Hello this is Jim Tompkins the President and CEO of Tompkins Associates and Tompkins International. I am pleased to be back with you again today to begin a new Podcast series.
This eight part series will focus on one of the most important opportunities facing business today. This opportunity is the understanding of how to leverage the supply chain for increased shareholder value.
You should note that I did not say one of the most important supply chain topics, but one of the most important opportunities facing business today.
You see, it is my view that 2008 was the year of panic. The Great Recession hit with such force that business leaders became like deer in a way. Not only did they stand in the road staring into the on-coming headlights, but worse, they ran back and forth across highways at night, tempting their fate to unreasonable levels. This panic resulted in many businesses disappearing and many business executives feeling overwhelmed.
Following 2008’s panic was 2009’s total focus on survival. In many cases this meant tossing away strategy and cutting costs at every corner without regard to the long-term effects of these measures.
As 2009 turned to 2010 there was still a lot of hunkering down and a lot of uncertainty, as we have discussed, but things started to return to working on the basics of the supply chain and some strategy and long-term goals returned.
By the end of the year things began to open up and get to a norm. It was not the old norm, but things eventually settled to a level of growing optimism and confidence in moving towards success. As this confidence in moving towards success began to take hold organizations, company management and board leadership searched for the new frontier to drive shareholder value.
What was discovered by organization after organization was that the new frontier, the new focus for taking their organization to profitable growth was the supply chain.
This focus on the supply chain (and often on the global supply chain) is exciting to us who have focused our whole career on creating supply chain excellence.
Isn’t it cool that what you and I do has become the hot topic for shareholder value?
My view is that this is not just the focus of 2011. I strongly believe we are entering the golden decade of the supply chain. You see not only is the supply chain the enabler of increasing shareholder value, I believe for the next 10 years the supply chain will be the creator, driver, and force behind increasing shareholder value. So this podcast series is very, very important, and will present the driving force for increasing shareholder value for the next decade. These are exciting times and I am so pleased to be here to help you grasp how your organization needs to leverage the supply chain to increase shareholder value.
The purpose of today’s podcast is to introduce you to the topic of leveraging the supply chain for increased shareholder value as well as to lay the foundation for this series (which will run through the middle of May).
Before I give you an overview of the next seven installments on this series, allow me to explain our overall framework for supply chain value creation. We believe the goal of increasing shareholder value is achieved by pursuing three objectives:
Profitable Growth
Margin Improvement
Capital Efficiency.
Let's begin with the objective of Profitable Growth. All growth is not profitable. Unfortunately, many of us have learned this the hard way. The key here is not just to grow the top line, but at the same time to grow the bottom line. Just growing the top line is the wrong goal. We must achieve profitable growth.
I assure you that every board meeting at the end of 2010 and in early 2011 will have had substantial discussions on profitable growth and many of the meetings have concluded that the supply chain is the vehicle that will power profitable growth. There are two macro sets of actions that will beget the objective of profitable growth.
First we must capture new markets and customers. This obviously is about growing the top line. This can be done by increasing market penetration, product development, by market development or through diversification. At Tompkins we call this effort Strategic Market Planning.
This will be the subject of our second podcast in this series when I welcome back my friend and partner, Steve Ganster, who has dedicated the last 25 years of his professional career helping clients understand how best to capture new markets and customers. Second, in addition to this development of top line growth we must do this in the context of outperforming our competitors. This will assure our bottom line performance will be improved as we achieve top line growth.
In other words, we will achieve profitable growth.
It is the third part of this podcast series when we will focus in on our overall supply chain performance to outperform our competitors. I am very pleased to welcome back my friend and partner to this podcast, Valerie Bonebrake, who will present the keys to supply chain performance enhancement to support the overall objective of profitable growth.
Again, achieving the second objective of increased shareholder value, also known as Margin Improvement, can be broken into two actions and two podcasts in this series. The first has to do with reducing the costs of goods sold and the second is to improve speed and productivity.Of course reducing the cost of goods sold cuts across all the supply chain mega processes ( Plan-Buy-Make-Move-Store- Sell and Return).
We are fortunate to bring to this podcast, Dan Avila, a leading partner in our Global Supply Chain Services practice in the fourth part of this podcast series to discuss this process of reducing the costs of goods sold.
The second action that needs to be taken to improve margins is the improvement of speed and productivity. To do all activities quicker, smarter, and better. Joining us on this podcast to cover this topic will be a new person to Tompkins and to this podcast, Mark McCallister, who has, for more than 20 years, worked with clients to increase speed and productivity throughout the supply chain and thus improve margins. The range of supply chain improvement initiatives that will be discussed by Mark will be vast, all while he challenges you to do all of these things quicker and better.
This then leaves the last objective of increasing shareholder value, Capital Efficiency. There’s a long list of potential actions that need to be addressed here, but the two most important have to do with reducing working capital and fixed assets. There are many value drivers to reducing working capital and fixed assets, but the two most important topics here are to reduce inventory and to optimize your supply chain network to reduce your fixed assets.
On the sixth installment of this podcast I am pleased to welcome back our own Tompkins export on inventory, Ralph Cox. Ralph will help you guide your firm to reducing working capital while increasing customer satisfaction. This focus on inventory reduction is very, very important and the source of the free cash flow that is so important to increasing shareholder value.
Then on the seventh installment in this series I welcome back a long time Tompkins partner, John Spain, who has been here at Tompkins for over 30 years to help you navigate Network Optimization, a practice he founded here at Tompkins in the late 1970’s.
So this then describes our framework for leveraging the supply chain to achieve an increase in shareholder value. This podcast today has presented an overview of this framework and this podcast series will present the process-specific view of how to create shareholder value through profitable growth, margin improvement, and capital efficiency.
Of course, this podcast cannot address the complexity or the breadth of today’s Global Supply Chains, but hopefully we will be able to lay a basic foundation and stimulate your interest in learning more about leveraging the supply chain to increase shareholder value. Towards this end I have asked the Tompkins king guru on the supply chain, Gene Tyndall, to join me on the eight and last installment of this podcast series. It is clear that Gene is the leading thought leader in the Global Supply Chain space and I look forward to welcoming him back to this podcast to highlight the conclusions and takeaways that I hope you gained by listening to this series.
These times are fun times for us in the supply chain. I truly see us entering the Golden Age of the supply chain an see the attention and focus from the C-level to be exciting. I look forward to your being with me on this podcast series as we plow into the key subject of creating shareholder value through the supply chain.
Thanks for being with me today; I look forward to speaking to you all again real soon. Goodbye for now.
