Supply Chain Management or SCM, is a concept in Supplier Management System. This concept stresses on strong partnership and synergy between manufacturers and suppliers. Thus promoting a win-win situation for both parties, and is ultimately targeted to satisfy consumer needs.

Since academics and industrialists have not defined SCM, it is therefore still very much a broad concept rather than a more focus practice like the Kanban System (Just-In-Time). As such, SCM will generally takes the form of promoting greater out-sourcing; greater supplier autonomy; sharing of information; forging closer ties between suppliers and manufacturer; and the use of Electronic Data Interchange (EDI).

Throughout the course of the seminar, many case studies were discussed to reveal the various practices of SCM in different industries. For example, the case study on Asahi Beer focuses on how the brewer revived its market by using SCM to improve its distribution system between the brewer and its distributors/wholesalers. Fuji Xerox uses SCM to reduce its costs of developing new products through the introduction of Early Supplier Involvement (ESI). DELL Computer, probably the first company that introduces the SCM concept embarked on the bold idea of being a manufacturer without factory. This is made possible through the use of EDI to manage suppliers of various components in different geographical locations. Visit to the Thai International Airways Catering Services focuses SCM practice on procurement of material and services.

Depending on the size of the manufacturer, implementing the SCM concept can vary in scale. It could be limited within a particular department, e.g. the distribution chain of Asahi Beer, to the entire company’s operation like DELL Computer.

However, it is the study on the implementation of Matsushita Electric’s SCM that best describe the advantages and pitfalls of the system. Firstly, Matsushita describe the SCM concept as a way to reform Matsushita’s business structure and processes with cooperation from its partners; suppliers and dealers, who share the same values regarding the company’s Basic Business Philosophy, management ideas and the use of IT. The key success factor is that all departments including those responsible for material procurement, development, design, manufacturing and sales, implement weekly management cycles. This means that manufacturing and sales turnover can be conducted on a weekly basis, enabling shorter lead times, reduction of excess inventory and cash flow improvement. This will then enable the company to accept order on a weekly basis from large-scale retailers who are well advance in the introduction of Electronic Ordering System (EOS). Since the launch of the SCM campaign, it has led to both an increase in sales and a reduction of local inventory.

The introduction of SCM will see the demise of old practices in the following areas:

• Order Processing (from manual to computers)
• Communication (from fax, mails, etc., to Electronic Data Interchange)
• Procurement System (from Individual Procurement to Group Procurement through Web-Based Database)

Some of the challenges that Matsushita faces are in the area involving EDI. Although Matsushita’s Procurement Policy stresses to promote material localization to strengthen the power of supporting industries, many of the local suppliers are not well in advance on IT, carrying out data exchanges could pose a problem. Similarly, the cost of implementing an EDI system that synchronizes the information between manufacturer and supplier can be costly and time consuming.

Understand the Other Side

Solve the other person’s problem to your advantage. Gather as much information as possible about their situation. Specifically, you need to know:

• Any existing time, industry, and/or financial pressures.
• Their corporate goals & objectives.
• Their specific goals for negotiation.
• Their options if they don’t make the deal with you.
• The personal goal of the negotiator.
• Who makes the final decision on the deal.

Research involves the process of gathering information before you sit down at the negotiating table. Discovery consists of asking questions to learn more about the other side during the actual negotiations.

Smart negotiators spend more time on research & discovery than do actually negotiating the deal.

The more information you have, the greater your ability to solve the other person’s problem to your own advantage.

Plan Your Approach

Having a planned approach to the negotiations always leads to a better deal. Understanding of your own position by identifying the three different deal scenarios:

• Best possible outcome – when everything lined up in your favor, what would your best deal look like?
• Worst acceptable outcome – least acceptable outcome whereby you can still sign a deal.
• Expected outcome – the deal you are most likely to walk away with.

the best dealmakers always prepare 2 other key elements

• Walk-away-point – this sets the absolute limit on the least favorable outcome you will accept. Know when the deal can do more harm than good for your company.

“More deals are killed by ego than any other factors.”

• BATNA – identify your “best alternative to a negotiated agreement”. Do you have a plan B?

Built the Relationship

If you want to cut a good deal, take the time to build the relationship before getting into the actual details of the deal.

• Exchange information – Win-win deals are created by enlarging the pie, not splitting it. This requires sharing information on both sides.
• Active listening – Ask questions. Never assume you know what the other party wants.
• Acknowledging the other party’s needs – People have a need to tell you what they want, if you don’t hear them out, they won’t perceive that your company can meet their needs

Solve Their Problem

To create a true win-win deal, you have to solve the other person’s problem as well as your own. Learn these three things during the discovery phase:

• What the other side values – asking open-ended questions like “Tell me more about that. How do you see this working? What happens next? What will that do for you? How will this help you reduce costs or increase productivity?”
• What are they looking for in the deal – keep asking questions until you get their real core issues.
• Their “Never agains” – negative situations that have happened to the other person in the past and guide all their future negotiations

Enlarge the Pie

Fixed-resource negotiations involve win-lose propositions because one side gets more and the other gets less. Expanded-resource negotiations involve finding ways to exchange things of varying value so that each side walks away with a positive outcome.

• Gather as much information about both sides.
• Identify items of value for both sides and list its order of priority.
• Avoid the temptation to bargain and compromise. Instead, get creative about ways to exchange items of value so that both sides get their needs met.

Stay focused on the desired outcome for the deal.

Make the Numbers Work

CEOs love to quantify things and reduce them to numbers because they are easy to work with. They love precise formulas for the numbers and the rationale behind the numbers always counts for more than the actual numbers. Knowing about the method the other side uses, the better your chances of reaching a win-win deal.

• Clarify rules & structure of the deal. Know the guidelines, goals, how the deal work and who is involved.
• Communicate as much as possible. Make a request for clarification on even the slightest items because it establishes communication and gives you an edge.
• Question all assumptions. When the other side hands you some numbers doesn’t mean you have to accept them. Always question the assumptions and/or ask for clarification.
• Show how you are different. Demonstrate how your product will help their bottom line. Show what makes you different from your competitors.

Focus on the risks as well as the benefits. There are only three things that can go wrong for the other side – it costs the company a lot of money, the decision-maker gets fired or the deal doesn’t work. Tactfully inquire about the risks if they do business with someone else and let them imagine their own scenarios if something goes wrong.

Conclusion

If you do the first five steps properly, working out the numbers becomes almost a formality. The key to any successful negotiation is to enlarge the pie by changing a fixed-resource negotiation into an expanded-resource negotiation. You do that by gathering information, identifying items of value to each side and looking for ways to exchange them. When you do these things well, you will cut deals that work for both sides.

1. ACCEPT THE UNCHANGEABLE

Understand that the past is history – we cannot change what has passed.

It is a complete waste of time and energy thinking of undoing past event.

• It’s a waste of time when we spent too long on thinking about missed opportunity.
• It’s a waste of energy thinking of revengeful past.
• It’s a waste of time and energy lamenting past events.

Learn to Forgive – we need to forgive our trespassers. Concentrate on what’s going forward and what you should do next. Remove any obstacles that is preventing us to go forward.

ACTION – Write down past hurts/pains and throw/tear/burn the paper to symbolizes letting go of past misfortunes.

2. CHANGE THE CHANGEABLE

Change your reaction.

• Control your own thoughts & actions.
• Do not act on reflex, subconscious habit or emotional impulse.

ACTION – Start writing down in your diary / PDA one thing that you will do tomorrow to help you relax more during and after a stressful day.

3. AVOID THE UNACCEPTABLE

• Go out of your way to get out!
• If people tailgate you, change lanes.
• If people follow you at night, drive to well-lighted public area / to police station, etc.
• If you meet a loud, rude person, change table / restaurant. “Do not add fuel to fire”.
• Come back to the person when the weather is better.

ACTION – Ask yourself, what is one unacceptable behavior you have or allow others to do to you that you will avoid starting tomorrow?
Eg. Change the way you drive, change the company you are with from negative to positive people.

Conclusion

We can’t change others, but we can change ourselves.

After the N series Nokia designed a new model for its portfolio; the new Nokia E71 under the Eseries. This model prides its 3.2 megapixel camera with digital video zoom and a LED flash. Using advanced technologies, Nokia E71 is capable of supporting 8GB microSD memory card and has a 110 MB internal dynamic memory. It has a 2.36 inches screen size and 320 x 240 pixels resolutions which should be good when viewing pictures.

Nokia E71′s QWERTY keyboard is designed to fit the slim casing. Typing your text will not be a problem. Running on Symbian OS 9.2 S60 3.1 Edition, E71 can send and receive emails with attachments. Designed to view and edit Microsoft applications such as Word, Excel and PowerPoint through Quickoffice. It can also support email protocols such as IMAP, POP and SMTP. Connecting to the Internet is not a problem. With a built in Nokia browser, E71 can let you browse the Internet.

E71 can be your partner in entertainment. It supports audio and video formats such as MP3, WMA, MP4, 3GP and other well known format. It allows you to record and has a built in Voice commands and a Text-to-speech feature. Pair it with the Nokia Bluetooth Headset BH-602 and you’ll blast with full entertainment.

Other applications include Dictionary, PDF Viewer, ZIP Manager and File Manager. Viewing those attached emails in PDF format is not going to be a problem. It`s perfect for business or personal need. This is the phone that you have been waiting for.

TEC Speaker John Asher, chairman of U.S. China Business Solutions, Inc., has been helping businesses connect with China since 1980. He says that understanding 10 simple rules will help manufacturers who want to establish relationships there.

1. Take time to build a sound relationship with your Chinese counterparts. Absolute trust must be established, since the Chinese have no faith in the legal/court system. It takes time to develop trust. Plan on this stage of the process taking at least six months of continuous dialogue. Establish the right structure for your relationship in China.
2. Establish the right management structure for your relationship in China. The road to China is littered with companies that have tried to go at it alone and failed. There are a number of ways to do it, including:
   • Turnkey operations
   • Using agents in Hong Kong or Taiwan
   • Using agents in China
   • Using several different types of joint ventures
   • Owning your own factory

   As you proceed through this list, the savings increase, as do the risks.

3. Look for a Chinese partner with strong quality and process control. You cannot depend on certification from the International Standardization Organization (ISO). QS Certification (used in the automotive industry) is more dependable.Find out whether your potential partner can be quickly qualified to manufacture to your standards. If your prospective manufacturer is too far below your required standards, the time lag to get up to speed could be prohibitive.Conversely, if your potential partner is too large or too quality-focused, and if you would not represent a significant part of their business, you might not be able to get the attention you need. You don’t want to become low priority for them.The best match is when you find a small manufacturer just achieving your level of quality control.
4. Engineering is needed on both sides. Examine the high-tech capabilities of manufacturers. You are looking for their Web and CAD-CAM capabilities in particular.
5. Plan routine trips to China. You will need to go twice a year to get the “face time” that builds and maintains relationships in China, unless you are looking for a turnkey structure.
6. Understand the logistics. If you will be shipping by sea, for instance, expect a six to eight week allowance for delivery of products. Therefore, just-in-time inventory systems may not work. Your costs may go up. You will need to maintain a higher level of inventory to support your customers. It is also useful to maintain a backup U.S. supplier — stuff happens!
7. Understand the “rules of thumb” for costs of manufacturing. For example, labor costs are typically $.50 per hour and the labor content of manufacturing costs is typically 5 percent. Generally, your manufacturing costs can be reduced by 30 percent to 50 percent, depending on the structure of the relationship. (See point #2.)
8. Recognize the importance of family relationships in China. Business networks are based on familial ties. For example, the father owns the factory and 11 relatives work in it. An entire family might be involved in the factory, which helps them diminish the impact from the sudden loss of a key employee, but might not always be the most productive organizational structure.While you might find it inefficient, it’s a fact of life — not a problem you can fix.
9. Plan to participate robustly in social activities. Business is conducted through social interactions more in China than in many places. Dinners, drinking, tours and sightseeing are all part of a continuum to daily commerce and are important in building relationships and establishing the trust that is mandatory in doing business in China.
10. Politics are important and special favors show your commitment. The politicians are in control. You need their approval for almost everything, including a business license.

Gifts are part of the social-business mix too. Give them liberally. Accept them graciously.

Be especially “giving.” By doing special favors and contributing generously to influential individuals, you are identified as a committed partner who is in for the long haul.

John Asher was a member of a TEC group in the Washington, D.C. area for eight years and has been a TEC speaker for the past six years.

Created for MyTEC. Copyright 2005, TEC Worldwide, Inc. All rights reserved.

Published with the permission of Vistage Malaysia.

By Web Editor Paul Diamond
Are you working such long hours to get everything done that you’ve hit your limit? Are your employees not finishing what you ask them to do or creating more problems with poor work quality? Do you often feel that if you’re not there to manage your business, important things will fall through the cracks or not get done right?

If this describes you, you’re not alone. Of almost 2,400 CEOs surveyed on the most recent Vistage CEO Confidence Index, 50 percent say they are more stressed this year than last. Only three percent say they are experiencing less stress, while 44 percent expressed feeling the same amount.

Stress makes you sick…and fat
Stress drives people to overeat, smoke, drink too much or lose sleep, and these problems lead to health issues. Chronic stress robs the joy from your life and lowers your body’s natural ability to fend off disease, specifically migraines, ulcers, heartburn, diabetes, asthma, high blood pressure, heart disease, autoimmune diseases and skin problems. As if that’s not enough, stress is also linked to increased abdominal fat.

Two kinds of stress
Stress release expert Dr. Bin Yang describes two kinds of stress. “Intense stress produces the fight-or-flight response and can increase blood flow by 300 to 400 percent to the lungs, muscles and brain. Chronic stress, the type found in the workplace, has negative effects on our health, emotion and performance.”

Chronic stress leads to anger, hostility or a feeling of being in a constant rush. More than 1,000 stressed attorneys were recently studied and found to be three to five times more likely to have a heart attack, says Vistage speaker E. Lee Rice, D.O.
Strategies to reduce stress
The following strategies can help when you’re not coping well with stress in your life. Every person has a stress “cup.” Once that cup gets full and overflows, symptoms begin to occur. The trick is to recognize when your cup is reaching “full” and have a method for pouring it out.

• Monitoring system. Give your spouse, children, friends, peers and employees permission to tell you when they see the signs of stress getting out of control. If you get angry and defensive, they’ll never tell you. Give them permission to speak the truth.
• Thought control. Says author/talk show host and psychotherapist Barton Goldsmith PhD: “Instead of just thinking about the worst that could happen, think about what the best scenario could be. Then examine what’s most likely to happen, and grab hold of that. Let your mind find a reasonably positive outcome and it will release your anxiety. If this doesn’t work, then you may need to roll up your sleeves and do something deeper about it.”
• Exercise. This is one of the best ways to immediately reduce stress. Moderate, comfortable exercise generates the relaxation response.
• Nutrition and supplements. The higher your stress level, the more vitamins and minerals your body needs. Eat healthy and supplement appropriately.
• Meditation. More than 1,300 scientific studies have documented the benefits of meditation. To meditate, put yourself in a place of relaxation and listen for that “still point” within yourself. Slow down your thoughts so you can have feelings in between your thoughts. Amazing neurochemical changes happen during meditation.
• Getting outdoors. Vistage Speaker, Dr. Paul Brenner recommends, “Time alone, spent in nature” as a way to refocus on the moment. Hiking on your local trail or sitting by the river can clear your mind.
• Relationships. Feeling connected to other people plays a major role in reducing stress. Isolation from others increases stress. “Our relationships with people give us a sense of connectedness, balance, perspective and fulfillment. Many studies show the value of relationships in strengthening our health and immune response,” Dr. Rice says.
• Music and the arts. Listen to music. Read a good book. Watch the sun set. Having multiple-senses imagery causes immediate neurochemical changes that enhance the relaxation response.

Other stress reduction strategies include:

• Having a positive outlook
• Sex
• Play (fun activity without an end-result in mind)
• Laughter
• Helping others
• Silence
• Forgiveness
• Express your gratitude
• Hobbies
• Massage
• Vacations
• Solitude
• Spiritual connectedness
• Deep abdominal breathing

All of these suggestions point toward one truth about stress: Overlooking play, solitude and significant relationships has potential health risks.

Stress Seminars
Dr. Yang holds two- and four-day executive stress seminars that teach business owners how to utilize, prevent, eliminate and transform stress. The seminars aren’t cheap, but what price would you place on more enjoyment from life, looking and feeling younger, and attaining higher peak performance and productivity?

For detailed information on managing stress, see our Stress Management best practices module.

Created for MyTEC. Copyright 2005, TEC Worldwide, Inc. All rights reserved.

Published with the permission of Vistage Malaysia.