Last week, I started this mini-series on management practices and the link to productivity (in this case, we are talking about total factor productivity, TFP).
I would push back a bit on the usefulness for just-in-time and be in favor of a conscious trade-off for some resilience or (purposeful) slack in supply chains. I understand resilinece may not show up favorably in profitability for a long time(until it does). So potentially, a difference in costs incurred due to relying on a supply chain with e.g. higher than de minimis inventory levels or multiple suppliers (each with lower share compared to a single supplier - presumably resulting in less volume-related discounts) should be seen as an investment in an option for providing resilience of business continuation in the face of disruptions?
I agree with you. I think in the past we have gone too far down the road of supply chain optimisation and we forgot about supply chain resiliency. In 2022 we found out why supply chain resiliency is important and I think many businesses are now correcting their course.
Firstly, I wonder if management practices are universal, and the US dog-eat-dog turbo Capitalist model of lunch is for wimps and getting sacked by text translates to more communitarian societies? Even many American's are feeling squeezed.
Secondly, I wonder if a lack of automation and digitalisation is a symptom of short term thinking? I don't see much long term thinking here in the UK. Nor do I see any appetite for implementation. I don't know what it is but it's like Brits love getting an idea but get bored implementing it - working right near the HS2 terminus in Birmingham is a daily reminder of this.
I think you are on to something. The Brits lack 'grit' as I would say. The discipline to not only have an idea but stick to it as the going gets tough. You see that everywhere in the UK, not least in politics, where every politician likes to chase the shiny new toy for a couple of months just to turn their attention to something else. I can see the same happening in businesses as well.
As for US management practices, I think it is less a matter of turbo capitalism and more a matter of management practices like efficient processes and good talent management. These can and do lead to massive excesses in the US like the hire-and-fire mentality of many bosses and in my view, this is where thing become very counterproductive again since high staff turnover leads to lower profitability.
Amen to that. We seem to uniquely produce the likes of 'Neutron' Jack so named for the firing of 100,000+ GE managers and 10% up or out policies and Al 'Chainsaw' Dunlop for his ruthless cost cutting leading to corporate anorexia...
As an American, don't get me started on our US politicians, especially the Mad Orange....;-)
Very interesting article, I enjoyed it a lot.
I would push back a bit on the usefulness for just-in-time and be in favor of a conscious trade-off for some resilience or (purposeful) slack in supply chains. I understand resilinece may not show up favorably in profitability for a long time(until it does). So potentially, a difference in costs incurred due to relying on a supply chain with e.g. higher than de minimis inventory levels or multiple suppliers (each with lower share compared to a single supplier - presumably resulting in less volume-related discounts) should be seen as an investment in an option for providing resilience of business continuation in the face of disruptions?
I agree with you. I think in the past we have gone too far down the road of supply chain optimisation and we forgot about supply chain resiliency. In 2022 we found out why supply chain resiliency is important and I think many businesses are now correcting their course.
Thank you again for a thought provoking series.
Firstly, I wonder if management practices are universal, and the US dog-eat-dog turbo Capitalist model of lunch is for wimps and getting sacked by text translates to more communitarian societies? Even many American's are feeling squeezed.
Secondly, I wonder if a lack of automation and digitalisation is a symptom of short term thinking? I don't see much long term thinking here in the UK. Nor do I see any appetite for implementation. I don't know what it is but it's like Brits love getting an idea but get bored implementing it - working right near the HS2 terminus in Birmingham is a daily reminder of this.
I think you are on to something. The Brits lack 'grit' as I would say. The discipline to not only have an idea but stick to it as the going gets tough. You see that everywhere in the UK, not least in politics, where every politician likes to chase the shiny new toy for a couple of months just to turn their attention to something else. I can see the same happening in businesses as well.
As for US management practices, I think it is less a matter of turbo capitalism and more a matter of management practices like efficient processes and good talent management. These can and do lead to massive excesses in the US like the hire-and-fire mentality of many bosses and in my view, this is where thing become very counterproductive again since high staff turnover leads to lower profitability.
Amen to that. We seem to uniquely produce the likes of 'Neutron' Jack so named for the firing of 100,000+ GE managers and 10% up or out policies and Al 'Chainsaw' Dunlop for his ruthless cost cutting leading to corporate anorexia...
As an American, don't get me started on our US politicians, especially the Mad Orange....;-)