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Supple Supply Chain

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Why do executives often fail in the execution of strategy? Identify how the chances of success can be improved? Explain the concept of a "supple supply chain". What strategies can executives implement to help ensure a supple supply chain?

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1. Why do executives often fail in the execution of strategy? Identify how the chances of success can be improved?

Lack of expertise in execution: For example, from Vivendi to Webvan, the shortcomings of a bad strategy are usually painfully obvious -- at least in retrospect. But good strategies fail too, and when that happens, it's often harder to pinpoint the reasons. Yet despite the obvious importance of good planning and execution, relatively few management thinkers have focused on what kinds of processes and leadership are best for turning a strategy into results. As a result, says Wharton management professor Lawrence G. Hrebiniak, MBA-trained managers know a lot about how to decide a plan and very little about how to carry it out. " Making Strategy Work: Leading Effective Execution and Change (Wharton School Publishing). "Even though they are good managers, over time they really have to learn through the school of hard knocks, through experience, which means they make a lot of mistakes." (1)

This lack of expertise in execution can have serious consequences. In a recent survey of senior executives at 197 companies conducted by management consulting firm Marakon Associates and the Economist Intelligence Unit, respondents said their firms achieved only 63% of the expected results of their strategic plans. Michael Mankins, a managing partner in Marakon's San Francisco office, says he believes much of that gap between expectation and performance is a failure to execute the company's strategy effectively. But can better execution be taught? "I think you can at least make people aware of the key variables," says Hrebiniak. "You can develop a model.... If people know what the key variables are, they know what to look for and what questions to ask." (1)

Example 1: The Pitfalls of Poor Synchronization

Mis-Synchronization: While execution can go wrong for a variety of reasons, one of the most basic may be allowing the focus of the strategy to shift over time. The attempt by Hewlett-Packard, after it acquired Compaq, to compete with Dell in PCs through scale is a classic example of goal-shifting -- competing on price one week, service the next, while trying to sell through often conflicting, high-cost channels. The result: CEO Carly Fiorina lost her job and HP still must resolve some key strategic issues. The first step is to define the challenge. Ultimately, argues Richard Steele, a partner in Marakon's New York office, the challenge of execution is mostly a matter of synchronization -- getting the right product to the right customer at the right time. Synchronization is hard for a variety of reasons, including the fact that "any large company these days sells multiple products to multiple customers in multiple geographies. In order to pursue the scale benefits of size -- those benefits of scale through consolidation -- you now have more and more complexity across the matrix." For example, Steele says, a regional manufacturing initiative in Europe may involve reconfiguring 15 different supply chains and understanding the markets of 15 different countries. "It's really tough to do." (1)

Example 2: Mis-Synchronization

Mis-Synchronization: Another classic example of mis-synchronization: United Air Lines' TED, which attempted to set up a competitive subsidiary to compete against upstarts such as Southwest. This was a good idea as far as it went, but United tried to compete using its same old cost structure -- the main reason it was losing markets to the low-cost airlines in the first place. At other times, plans fail simply because they don't get communicated to all the people involved. "I've done consulting where a major strategic thrust has been developed, and a month or two later I go down four or five levels and ask people how they're doing. They haven't even heard of the program," Hrebiniak says. Strategies also flop because individuals resist the change. For example, headquarters might want more standardization in a product, but a local marketing executive disagrees with the idea. "He might say, 'I need more nuts in my chocolate bar' or 'I need a different pack size,'" Steele says. "You can only get the cost benefit and you can only consolidate if everybody agrees that we are actually going to execute the strategy." (1)

Many times, there can be sound reasons for resistance. Sometimes a strategy might make sense at the highest level, but its full impact on the whole organization has not been fully considered, according to Steele. For example, imagine that the general strategy calls for promoting one brand throughout the company while taking resources away from another brand. That might make sense in one market, yet be completely counterproductive elsewhere. Faced with the choice to promote a product that's considered an advantaged brand in one market but lags in his own, a country manager is ...

Solution Summary

By example, this solution discusses why executives often fail in the execution of strategy and identifies how the chances of success can be improved, It explains the concept of a "supple supply chain" and the strategies that executives can implement to help ensure a supple supply chain.