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Why Business Transformations Fail: A Comprehensive Guide to Avoid Costly Mistakes and Drive Success
Global supply chain blogs
Vivek Sood: Sydney based managing director of Global Supply Chain Group, a strategy consultancy specializing in supply chains. More information on Vivek is available on www.linkedin.com/in/vivek and more information on Global Supply Chain Group is available www.globalscgroup.com
Vivek is the Managing Director of Global Supply Chain Group, a boutique strategy consulting firm specialising in Supply Chain Strategies, and headquartered in Sydney, Australia . He has over 24 years of experience in strategic transformations and operational excellence within global supply chains. Prior to co-founding Global Supply Chain Group in January 2000, Vivek was a management consultant with top-tier strategy consulting firm Booz Allen & Hamilton.
Vivek provides strategic operations and supply chain advice to boards and senior management of global corporations, private equity groups and other stakeholders in a range of industries including FMCG, food, shipping, logistics, manufacturing, chemicals, mining, agribusiness, construction materials, explosives, airlines and electricity utilities.
Vivek has served world-wide corporations in nearly 500 small and large projects on all continents with a variety of clients in many different industries. Most of projects have involved diagnostic, conceptualisation and transformation of supply chains – releasing significant amount of value for the business. His project work in supply chain management has added cumulative value in excess of $500M incorporating projects in major supply chain infrastructure investment decisions, profitable growth driven by global supply chain realignment, supply chain systems, negotiations and all other aspects of global supply chains.
Vivek has written a number of path breaking articles and commentaries that are published in several respected journals and magazines. Vivek has spoken at several supply chain conference, forums and workshops in various parts of the world. He has also conducted several strategic workshops on various aspects of supply chain management. He received his MBA with Distinction from the Australian Graduate School of Management in 1996 and prior to these studies spent 11 years in the Merchant Navy, rising from a Cadet to Master Mariner.
Companies must continuously adapt to evolving market conditions, improved technologies, and ever changing consumer preferences to remain competitive. Many businesses struggle to successfully transform and remain stuck in an outdated economic model that is ill-suited for the current information age. This model, which emphasizes resource scarcity and ownership of infrastructure, is not effective in the information age where building collaborative networks with suppliers and customers is critical for success. Even though there is abundant evidence of the advantages of early and comprehensive collaboration, many companies still prioritize asset efficiency over collaboration. We will explore the reasons behind this trend and why businesses must shift their focus to building collaborative networks to succeed in the modern business landscape.
Business transformation – Use of outdated model
Many businesses struggle to achieve successful transformation due to their continued reliance on an outdated economic model from the industrial age. This model focused on resource scarcity and ownership of infrastructure, which is not suited to the modern information age. This approach was effective when resources were genuinely limited, and owning infrastructure gave companies a significant advantage over competitors. With the emergence of the information age, the situation has changed.
Today, resources are abundant and easily accessible, thanks to technological advancements and globalization. Consequently, owning infrastructure is no longer the sole determinant of business success. Instead, companies need to adapt to the new reality of building collaborative business networks to achieve success in the information age. Collaborative business networks prioritize working with suppliers and customers in a more cooperative and interdependent manner. This approach provides businesses with more significant opportunities to access resources and build long-term relationships with stakeholders.
Therefore, companies that prioritize collaboration are more likely to thrive in the information age than those that adhere to the traditional industrial age model of ownership and control.
Overlooked aspect of collaborative model
The ability to collaborate and build strong business networks is crucial. This shift in focus requires a significant mindset and approach change that goes beyond merely acquiring resources and owning infrastructure. Companies must now prioritize collaboration with their suppliers and customers, sharing knowledge and expertise to achieve common goals. This approach helps to build trust, foster innovation, and drive overall business success. Adopting new technologies, such as cloud computing, data analytics, and artificial intelligence, can also support the collaboration process and improve business operations. It’s essential for companies to embrace these new technologies and ways of working to stay competitive in the modern business landscape.
One of the key benefits of collaborative business networks is that they enable companies to tap into a wider range of resources and expertise. By working closely with suppliers and customers, companies can access resources that they would not have been able to access otherwise. This, in turn, can lead to increased innovation, improved efficiency, and ultimately, increased profitability.
Another benefit of collaborative business networks is that they can help companies to identify and respond to changing customer needs more quickly. By working closely with customers, companies can gain a deeper understanding of their needs and preferences. This can help them to develop new products and services that better meet customer needs, and respond more quickly to changing market conditions.
J.C Penny- A failed business transformation story
In 2011, the company hired a former executive from Apple, to lead a complete overhaul of the company’s branding, store layout, and pricing strategy. Johnson sought to modernize the company and appeal to a younger demographic by rebranding the store and eliminating promotions and coupons in favour of everyday low prices. This strategy ultimately failed to resonate with customers, and sales dropped dramatically. Customers were confused by the new pricing strategy and missed the discounts and promotions that they had become accustomed to. As a result, the company lost significant market share and revenue.
J.C. Penney’s failure highlights the importance of understanding customers’ needs and preferences when implementing a business transformation strategy. While the company sought to modernize its approach and appeal to a new demographic, it ultimately neglected its existing customer base and failed to communicate its new strategy effectively. This ultimately led to a significant decline in sales and a setback for the company’s transformation efforts.
Companies must shift their focus to building collaborative business networks that prioritize working with suppliers and customers in a more cooperative and interdependent manner. This approach provides businesses with more significant opportunities to access resources and build long-term relationships with stakeholders, which is crucial for success in the modern business landscape.
A significant reason for failed business transformation is the lack of emphasis on building collaborative networks. Companies must now prioritize collaboration with their suppliers and customers, sharing knowledge and expertise to achieve common goals. Adopting new technologies and ways of working, such as cloud computing, data analytics, and artificial intelligence, can also support the collaboration process and improve business operations.
Collaborative business networks offer several benefits, including access to a wider range of resources and expertise, increased innovation, improved efficiency, and faster responses to changing market conditions. By embracing collaboration and adapting to the new realities of the information age, businesses can thrive and achieve long-term success.
The global supply chain of products is an immense and complex system. It involves the movement of goods from the point of origin to the point of consumption, with intermediate steps that involve resources, materials and services to transport them. A supply chain encompasses activities such as purchasing, production, distribution and marketing in order to satisfy customer demands. Companies rely on a well-managed supply chain to meet their business goals by providing quality products and services at competitive prices.
Efficiently managing a global supply chain requires considerable effort, particularly when dealing with multiple suppliers located around the world. Complex logistics tracking systems are needed to monitor product movements from one place to another. Technologies such as artificial intelligence (AI) can help companies keep track of shipments across different locations for greater visibility into their processes.
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