by Keith Carruthers MBA, SCMP


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Tuesday, October 28, 2008

Linking Execution to Strategy


As purchasing professionals, it is tempting to get caught up with our desire and goal of reducing the yearly spend by category for our organizations. In fact, it is often one of our most focused on objectives that are brought up during the dreaded "performance appraisal".
Sometimes, however, we need to reflect at a 50,000 foot view of where our organization is going, and what our corporate strategy is. This seems like a "no brainer", but it is surprising how often we forget this important attempt at ensuring we are on the right track.
If you think about it, how can we possibly work effectively on a day to day basis, at the tactical level, if we haven't first thought strategically about where we are and where we are supposed to be going? How can we actually get to where we want to go, if we are not sure where it is we are supposed to be going? It's kind of like hitting the TransCanada highway heading west, when we actually intend to end up in Boise Idaho. Is heading west enough?
The point is, all of our day to day activity needs to come from our organization's overall strategy. In other words, first you decide "what you want to be when you grow up", in the organizational sense, then develop the strategy that will get you there. Once you have this vision clearly in mind, you have the ability to ensure that the day to day activities are in line with getting you to the end result.
I do a significant amount of business dealing with importing products for domestic manufacturers from low cost labour countries. It is an activity that strategically has to happen for these domestic manufacturers to remain competitive. In other words, without the import strategy, they would lose customers to competitors.
Despite the fact that this is a major part of what my company does, potential customers are often taken aback when I tell them during our initial meeting that importing is not for everyone. I often hear comments like "What do you mean? Isn't that why you're here?". No that is not why I'm here. That would be a very short sighted view of business development. I am meeting with them to see if I can help them reach their goals, and to gain a competitive advantage to grow their business. Don't get me wrong, if I can retain them as a customer, that's great too, but the goal is to find customers that I can add value to....customers that I can make a difference with.....customers for life.
What I am of course referring to when I say importing is not for everyone, is the fact that it depends on what your corporate strategy is. If you are selling your products at premium "value added" prices, and the value that you are providing your customers is high flexibility, short lead times, industry leading service, it is difficult to do that when your supply base is on the other side of the world. I would guess that in most cases, importing is not in line with where you need to go.
On the other hand, if you are in a "down and dirty", highly competitive industry, where your value proposition is (unfortunately) being the low cost producer and therefore the lowest priced supplier, importing is probably one of the most critical strategies to your organization's potential success.
The point is, we need to start with where it is our organizations want to be in 10 years..........What does that mean for us with where we need to be 5 years from now, and then finally, what do we need to do over the next 1 to 3 years to at least get us on the right road? Once we do that, we can then choose our current activity plans that put us in the best position to succeed at making this 10 year vision a reality.
It's all about vision and strategy....................before execution.
It's about starting at the end, and working back to the beginning.

1 comment:

faz said...

Thanks for the post Keith. Really enjoyed the read.

It seems even more important these days where the economy is where it's at that organizations take the opportunities to bring forth their competitive advantages in order to try and win as much market share and in turn, customer loyalty instead of cutting down production and manufacturing or even worse bailing out.