Transcript MLCP: The Business of Tomorrow MODULE 3

MLCP: The Business of Tomorrow
MODULE 3: RESILIENCE IN CHAOTIC TIMES
Back in the ’90s…
. . . all we heard was “Short Supply Lines!”,
“JIT!”, and “Zero Inventories!”
Disruptions were considered
unpredictable - and when
they did occur, the operation
would go into crisis mode,
and costs would soar!
Today the logic is to also have
plans that allow the operation
to be flexible and resilient to
economic and other shocks.
TODAY’S LOGIC
MLCP: The Business of Tomorrow
MODULE 3: RESILIENCE IN CHAOTIC TIMES
Looking Back to the Early 1970s….
Typical N.A. car:
but FUEL EFFICIENCY? - Not even considered!!
THEN IN 1973, OPEC DOUBLED THE PRICE OF OIL!
- The Japanese imports were suddenly in vogue
- In terms of market share, the ‘BIG 3’ have never recovered!
MLCP: The Business of Tomorrow
MODULE 3: RESILIENCE IN CHAOTIC TIMES
In the 35 years since OPEC, the ‘Caught Unprepared’ pattern has been
repeated in many sectors - We should have learned the lesson!
While many aspects of management have undergone change,
the unexpected still trips up companies that are not ready for
shifts in customer taste, thinking, government regulation, etc.
MLCP: The Business of Tomorrow
MODULE 3: RESILIENCE IN CHAOTIC TIMES
Re sil ience (noun)
Resilience is the ability to avoid, minimize,
withstand, and/or recover from the effects
of adversity, whether natural or man-made,
under all circumstances of use.
As the global footprint of firms expands, so also do the risks they
face on a daily basis: - Extended supply chains; technological
interdependencies; IT vulnerabilities; mutating viruses; turbulent
geo-politics; flat-world economics; and even weather phenomena
all combine to increase business risk. As such, resilience is
a matter of ever-increasing importance.
MLCP: The Business of Tomorrow
MODULE 3: RESILIENCE IN CHAOTIC TIMES
Desired Outcomes for this Module:
Gain a clearer understanding of the
kinds of emergencies that may have
to be faced at work;
Work with the other participants to identify how these
contingencies directly affect your businesses;
Explore opportunities to plan for contingencies and
minimize the damage to your businesses.
MLCP: The Business of Tomorrow
MODULE 3: RESILIENCE IN CHAOTIC TIMES
Scope of this Module:
The Speed of Change
The Role of Government
The Matter of Money
Trade Treaties
The Environment
Contingency Planning
Paradigm Shifts
Natural, Man-Made, and Business Contingencies
CHANGE
2008
1958
TIME
Quality and quantity of information has
been increasing exponentially. With so
much data now instantly available, we
can easily become lost in analysis at
the expense of decision!
CAD / CAM
CNC / more
Skill requirements have changed
Automation yields productivity
gains and allows semi-skilled
operators to replace skilled trades
personnel, lowering labour cost.
Food & beverage systems
have made quantum leaps
in capacity and automation.
Windows-type touchscreens
are now more the norm than
the exception.
Maintenance has become
module replacement.
Today’s only constant is
change itself, and even
then the rate of change
is changing!
Today’s paper machines
produce a sheet twice as
fast; twice as wide; and
with half the crew size
than just a few years ago.
To monitor automated
printed circuit assembly,
cameras have replaced
human inspectors whose
reaction times are slower
than the machines.
Quality Control
Process Control
Statistical
Process Control
Root Cause Analysis
Risk Analysis
THE ROLE OF GOVERNMENT
Governments have changed the
way they control their economies
over the years. Change factors
include:
- Shifts in internal economic
thinking;
- International pressures;
- Treaties and agreements;
- Influence of global corporate
giants.
Today no one government alone
is able to substantially change
many of the circumstances that
businesses now face.
Some changes, e.g., Globalization and Off-Shoring, are irreversible.
THE ROLE OF GOVERNMENT
EXCHANGE RATES:
Governments do have some influence
over exchange rates:
By using central banks to adjust
interest rates, they can slow or
speed up the rate of investment
and the price of debt
If the economy is growing
too fast, they worry about
inflation, so they raise the
interest rate to slow growth
To counteract recessions,
rates are lowered to spur
spending
Releasing money into the
economy helps improve it
THE ROLE OF GOVERNMENT
TRADE TREATIES:
Trade treaties, such as NAFTA, do
good things for the economy, but
there are compromises, too.
- With trade treaties, policy change
is restricted by external agencies
- Tariffs and subsidies cannot be
arbitrarily applied
- There are mechanisms for redress
when disputes arise
Trade treaties help create a faster,
more lucrative global arena, but
also a more exacting place in the
event of bad planning.
How does white Writing Stand Out?
Prior to WWII the World ran on
a Gold Standard:
- The US backed its currency
with gold held in Fort Knox
- Britain backed the Pound
with sterling silver & gold.
Today, exchange rates between
currencies depend on the extent
of confidence the money markets
have in each country’s economy.
When confidence in the US economy
falters, the comparative value of the
Canadian dollar increases
How does white Writing Stand Out?
Financial institutions, banks and investors
worldwide trade in currencies & debt daily.
With the speed of IT today, a
change in conditions in one
part of the globe can almost
instantly affect confidence in
a currency elsewhere.
This causes exchange
rate changes that can
have lasting adverse
effects far beyond the
control of the affected
businesses.
CRUDE OIL PRICING:
The World crude oil price is central
to the value of the Cdn$, as we have
vast Tar-Sand reserves in Alberta,
as well as offshore oil.
Above US$55 / Bbl, the Tar-Sands are
profitable to exploit
At US$60 / Bbl World commodity price, the
Cdn$ is viewed as a stronger currency.
Strong currencies with stable
government systems are safe
havens for capital investment:
Money flows in; the economy
grows stronger; and the spiral
continues….
Exchange Rate Impact:
Around the turn of the century, the
Cdn$ had a value of 60-70 cents US:
Cdn firms received Cdn $1.50
for every US $ sold.
Many US firms manufactured
here cost-attractively.
Auto manufacturers increased
output in Canada, as wages,
productivity rates, and health
costs were also cost-attractive
compared to in-US costs.
Canadian firms providing parts
and services to US did well.
Then in 2001, this happened:
- The World changed rapidly:
- The price of oil skyrocketed;
- The US went into huge debt to fund its
wars against terrorism;
- Eventually the Cdn $ reached US par.
(For exporters to the US, this cut their
revenues from $1.50 to $1.00!)
The Canadian government could not offset so huge a hit:
The causes were bigger, faster than economic measures
could handle, so profits fell rapidly.
Continuous Improvement is no longer just ‘fashionable’: It has
become an essential element for business survival and recovery.
PARADIGM A paradigm is a generally-accepted rule or belief
that affects the way we view things
PARADIGM A fundamental CHANGE in belief that forces us
SHIFT to revise our thinking
Example: Before Columbus, the paradigm
was that “The world is FLAT!”
He helped create a SHIFT in
belief, to “The world is ROUND!”
Another Example:
Old Paradigm:
Paradigm
Shift:
“Carry large buffer stocks!”
Better Business Practice!
Paradigm shifts don’t occur overnight:
Wal-Mart was a paradigm-shifter in
retail thinking
- but others were slow to catch on
- and many still fight the ‘New Reality’
In Manufacturing, shifts are clearly evident:
Magna personifies the ‘New Paradigm’:
- Less and less vertical integration;
- Smaller unit plant size
- Fewer processes per plant
- More and more specialization
- More and more outsourcing
- More and more automation, with
ever-lower skill requirements.
Joel Barker, Futurist
“The Business of Paradigms
- Discovering the Future”
Publisher: William Morrow & Co
New York, New York
ISBN 0-688-10936-5
The environment is an area where government can have major impact.
Growing public awareness of global warming provides politicians with
the chance to convince electorates that they are worthy of your vote.
For business, resulting government regulatory change will represent
opportunities for some, and considerable risk for others.
- What if you produce only incandescent light bulbs, and a switch
to fluorescents is mandated?
- What if you produce only plastic grocery bags, and their use is
discontinued or heavily taxed?
Pollution of the air we breathe is a recognized major problem.
Governments retain the right to regulate accordingly, and are
under increasing global pressure to sign treaties, such as Kyoto.
Internal pressures in most Western countries are intensifying,
with coal-fired generation facilities and ‘smokestack’ industries
becoming prime targets.
If your business has high carbon emissions because of process,
you’ll soon be under fire.
GLOBAL WARMING IS
AN ABSOLUTE REALITY
THERE IS AN ALARMING
CORRELATION WITH THE
INCIDENCE AND SEVERITY
OF NATURAL DISASTERS
THIS DVD IS
A ‘MUST-SEE’
‘RESILIENCE’ includes risk
recognition and contingency
planning / preparedness:
- How comprehensive are your organization’s contingency
and preparedness plans?
GLOBAL WARMING IS
AN ABSOLUTE REALITY
THERE IS AN ALARMING
CORRELATION WITH THE
INCIDENCE AND SEVERITY
OF NATURAL DISASTERS
THIS DVD IS
A ‘MUST-SEE’
‘RESILIENCE’ includes risk
recognition and contingency
planning / preparedness:
- How comprehensive are your organization’s contingency
and preparedness plans?
Contingency Planning aims to best
assure that a company can sustain
the impact of a interruption, recover
promptly, and resume ops without
long-term ill effect.
Most organizations have plans in
place for eventualities like these:
But what about something like this: A major IT wipe-out?
A recent study found that malicious
damage, major IT system faults, and
hacking account for more ‘disaster
scenario incidents’ than fires & floods!
Further, that 60% of firms sustaining
an IT outage for a period of 10 days,
go out of business within a year!
A good Contingency Plan and
IT system backup process can
limit the damage and in some
cases, provide recovery up to
the moment of destruction.
How well does your company
score on this assessment?
- Might follow-up action be
warranted?
What other Contingency Plans does / should / could your
company have in place for such occurrences as:
Further adverse trend in Cdn/US
exchange rate?
Unfavourable regulatory
Changes by Government?
A serious oil crisis?
Terrorist (or resulting) activity?
Severe supply chain disruption?
“There must be others, too!”
The Flexible Supervisor
Supervisors may have only limited impact
on a company’s overall policies, and lack
the power to decree what contingency
plans the company should have.
Most supervisors are, however, at liberty
to make their own. Also, supervisors have
a responsibility to be able to react in the
company’s best interests when disasters,
emergencies, or other disruptions occur.
How about the plans that ARE in place:
Are you up-to-date on them? How about
for bomb threats? How about your data
integrity, and what your best practice
should be in that respect?
Confucius
#1: Reefs in the Lagoon – Who Remembers the ’70s?
#2: The Best-Laid Contingency Plans . . . .
#3: The Saga of the Incandescent Light Bulb
#4: The Plastic Bag and the Joy of Shopping
#5: The Natural Disaster
#6: The Man-Made Disaster
Take Care, Folks!
See You Next Week.