About Dalip Raheja

Dalip Raheja is President and CEO of The Mpower Group (TMG). Dalip has over 30 years of experience managing large organizations and change initiatives. He has worked across the spectrums of supply chain management, strategic sourcing, and management consulting.

Ebola, Halloween and Supply Chain Risks

chococalteWhile there is no comparison to the human suffering and tragedy, the Ebola crisis does have some lessons to be learned from a Supply Chain Risk Management perspective.  We discussed some of them as they relate to the “Ebola response” Supply Chain here and here but there is also the risk associated with Supply Chains that are supported in West Africa – a prime example being Cocoa.

 If you have not noticed, your favorite chocolate bar is already more expensive and cocoa contracts are at a three year high.  According to Jack Scoville, the spike is largely related to Ebola fears.  While cocoa is largely grown in the Ivory Coast and Ghana and the Ebola epidemic is in the neighboring countries of Liberia and Guinea, the fear is  that it will spread to the cocoa fields. Even just the perception that it might, had that perception taken hold, would have been enough to start driving farmers away from their crops.  The way that risk was mitigated was by closing the borders to human traffic.

 The resulting risk created though was that the entire migrant labor for cocoa harvesting comes from Liberia and Guinea.  The impact of this is totally un-predictable as the harvesting season is currently underway.  While the hope is that labor will be available from other sources, the potential impact of this will be significant on the cocoa crop and therefore chocolate prices.  Which is probably why the futures contracts on cocoa are baking that risk into their pricing.  And  by the way, the agronomists and economists, who would be visiting the cocoa fields to project this year’s crop, yield, quality etc. to price out cocoa futures cannot do so as they have not been willing to travel because of Ebola fears.  The level of uncertainty surrounding cocoa is probably unprecedented.

Now place yourself in the shoes of your peers who are in the Chocolate industry or just substitute cocoa with your critical commodities, and Ebola with any significant major disruption (another Ebola like event, terrorist event, natural disaster, etc.) for your suppliers or their suppliers.  Does your Supply Chain Risk Management process incorporate such events and know what to do when they occur?  Or, does it ignore the existence of such risks?  Have you checked with your key suppliers and asked them to share their risk process with you so you know how much “pass through” risk you have.  What if 75% of your key suppliers are dependent on a small region in China or India – is that too much portfolio risk for you to assume? And this risk is prevalent whether we are discussing products or services.  What if the risk (Ebola) was able to contaminate your supply chain and cross borders as an intrinsic part of your supply chain?

For living proof of this, all you have to do is to look at McDonald’s (and KFC, Burger King etc.) and the impact it has had on them – and they are a vaunted Supply Chain organization.  Tainted meat from a Chinese supplier has had a significant impact on their sales, market share, brand, earnings, stock price etc. and  they all are still a long way from recovering from.

Halloween is coming and while no one is predicting any impact on demand because of any connections between Ebola and chocolate, high prices will definitely mean a lot less chocolate for the kids in their bags.  And that also means a lot less chocolate for me to steal from those bags the next morning.

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When Supply Chains Kill Thousands That Could Become Millions!! Part 2

ebola2We had recently written about the Ebola catastrophe and how it was poised to jump borders and go from an epidemic to a pandemic.  While not yet a pandemic (thank your favorite god), it has not yet been brought under control and continues to spread.  Spain just had their 1st case and the US just had its 1st casualty in Dallas.  News reports now indicate that there may be another case in Dallas and a police officer who was a first responder in Dallas may also have contracted it.  Spain (and Europe) are extremely concerned and now the concern has spread to dogs.  The pet dog of the nurse that contracted it was euthanized out of fear that it might have the virus and may spread it – without any actual proof that the dog had the virus or was capable of spreading it.

 Here is what we wrote a few weeks ago, “After scaling manufacturing, ensuring distribution is still a major challenge.  Transportation can only happen if the pilots/crews are willing to go to these areas.  That means they need to feel confident they will have access to the drugs, if they are infected.  That’s a totally different flavor of Supply Chain Risk Management than we are used to?  That logic extends to the distribution channel that actually delivers the drug to the patients (doctors and nurses) and there is a huge shortage of that currently in the infected areas and the supply continues to dwindle as medical professionals are leaving in droves for fear of infection.  That risk has to be mitigated for that channel immediately.” And this continues to be a major risk that has not yet been mitigated.  As mentioned above, the police officer in Dallas and the nurse in Spain are all part of the “Supply Chain” that is responding to the crisis and unless we are able to manage that risk – we cannot respond! 

Evidence of this can be found in the response by the U.S. Thousands of troops are being sent over to construct 17 field hospitals to provide immediate care in the infected countries.  But these hospitals are exclusively for the responders– because it is clearly recognized that this is the major Supply Chain risk facing the crisis.  Unless we can create a supply chain that can deliver what is needed, where it’s needed – we have no chance of containing this.  There are tons and tons of badly needed supplies and medicines that are wasting away in the ports of the infected countries because there is no “supply chain” that can deliver them to where they are actually needed and consumed.  The crisis will continue to worsen untill this risk is fixed – the people who dispose of those that died from the disease have recently gone on strike.  The impact of this could be catastrophic as disposing of the dead is the biggest threat.

While all this is going on, the U.S. has announced strict monitoring at the airports in the infected areas AND has recently announced similar measures at the U.S. based airports.  Every expert opines that these measures have very minimal impact, if any, on managing the actual risk.  If these measures had been in place, they would not have flagged the infected individual in Dallas.  Similar measures put in place for SARS had absolutely no impact in controlling the spread of that infection.  Yet, governments feel compelled to take these measures to satisfy the demands of the general public to do something – anything to control the problem.  All these measures do is to make people feel better.  If you have gone through the security process at any airport and felt safer – you will understand the dynamics at play here.  Every expert will tell you that these security measures at airports have minimal impact on actual safety – they are put in place to make the public feel better.

Supply Chains  have an integral part to play when disasters strike and the risk management around these supply chains are totally different.  We invite comments on this very critical issue facing us globally and what we can do as a professional community.

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9 Tips for email from Eric Schmidt

emailI must admit that while emails are obviously phenomenally efficient and fast as a mode of communication, there are days when I dread opening up my email in the morning, only to  be faced with an avalanche of useless junk – I’m sure you’ve had days like that too?  I’ve seen these types of hints before but when  I saw the name behind this one, I was intrigued.  So here they are.  I would love to hear back from you to see if any of these make any sense.

 1.       Respond quickly: That’s obvious and his logic makes sense – especially from a stakeholder management perspective.  However, there are times when I need to let things percolate in my mind so I may deliberately want to slow down my response to send a subtle message.

  2.       Be crisp:  Yup – could not agree more and one that I struggle with.  He quotes Elmore Leonard, “I leave out the parts that people skip”.

  3.       Clean out your inbox: I  find this very ironic given the author of Google is probably responsible for half the email I get and regardless of how many filters I set up – I still get tons of email that I have no interest in. So Eric, you could do your part to help out here???

 4.       LIFO: Another obvious one but I have found relevant emails when I’ve gone through older emails in my humongous inbox looking for something else – I bet you have too?

 5.       Be a “Router”: This basically refers to forwarding information to others who will find it relevant.  The issue here is that you are defining what is relevant for someone else.  I know that being the recipient of many such forwards that a lot of them I really had no interest in but someone assumed that I did.

 6.       Don’t use bcc:  Hmmmmmm, Not sure I understand why or agree with it.  Do you?

  7.       Don’t YELL:  I’ll agree except when you are really frustrated with customer service reps who have screwed up your cigar order for the 5th time – then it’s time to YELL!!  Or when you are trying to get your kid’s attention.

 8.       Make it easy to follow up on requests – And when they don’t for the 5th time, then is it okay to YELL?

  9.       Help yourself to search:  I found this to be the most intriguing because a lot of time is wasted by all of us in searching for that one email that we know we got but cannot find right now and need it right away.  The Search function is the least utilized and one that could save a ton of time if we learned  how to do it better.  Using descriptive words and then knowing how to use them in your search is fairly obvious but one that we often ignore.

 What is you experience with email?  Any long term frustrations?  Helpful hints for the rest of us?  Would love to get an email back from you.  :-)

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When Supply Chains Kill Thousands That Could Become Millions!!

fixtheSCBy now it is obvious that the Ebola epidemic (regional) has the potential to turn into a pandemic(global).  Every agency (WHO, CDC etc. etc. ) has been extremely vocal about the threat.  Not only is the virus spreading but it is also mutating.  New strains are already emerging and spreading and the threat of the next mutation becoming airborne cannot be ruled out.  Entire suburbs are being quarantined, violence has erupted, air/ship traffic is non-existent and yet the virus spreads and is a few international passengers away from total disaster – from a few thousand tragic deaths to catastrophe.  All because of the lack of a Supply Chain.

 A potential solution does exist (small bio-tech) which has saved a few lives (ZMapp) but unfortunately it cannot be manufactured fast enough on a sufficient scale and then delivered to the areas where it’s needed the most.  The traditional model would be for experimental trials to test out the drug, then the small bio-tech scales up somehow or the  patent is acquired by a bigger player and then  the drug is commercially released at a price point that would let it make its profits until the drug becomes generic and affordable.  Clearly this particular Supply Chain cannot wait that long to be developed.

 A different model is needed that can accelerate at warp speed the delivery of ZMapp (or other solutions) to not only save those in the region but also prevent a global catastrophe.  Competitors have to collaborate.  While the profit motive of bio-tech firms is what leads to advances like this, a solution must be found that might protect the profit (a financial guarantee by WHO?) and therefore allow ZMapp to release its patent.  Johnson& Johnson and Bavarian Nordic are pooling their research and are therefore accelerating their trials and release of their drug.  Perhaps a consortium facilitated by a global body that would allow the various companies to pool their research and be guaranteed a return is an option? 

That only addresses part of the problem.  Governments also have a role to play in providing a regulatory regimen that is flexible enough to deal with desperate times.  While ensuring safety is critical (so we’re not compounding the problem) prudent risk management should dictate a more accelerated approach to development and trials.  Not only that, but governments also  need to play a very active investment role in providing capital(link). 

After scaling manufacturing, ensuring distribution is still a major challenge.  Transportation can only happen if the pilots/crews are willing to go to these areas.  That means  they need to feel confident  they will have access to the drugs, if they are infected.  That’s a totally different flavor of Supply Chain Risk Management than we are used to?  That logic extends to the distribution channel that actually delivers the drug to the patients (doctors and nurses) and there is a huge shortage of that currently in the infected areas and the supply continues to dwindle as medical professionals are leaving in droves for fear of infection.  That risk has to be mitigated for that channel immediately.

Desperate times require desperate measures and desperate ideas.  Normal Supply Chain models clearly cannot work in situations like this and we as a profession must challenge ourselves to come up with a totally disruptive model that can be deployed immediately.  The lives we save may be ours?  We would love to hear any disruptive ideas that you may have to address this challenge.

 

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When The Strategy Consultants Leave……

transformation

Nothing against the strategy consulting firms and we do our fair share of that kind of work but it is intriguing to find bewildered client after bewildered client – once the strategy firms have left.  Leaving behind  a client Executive Team convinced of the tremendous value that is lying untapped inside their organization only if their organizational leaders could get their act together and Transform their organization.  No mention is made of the various elements of any Transformation Roadmap that must be put in place (Governance, Competencies, Change Management etc. etc. etc.).  The effort required from the Executive Team is especially absent and especially critical.

Large numbers are thrown around (red herrings) that generate lots of excitement at the Executive level and dread at the leadership level.  There is no mention of the “investment” that will be needed for the Transformation – investment of resources, political capital, executive and leadership attention, churn, funding for training and external help, etc.  In the absence of all of these things, the timelines and expected results become unrealistic and the Transformation is doomed for failure before it even begins.

While nothing that the strategy firms have said is ever wrong, it’s what’s not said that causes the problem.  If their strategies are not Adopted, the value from their work diminishes significantly and leads to frustration at the leadership level – who wait with dread for the next strategic engagement with their Executives.  How many times have you been at the receiving end of what I’m describing?  There is no discussion of where the resources are going to come from and whether the active and visible political support will be delivered by the Executive team.  Expecting different results from the same group of people without enhancing or changing their competencies seems illogical but far too many Transformation plans don’t address that.  Not having an active Change Management competency to help manage the inevitable churn is just adding significant risk yet it is often ignored.  Implementing governance structures to help resolve issues and accelerate decision making seems obvious but very often missing.  Yet no mention is made of most of these – and these are all, ALL – Predictable and Inevitable – for ANY Transformation. 

The poor leaders of the organization feel like they’ve been through the wringer after a year or so when hardly any progress is being made on the Transformation and the executives keep asking for progress updates against the promised results that the consultants presented.  Funding requests are viewed skeptically because the results are not there.  The organization has been through churn and people are losing trust in their leaders – yet more and more is expected from them.  As they say – the height of folly is to keep doing the same thing over and over again yet expect different results.  The executives make a change in the leadership and wait for the next strategy consultant to come in – and the cycle starts all over again.

 

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