PERSONAL SPECIAL ....The Courage to Change Before You Have To

The Courage to Change Before You Have To 

In January 2016, GE announced plans to move its headquarters from Fairfield, Conn., to Boston. The move to the Seaport District, the city’s innovation hub, is symbolic of the digital transformation the 123-year-old company has undertaken.

Central to GE’s transformation plan is the decision to integrate its software unit, global IT and commercial software teams, and cybersecurity capabilities into a new digital business unit. GE’s goal is to make its industrial products “smart”: Connected to the company’s ecosystem of apps, these machines will communicate automatically when they need maintenance, thus eliminating downtime and lapses in productivity. With this move — arguably GE’s most ambitious undertaking since its Edison Engineering Development Program — the company is aiming to become the dominant player in the industrial Internet of Things.

GE is not the only company with an ambitious transformation agenda. GM, with its research in driverless cars and US$500 million investment in Lyft, is moving into the rapidly changing ride-sharing industry.

The companies understand that customer expectations are changing dramatically. GE sees that with machines getting smarter, customers are looking for greater productivity, while GM sees that with the advent of driverless cars and ride-sharing services, people are becoming more interested in transportation and less in car ownership.

In this sense, GE and GM resemble the visionary self-made billionaires my colleague Mitch Cohen and I analyzed for The Self-Made Billionaire Effect: How Extreme Producers Create Massive Value (Penguin, 2014). We interviewed 16 of them in person, including Jeffrey Lurie, film producer and owner of the Philadelphia Eagles; Glen Taylor, founder of Taylor Corporation, one of the largest printing and electronics companies in the U.S.; and Joe Mansueto, founder of Morningstar.

When asked how they came up with the ideas for their blockbuster products or services, nearly all of the billionaires said they knew what their customers were going to want long before the customers themselves. They had what we call “empathetic imagination”: They understood on a very practical level how technological, social, and market changes would affect customer needs, and they had the imagination to envision the products or services that would meet them.

This ability to predict the next big thing is characteristic of the most successful entrepreneurs, regardless of industry. Lurie, an avid sports fan, recognized in the early 1990s that with the advent of cable TV, football games were likely to become the next great TV entertainment. “Nobody really saw the fact that the NFL was producing hit television shows that were starting to dwarf anything that Hollywood was producing.... [With cable] the distribution of this was just beginning…. I felt there was going to be a significant paradigm shift.”

A similar story can be told about Taylor. While working at a local printing shop, he saw that wedding invitations were the company’s sole source of profit, and could be the source of a burgeoning business. Taylor asked his friends what they wanted in wedding stationery. “They said, ‘I want stationery that matches my dress.’ Or, ‘I want something pretty on it other than just two rings intertwined,’” he recalled. “So I went out and developed those products that the bride said she wanted.”

Mansueto likewise had an innate sense for what people would want. As a mutual fund investor in the early 1980s, he used to read the quarterly prospectuses published by investment firms. Poring over them one day, Mansueto realized it would be incredibly useful to have all the information about similar funds in one publication, along with a quick assessment that compared them. “Gee, this could be a business,” he thought.

The GE and GM senior executives taking their companies down new paths are also empathetically imaginative. They, however, face a challenge that the billionaires we studied weren’t up against. Whereas entrepreneurs like Lurie, Taylor, and Mansueto designed their businesses from scratch, established companies like GE and GM have to take an entrenched business model and transform it. That requires wholesale reinvention, which is one of the greatest business challenges there is.

It’s difficult not just because it requires major changes to practically every aspect of the organization — it also means placing a bet on customer preferences that are far from certain. And it means choosing to undertake an tremendously costly venture, before a crisis makes it necessary. In short, it takes courage, which I believe is the hallmark of great leadership.

What gives the GEs and GMs of the world the courage to reinvent themselves? The answer is complicated, but one thing is clear. They do it because they have a relative view of risk, like the entrepreneurs we analyzed. Case, Lurie, and Taylor all believed that what they stood to gain — an enormous untapped market — far outweighed what they stood to lose.

So, as you search for the next big opportunity, it’s worth asking not only what it is, but whether you have the courage to seize it.

John Sviokla

https://www.strategy-business.com/blog/The-Courage-to-Change-Before-You-Have-To

INTERVIEW SPECIAL ....The Surprising Ways You Ruined Your Interview Before You Even Opened Your Mouth

The Surprising Ways You Ruined Your Interview Before You Even Opened Your Mouth

First impressions aren’t always everything, but they can make or break your interview.

If there’s ever a time in our lives when everything we do will be scrutinized, it’s when we’re at a job interview.

With that in mind, many of us spend hours preparing what we’re going to say to wow the hiring manager. And while this part of the pre-interview process is extremely important (just make sure that you’re preparing the right way), you also want to make sure that you don’t neglect the nonspeaking part of the interview. After all, a bad first impression is extremely difficult to undo.

Here are some things that can ruin your chances at a job interview, even before you open your mouth:

YOUR HANDSHAKE

Sweaty palms, attempting a fist-bump, or trying the “shake and hug” on the hiring manager can all create unfavorable first impressions. According to a 2016 Harris Poll conducted on behalf of CareerBuilder, 22% of responders listed weak handshakes as the biggest body language deal-breaker. On the other hand, 9% listed “having a handshake that was too strong” as the biggest physical gesture mistake they saw.

A good handshake needs to be strong, but not so much that you almost crush the other person’s hand. And don’t hold the handshake for too long, as that would just be awkward.

NOT MAKING EYE CONTACT

The same CareerBuilder survey also saw 67% of responders listing lack of eye contact as one of the main factors that ruined an interviewee’s chances. Crystal Barnett, senior human resources specialist at HR services provider Insperity, told Fast Company that a failure to look someone in the eye could be interpreted as a lack of confidence.

In the case of group interviews, Barnett advised candidates to “initially maintain eye contact with the person who asked the question.

“In the course of responding, the candidate should also look at other interviewers to read their nonverbal cues and keep them engaged,” Barnett suggested.

ARRIVING EMPTY-HANDED

Have you ever been to an interview where the hiring manager asks for a copy of your resume and you have to embarrassingly say you don’t have it? It’s true that we live in a digital world, and your interviewer could probably easily pull it up on their phones or walk to their desk and hit “print.” But remember, at a job interview, it’s on you to make the case of why you’re the best for this job.

Bringing hard copies of your resume, portfolio, and copies of references can “show that you’re prepared to move forward with the job should an offer be forthcoming.”

WEARING INAPPROPRIATE CLOTHING

When you’re in a job interview, you want to make sure that you’re presenting the best version of yourself. That said, what you’re wearing should be reflective of the company culture. So while it’s always better to be overdressed than underdressed, you probably wouldn’t want to show up in a three-piece tailored suit if most of the office wears jeans and T-shirts. That may signal that you’re not a culture fit.

So pay attention to your industry, the company’s website, and the type of role you’re being interviewed for to figure out what the best version of you should look like. Surveys have shown that colors can convey meaning. Black, for example, signals strength and authority—meaning that it’ll probably be a good choice if you’re going for a management role, while purple suggests uniqueness and creativity—a great pick for those seeking jobs in the creative industry.

The one color that you should probably avoid? Orange. In one survey, 25% of employers indicated that it’s “the color most likely to be associated with someone who is unprofessional.”

BEING LAST IN LINE TO INTERVIEW

Unfortunately, being the last candidate on the hiring manager’s interview list can have a negative impact. It’s one of those subconscious biases that humans have, particularly if the candidates before you were all good candidates. You might be as qualified and talented, or in some cases, even better, but the hiring manager is more likely to think critically of you if you’re one of the last ones to be interviewed.

BEING TOO LATE OR TOO EARLY

Arriving after the time you are scheduled to meet is an established faux pas. Diane Domeyer, executive director of staffing agency The Creative Group, previously told Fast Company that “showing up even a few minutes late might signal to the hiring manager that you have little regard for his or her schedule.”

But being too early to your interview can send the wrong signals, too. Yes, showing up extremely early to steady your nerves may be useful to you, but it doesn’t always translate to an impressed hiring manager. They might have something already scheduled for that time slot and probably won’t appreciate the interruption. The sweet spot is 10 to 15 minutes early, no more, no less.

YOUR LINKEDIN PHOTO, TWITTER ACCOUNT, OR FACEBOOK POST

You should assume that when you submit a job application, prospective employers will conduct a background check on you, starting with your social media accounts.

And unfortunately, sometimes it’s not necessarily your unflattering spring break pictures from Cancún 10 years ago that tip the scale. It might be your heavily filtered LinkedIn photo, your explicitly political post, or your Twitter rants full of typos and grammatical mistakes. It might seem unfair, but it’s just part of the application process these days. Remember that when you make a post public on social media, it’s technically available for the whole world to see, including your prospective employers.

BY ANISA PURBASARI https://www.fastcompany.com/40410078/the-surprising-ways-you-ruined-your-interview-before-you-even-opened-your-mouth?utm_source=mailchimp&utm_medium=email&utm_campaign=fcdaily-top&position=6&partner=newsletter&campaign_date=04222017

DIGITAL SPECIAL..... Are you ignoring the most important digital playing field?

Are you ignoring the most important digital playing field?

By neglecting digital supply chains and ecosystems, companies risk irrelevance.

Apple. Google. Tencent. Alibaba. What do these companies have in common? Yes, they’re all fast-growing global behemoths closely watched and emulated by competitors. But they also share a key characteristic: Each created and leads an entire digital ecosystem.

These days, traditional companies preparing for a digital future focus mainly on how they market and distribute their products and services. That’s sensible. However, such initiatives no longer provide any competitive advantage; they’re merely the table stakes for staying in the game. The aspect that makes the biggest difference in successful digital reinvention is morphing from products to platforms, which means adapting supply chains and leveraging ecosystems.

However, incumbent companies have largely ignored this dimension to date, putting themselves at risk of missing key changes to their industries. This finding, along with others I discussed in two earlier posts, comes from a major research effort my McKinsey colleagues and I undertook to study the progress and implications of digitization’s spread. We found that for incumbents standing still, digital disruption exacts a dramatic cost, reducing revenue growth almost in half, on average, and shaving a third off earnings. We also identified two strategic approaches that put companies on the best footing for addressing digital change.

Digitization of supply chains has a more powerful impact on performance than any other digital initiative. In fact, this dimension of digitization accounts for up to two-thirds of the impact on incumbents’ revenue growth, and more than 75% of the impact on their profit growth. The reason is that a fully digital supply chain often involves the creation of a new ecosystem, which opens the door to a fundamental re-shuffle of how value is distributed among industry players. This, in turn, affects incumbents’ ability to sustain their revenue and profit models.

Think of how new technology, and the resulting digital ecosystem, restructured the music industry’s traditional supply chain. Digital music providers have allowed consumers to “unbundle” albums that were the major source of record companies’ revenues, and search and recommendation tools have shifted power away from record labels’ marketing efforts. Record companies no longer control the music supply chain, nor do retailers control distribution.

 A digital-strategy framework

Another example is the impact of advanced robotics and sensors on the retail supply chain. With RFID, retailers can easily track and anticipate stock needs, helping them optimize inventory. Robotics, meanwhile, can double productivity per square meter through more efficient stock organization. As a result, stocking efficiency has become a key differentiator for retailers that adopt these supply-chain technologies.

The ecosystem effect

Digital attackers often combine a digital supply-chain play with a platform-based business model. As my colleagues pointed out in a recent article, companies like Tencent, and Google are blurring traditional industry definitions by spanning product categories and customer segments. “Owners of such hyperscale platforms enjoy massive operating leverage from process automation, algorithms, and network effects created by the interactions of hundreds of millions, billions, or more users, customers, and devices,” they write.

Such platforms have the power to radically alter the value chain, and their numbers are growing. A recent global survey examining the rise of platform-based businesses shows that pure digital players have already created close to 180 such ecosystems, but only a few incumbents — Johnson Controls, Daimler, India’s Apollo Hospitals, Samsung and GE among them — have reacted by building sizeable ones of their own.

Our research confirms these findings: Barely one in eight of the digital plays incumbents have initiated focus on creating a platform-based business. Of course, some industries are more progressive on this front than others, with telecom and high-tech twice as likely as banks, for example, to launch a digital platform.

Why haven’t more incumbents tried to preempt such attacks? I think there are three main reasons.

1. Launching a digital platform requires a willingness to disrupt your industry, and your own business. To date, only 10% of companies have dared to take that route; the majority fear self-cannibalization and the loss of their current dominant position — even though this position may prove short-lived as digitization advances.

2. Moving into the platform game is hard for companies with legacy IT investments. Building a digital platform requires an agile and scalable IT architecture — something for which most few incumbents prepared in their past technology investments.

3. The platform game requires an allo-centric rather than ego-centric approach. When investing in a new industry ecosystem, the primary focus should be on growing that ecosystem’s total value. That’s not a natural mindset for traditional companies. Most incumbents worry mainly about their own share of the pie, not about growing the pie for everyone. This is a strategic mistake, as I argued in a 2015 article in the Journal of Digital & Social Media Marketing. The best way to ensure a high share of the digital ecosystem is to both shape it and distribute value fairly in the network, which helps ensure that others adopt the platform and make it sustainable.

Nokia learned this lesson the hard way. It was an ecosystem pioneer when it created a platform for developing mobile applications for the Symbian operating system. However, when it acquired 49% of the OS, it focused on vertically integrating the system and started to reduce its technology and commercial support to the broader network. Many players felt the ecosystem no longer offered them fair value, and moved to other mobile platforms, hastening Nokia’s mobile-phone downfall.

So, what does our research — and my three posts — ultimately add up to? The incumbents that succeed in the digital future are those that cultivate organizational agility, an ecosystem mindset and willingness to self-disrupt. These ingredients will encourage them to engage in offensive strategies rather than just defensively reacting to incursions from digital newcomers, and to experiment with the more radical business models needed to thrive in the digital future

http://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-strategy-and-corporate-finance-blog/are-you-ignoring-the-most-important-digital-playing-field?cid=reinventing-eml-alt-mip-mck-oth-1704&hlkid=5c4be983b33d4358b370ac9447c65c9f&hctky=1627601&hdpid=08fcf9d6-8466-444c-bd58-8609402719b9

SUPPLY CHAIN MANAGEMENT.... Supply Chain 4.0 in consumer goods

Supply Chain 4.0 in consumer goods

In Supply Chain 4.0, supply-chain management applies Industry 4.0 innovations—the Internet of Things, advanced robotics, analytics, and big data—to jump-start performance, and customer satisfaction.

Over the last 30 years, supply chain has undergone a tremendous change. What was once a purely operational logistics function that reported to sales or manufacturing and focused on ensuring supply of production lines and delivery to customers has become an independent supply-chain management function that in some companies is already being led by a CSO—a chief supply-chain officer. The focus of the supply-chain management function has shifted to advanced planning processes, such as analytical demand planning or integrated sales and operations planning (S&OP), which have become established business processes in many companies, while operational logistics has often been outsourced to third-party logistics providers. The supply-chain function ensures that operations are well-integrated, from suppliers through to customers, with decisions on cost, inventory, and customer service made from an end-to-end perspective rather than by each function in isolation.

Digitization creates a disruption and requires companies to rethink the way they design their supply chain. At the same time, customer expectations are growing: recent online trends have led to growing service expectations combined with much more detailed orders. Also, a definite trend toward further individualization and customization is driving strong growth of and constant changes in the SKU portfolio. The online-enabled transparency and easy access to a multitude of options regarding where to shop and what to buy drive the competition of supply chains.

To build on these trends, cope with changed requirements, and enable a wide range of new technologies, supply chains need to become much faster and much more precise.

Vision of the future state

The digitization of the supply chain enables companies to address the new requirements of customers, the challenges on the supply side, and the remaining expectations in efficiency improvement. Digitization leads to a Supply Chain 4.0, which becomes …

·         … faster. New approaches to product distribution can reduce the delivery time of fast runners to few hours. How? Advanced forecasting approaches, such as predictive analytics of internal data (e.g., demand) and external data (e.g., market trends, weather, school vacation, construction indices), when combined with machine-status data for spare-parts demand, provide a much more precise forecast of customer demand. What once were monthly forecasts instead become weekly—and, for the very fastest-moving products, daily. In the future, we will even see “predictive shipping,” for which Amazon holds a patent: Products are shipped before the customer places an order. The customer order is later matched with a shipment that is already in the logistics network, and the shipment is rerouted to the exact customer destination.

·         … more flexible. Supply Chain 4.0’s ad hoc, real-time planning allows companies to respond flexibly to changes in demand or supply, minimizing planning cycles and frozen periods. Planning becomes a continuous process that is able to react dynamically to changing requirements or constraints (e.g., real-time production-capacity feedback from machines). Even after products are sent, agile delivery processes let customers reroute shipments to the most convenient destination.

New business models increase the supply-chain organization’s flexibility. Rather than maintaining resources and capabilities in-house, companies can buy individual supply-chain functions as a service on a by-usage basis. Service providers’ greater specialization creates economies of scale and scope, increasing the potential for attractive outsourcing opportunities.

An “Uberization” of transport—crowdsourced, flexible transport capacity—will significantly increase agility in distribution networks as well. Manufacturers may therefore see new direct-to-consumer opportunities in what once was a playing field only for retailers.

·         … more granular. With customers looking for more and more individualization in the products they buy, companies must manage demand at a much more granular level, through techniques such as microsegmentation, mass customization, and more-sophisticated scheduling practices. Innovative distribution concepts, including drone delivery, will allow companies to manage the last mile more efficiently for single-piece and high-value, dense packages—fulfilling customers’ customization needs while delivering their orders even faster than is possible today with mass-market, standard products.

·         … more accurate. Next-generation performance management systems provide real-time, end-to-end transparency throughout the supply chain. The span of information reaches from synthesized top-level key performance indicators, such as overall service level, to very granular process data, such as the exact position of trucks in the network. The integration of that data from suppliers, service providers, and others in a “supply chain cloud” ensures that all stakeholders in the supply chain steer and decide based on the same facts.

In digital performance-management systems, clean-sheet models for warehousing, transport, or inventory set targets automatically. To keep performance-management aspirations in focus even if supply-chain disruptions occur, the systems will automatically adjust targets that can no longer be achieved to more realistic aspiration levels.

We will see performance-management systems that “learn” to automatically identify risks or exceptions, and that change supply-chain variables to mitigate harm. These capabilities enable the automatic performance-management control tower to handle a broad spectrum of exceptions without human involvement, engaging human planners only for disruptive, unplanned events. The resulting continuous-improvement cycle will push the supply chains closer to its efficient frontier.

·         … more efficient. The automation of both physical tasks and planning boosts supply-chain efficiency. Robots handle the material (pallets or boxes as well as single pieces), completely automatically the warehouse process from receiving/unloading, to putting away, to picking, packing, and shipping. Autonomous trucks transport the products within the network.

To optimize truck utilization and increase transport flexibility, companies share capacity through cross-company transport optimization. The network setup itself is continuously optimized to ensure an optimal fit to business requirements.

To create an ideal workload in the supply chain, the system leverages the high degree of transparency and dynamic planning approaches to drive advanced demand-shaping activities, such as special offers for delivery time slots with low truck utilization.

Increasing operational efficiency by leveraging Supply Chain 4.0

Supply Chain 4.0 will affect all areas of supply-chain management. In the end, the improvements enable a step change in service, cost, capital, and agility.

Planning

Supply-chain planning will benefit tremendously from big data and advanced analytics, as well as from the automation of knowledge work. A few major consumer-goods players are already using predictive analytics in demand planning to analyze hundreds to thousands of internal and external demand-influencing variables (e.g., weather, trends from social networks, sensor data), using machine-learning approaches to model complex relationships and derive an accurate demand plan. Forecasting errors often fall by 30 to 50 percent.

Heavily automated, fully integrated demand and supply planning breaks traditional boundaries between the different planning steps and transforms planning into a flexible, continuous process. Instead of using fixed safety stocks, each replenishment-planning exercise reconsiders the expected demand probability distribution. Consequently, the implicit safety stocks are different with every single reorder. Prices can then be dynamically adapted to optimize profit and minimize inventories at the same time.

In the consumer-goods industry, several of the most prominent global conglomerates are leveraging advanced planning approaches, and a strong interest in broader application can be observed.

Physical flow

Logistics will take a huge step forward through better connectivity, advanced analytics, additive manufacturing, and advanced automation, upending traditional warehousing and inventory-management strategies. Easy-to-use interfaces such as wearables already enable location-based instructions to workers, guiding picking processes. Advanced robotics and exoskeletons could have equally dramatic effects on human productivity in warehouses.

Autonomous and smart vehicles will lead to significant operating-cost reduction in transportation and product handling, while at the same time reducing lead times and environmental costs. Linking warehouses to production loading points may even enable entire processes to be carried out with only minimal manual intervention. Finally, as production facilities start to rely more on 3-D printing, the role of the warehouse may change fundamentally.

Performance management

Performance management also is changing tremendously, with several major food companies taking a lead in making detailed, continually updated, easily customizable dashboards available throughout their organizations. Gone are the days when generating dashboards was a major task and performance indicators were available only at aggregated levels. Instead, performance management is becoming a truly operational process geared to real-time exception handling and continuous improvement, rather than a retrospective exercise on a monthly or quarterly basis.

Using data-mining and machine-learning techniques, this type of revamped performance-management system can identify an exception’s root causes by comparing it with a predefined set of underlying indicators or by conducting big data analyses. The system can then automatically trigger countermeasures, such as by activating a replenishment order or changing safety-stock or other parameter settings in the planning systems.

Order management

Order management is improved through a pair of measures: no-touch order processing integrates the ordering system to the available-to-promise (ATP) process, and real-time replanning enables order-date confirmations through instantaneous, in-memory rebuilding of the production schedule and replenishment needs in consideration of all constraints. The net result is reduced costs (via increased automation), improved reliability (via granular feedback), and better customer experience (via immediate and reliable responses).

Collaboration

The supply-chain cloud forms the next level of collaboration in the supply chain. Supply-chain clouds are joint supply-chain platforms between customers, the company, and suppliers, providing a shared logistics infrastructure or even joint planning solutions. Especially in noncompetitive relationships, partners can decide to tackle supply-chain tasks together to save administrative costs and learn from each other.

One leading consumer conglomerate has already found that collaboration along the value chain allows for much lower inventories through an exchange of reliable planning data. It also slashes lead times, thanks to instantaneous information provision throughout the entire chain, while providing an early-warning system and the ability to react fast to disruptions anywhere.

Supply-chain strategy

Following the need for further individualization and customization of the supply chain, supply-chain setups adopt many more segments. To excel in this setting, supply chains need to master microsegmentation. A dynamic, big data approach allows for the mass customization of supply-chain offerings by separating the supply chain into hundreds of individual supply-chain segments, each based on customer requirements and the company’s own capabilities. Tailored products provide optimal value for the customer and help minimize costs and inventory in the supply chain.

Impact of Supply Chain 4.0

Eliminating today’s digital waste and adopting new technologies together form a major lever to increase the operational effectiveness of supply chains. The potential impact of Supply Chain 4.0 in the next two to three years is huge. Expectations include up to 30 percent lower operational costs, 75 percent fewer lost sales, and a decrease in inventories of up to 75 percent. At the same time, the agility of the supply chains should increase significantly.

How did we calculate these numbers? They are based on our experience with numerous studies and quantitative calculations. The three performance indicators are highly correlated; for example, an improved inventory profile will lead to improved service level and lower cost.

·         Supply-chain service/lost sales. When customer service is poor, the driver is either a wrong promise to the customer (e.g., unrealistic lead times), a wrong inventory profile (ordered products are not available), and/or an unreliable delivery of parts. Lost sales in addition occur if the required products are not available on the shelf or in the system; customers will decide to switch to another brand. This is true for both B2C and B2B environments.

Service level will increase dramatically when the supply chain significantly improves interactions with the customer, leverages all available point-of-sale data and market intelligence, improves the forecast quality significantly (up to more than 90 percent in the relevant level, e.g., SKU), and applies methods of demand shaping in combination with demand sensing to account for systematic changes and trends. With the resulting service improvement, lost sales will decrease significantly.

·         Supply-chain costs. Driven by transportation, warehouse, and the setup of the overall network, the costs can be reduced by up to 30 percent. Roughly 50 percent of this improvement can be reached by applying advanced methods to calculate the clean-sheet costs (bottom-up calculation of the “true” costs of the service) of transport and warehousing and by optimizing the network. The goal should always be to have minimal touch points and minimal kilometers driven while still meeting the required service level of the customer. In combination with smart automation and productivity improvement in warehousing, onboard units in transportation, etc., these efforts can achieve the savings potential.

The remaining 15 percent cost reduction can be reached by leveraging approaches of dynamic routing, Uberization of transport, use of autonomous vehicles, and—where possible—3-D printing.

·         Supply-chain planning. The planning tasks such as demand planning, preparation of S&OP process, aggregated production planning, and supply planning are often time intensive and conducted mainly manually. With advanced system support, 80 to 90 percent of all planning tasks can be automated and still ensure better quality compared with tasks conducted manually. The S&OP process will move to a weekly rhythm, and the decision process will be built on scenarios that can be updated in real time. This combination of accuracy, granularity, and speed has implications for the other elements, such as service, supply-chain costs, and inventory. Systems will be able to detect the exception where a planner needs to jump in to decide.

·         Inventory. Inventory is used to decouple demand and supply, to buffer variability in demand and supply. Implementing new planning algorithms will significantly reduce the uncertainty (the standard deviation of the demand/supply or forecast error), making safety stock unnecessary. The other important variable to drive inventory is the replenishment lead time: with more production of lot size 1 and fast changeovers, the lead time will be reduced significantly. Also, long transport time—say, from Asia to the European Union or the United States—will be reduced, due to a significant increase in local-for-local production. In addition, 3-D printing will reduce the required inventory. We would expect an overall inventory reduction of 50 to 80 percent.

Transformation into a digital supply chain

The transformation into a digital supply chain requires three key enablers: a clear definition, new capabilities, and a supportive environment. Defining the digital supply chain starts with an understanding of the current operation’s digital waste. Capabilities regarding digitization then need to be built; typically they require targeted recruiting of specialist profiles. The final prerequisite is the implementation of a two-speed architecture/organization. This means that the establishment of the organization and IT landscape must be accompanied by creation of an innovation environment with a start-up culture.

This “incubator” needs to provide a high degree of organizational freedom and flexibility as well as state-of-the-art IT systems (two-speed architecture independent of existing legacy systems) to enable rapid cycles of development, testing, and implementation of solutions. Fast realization of pilots is essential to get immediate business feedback on suitability and impact of the solutions, to create excitement and trust in innovations (e.g., new planning algorithms), and to steer next development cycles. The incubator is the seed of Supply Chain 4.0 in the organization—fast, flexible, and efficient

By Knut Alicke, Daniel Rexhausen, and Andreas Seyfert

FOR EXHIBITS SEE http://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/supply-chain-4-0-in-consumer-goods?cid=other-eml-alt-mip-mck-oth-1704&hlkid=02e6c1a30c6142d986c2e234830165df&hctky=1627601&hdpid=897d4318-f48e-414c-bb29-4eba5015ac91

CAREER / HOBBY SPECIAL ........How your hobby can be a lucrative career option

How your hobby can be a lucrative career option



To convert a passion into a money-making venture, one must invest in acquiring skills and experience.

Can you turn your hobby into your profession? Farhan Qureshi, one of the 3 idiots, thought so and gave up engineering to become a wildlife photographer. In real life, Delhibased Ashish Massey dropped out of engineering college to pursue his love for cooking at the Institute of Hotel Management in Lucknow. Today, the 31-year-old chef is the proud owner of three restaurants.

However, the road to living your passion can be tricky. Your hobby may keep you engrossed for hours, but it may not earn you big bucks. As author, educator and entrepreneur Shiv Khera says, “Converting a passion into a commercial venture takes a lot more than spirit alone.“ To turn your hobby into a money-making venture, you need to be skilled. For that you have to train yourself before you can succeed.

Learn and explore

One way of gathering valuable hands-on experience is to work in a related field before striking out on your own like Mumbai-based travel consultant and blogger Rutavi Mehta, 30. After completing a course in hotel management, Mehta worked in the sales and marketing department of a five-star hotel in Mumbai before venturing into full-time travel blogging. Today she travels the world and shares her experiences on her blog. She is also a consultant for tourism boards and hotels. Mehta recognised the need for experience early on. And the time she spent with the hotel also gave her the opportunity to explore various options in the travel sector.

If working for others does not appeal, start out small. Shiamak Davar, dancer and choreographer, says, “Test the water with a pilot enterprise while you continue in your existing profession. If your passion enterprise does start churning out the desired results and has scalability, you can then decide to make the switch.“

Opting for courses that complement your hobby is a good idea. The course will not only enhance your knowledge but also introduce you to other aspects of the subject. For instance, Massey not only studied hotel management, but also followed it up with a stint in the industry to gain experience. It was only after that did he feel confident enough to open his own restaurant.

Find a mentor

Seek out professionals. A great way of learning the ropes is by working with an established name in your field of interest. Vikrant Pande, Provost, TeamLease Skills University, says, “Take out time to pursue your hobby with professional help and see if it can become a career. Work as an assistant to an expert and analyse opportunities while working in the field.“ That was the route childhood friends and music composers Rohan Utpat, 30 and Vinayak Salvi, 31 took before they founded Rohan Vinayak Music Production LLP in 2010. Utpat had been playing the tabla since he was 11 and Salvi picked up the guitar at 19. After graduation, the two worked at a knowledge process outsourcing firm to take care of expenses even as they kept their love for music alive by playing at live gigs in their free time. “We realised it was important to assist some expert in the field and learn about the music industry on-the-job. So, we quit our jobs and began assisting a composer friend in his music assignments.“ That stint opened their eyes to the immense opportunities that existed for composers in advertising, tele-serials and radio.

The two have so far composed the score for several television shows, films and commercials. “Seven years ago we didn't know that so many opportunities existed. We found the right mentor and it paid off,“ says Salvi.

Create a niche

Before setting up shop, figure out who your prospective customers could be. To market yourself better, offer something different but of value at the same time. Says Khera, “Know your target customers. How much will they pay for your service? Develop your special style or skills to create a niche identity.“

Pune resident Nupur Shikhare, 31, had always been a fitness freak and it was but natural that he would want to build a career around his passion. However, when fitness instructors are a dime a dozen, Shikhare knew he had to offer something different to attract interest. He trained himself in a variety of fitness disciplines and in 2009 set up Fitnessim, where capoeira, an AfroBrazilian martial arts form, is taught. A consultant to beauty pageants, Shikhare has kept up his learning. “I keep learning new things and keep improving on my form,“ he says.

Like Shikhare, Mumbai resident and yoga enthusiast Haresh Solanki, 29, always wanted to be a yoga trainer. He dropped out of college and landed a few temporary jobs, but never gave up learning yoga. To perfect his skill he did a few courses before starting out as a freelance trainer. He then developed yoga regimes for different kinds of sport like cycling and running, and today offers tailored exercise regimes for his clients.

Be ready to fail

Struggle, failure and setbacks are inevitable when you are trying to do something different. Says Davar, “You have to be very sure that you are good at what you want to do. It is important to evaluate your failures from time to time, learn from your mistakes and do a reality check. The hobby is yours and that should be your only driving force.“ When Massey first started as a chef, he failed miserably. The same thing happened when he opened his first restaurant. “I didn't lose hope. I didn't want to lose. I tweaked things and listened to suggestions and everything fell into place. Hard work and perseverance are the two pillars of success,“ he says today.

Arrange the money

If you think your hobby has the potential of being a viable business idea, get going on arranging finances to start off. Gurinder Singh Bhatti, CMD of recruitment consultancy services, ESS Global, says, “Get your project report ready with a clear vision of how you are going to scale up, the expenses involved and earnings. Then seek assistance from friends and relatives by giving them stake in the company.“ You could also approach a venture capitalist with your idea if it is innovative.

Those who are working can approach their employers for help.

HIRAL THANAWALA

ETM24APR17