyance caused by poor Customer Experience presents potential strategic opportunity to win customers by fixing it.  They are able to see the bigger picture and strive hard to relieve customers’ aggravation and offer exemplary Customer Experience.

For instance, creation of Netflix Inc. was the result of Reed Hastings having to pay a fine of $40 as late fee for a rented video cassette he had lost.  Leading organizations, such as Netflix, offer quality offerings and provide their customers seamless, quick, and pleasing experiences.

Opportunity 3. An item is often priced low only because not many people know about it.

Hidden merits of a location offers an opportunity for sharp people to invest in for future appreciation.  One of the reasons for inexpensive resources or items is the lack of their awareness and cognizance of their true potential among people.  When people recognize the potential of a property or resource, its price rises steeply.

Interested in learning more about the other hidden strategic opportunities?  You can download an editable PowerPoint on 10 Hidden Strategic Opportunities here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

3 Pillars of Business Globalization

17 Dec

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Early 2000s saw a change of mind regarding the Globalization of commerce by members of the political and economic arenas.  This change of mind was instigated by myths perpetuated against commerce Globalization because of the dichotomy that appeared between existing Operating Models of companies and needs of the emerging markets.

These perceived trade-offs that were myths included ideas like choosing between centrally-controlled Operating Model and local responsiveness model.

Proponents of the central model had the view that intellectual power and Innovation capability had to be centralized, all products and services brought in line everywhere, foregoing catering to diverse needs and demands of customers in every emerging market.

The converse view was that in order to have locally applicable distribution systems, proactive Supply Chains, and reduced costs of emerging-market management, it was necessary to devolve the company and operation as a loose federation.

This trade-off incompatibility was addressed by the Hub Strategy where, in place of a single center, companies set up principal office “hubs” in as many of the 20 gateway countries of the world as required—a global corporate structure with no headquarters.

These 20 gateway countries represent 70% of the world population and generate 80% of the world income.  The gateway countries include Australia, Canada, France, Germany, Italy, Japan, the Netherlands, Spain, the United Kingdom, and the United States from the developed economies.  Rest of the 10 are emerging markets of Brazil, China, India, Indonesia, Mexico, Russia, South Africa, South Korea, Thailand, and Turkey.

This new Business Model covers both the recognized advantages of developed markets and the possibilities of emerging economies.  A model that handles decentralization, centralization, existing practices, and possible disruptions not as trade-offs, but as complements.

It is, however, important to understand that for the model to have its full impact, 3 core pillars have to be integrated and pursued simultaneously.  The 3 Pillars of Globalization are:

  1. Customization
  2. Unity
  3. Arbitrage

Only business leadership that has taught itself and its teams to be very careful about where to customize, how to develop capabilities, and what to arbitrage are the ones reaping benefits from this model.

Let us delve a little deeper into the details of the 3-pillar Business Model.

Customization

Variation in needs, wants, and cultures of consumers makes it impossible to customize centrally.  Providing products and services in a locally competitive manner is therefore central to become a global enterprise.

Customization entails fulfilling the requirements and wants of varied consumers, in areas such as product or service features, affordability, and cultural alignment.  Hub Strategy provides the leverage to fulfill this demand by enabling companies to customize only in the 20 gateway countries.

Unity

Unity entails worldwide alignment of the company with, a unified central purpose, a body of exclusive first-rate knowledge, and capabilities that differentiate the company from all others.

Core purpose must be understood in the same manner by all functions of the company, in every geographical location.

Arbitrage

Arbitrage is a methodical initiative that consists of increasing effectiveness and Cost Reduction by discovering materials, manufacturing methods, logistics practices, funds sourcing, or infrastructure that are less expensive.

Interested in learning more about the 3 Pillars of Globalization and its Case examples?  You can download an editable PowerPoint on 3 Pillars of Globalization here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Digital Fabrication: Manufacturing Transformation

6 Dec

Editor’s Note:  If you are interested in becoming an expert on Supply Chain Management (SCM), take a look at Flevy’s Supply Chain Management (SCM) Frameworks offering here.  This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts.  By learning and applying these concepts, you can stay ahead of the curve. Full details here.

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The conventional Business Model for Manufacturing is in the process of Transformation.  Centralized production has given way to dispersed manufacturing that is customized.  Conventional operating practice at large-scale manufacturers is to keep the high-cost R&D distinct from the low-cost production.  Digital Fabrication is changing this operating practice.

More and more Digital Fabrication Tools are being developed and used every day which is laying the foundation for Digital Transformation revolution.  These tools are being used to develop customized end-products by small-scale manufacturers and in some cases single-person manufacturing concerns.  Digital Fabrication tools may be 1 of the following 2 types:

  1. Programmable Subtractive Tools—designed to carve shapes from raw materials. Examples of such tools include laser cutters, CNC routers and milling machines, plasma or water jet cutters.
  2. Additive Rapid Manufacturing Tools—which are predominantly computer-operated 3-D printers that chiefly construct objects layer by layer but may also be designed to use laser or electron beams.

The impact of the community of individuals dealing in Digital Fabrication tools in disrupting the conventional manufacturing model, is more than the tools themselves.  The community is, essentially, a self-established, worldwide Supply Chain, involving quite a few interconnected setups, user clusters, cybershopping sites, and social media environments.

The creators have fashioned open-source collaborations that leverage dropping costs of Digital Fabrication and current social media connectedness.  Distributed manufacturing networks allow customers to post job requests that can be taken up directly by fabricators.

In the fabricator-culture, individuals are supposed to make their plans and specifications public, usually under an open-source license, which permits anyone to replicate, adapt, and learn from the designs; always giving credit to the creators and common access to ideas.  Collaborators share information mutually, assist each other in progressing, and nothing is owned or controlled centrally.  Accessible repositories allow creators to trade plans and instructions, align production, and sell their designs and fabricated articles straight to the society.

Considered holistically, Digital Fabrication and information sharing is ushering in a broadening of the manufacturing environment.

Big manufacturers will have to undergo Business Transformation by adopting open-source innovation, adaptable production, and knowledge-intensive production lines in order to move towards Digital Manufacturing.  Large-scale manufacturers desirous of taking advantage of the Digital Fabrication Transformation will find the following 5 principles indispensable in transforming their operating practices:

  1. Cultivate Digital Capabilities.
  2. Establish a Hybrid Product Line.
  3. Embrace Open Innovation.
  4. Develop New Fabrication Materials.
  5. Prepare for Misuse and Infringement.

Digital Fabrication’s effect on manufacturing has been similar to that of the internet on information-centric solutions and services or like video content platforms’ effect on television networks.

Let us delve a little deeper into some of the principles.

Cultivate Digital Capabilities

Investing in technology that enables the business to make part of the product portfolio using printable composites, in a back room, will give it a Competitive Advantage.

Gaining Digital Fabrication skills and experience now will set the launch pad for leveraging when the time is right.

Establish a Hybrid Product Line

Start a product line that is mixed—with corresponding mass-production and individual-production articles.  New feature substitution, alteration in production line, or restarting production of old products can easily be achieved with Digital Fabrication tools, at a profit.

Certain commonly used products that are consumed in large quantities are better off produced on large scale.

Embrace Open Innovation

Offset reverse engineering and modification culture being driven by the ease of Digital Fabrication with Open Innovation.

Interested in learning more about Digital Fabrication Transformation?  You can download an editable PowerPoint on Digital Fabrication Transformation here on the Flevy documents marketplace.

Want to Achieve Excellence in Supply Chain Management (SCM)?

Gain the knowledge and develop the expertise to become an expert in Supply Chain Management (SCM).  Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts.  Click here for full details.

Supply Chain Management (SCM) is the design, planning, execution, control, and monitoring of Supply Chain activities.  It also captures the management of the flow of goods and services. 

In February of 2020, COVID-19 disrupted—and in many cases halted—global Supply Chains, revealing just how fragile they have become.  By April, many countries experienced declines of over 40% in domestic and international trade. 

COVID-19 has likewise changed how Supply Chain Executives approach and think about SCM.  In the pre-COVID-19 era of globalization, the objective was to be Lean and Cost-effective.  In the post-COVID-19 world, companies must now focus on making their Supply Chains Resilient, Agile, and Smart.  Additional trends include Digitization, Sustainability, and Manufacturing Reshoring.

Learn about our Supply Chain Management (SCM) Best Practice Frameworks here.

 Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Neuroscience of Change: 6 Core Principles

30 Nov

neuroscience change 2

Business Transformation initiatives are typically undertaken to solve a pressing issue, bring about improved performance, or to serve customers better.  A critical element of the success of such initiatives entails transforming the existing behaviors of the employees across the organization.  However, this isn’t a straightforward task.

Attitudes and practices get reinforced in people by following established routines day in and day out.  Such practices become a part of an Organizational Culture over time.  These ingrained behaviors and practices aren’t considered burdening until the organization’s performance keeps declining considerably over time.  That’s when the leaders think about changing these beliefs and habitual actions.

Psychology and Neuroscience can help enterprises change the deeply embedded attitudes and practices of people and replace those with new beliefs and practices.  Leading organizations are using psychology and brain research to induce successful Organizational Transformation.

The practices that these organizations employ to engender Transformation are based on the following 6 core Principles of Neuroscience:

  1. The brain is hardwired to hold on to habits, making it difficult to change them.
  2. Connections in the brain—even deeply embedded thoughts—are quite flexible to transform.
  3. Concentrating on new ways of thinking can overhaul individuals thinking habits.
  4. Don’t tell people what is wrong, just focus on drawing their attention to the positives.
  5. Encourage the ability to reject negative cerebral impulses.
  6. The competence to focus attention has to be created bit by bit.

Let’s dive deeper into these first 3 principles of Neuroscience.

Principle 1 – The brain is hardwired to hold on to habits, making it difficult to change them.

Our thinking patterns are stored in circuits by brain parts—including the habit center (basal ganglia), amygdala (emotion center), and hypothalamus (which manages hunger, thirst etc.).  These brain parts, especially the basal ganglia, process info unconsciously and the activity feels rewarding to the individual.  This activity makes stronger neuronal connections with other areas and gets the activity reinforced.

For the desired behaviors and practices to get embedded, the organization need to make stronger connections with the entire workforce’s’ basal ganglia to enable deep rooted neuronal circuits.  The practices ingrained this way are difficult to remove.

Principle 2 – Connections in the brain—even deeply embedded thoughts—are quite flexible to transform.

People with obsessive compulsive disorder keep deliberating on their impulse to wash hands to ensure cleanliness.  This fortifies brain circuits in the basal ganglia, which takes over their behaviors.  However, Neuroscience reveals that even the most well-established notions can be altered.  This can be done by making the individuals aware of what they are thinking and where their focus is in a given moment.

Training and directing people to think about their thoughts can make them conscious of their undesired behaviors, disengages brain areas notable for causing distraction, and adopt new behaviors.

Principle 3 – Concentrating on new ways of thinking can overhaul individuals thinking habits.

The 3rd principle highlights that persistent focus on unfamiliar, desired thoughts and objectives activates the habit center of the brain, which turns these desired thoughts into habits.  The mechanism according to Neuroscience is such that basal ganglia’s caudate nucleus region processes…

Interested in learning more about the other principles of Behavioral Transformation?  You can download an editable PowerPoint on 6 Core Principles of Neuroscience here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

7 Principles of Culture Change

25 Nov

org culture 1

Employee behaviors are critical for the success of Business Transformation endeavors.  However, transforming the ingrained behaviors and mindsets of the workforce isn’t straightforward, and when tackled cause the enterprise’s emotional state to go down.

Leaders need to identify the components of Culture that are in line with their Corporate Strategy.  They have to ascertain and harness the positive elements of culture that can drive the desired Transformation and suppress those that obstruct it.

For the desired Organizational Culture to sustain, leaders should work on gaining acceptance of the transformed behaviors.  Leaders who do not give culture its due importance risk ruining their strategic endeavors, as they lack the commitment required from the employees to achieve success.

The real question is why senior leaders fail to use the positive elements of Organizational Culture constructively in the first place.  The answer is simple; there are 4 common yet wrong assumptions—or myths—regarding culture change that are deeply established in most businesses that are anything but facts.  Paying heed to—and acting on—these 4 myths results in grave consequences:

  1. Culture is the root cause of all our failures
  2. Changing our Organizational Culture is beyond us, forget about it
  3. Let Human Resources deal with Organizational Culture
  4. Culture is the responsibility of top management

When senior executives devise a strategy to transform the deeply entrenched organizational culture—by putting in place new policies, practices, reward structures, and performance management systems—there is strong resistance that outplays the strategy.

This is primarily due to employees’ reservations and uncertainties regarding the impact of these changes on their work, colleagues, atmosphere, routines, family, and their enterprise’s reputation.  Transforming the Organizational Culture using the individual’s actions and conduct necessitates seeking assistance from 7 guiding principles:

  1. Be Practical
  2. Reinforce New Behaviors
  3. Seek Out Role Models
  4. Identify Cultural Carriers
  5. Leverage Existing Culture
  6. Be a Role Model
  7. Explain Impact of New Behavior

Application of these guiding principles facilitates in transpiring successful culture change.  Let’s dive deeper into a few of these guiding principles.

Be Practical

The first guiding principle to changing the culture involves starting rationally and pragmatically.  It is not feasible to strive to change every behavior at once.  Leaders need to concentrate on the behaviors most critical for the organization.   The ones that reverberate with the existing company culture and have a key role in improving the organizational performance.  This entails ascertaining groups of employees whose behaviors should be transformed immediately.  A clear demonstration of the requisite changes goes a long way in reinforcing the desired behaviors and culture in the organization.

Reinforce New Behaviors

The 2nd principle to changing culture involves emphasizing new behaviors.  The desired behaviors should be reinforced using formal and informal mechanisms.  Formal reinforcement mechanisms include metrics, processes, appraisals, salary reviews, training, and incentives to reward new behaviors.  These formal mechanisms allow people to practice new behaviors repetitively, until they begin to realize their value.  Informal reinforcement mechanisms include support networks and associations to nurture sensitivity and devotion needed to cope with uncertainties.

Seek out Role Models

Organizational Culture Transformation necessitates distinguishing role models to demonstrate the desired behaviors.  Culture change begins when change practitioners act by modeling the new behaviors.  These change practitioners are pride builders for an organization.  The examples set by these practitioners assist in inculcating pride in others about embracing the desired behaviors.  This action is referred to as “positive deviance” or constructive non-conformity.  These pride builders in turn identify and develop more exemplars.

Interested in learning more about the other guiding principles of culture change?  You can download an editable PowerPoint on 7 Guiding Principles of Culture Change here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Site Selection — 5Cs of Site Selection

22 Nov

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Site Selection is the practice of choosing a new facility location. It involves measuring the needs of a new project against the merits of potential locations. The practice became popular during the 20th century, as operations of many organizations expanded to new geographies on a national and international scale.

Selection of sites has been known to have taken place due to factors such as:

  • Best required skills being available in a particular city.
  • Setting up in an off-the-trail location because all operations will be managed remotely.
  • Following the trend to set up offices and facilities in a particular city because every company is doing so.
  • Factory facilities of the company being close-by.
  • Top boss living in the vicinity.
  • Person tasked with choosing the site liking the area for a particular feature such as restaurants and the like.

Making such significant long-term choices based on haphazard and indifferent reasons is a blunder.  The consequences of the mistake are exacerbated when such sites are being selected in emerging markets.

Site selection, in particular, for R&D, Design, and Engineering, warrants a more serious approach than is given to it.  Employing a formalized selection method aids in eliminating sentiment in the concluding decision.  The orderly selection procedure is also valuable in conveying the ultimate decision to all involved.  Selection criteria and their priority should be agreed to in advance for removal of any partiality from the Site Selection process.

Site Selection, especially when being done in emerging markets, has to be conducted while considering at least 5 factors—or the 5 Cs of Site Selection.  Companies ought to identify which among the 5 factors they deem significant and prioritize the factors accordingly:

  1. Cost
  2. Capacity
  3. Capability
  4. Communications
  5. Culture

Selecting a site in light of the set priority order, the company has to take into consideration the characteristics of the site in the present time as well as in 3 to 5 years.

Let us delve a little deeper into some of the factors.

Cost

Ideally, Cost Reduction should not be the only factor influencing site selection decisions.  If Cost factor is predominant in the decision, then the local standard of living and the changes there to, have to be taken into consideration.  Costs in setting up a site include items such as:

  • Buying or leasing land.
  • Office equipment costs.
  • Communication infrastructure and operations costs.
  • IT infrastructure costs.
  • Employee Training costs.

Companies basing their decisions exclusively on Cost factor rather than what suits their requirements end up paying more than estimated.

Capability

Capability is the ability of the site under consideration to provide the necessary infrastructure, resources, and the work/ operational environment required by the company.  Capability includes existence of exclusive skills and expertise that a company explicitly needs.

Also advantageous to capability are nearby R&D, design, testing, and prototyping centers setup by foreign and local companies.

Capacity

Capacity refers to the abundance of qualified skill available on the site under consideration.  Capacity comes into play when the company needs rapid scaling up of its operations.

Although the 5 Cs are of extreme significance, there is an additional factor that cannot be ignored—the Customer.  Recent advances in technology and communication have further empowered the Customer.  The result is that more organizations are seeking to focus on Customer-centric Design.

Interested in learning more about 5 Cs of Site Selection?  You can download an editable PowerPoint on 5 Cs of Site Selection here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Green Tourism Strategy: 3 Key Phases

15 Nov

Tourism Strategy2

Tourism is a key element in creating an impetus for financial growth across the globe.  The sector was providing jobs to around 260 million people and contributing to over 10% in global GDP, based on 2010 numbers.  These numbers will grow in future.

However, these financial benefits do not occur without costs that have the potential to destroy popular destinations and disrupt tourism.  Costs—or adverse effects—of travel involve:

  • Massive carbon footprints produced by air travel
  • Changes in the clean environments due to human footprint
  • Degradation—or obliteration—of ecology because of travel
  • Climate change happening across the world—e.g., unpredictable weather, mounting sea levels, or land turning into deserts.

Tourism Research by UK’s Devon County Council reveals that tourists were considerate of environment when booking their travel, and were willing to pay more for green tourist destinations.  Tour operators, in turn, now regularly rank destinations based on their green services and products, and demand higher green standards from tourist resorts.

However, still a large majority of resorts, hotels, and tourist destinations fall behind in terms of environmental sustainability, green standards, and services.  Some are only hinging on marketing tactics, glossy brochures, and eco-friendly language.  These destinations are only eyeing near-term gains, and are at a high risk for draining their resources, environmental degradation costing fortunes to repair, and losing a sizable potential customer base.

Tourist destinations are facing critical environmental issues—e.g. clean water, carbon emission, protection of biodiversity, and waste reduction / disposal.  These issues necessitate commitment from all stakeholders and having proper structures and systems—i.e. regulations, stakeholders’ education, funding, marketing, and public relations—to regulate and promote Sustainable Tourism.

Above all, confronting these issues demand a coherent, carefully-crafted Green Tourism Strategy.  The challenge to devising a Green Tourism strategy is the uniqueness of each destination—in terms of culture, ecology, resources.  Thus, each destination warrants a bespoke strategy encompassing 3 key phases:

  • Appraising Environmental Health
  • Plotting the Green Journey
  • Implementing the Green Strategy

Let’s take a closer look at the first 2 phases.

1. Appraising Environmental Health

The first step to devising a Green Tourism Strategy entails carrying out a thorough baseline analysis of the existing environmental health status of the tourist location, to outline its strengths and weaknesses.  This should encompass Benchmarking the site’s performance in comparison to global environmental best practices and defining what needs to be done in the near as well as long term (key initiatives), in the order of their importance for the destination.

2. Plotting the Green Journey

This phase entails defining the vision for Green Tourism and taking into account the objectives to realize that vision.  The vision enables the policymakers to plan and choose the measures to be taken to maintain the sustainability of the destination.  These measures fall into 2 categories:

  • Preventive measures—meant to inhibit or avert any damage to the surrounding ecosystem of the destination. These initiatives are aimed at finding and employing cost-effective solutions and technologies rather than using modern technologies.  These initiatives suit locations with limited funds.
  • Radical measures—meant for those destinations that are financially sound and want to maintain their status of being leaders in green tourism. These sites are always ready to adopt cutting-edge technologies to safeguard their eco-friendly status.

Interested in learning more about the key phases of Green Tourism Strategy?  You can download an editable PowerPoint on Green Tourism Strategy here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

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