Have you ever read Alice in Wonderland, or watched some of the screen adaptions and thought that the Mad Hatter isn’t as mad as he seems. If you’re working in Supply Chain then you’ve definitely thought it.
Having the benefit of time in the Supply Chain is a luxury, but it’s important to recognise key times within your business that create uncertainty. Seasonal volume increases, periods of no demand, new customers signed up, existing customers dropping off, new contracts won, old contracts lost. These are just a few examples of times of volatility in our operations. In Supply Chain, it never ends, and sometimes it feels like the day-to-day issues just pull us down the rabbit hole.
And on the other end of the spectrum, the world is changing. Customer needs and requests are changing. New technology on the market, old areas of inefficiencies that you’ve been operating with, changing customer requirements, shorter demand cycles. Theres a compelling need for improvement and change to the existing, but with the volatility, how do you know when the right time is to invest in the business? And where do you even start.
There’s no correct answer to the question. In fact, sometimes, just contemplating a possible answer could lead you to not wanting to decide at all. But at the back of your mind, should be a voice (not the Mad Hatter, I promise!) asking what’s the risk if you don’t start? And this should be the fuel for you to make that jump.
If you often find yourself sitting and asking yourself, I wonder which way to go, don’t lose hope. I think that there are a few practical steps to help decide when and where to invest in your business, if at all.
Step 1 : Business Development
This step is key to understand what stage your business is in. Are you growing, shrinking or remaining stagnant. Asking this question and then scoring will help guide the discussion. Traditional 0-10 scales help in this regard, with 10 being a strong growth business, 1 being a business that is shrinking and 4 or 5 stagnant. Naturally its easier to justify an investment in technology or to improve efficiency in a business that’s growing and often times this is the sole driver of the decision. The other steps below may just be used to determine the amount of investment at this point in time. Just remember to be brutally honest in this step, and the subsequent steps, this tool is for your benefit at the end of the day.
Step 2 : Ease of Implementation
We’ve all seen those videos of drones delivering packages to consumers or self-driving trucks delivering to stores but how practical and possible is it. Does the cost make sense for your business and would the solution easily fit into the existing processes and systems of the business. If you’re scoring in the same manner as the previous step, then 10 would be low-cost relative to your business and/or very easy to implement. 1 being on the other end of the spectrum, with scoring variations in between as a result of cost or complexity.
Step 3 : Size of the cake
At the end of the day, action happens for benefit or to avoid loss. So how big is the risk or opportunity. When answering this, try and take a long term view and don’t score based on the current situation. You’re an expert on this scoring scale by now, so no need to explain.
After all 3 steps are complete, just multiply your scores for each step and the size of the answer should help guide your decision. Based on your environment, you most likely have to complete a business case to progress any decision but that’s an article for a whole different day. Bear in mind that this tool just provides directional guidance on whether you should follow the white rabbit or not.
Like the caterpillar, I hope I’ve helped in your journey !
