Excellence in Managing Contemporary Organizations

Wednesday, February 21, 2007

Recently a relative of mine sought my views on this topic in the course of her post graduation studies, with special reference to leading companies who are in the logistics business
A couple of years ago, I lectured on the subject-Supply Chain Management- to students of MBA in Hyderabad as per the syllabus, referring several management books besides the prescribed book:: Designing & Managing the Supply Chain by David Simchi-Levi, Philip kaminsky, E.Simchi-Levi, which I found excellent.
My effort is this small write-up, which I have forwarded to her, and posting it here for other students, friends, relatives, and others.

Any Organization that needs to remain in business must first identify its own core competence. That is, its strength in terms of its existence, its role in a business scenario and what it is there for. In other words, the core of its business requires focus. For example,

· The core of manufacturing business is PRODUCT IMPROVEMENT, which it is engaged in manufacturing. Automobiles, Household appliances, Industrial chemicals, steel etc are products that require constant improvements in their designs and techniques of making them.
· The core of Service industry is providing SERVICE to its customers. Banks, Insurance, retail trade, consulting companies are in this industry, which need to constantly update their methods of service with value additions to remain in business.
· TRANSPORTATION is the Core of Air, Rail, Ship and Trucks.
· Likewise, every segment of Industry has its core.

After having identified its competence and within four walls of an organization, the Principles and Practice of management should be followed so as to determine its own culture to achieve its final objective. That is to be a profitable venture in its business and in the society. This is the first step.
To remain in business and that too profitably year after year in a global competition requires a flexible mindset to adapt to all round changes in the way business is carried. And nothing but achieving excellence in operations must be the Organization goal.
Who determines this excellence? From whichever angle you look, it is the Customer. It could be a person, a company, a group, a society or even a country, for whose needs/desires the operations are focused. Satisfying a customer may bring in profits to the organization for a period, but the tastes/desires/needs of the customer/customers could vastly differ and change. Meeting their needs and satisfying them always is an absolute requirement to remain excellent.

What I have stated above is a pre-requisite for an organization to remain in existence and a platform to achieve excellence.

1) How do companies like UPS and Fed EX add value to their customers in terms of improving quality, efficiency and responsiveness to customers?

The Topic “Excellence in Managing Contemporary Organizations” can be viewed and examined within the framework of a corporate structure and its companies; AND from the viewpoint of companies to whom distribution operations have been outsourced and entrusted with.
We shall focus our views on these Logistic companies, who have taken the responsibility of playing their part in satisfying the needs of their customers and clients, who are again varied and so are their requirements. Their operations aptly fit for managing contemporary organizations which are ever changing in tune with changes in global trade.
With developing countries reforming their economies and adopting a flexible trade policy, many multi-national companies opened up new ventures in those countries for cost advantages while bringing up improvements in product design. Internet helped in customer awareness of products, and online business (e-business) spurred the desires and demands of customers for early and prompt deliveries of products. Thus marketing trends changed globally and many companies resorted to Supply Chains and Logistics.
By definition, A Supply chain is a chain link of facilities and distribution choices available that performs the functions of purchasing of materials, conversion of these raw materials into intermediate products and then into finished products, and then finally the distribution of finished products to customers.
The Supply chain comprises of Suppliers, manufacturing plants, warehouses, distribution centers and retail outlets as Facilities; and in between, the materials, work-in-progress, and finished products flow. The overall view of all these operations is called Supply Chain Management.
Logistics is the art of transporting the necessary requirements like men, materials, services from one place to another place wherever whenever they are required with minimum costs without causing interruptions in the operations of facilities.
Logistics can be internal and external. Internal logistics operation refers to movement of materials/resources from one department to other for carrying out the work/project within a facility, and external logistics operation helps in the regular flow of materials/resources through different facilities spread across.
FEDEX and UPS, we can say are in the Logistics business, performing and meeting the needs of transportation requirements of various organizations engaged in different type of businesses, and located at different places nationally and globally.
So the needs of their clients are varied, and to meet them they have to have a flexible mindset with expertise in their operations.
Many companies, whose operations transcend across continents, often outsource their logistics business, and work closely with the outsourced companies to mutual benefit.
The ultimate objective is to satisfy the customers in the network and retain them.
A close examination of the website of FedEx www.fedex.com/ and its each link illustrates the wide range of services it offers for its clients and customers as well. One of its maxims “The Next Big thing is access to the Next Big Thing” is a classic example of its own commitment to achieve excellence in letter and in spirit without resting on its own achievements, which we all know that it is no mean achievement.
A complete reading of its website is itself an education in the way business is done and carried on and on. To list all of them here is beyond the present purview, but is only an indication of its path to excellence.
Similarly by visiting the website of UPS www.ups.com we can study the organization, which is older of the two. Both exhibited leadership qualities throughout their existence by performing with a vision.
The simple message at the outset is perform on your strengths, improve upon your weaknesses, utilize the opportunities, look and prepare to face threats in achieving the objectives, which is to attain excellence and remain there.
This is just a small note in knowing what it takes to achieve and remain excellent in managing contemporary organizations.