| FUTUREWISE
- Guide to surviving the FUTURE for those managing logistics
Managing logistics through the downturn
The Future of Logistics Outsourcing
Business processing outsourcing, call centre, IT, offshore HR services, customer support, legal and accounting. Truth about outsourcing impact on emerging economies, US and Europe. Benefits and risks.
Presentation and Video on Future of Logistics, Distribution, Manufacturing, Wholesale and Distribution - Keynote for 700 clients of IBS. Video is 45 minutes long.
Many executives responsible for logistics are feeling battered and
bruised right now. Hit by one event after another, there’s
little time to regroup or reflect, and the top of a corporation
can be a lonely place. Profit warnings, share price pressures, mergers,
reorganisations, relocations, disposals, painful layoffs and great
geopolitical uncertainties can sweep away even the most comprehensive
logistics strategies – and that’s despite outstanding
management over many years.
These are exceptionally difficult times and it has never been more
important to connect logistics planning to executive board thinking
than now. It’s easy to lose sight of the bigger picture in
the rush to cut infrastructure cost and conserve cash. Hopefully
you succeed in protecting the business, satisfying shareholders and analysts, but what about capacity and flexibility, morale and
momentum?
To be a logistics winner in the next three years you need to use
the downturn to reshape for growth, propelled by an unshakeable
conviction that your mission is still important, that more prosperous
times lie ahead, and that in some way your company infrastructure
is helping to build a better kind of world. Your own passion for
running the race matters most of all in a downturn when people are
insecure, see only savage cost savings, and loyalty is tested.
Your corporation’s future will be dominated by six factors,
or faces of a cube, spelling F U T U R E. So if you are going to
cut, then cut carefully for healthy fresh growth.
SEE also: Next logistics technowave: 10 billion wireless barcodes and tagging devices - Walmart, Tesco and Pentagon race ahead
Fast: The world is changing faster than boards
can think, and far faster than logistics can respond. Gone are the
days when grand plans could be made with confidence for a post-merger
HQ. In today's economy you may be overtaken by further consolidation
and perhaps even by the entire reorganisation of the corporation.
We have to think differently. Survival means scenario planning as
far as possible before events happen, with rapid response plans,
making every logistics dollar count. Market research can’t
predict the future in a rapidly changing world – it just shows
what consumers and internal clients think. We need bifocal leadership:
clear short-range thinking and sharp action now to steer through
the downturn, as well as accurate vision and steady nerves to see
beyond.
Look out for the next big wave of techno-change which will profoundly
alter office and manufacturing requirements as well as client relationships – we are still in the first day of the digital age, and many
corporations are distracted by other pressures. Who’s watching
your radar screen? Where does your own team get fresh insights from?
Who’s bringing external perspectives to protect you from institutional
blindness? Who’s watching your own back? New technology is
dramatically speeding up back-end integration of incompatible IT
systems but this will continue to be an area of major concern and
should be at the centre of thinking about every new IT project.
Urban: Big demographic and social “lifestyle”
shifts will impact your logistics requirements in this new decade
with profound changes in working practices. Every aspect of life
is being transformed with fickle fashions, ageing but wealthy populations,
retired people inheriting trillions of dollars, aggressive war for
top talent, female consumer influence, designer biotech life, human
cloning, medical breakthroughs, virtual relationships and a host
of other factors, including the huge untapped challenge of megacity
markets in emerging economies. These society changes are fundamental
to the future shape of your business, in many ways indirectly because
they will alter how people think and feel. Soft factors may create
your greatest new business opportunities. But are your teams gearing
up to exploit them?
Tribal: Although the world is increasingly globalised,
tribalism is the most powerful force on earth, when a group of people
identify only with each other. It’s more powerful than nuclear
bombs, or the combined might of the US, Russian and Chinese military.
We see it around the world in 100s of tribal conflicts and tensions
and in recent events, fuelled by growing global inequality and anger
at perceived injustice. Attention will be focussed around the world
on these issues. Terrorism will continue, but will not win. Individuals
will respond by sacrificing personal liberties for increased security,
and by resolving that normal life must go on.
Yet tribalism is also a huge positive force. It’s the basis
of every family and every neighbourhood. Tribalism makes us proud
to be who we are, and gives us national identity. It also affects
us all through niche branding and product loyalty: every one of
your successful products creates a tribe and every successful organisation
is one. Tribalism is the secret of your strongest teams, corporate
character, people movements and product lines. The key to all successful
mergers and leadership is harnessing tribal culture.
Team leaders manage up to twelve others, but tribal leaders create
dynamic people movements of more than 100,000. Are you making tribalism
work for you, rebuilding group confidence and a sense of belonging
at a time of workforce reductions?
Are you paying enough attention to tribalism when
planning and running global operations? The current geopolitical
situation makes it even more important that all operations on the
ground are conducted with utmost sensitivity to local customs and
culture.
Universal: The opposite of Tribal is Universal.
Globalisation, the emergence of the global super-brand and huge
pressures to manage global logistics operations more effectively,
using new technologies, emergence of virtual teams and companies.
We are still playing games with globalisation. Many executives I
know are already spending more than six weeks a year at 35,000 feet,
and it’s no fun anymore. Successful multinationals need totally
new management models to grow beyond constraints of constant air
travel to meetings. Daylight is now the biggest barrier to the global
village – because people have to get out of bed to attend
virtual meetings.
The future of Europe – growing soon to over 22 nations –
will be dominated by conflict between two equal and opposite forces:
tribalism is causing many European countries to fragment, and universalism
is welding these same fragile nations into one super-state. It is
strange that countries are rushing into total one-ness at the same
time as neighbours kill each other for speaking with the wrong accent
or language. Low-grade ethnic cleansing by intimidation and violence
is a daily reality in Europe – not only in bits of former
Yugoslavia but also in the UK (Northern Ireland) and elsewhere.
Tread carefully in pan-European business deals. It may all look
Euro-ised from the outside, but beneath may be pure tribalism.
Globalisation will dominate the shape of all large corporations
as competitors realign through rapid mergers, acquisitions, disposals
or new partnerships. However reactions to globalisation will grow
and require careful handling. Powerful global structures will emerge
and affect your international interests. Are you being radical enough
in globalising your operations and structures?
Radical: Few of your workforce or clients are likely
to be active members of political parties, compared to the vast
numbers who have signed petitions or campaigned for causes. With
the death of left / right
politics and weakening of “big” government power,
corporations are increasingly vulnerable to attack by single issue
groups. Examples include the war against terrorism, animal welfare,
and child labor in the textiles industry. As Swiss banks found with
Nazi gold, Shell found with oil rig dumping, Nestle found with baby
milk products, Nike with factories in emerging nations, and MacDonalds
with beef-contaminated French-fry oil in India, these issues strike
hard and their impact can be hard to predict. Clear policies, strong
values and rapid media response teams are vital.
Logistics is particularly vulnerable to single
issue campaigns - for example on the environment. Are you monitoring
this area sufficiently?
Ethical: What kind of world do you want to live
in anyway? And what about your children or grandchildren? Whenever
I talk to CEOs about the future, they end up talking about the personal
concerns they have, their values, priorities, ethics, motivation,
and spirituality – and all these will be key issues for large
corporations, even more so following recent events.
The heart of our society has always been stirred by more than money,
but even more so today. For example in countries like the US 60%
of adults and teenagers give time to causes they believe in –
an average of 200 hours a year each, equivalent in value to 4.5%
of GDP or 12% of the Fed budget. We’ve seen a huge increase
in a decade. You’ll learn more in five minutes asking a colleague
what organisations or causes they give time to, than in five months
working in a team planning a new office, call centre or factory.
Retaining and motivating top executives will mean far more than
money in future. Personal work motivation has already changed dramatically
in the last five years and will continue to do so. It’s much
deeper than work-life balance. The key to capturing people’s
passion will be showing how your operations and infrastructure builds
a better kind of world, not only for individual people and their
families, but also for the community and for the whole of humanity.
Then people will be proud to work for you, and to by your products
and services. How do you measure up?
And finally…. The six faces form a cube but the cube is weighted.
Most logistics executives see the world mainly as Fast, Urban and
Universal – but how many people in a nation need to be very
Radical, Ethical and Tribal to change your world? Fortune 500 CEOs
and Chairmen usually tell me just 0.5-2%. And just one shareholder
on a mission to change a corporation can be enough to keep a CEO
awake at night before an AGM. You can’t keep all the faces
in view at once so… keep turning the cube.
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