Cross Border Journal

Managing Across Borders - Part 1: Knowing Where You Are

Managing Across Borders is one of those books that I have read over the past year or so, taking notes and highlighting key passages for later follow-up here at the Journal. This post is Part 1 in my exploration of key concepts in this book.

Over the 7 years I have worked overseas, I have been in organizations and teams where people have come and gone at various levels. The impact of these organizational changes depends not just on the roles and responsibilities that each person is assigned but also the context / environment that they are either entering into or departing from. At the same time, a person brings with them their own personal history, timeline and set of aspirations / goals that must be considered against the history, timeline and aspirations / goals of this organizational context / environment. If neither the personal nor organizational characteristics mentioned above are understood by organizational leaders, then it is possible for breakdowns to occur in achieving the success and professional excellence that leaders often envision their teams achieving and displaying respectively. This is essentially what I refer to as 'knowing where you are', whether you are considering your own individual situation or that of an organization you are leading.

Take as a generic example the global office of a project-driven, services organization that has seen significant sales volatility and thus volatility in resource demand over the course of several years since the office's initial market entry. It is admittedly difficult to structure an organization to properly balance the resourcing needs of a relatively new market while avoiding the risks of either over-resourcing or under-resourcing. This is the structure vs. environment link.

Strategy comes in to the picture to guide the building of organizational structure as well as respond to the environment. In our example, at the extremes, there are a couple strategic options available to the organization:

1) Source resources from within the established talent pool of the global organization; this equates to a rapid build-up of services expertise at the expense of local market knowledge and experience. The objective of this strategy is project execution rather than organization building and development.

2) Source primarily local resources with local market knowledge and experience, but with limited to no expertise as it relates to the organization's services and offerings. This equates to a rapid build-up of local market knowledge and expertise at the expense of a strong services delivery. The objective of this strategy is organization building and development.

Obviously, neither of the two strategies above are ideal on their own--it is obvious that a blending of the two is required to capitalize on short-term project opportunities while establishing a foundation for future success without an over-reliance on the global organization's talent pool. But how to balance the two strategies for maximum effect?

I have learned from my experience that it is often best to focus on acquiring experienced local resources around the products and services that are more difficult to source from the global talent pool. For example, if the global organization is strong across the board in transportation management, with a number of key resources willing to take leadership roles in global offices, then better to get a local, experienced lead familiar with say distribution. Sales is another area where the organization is best served by hiring a consistent local presence, complemented by regularly rotating global leads in marketing, product management, etc. At the same time, the organization can 'slow hire' in the area of transportation management to internally train more fresh and inexperienced hires that can learn on the job from the global resources rotating through in this area.

This all sounds great, but one of the most difficult aspects of managing a smaller global office is team cohesiveness. As already discussed, globally rotated resources must be carefully chosen based not just on availability but on how personal and professional timelines fit the state of the organization. These timelines must balance with the timelines of locally hired resources so as not to cause unnecessary disruptions that might negatively impact the quality of project delivery, overall team morale, career development, and the degree of administrative oversight required. In a smaller office, a leader's inability to manage and cultivate this aspect of team cohesiveness is much more visible than in a larger office with more layers and middle management 'handlers'.

Clearly understanding the state of the organization and its administrative heritage, as put in Managing Across Borders, and preparing new team members in advance of their global transfer or local hire is the least a leader can do for the benefit of team cohesiveness. In addition, it is critical that the leader properly frames the state of the organization within the strategy- structure - environment linkage before proceeding with the execution of a decided strategy. The above ultimately contributes to how the larger global organization is able to develop into a 'transnational' that appropriately leverages its existing configuration of assets and capabilities; its distribution of managerial responsibilities and influence; and ongoing set of relationships that endure long after any structural change.

In Part 2 I begin to explore the ways that Managing Across Borders suggests an organization can develop and build the transnational mentality towards achieving high performance as a global entity. A key part of this is not only understanding the role you currently play within your company, but also the role you aspire to be in and how to categorize the roles that others play in the organization.

 

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Staff Managers vs. Task Managers

While working for a few organisations, both public and private, since 1998, I have worked for a wide variety of managers, and have observed many more in action. In this experience, I have come to believe that there are essentially two types of managers--those who primarily focus on managing the tasks executed by their staff and those who primarily focus on managing the staff that executes those tasks. This is critically important to me in my current role since, as a project manager, I am regularly involved in both task and staff planning and the successful alignment of the two.

Up front, I propose that organisations require a mix of both types of manager, but positioned in the correct roles and in the proper ratio based on operational needs. To distinguish why I feel this way, it is important for me to provide my definitions and characteristics of both manager types.

Task Managers - Driving Event-Specific Solutions

At a high level, the focus of task managers are deliverables and timelines. As long as these are met, the people involved are interchangeable as long as they get the job done. A staff's interaction with this type of manager most often revolves around the status of deliverables, updates on timelines, and task issue resolution. As a result, a staff member's relationship with the task manager rides the volatility of each task at hand. If your tasks are going well, deliverables are executed and timelines met, you may almost never hear from a task manager until the next staff meeting or until you are on a task for which they share direct responsibility.

Task managers are great when an organisation, team or project is in crisis, or is perhaps facing an unusual challenge. They are excellent at focusing individuals on the items at hand and the goals for the immediate future.

Staff Managers - Building Team and Organisational Foundations

Whereas task managers are out to ensure a task or assignment is executed properly, staff managers are concerned with the context in which members of a team or organisation are executing those tasks and how those tasks fit into the bigger picture, both short-term and long-term for each individual and, by extension, the team and organisation as a whole. Thus, the interaction between staff manager and individual staff members is focused on such things as work environment quality, training, organisational- or team-building activities, short- and long-term goals and aspirations, salary and benefits, and general feedback on the relationships between management and staff.

Staff managers ensure that, throughout the volatility and ups and downs of day-to-day tasks, individual staff members have a strong foundation to fall back on within their team and / or organisation.

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With these definitions in mind, it is easier to understand why employing the right mix of the two manager types is key to an organisation's success. Having too many of either type will lead to different sets of problems - too many task managers will result in lower employee morale, burn out and eventual turnover of quality staff; too many staff managers will result in lower operational execution, weaker financial performance, and eventual downsizing of quality staff.

A final thought - can a manager successfully combine both types in the execution of their duties? From my experience, managers should try to adopt aspects of both types into their roles and responsibilities, but with the 80/20 rule in mind. A task manager should be incorporating the perspective of the staff manager as approximately 20% of what they do. Likewise, the staff manager should try to similarly incorporate the task manager perspective. This will ensure both manager types are not regularly in opposition on the critical needs of a team or organisation. If you try to get both types out of the same manager, that manager will regularly fail to live up to the expectations that individual staff members should have of them when in either role. In the end, it is up to the presidents, CEOs, directors, etc. of the organisation to ensure this does not happen.

Thoughts on Developing Supply Chain Professionals

As I progress in my career with Manhattan Associates as part of Asia-Pacific operations, I regularly try to revisit some of the concepts and principles that I feel should guide me in developing the experience and skills that are required of a supply chain professional.

I would say that many in the supply chain industry, when framing what they require in their people, still focus on the traditional, functional roles of supply chain--transportation, warehousing, procurement, shipping, etc. I believe that this causes managers to fall into the trap of building an inflexible workforce and organizational structure that will struggle to adapt to supply chain initiatives that require working cross-functionally across these areas of business.

This scenario puts strain on supply chain people because they find themselves in "stretch roles" that consistently push them outside the range of responsibilities originally intended for and communicated to them based on an antiquated, narrow and traditional approach to human resources management. It would be nice if at least these stretch roles were recognized in hindsight and properly rewarded, but many organizations both lack the ability to properly evaluate their people in this situation and will often just happily accept these efforts as what was expected all along.

The above can be avoided by approaching the supply chain of a business, including its people, from the standpoint of supply chain architectures rather than functional roles and responsibilities. I have discussed these architectures extensively on this blog, but their importance has hit home for me again in the past few days as I have talked to a variety of supply chain people, both within Manhattan and those working for our clients.

Human architecture, the supply chain people, underlies every initiative a business can put forth--whether it is an investment in equipment, facilities, technology, new services or product development, etc. For a 3PL, an integrated logistics services solution may sound great as a pitch to customers, but all the technology, facilities and equipment in the world will mean nothing if your people aren't in place to deploy such a solution.

After people, a business should start its people thinking about how its physical and financial resources, or architectures, are deployed rather than zeroing in on trucks, warehouses, facilities, budgets, etc. off the bat. The whole idea is that resources are rationalized across a supply chain and not piece-meal, where imbalances can occur that negatively impact the end result of services and products provided to customers.

It is advances in and the procurement of informational architecture, primarily supply chain technology, that is driving the effort by many companies to challenge employees to think cross-functionally, to think in terms of general supply chain architecture rather than in terms of individual supply chain components. The problem with this is that technology can quickly get ahead of companies and their employees to the point that human resources management ends up "chasing the tail" of end-to-end supply chain restructuring. In the end, the progress of technology deployment will be as slow as the slowest caboose--which unfortunately in many cases is the constraint faced by under-developed competencies and capabilities of your supply chain people.

Only when the above hurdles are overcome can a business truly think about making advances in relational (think relationships with supply chain partners) and innovational (think new approaches to products and services via cross-functional analysis and critical thinking) architecture. But as long as the foundation of your supply chain activities, your supply chain people, have made the paradigm shift to understanding supply chain architecture, versus knowing simply the individual components of warehousing, transportation, shipping, etc. with the traditional overlaps, reaching this pinnacle is much closer to realisation.

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As can be inferred above, mindset and attitude are key factors in developing supply chain professionals for the new paradigms of today's supply chain challenges. Cultivating this mindset means taking every opportunity available to illustrate the concepts that underly architecture-oriented thinking in supply chain. One simple and probably obvious concept is that, when providing a specialised service, a supply chain professional must be ahead of, or at least keep pace with, their customers' and clients' (both internal and external) knowledge in the field. Continued attention to detail of customer and client needs will ensure you keep pace with the services or products required. But it is innovation driven by analysis and critical thinking in response to daily issues and challenges that will allow you to provide additional value above and beyond that level.

I once drew this in a simple graph for a young Japanese colleague that had just left the university for a job with the 3PL I worked for in Tokyo. The graph posited the progression of time against the progression of knowledge, as shown below:

I told her that it was possible one could spend a few years in the wrong business environment and actually lose ground relative to peers across the supply chain industry (the Fall Behind line).  The next best case would be that you kept pace with not only your peers but the clients and customers demanding your product or services. Far better, you would stay ahead of that curve through seeking challenges, maintaining a learning curiosity both inside and outside of work, and making the necessary changes when it seemed like you were falling back to the "Keep Pace" line. I saw firsthand a friend in the same company realise only too late that they had been tracking along the "Fall Behind" line and thus presented a huge wake-up call when they had left the company and looked for new jobs. Some others in this category simply remained in the company because they new it was safer.

One comment by the president of that Japanese 3PL always stuck with me and summarised part of the problem he faced with his workforce at that time: If you are taking the same approach to your work today that was used last year, or in the years before, then you are that many years behind the curve.

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I personally keep an eye on not only new opportunities at work but also new opportunities and ideas from outside work that will add value to my professional growth and provide that spark which takes me to the next level. Although what each of us chooses to do in developing as a supply chain professional may sometimes seem unorthodox as compared to traditional approaches, as long as our activities result in enhancing our understanding of the supply chain architectures that underly successful businesses today, we are well on our way to fulfilling our desired goals and vision for the future.

Update: Steve DeAngelis at the Enterprise Resilience Management Blog has more thoughts on this topic.

Manhattan Momentum 2010: At the Supply Chain Intersection

The most exciting thing about working for Manhattan Associates is the opportunity to positively impact the evolution of a client's business through supply chain improvement and innovation. As part of this experience, I am also in the position to have some impact internally on the evolution of the next generation of supply chain software by bridging R&D with the latest marketplace demands in Australia.

Coming up in a week is Manhattan's annual Momentum Conference, from May 2nd to May 5th. The theme is "Platform Thinking," which is nothing new from a general business management perspective. The use of platforms in the automotive vehicle production space dramatically changed the auto industry beginning in the late 20th Century, a practice defined as a "shared set of common design, engineering, and production efforts, as well as major components over a number of outwardly distinct models and even types of automobiles, often from different, but related marques."

So the question is: Why does this deserve attention now in the supply chain software space? When one examines all of the various touchpoints and activities in an end-to-end supply chain, the sheer scope and scale can be overwhelming. It is thus no surprise that many supply chain disciplines developed early on as responsibilities in smaller, manageable silos--manufacturing, procurement, transportation, warehousing, and POS fulfillment are the primary examples, and each can be further broken down into related activities. It is upon this market landscape that supply chain software has evolved as a wide range of offerings and solutions geared towards particular silos with some peripheral overlap. Manhattan Associates began this way with its WMS and has since developed a full suite of supply chain execution-oriented applications through acquisition, organic R&D efforts, and partnerships on a common platform.

I believe that "platform thinking" is about further removing the barriers in making significant gains in supply chain improvement and innovation. Where a variety of solutions have been available from a number of vendors for almost every primary supply chain activity in the past, the solutions and the decisions behind them have been disjointed from the standpoint of both business processes and the underlying system architecture. Many companies have had to make an amalgam of solutions work as their approach to managing human, financial and physical architecture in the supply chain evolved in advance of technology.

A perfect example of this evolution is a large company that internalises its supply chain functions and people into one business group (human / organisational), takes the next step to establish this group as a profit center which sells its supply chain services to the rest of the company's units (financial), and then begins to organize its assets around this framework (physical). This group will likely come together initially with disparate tools and systems around such services as transportation management, warehouse management, and ocean freight management. The ability to provide such a group with a suite of proven supply chain execution solutions on one platform clearly becomes an advantage in terms of overall deployment speed, quality and cost, as well as in post-implementation support and future upgrades. Integration with a single ERP system that spans the entire company's business units would also work from the same platform. End users, including internal customers, external customers and supply chain partners become linked together via a single networked interface. As a result, the platform solution becomes an enabler towards further strengthening relational (collaboration) and innovational (new ideas) supply chain architecture.

Momentum as an "Intersection"

I recently finished reading "The Medici Effect," an excellent book that explains how to create opportunities at the "intersection of ideas, concepts and cultures." For all those who attend Momentum 2010, it will indeed be an intersection worth taking advantage of towards taking your supply chains to the next level. Manhatta provides its own top 10 reasons for attending, but the truth is that an event that blends fellow Manhattan customers from around the world, product experts, technology partners and industry analysts all in one location is ripe for generating new insights and ideas into general supply chain practices as well as each attendee's own personal supply chain challenges.

Thinking Beyond Momentum

One of the things that blogs do for readers, and which Twitter does even better, is point us towards intersections. The list of individuals I have had the honor of sharing ideas with over the past few years via this blog has been fantastic and far more rewarding than I imagined at the start of my writing. With the advent of Twitter, the speed with which intersections are presented as increased tremendously. Recently, I came across another blogger who is an entrepreneur and, in my view, an intersection specialist--Valdis Krebs of The Network Thinker. Mr. Krebs has worked with IBM, with which Manhattan Associates is a key partner in deploying its Supply Chain Intelligence solution.

Once a company has deployed platform thinking from an informational architecture perspective, Mr. Krebs' work in network analysis seems perfect for the next leap in relational architecture, leading to as Mr. Krebs describes on his blog:

"...a focus on patterns of connectivity and self-organizing behavior in economic and social networks and how these new structures lead to resilience, adaptability, agility, transparency, and innovation."

These are all attributes that any supply chain professional aspires to internalise within their organisation, but this can only be done if we see the important linkages between our field and at first unrelated fields such as social network analysis in addition to driving existing skill sets and capabilities forward.

Imagine now if we take this network analysis approach devised by Mr. Krebs and apply it to not only our internal supply chain organisations and networks, but to industry wide supply chain networks in seeking a mutually beneficial reduction in total costs. In the article"Keeping Trucks Full, Coming and Going," New York Times writer Ken Belson examines one group executing upon such a goal:

"Some of the country’s largest retailers, manufacturers and trucking companies are working on a solution, sharing information about their trucking routes in hopes of matching empty trucks with goods that need to be shipped.

"Known as Empty Miles, the program is the brainchild of the Voluntary Interindustry Commerce Solutions Association, or VICS, a nonprofit group that tries to make the supply chain in consumer goods industries more efficient.

"For decades, companies have tried to eliminate empty truck miles in an ad hoc fashion. One company would hear about another company that shipped along the same route. One manager would call his counterpart and work out a deal. Then, about two years ago, VICS members representing a swath of corporate America bore down on the problem. Diesel fuel was near record highs; the economy was slowing. Running empty trucks was more and more the difference between profits and losses; running fewer trucks was a way to reduce emissions and help meet corporate sustainability goals.

""The economy is demanding that these trucks run with things in them," said Joe Andraski, the president and chief executive of VICS, which is based in Lawrenceville, N.J."

As Mr. Krebs network analysis tools would show, a critical mass of participants in such a program would drive the overall benefits. His tools could also provide critical information to participants where the service is providing the most benefit, towards which industry counterparts are shared routes most beneficial, as well as a number of other patterns important to supply chain decision-making. Please take a look at his post on "overlapping networks."

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All-in-all, there is much to look forward to in the supply chain space that makes working in this industry, and across borders, an exceptional experience. I look forward to sharing more of this experience into the future both on the blog and via Twitter. Cheers!

The Global Mindset: Measuring the Caliber of Cross-Border Managers

In the April 2010 issue of the Harvard Business Review, three Thunderbird professors have published an article titled "Making It Overseas" as part of the "Managing Yourself" series. The full article can be purchased for USD $6.50 if you don't have a subscription. For anyone who manages projects across borders, or who oversees people that do as an executive or HR manager, this article is worth the expense.

While attending Thunderbird myself, there was always a sense that successful cross-border managers and employees possessed a set of somewhat vague and intangible assets in character, personality and approach to life that could not be easily pinned down and measured. Those on campus possessed these abilities to varying degrees, but there was always the common denominator of passion for cross-border ventures that I didn't see elsewhere in my MBA experience outside of Thunderbird. Now, three T-Bird faculty have made a successful effort to deploy a system of measuring the "global mindset," collecting data that is bound to help organizations better manage their cross-border enterprises and activities.

According to the authors, the attributes that define global leaders can be narrowed down as follows:

Intellectual Capital: general knowledge and capacity to learn

• Global business savvy
• Cognitive complexity
• Cosmopolitan outlook

Psychological Capital: openness to differences and capacity to change

• Passion for diversity
• Thirst for adventure
• Self assurance

Social Capital: ability to build trusting relationships with and among people who are different from you

• Intercultural empathy
• Interpersonal impact
• Diplomacy

Subscribing to the article allows you access to take the 76-item "Global Mindset Test" free of charge until May 31st. This is a great interactive benefit of paying for the article. Although these days all Thunderbird students take the test at admission and matriculation, I graduated before its implementation. So, as part of subscribing to download this article, I took the test online. Once I receive the hard copy of my results, I will share those in a follow-up post. Of course, it is important to be honest with these kinds of surveys in order for it to be effective in identifying areas where one can improve in their cross-border abilities.

I also believe that this assessment can be applied to people in professions outside of the private sector, such as those who work for the government, educational institutions and non-profits. In a world where events in other countries can impact us anywhere with great rapidity, a global mindset will not be something we aim to develop later in our lives, but rather, like the informal way in which the article's character Debra developed her mindset at a young age, will be something that is more conscientiously cultivated in the earliest years of a person's life. Language programs expanding at the kindergarten and elementary school levels all around the world--for example, English in Asia, Chinese in the U.S. and Indonesian in Australia--are a testament that this is already in progress. I look forward to comments on what readers are seeing in their own work, social and educational environments around the world.

Note: Please take a look at the blog Global Strategies, where one man in Oregon is on a mission to change education in that state to better develop the global mindset in local youth.

Brief Comments on Haiti (Updated)

Already weak from years of disfunction, the nation of Haiti and its physical, financial and human architecture has been devastated by this week's massive earthquake. Buildings, roads, all the physical means of commerce, aid deployment, and support services has been crippled; tens of thousands of people, including the people required for Haiti to recover, have died, been injured or lost friends and family. The means of financing a recovery, relief and rebuild effort has been severly disrupted.

Fortunately, the aid, military, and private sector supply chains spanning the globe are now humming to fill the sudden void of physical, financial, and human resources necessary to provide relief to Haiti and some sense of stability where possible. The role of logistics and logistics personnel at this juncture cannot be underestimated--but the volume of relief goods and services will be hindered in the short term by the infrastructure problems caused by the earthquake.

Let's pray that the supply chain and logistics teams out there succeed in getting relief services and goods to as many people as possible in these critical hours, days and weeks ahead.

Related:

• Rebuilding Haiti by the Enterprise Resilience Management Blog
• The Devastating Earthquake in Haiti--A Call to Action by Supply Chain Matters

Update:

• Adrian Gonzales at Logistics Viewpoint has a post "Haiti and the Role of Logistics in Disaster Relief" that touches on many points I have made the past 4 years, but in the context of Haiti.

2010 Goal-Setting and the Power of Principles

As 2010 swings into full gear, many of us are in the process of establishing goals for the year, whether privately or as part of procedures put in place by our employers. At the same time, we are looking back at goals for 2009 to assess where we were successful and where we fell short. But stepping back, the most critical factor in shaping your goals and your success in achieving them is the set of principles that guide yourself and / or your employer.

Last year, in my wonderings around the used bookstores of Melbourne, I came across an excellent book published in 1997 called"True Professionalism." The book, written by David H. Maister, starts off by articulating the "power of principles." Geared more towards the workplace, Mr. Maister does an excellent job of getting straight to the point:

"Professional firms expend immense efforts trying to get their people to do the "right" things through systems, structures and monetary incentives. Not only have all of these frequently failed to create excellence, but they also leave a bad taste in the mouth. "Do it and we'll pay you" smacks more of prostitution than professionalism...When something is presented as a management tactic, it is easy to argue with and dismiss. It is harder to argue with a matter of principle...Successful firms are not differentiated by their different goals, clever strategies, or special managerial tactics--these are all remarkably similar worldwide. Successful firms are clearly differentiated by a strict adherence to values, i.e. professionalism."

Mr. Maister further makes a clear distinction that "individuals and firms must recognize that there is a difference between "espoused values" (what they say they believe in) and "values-in-action" (how they actually live their professional lives)." The key is in aligning the two. Once a set of values has been defined, the next step is to "design systems which provide "consequences for noncompliance."" All of us have probably experience some point in our lives where what we or our employers espouse is not often reflected in our actions.

By this, Mr. Maister describes what needs to happen as follows:

""Consequences for noncompliance" need not be, and should not be, punitive. Professionals must live by the slogan "You're allowed to fail, you're not allowed to not try." If someone is exhibiting difficulties in achieving excellence in teamwork or project supervision or client service (or any of the firm's other core values), this needs to evoke a response from the firm which is characterized by concern, support, assistance, counseling, and everything else possible to help that person become aligned with the firm's values."

As Mr. Maister finishes in his introduction, none of this was particularly new at the time the book was published. But after a year where many companies let staff go, retrenched, and focused on restructuring for a rapidly shifting bottom line and where many individuals had to also retrench and restructure their lives against a new financial position, many of us may be entering 2010 hungry for a return of attention paid to personal satisfaction and growth, rather than simply trying to "survive."

I hope that everyone is able to set some principles to follow when setting their goals for 2010 and beyond, and that you have every opportunity to learn, grow and achieve some success throughout the year.

Latest Wal-Mart Strategy a Natural Result of its High Performance Supply Chains

A recent article in the Financial Times by Jonathan Birchall titled "Walmart looks to cut billions from supply costs" has spurred a few connected posts by some of my favorite bloggers: Bob at Supply Chain Matters, Steve at Enterprise Resilience Management, and Tom at his personal weblog.

Most people are familiar with Wal-Mart in one way or another, and from different perspectives and experiences. For management professionals, Wal-Mart has been under constant study for its supply chain prowess, analysed backwards and forwards to understand what works and what doesn't. However, few would argue that Wal-Mart does not possess tremendous strength in high-performance supply chain management. Due to its size and incredibly large financial turnover, when Wal-Mart launches new supply chain initiatives and / or programs, people from a wide range of disciplines and interests take instant notice.

Mr. Birchall outlines the program Wal-Mart is launching and the opportunity at hand:

"Walmart intends a drive this year to cut billions of dollars of costs from its supply chain by combining its store purchasing across national frontiers in a fresh stage of the globalisation of its business. The effort forms part of plans by the world's largest retailer to increase the proportion of goods that it buys directly from manufacturers, rather than by third-party procurement companies or suppliers.

"Eduardo Castro-Wright, head of Walmart's US stores, has said the retailer sees the opportunity to consolidate global sourcing as "a major source of leverage for the company in years to come."

"With annual sales of more than $400bn (£247bn), Walmart is famously tough in negotiating with its suppliers, exploiting the scale of its buying to gain discounts.

"It spends about $100bn on purchasing private label products such as its Faded Glory and George brand clothing, or its Great Value food and home products. But it acquires less than a fifth of these goods directly from the manufacturers, and has generally made its purchases on a country-by-country basis. Mr Castro-Wright has estimated that a shift to direct purchasing could reduce costs by 5-15 per cent across the supply chain within five years - suggesting potential savings of $4bn-$12bn if the retailer were to meet its long-term goal of shifting to sourcing about 80 per cent of purchases directly."

This type of program is launched based on a large amount of supply chain analysis targeting both internal and external aspects of Wal-Marts extended supply chains across the world. It likely involves a coordinated use of information technology deployed to enable greater purchasing capabilities against data collected on SKU volume and velocity across all of its global hubs and distribution centers.

Stepping back into a strategic viewpoint, executives like Mr. Castro-Wright have the ability to leverage the full breadth of supply chain architectures that make up a high-performance supply chain:

Due to the sophisticated level to which Wal-Mart has built its architectures, it has a greater ability to execute the strategies and programs deployed across its supply chains, as well as spur innovation in the development of new initiatives. Of course, when drilling down regionally and locally, it is likely that some of these architectures start to break down and face challenges that Wal-Mart has yet to solve (the Seiyu venture in Japan over the past few years comes to mind). For this exact reason, this move by Wal-Mart could help reduce the breadth of focus locally and regionally and allow on-the-ground managers to concentrate on the procurement of those goods that bring the most value to local consumers and communities. Overall, as Dr. Barnett notes, "Locals will naturally decry the death of middlemen, who add nothing but cost and waste and complexity, but this sort of manufacturer-to-retailer bonding will define the next great wave of globalization's tightening up."

Steve DeAngelis makes some additional comments around the increasingly dynamic compliance systems that will be required, while Bob Ferrari poses questions about supply chain risk, especially in regards to fresh food procurement. I encourage everyone to read their full posts.
  

Afghanistan's Endless War: Chapter 4 Review

In my review of Chapter 3, I summarized the series of stages in Afghanistan's experience with modern war as described by author Larry Goodson. Chapter 4, titled "Impact of the War on Afghan State and Society," focuses on the impact of this experience on the entire architecture of the Afghan nation. So to frame and organize the thoughts of Mr. Goodson in this chapter, I would like to use the supply chain architectures I have discussed in relation to Afghanistan previously. These architectures can be viewed as comprising a pyramid within which the base architectures are most critical and without which the entire pyramid would crumble:

Throughout the stages of modern war experienced by Afghanistan, the base architectures that been built over time with the help of foreign nations, such as the Soviet Union, were systematically destroyed and / or degraded to a point of deep distress.

Impact on Human Architecture

The toll the war has taken on human life across a broad spectrum of the Afghan population cannot be underestimated when taking assessment of Afghanistan's conditions. At the time of Mr. Goodson's book in 2001, he writes that "recent reports suggest that from 1.5 million to more than 2 million war deaths" had occured in Afghanistan "since 1978." This was approximately 10% of the population at that time. Furthermore, 500 thousand to 1 million Afghans had been wounded and injured. Another 6.2 million refugees existed outside of Afghanistan at the peak in 1990, in addition to which 2 million were internally displaced. Throughout 1996 and 1997, a stable 2.7 million refugees lived beyond the borders of their homelands.

Impact on Physical Architecture

As Mr. Goodson states, "at one point or another since 1978, virtually everything in Afghanistan has been a target. Cities, towns, villages, houses, mosques and minarets, schools, hospitals, industrial structures, other buildings, roads, bridges, orchards, and fields have all been damaged or destroyed during combat." Mr. Goodson continues that "as of early 2001, Afghanistan was a country reduced by the technology of modern war to a premodern level of existence."

Impact on Financial Architecture

Due to the destruction and degradation of the above architectures upon which the Afghan nation state was built, "its formal economy had essentially collapsed. Virtually no industry functioned, and the most vibrant economic activities were transit trade, opium growing, heroin manufacturing and smuggling, and other small-scale agriculture." The mechanisms, tools, and vehicles that existed to support and enable the Afghan people to deploy their goods and services to market no longer existed. In the ensuing chaos, the rise of the Taliban from out of Western Pakistan eventually led to the "Kalishnikovization" of the nation, facilitated by the illicit weapons and drug trade that extended beyond Afghanistan's borders.

The Rise and Role of the Taliban

As is detailed by Mr. Goodson, the Taliban was born solely out of the madrassas located in Pakistan's western provinces in the mid-1990s, and encouraged by Pakistan covertly, and later more overtly, as an effort to fill the vacuum left by the Soviet Union. In entering Afghanistan, the Taliban leveraged Pakistan-based support to maintain military prowess, channels of financing and overall logistical strength while taking advantage of the Pushtun population in Afghanistan to build a foundation of support from which to attack and degrade the positions of non-Pushtun minorities.

The source of Taliban strength is illustrated above. In essence, movement into Afghanistan is supported by a combination of leadership and students from the madrassas and logistical, financial and military support based in and / or routed through Pakistan. The extremely large Afghani refugee population in Pakistan has also contributed resources, human and otherwise, to the Taliban movement.

To complete the loop, Taliban hardened by the experience of fighting and living in Afghanistan return to Pakistan for rest and to train the next round of fresh recruits brought into the Pakistan madrassas and Pakistan-based Taliban militia. Up until 2001, this regular and for so long unimpeded movement allowed the Taliban to put down deep roots across the Pakistan-Afghanistan border. However, up until 2001, the Taliban mostly reinforced the current state of Afghanistan's base architectures more than they had acted to rebuild them towards reconstructing the nation state.

This was evident in how they tightened the vice on both men and women, massacred and forcefully migrated minorities, and further degrading all of the elements of culture and society upon which communities, and in aggregate a nation, would be re-founded.

The majority of the struggle in Afghanistan faced today is the difficulty in "unwinding" this deeply rooted Taliban entrenchment and cross-border intertwinement with Pakistan, including all the negative elements of criminal trade, while at the same time trying to establish the foundation for the legitimate and pro-development trade that is desired between Pakistan and Afghanistan for the benefit of progress in Central Asia.In review of Chapter 5: The Changing Regional Environment I will discuss Mr. Goodson's take on the actions and interests of the various external actors that have had an impact on Afghanistan's state of affairs up until 2001.

Developing the Cross Border Skills of Employees in India

An article in the Wall Street Journal back from early December have prompted me to write about India employees within multinational companies, and discuss how the skills and experience of these employees are developed so that they are successful when working across borders.

Within Manhattan Associates, my current employer, a key effort is made to develop the skills of India employees so that they can successfully support our projects from their India office as well as from on-site with clients. On every project I have worked on, an employee from our India office has rotated through as a technical or support consultant on-site. There are a few reasons why we see this as important:

• Client-facing Opportunities: Although an India employee may be successful supporting a project remotely and resolving multiple technical issues, working on-site allows the employee to get a hands-on sense of the client environment, the range of functional requirements involved, and also provides the client with an opportunity to become comfortable with the remote team.
• Direct Interaction with Functional Team / Project Managers: The rotation provides an opportunity for the India employee to deepen their relationships with on-site team members, who may primarily focus on more operational issues. Once the India employee returns to their home office, phone calls and online interaction increases in quality and effectiveness.
• Personal Satisfaction: The India employee develops a great sense of self-worth and value in relation to the company and client.

From personal experience, a great deal of value is also generated when on-site consultants rotate through the India office, including members from the client's team when possible. If both rotations can be done on the same project, the overall implementation for the client will improve considerably.

In the article "Microsoft Mines India Talent," Ravi Venkatesan, chairman of Microsoft Corp.'s Microsoft Corp. (India) Pvt. Ltd. unit, touches on this strategy (my emphasis where underlined):

"WSJ: How have you viewed the management profile of multinational companies in India changing in the past five years and how do you expect it to change in the future, especially with regard to the mix of expatriate versus local executives?

"Mr. Venkatesan: My sense is that during the past few years expats were in great demand. This was driven by the entry into India of a large number of global MNCs [multinational corporations] and also by the emergence of rapidly globalizing Indian MNCs like Infosys, Tata, Reliance or Jet Airways that needed specialized skills. A significant number of the "expats" have been people of Indian origin returning to India. All this is beginning to change. Global companies are localizing their management, recognizing both that this is a key to success in the market and that India can be a good source of talent. Cost pressures have also caused companies, both Indian and foreign, to take a close look at which skills are truly indispensable.

"Over the coming years I see a few trends. I see global companies paying much more attention to talent. The best companies will rotate their highest potential talent through places like India and China and Brazil as part of their development. We will also "export" more talent from India to other parts of the world as part of the same global talent development process. Finally, I also see a greater emphasis to growing local talent from within versus hiring a greater proportion of senior/middle management from outside. The mix of expats versus local executives may or may not change, but the underlying intent and strategy will certainly shift from a short-term fix to skill shortages to a more proactive global talent development agenda."

As part of this dynamic, a company needs to encourage a culture of learning where employees are able to share knowledge and formalize experience into a number of best practices for use across borders in multiple offices. Without this, a company may rotate employees, but there will likely be a higher chance of negative experiences occuring. For example, an India employee may be brought in, put to work and then sent home without much of a welcome and effort to engage them inside AND outside of work. As Mr. Venkatesan infers, it is an important time to invest in your India talent and put in place the programs that will make your business stronger as the global economy gradually recovers.