As most of you know, we publish an annual review of the challenges and risks that we see coming up for all of us. While this is derived from several sources, one of the key sources is the round of Executive and Leadership interviews we conduct. If you haven’t received an invitation from us, we apologize for the oversight and encourage you to contact us to be interviewed as this will give you early access to the resulting report. We recently concluded an executive interview with an alumnus and a client (when he was a CPO) and I think it was fascinating enough that I would like to share some details.
He is currently in a leadership position for a defense manufacturer based in Europe and let me just get some of the general discussion out of the way. They are clearly concerned about AI and the impact it’s going to have on their workforce. They recognize that several of the repetitive, routine tasks are about to go away and not only is leadership talking about it but so are the employees. They all recognize that the skills and competencies that are going to survive and thrive are this that cannot be replicated by computers, and these would be what the readers of this blog and our alumni will immediately recognize as Strategic Competencies 😉! This leads them to think very strategically about their Talent strategy and how they will make sure that they have the right talent and the right competencies when the need them. And they recognize that there is a lead time associated with getting the right talent and building the right competencies.
Because of all the geo-political turmoil, demand is very high for them, and their biggest challenge is building resilient sustainable supply chains. This requires procuring of critical raw materials(titanium) and protecting other parts of their BOMs(electronics) from geo-political risks (Taiwan). They have identified this as a major risk because they will lose major contracts if they cannot meet delivery schedules.
One fascinating major difference we picked up was the whole attitude about Work From Home (WFH) and how there are major differences between Europe and the US. Europe has pretty much walked away from WFH, and they are back to using it very sparingly for occasional flexibility just like pre-COVID. Whereas many of their customers (mostly in the US) are still practicing WFH in a much more active way and this is sometimes leading to some uncomfortable situations.
The most fascinating part of the conversation was when he stated categorically that they had abandoned JIT a few years ago. Many of you will remember the heydays of JIT and how it was the ultimate strategy. Organizations have now realized that JIT adds significant risk to the operations and is in fact extremely costly. They actually have a 3-month buffer on the incoming supply chain and an up to 6-month buffer on the delivery side to their customers. Just wrap your head around that for a minute and f you have any grey hairs, that may come as a shock. And not only that, but the buffer on the delivery side is also in collaboration with the customer and is in fact partially financed/funded by the customer. This is a far cry from my days in manufacturing (corrugated boxes) when customers demanded we hit delivery windows within 60 minutes exactly when their product was rolling off the production line.
Stay tuned for more interesting interviews and the final report and contact us to participate.