Mitigating Risk versus Reducing Costs in the Supply Chain

Reducing the cost of goods and services is an important goal for every business, especially in a competitive environment in a depressed market. Entrepreneurs should strive to improve gross margins by reducing their costs, but is this always the right focus?

Mitigating the risks associated with your critical supply chain, whether for procuring raw materials or goods or employing people who provide services, is more important in the long term than just reducing costs.

While one might be successful at lowering costs through tight controls, wage freezes, and aggressive negotiations, if the risks inherent in procuring such goods and services are not mitigated, there is no assurance that you would continue to receive such, regardless of cost. Short-term cost reductions might be replaced by higher replacement costs if the original supplier of the goods or services is incapable of delivering them or choses not to.

Entrepreneurs need to work with their supplier of goods and services (including employees) to find ways in reducing  risks for continued and reliable delivery of quality products and services for the long term. Foregoing short-term cost saving by gaining longer-term reliability of your supply chain is more critical for your success.

Ravi Patel

 

Published in: on August 30, 2010 at 5:40 am  Leave a Comment  
Tags: , , , ,

Laser Focus on Vision and Mission

Entrepreneurs understand the need for a clear Vision and the requirement to develop an appropriate Mission for that vision.

How many of you are really focused on the Vision and Mission (V&M) when making significant decisions? Do you get caught up in the day-to-day or near-term issues and challenges that you lose sight of the V&M? Do you get distracted on other opportunities that seem too good to pass up?

While attending a presentation by Bob “Nunndog” Nunnally, Director of Wingman Leadership at Your Wingman (www.yourwingman.com), I was struck by a point he made – “Beware of Distractions Disguised as Opportunities.”

How appropriate is that quote while focusing on V&M? Entrepreneurs could get distracted by what they perceive as opportunities, taking them away from their path towards V&M.

Be aware of potential distractions (disguised as opportunities) while you focus on your Vision and Mission.

Ravi Patel

 

Published in: on August 23, 2010 at 5:00 am  Leave a Comment  
Tags: , , , ,

Good Trends, but Poor Fundamentals!

I recently attended a talk by an economist who noted that during a recent three-year period, the U.S. economy showed good trends, but the fundamentals were weak. This led to some of the downturns in the stock market and housing meltdowns.

Entrepreneurs can learn from these lessons. What if your business shows good trends, but the fundamentals are poor? You  feel great in the short term, but the future might be bleak.

As an example, your sales may be on the upward trend, but if the fundamentals for your business – quality of product/service, delivery times, customer service, and so on are weak, how long will your sales continue to grow? What if your sales are growing, but your margins are rapidly declining? Is that really a good trend?

Entrepreneurs should not be fooled by short-term trends in their businesses, but focus on ensuring that the fundamentals are sound and going in the right direction. Determine the key drivers of your business and concentrate on fixing and enhancing these fundamentals to grow your company for the long term.

Ravi Patel

 

Letting Go

Entrepreneurs have a hard time of letting go; but, they must!

Starting and building a company is fun and exciting for Entrepreneurs. They are involved in all functions and cherish control over details. However, there comes a point in time to let go.

Successful companies are not built on single individuals, but a strong organizational team of management leading the employees. The Entrepreneur’s role is to build the management team, inspire them with the vision, and let them execute the mission.

Enlightened Entrepreneurs accept the process of letting go gracefully, while some pretend to delegate management responsibilities but continually interfere.

Are you an enlightened Entrepreneur willing to let go to build a successful company?

Ravi Patel