Category Archive for "Strategic Planning"

RECESSION CONTINGENCY PLANNING
Intelligent and experienced observers may disagree about exactly where the economy is today, and where it’s headed, but there’s certainly no disagreement about the fact that we are living in very difficult economic times:

• George Soros: “We are in the midst of the worst financial crisis since the 1930s.

• Warren Buffett: “I believe that we are already in a recession… perhaps not in the sense defined by economists. … But people are already feeling the effects of a recession…. It will be deeper and longer than what many think.

• Alan Greenspan: “…there is a greater than 50% probability of recession.”

• CNN “A growing number of top economists believe that the U.S. economy
  has now toppled into recession.”

Of course, this isn’t the first recession—and it certainly won’t be the last.  So in determining how to turn this particular problem into real opportunity, a good place for us to start is by learning what leading management consultants have recommended in the past. Continue Reading »

  Southern Californian manufacturers have long bemoaned the negative impact low-priced Chinese goods have had in the region. Low prices from overseas competitors, many argue, have placed them in an untenable position with their clients. The only defense against these low prices, runs the common wisdom, is to compete on a “quality, not quantity” basis. That wisdom, however true it may have been for the early 2000’s, is now out of date.

Anecdotal and statistical evidence now confirms that Chinese manufacturing plants are producing high-quality industrial, consumer and medical goods at near Six-Sigma levels (China Daily). Naturally, there are still a number of low-quality plants pumping out the lead-based toys and poisonous toothpaste that dominated the headlines in late 2007, but the message is clear: the “quality, not quantity” marketing position is about to become significantly more competitive.

Chinese efforts at improving quality will likely result in continued job losses and shutdowns in the Californian manufacturing sector, but the impact may not be as severe as some predict. Regional manufacturers are gradually learning the art of sourcing in China. Low-cost Chinese components, if sourced correctly, can redefine a manufacturing value chain. Input aspects of the manufacturing process are often relatively low in value-added effort and can, as such, often be eliminated from the manufacturing process altogether. Cutting a piece of steel or lumber, for instance, does very little to add value to an overall product because it is easily reproducible and labor-intensive. Sourcing pre-cut steel and other low value-added components allows manufacturers to focus on their key performance areas with the highest added value and most profit.

Moreover, if the low value-added components are of a high enough quality and a low enough price, they may even add margin to the product itself. Naturally, some business model flexibility is required to begin value-added sourcing, but companies serious about both growing and staying in Southern California are certain to adapt quickly.  

U.S. Air Force’s Arnold Engineering Development Center (AEDC) in Tennessee has decided to go back to 20-year strategic planning instead of running its Air Force jet engine testing program according to tactical short-term policies.

AEDC Commander Col. Art Huber said the Center is trying to achieve the following by re-emphasizing strategic planning (also referred to as “strategic landscaping”):

• What is the Center’s central mission?
• What are the mid-and long-term goals of the Center?
• What capabilities and resources are necessary to achieve them?
• Who are the main stakeholders? What are their interests and needs?
• What are the gaps, constraints and barriers standing in the way of meeting the strategic goals?

Thanks to the strategic planning in the past, today the Center has world-class altitude jet engine test cell capability, Huber said. Similarly, the needs of the future must be determined today through similar strategic planning if such superiority is to be maintained.

Strategic planning at times can suggest processes that could not be brought to the surface by mere tactical considerations. Here is an example:

Currently the Center also serves commercial customers, besides the U.S. Department of Defense. A decision to serve DoD exclusively may bring a change in the way the Center utilizes its client’s resources.

Currently the Center and its Aerospace Testing Alliance (ATA) emphasize reducing the the cost of testing by 3 to 5 percent, which makes sense from a conventional point of view.

But is it really the best way to maximize service value for DoD, given the fact that low-cost testing may also mean idle days with no testing scheduled?

“From a strategic viewpoint, when an aerospace program is spending a million dollars a day, whether they are testing or not. It may be much smarter for us to spend a little extra money and have resources on hand to expedite their time through AEDC rather than save a small amount of test dollars and drive a larger overall bill to the program,” said ATA General Manager Dr. David Elrod.

To read more on the merits of strategic planning in hi-tech defense industry: http://www.t-g.com/story/1298911.html

Strategic Planning is mainly a top-to-bottom process in that it’s a leadership level responsibility. It’s where the leadership refines and crystallizes its vision and direction for the organization and communicates it to the rest of the organization. Without that crucial communication the business entity is like a ship without a rudder.