transportation strategy – scmn 4780 leadership in business
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Transportation Strategy – SCMN 4780 Transportation Strategy – SCMN 4780
Leadership in Business Leadership in Business
Transportation Strategy Transportation Strategy SCMN 4780SCMN 4780
Corporation
Division A
Division B
Division C
Business Unit A-1
Business Unit A-2
Business UnitB-1
Business UnitB-2
Business Unit C-1
Business Unit C-2
Plants &Factories
Plants & Factories
Plants & Factories
Plants & Factories
Plants & Factories
Plants & Factories
Organization: Business Alignment Organization: Business Alignment
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 478033
Shareholder Value Roll-Up Shareholder Value Roll-Up
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 478044
BUSINESS Marketing & Operating Strategy
MISSION & VISION
CORPORATE Management System
Sales & Ops Planning
New Product Planning
Sourcing Management
Transportation Management
Strategic Management Framework Strategic Management Framework
Leadership Model
Strategizing and
Directing
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Performing and
Delivering
Transportation Strategy Transportation Strategy SCMN 4780SCMN 478055
BUSINESS Marketing & Operating Strategy
MISSION & VISION
CORPORATE Management System
Sales & Ops Planning
New Product Planning
Sourcing Management
Transportation Management
Strategic Management Framework Strategic Management Framework
Leadership Model
Corporate structure (overhead) must
contribute value to the collection of
businesses
Leadership in BusinessLeadership in Business
Transportation Strategy Transportation Strategy SCMN 4780SCMN 4780
ITT Corporation HistoryITT Corporation HistoryInternational Telephone & Telegraph was formed in 1920 by the Behn brothers merging acquisitions of the Pueto Rico Telephone Company, the Cuban-American Telephone & Telegraph Company and half-interest in the Cuban Telephone Company.
During the 1960s and 1970s, under the leadership of its CEO Harold Geneen the company rose to international prominence as the archetypal conglomerate, deriving its growth from hundreds of acquisitions in diversified industries. By 1989, ITT had sold all international telecommunications.
ITT Educational Services (ESI) was spun off through an IPO in 1994. In 1996, ITT Corporation split into 3 separate public companies:
• ITT Corporation (lodging & gaming) — By 1997, this business merged its operations with Starwood Hotels & Resorts. By 1999, ITT Corp. dropped the ITT name in favor of Starwood.
• ITT Hartford (insurance) — ITT Hartford is a major insurance company and has dropped the ITT from its name altogether. The company is now known as Hartford Financial Services.
• ITT Industries (manufacturing) — A major manufacturing and defense contractor. In 1998, ITT Industries sold its automotive businesses. The company operated under this name until 2006 when it reverted back to ITT Corporation to protect the brand.
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 4780
2011 ITT Corporate Breakup2011 ITT Corporate BreakupJan 12, 2011 (Reuters) - U.S. manufacturer ITT Corp plans to split itself into three publicly traded companies to take advantage of growing water management and industrial markets as its defense unit braces for U.S. military spending cuts.
ITT Chairman and Chief Executive Steve Loranger said the break-up had been considered for six months and was made by the management and board with no investor pressure. But activist investor Relational Investors' Ralph Whitworth told Reuters in an interview that the group has amassed a 4% stake in ITT and urged a break-up of the industrial conglomerate. Whitworth said that ITT's announcement will likely have averted a proxy fight with Relational Investors, which had nominated three directors in a November letter and had urged a sale of the defense business.
After the split, ITT Corp will continue as an aerospace, transportation, energy and industrial engineering company. Another company will make water pumps, and the third will supply defense equipment. Last month, ITT said the businesses that supply water pumps and products for transportation markets would drive earnings in 2011. It said revenue and operating income would rise in those two segments, but fall in defense, the company's largest unit. Skibitski said uncertainty about ITT's defense business because of expected U.S. budget cuts held back the share performance. With the share rise on Wednesday, ITT's value is about $11 billion.
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 478088
What is a Strategy? What is a Strategy? "Strategy is the direction and scope of an organization over the long-term which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations". **• Where is the business trying to get to in the long-term (direction)?
• Which markets should a business compete (market scope)?
• How can the business perform better than competition in the market (advantage)?
• What resources are required in order to be able to compete (resources)?
• What external factors affect the businesses' ability to compete? (environment)?
• What are the power broker’s values / expectations (stakeholders / shareholders)?
** Johnson and Scholes (Exploring Corporate Strategy)
Leadership in BusinessLeadership in Business
Transportation Strategy Transportation Strategy SCMN 4780SCMN 4780
Integrated Management FrameworkIntegrated Management Framework
MISSION core
purpose of the enterprise
VALUES timeless guiding principles
VISION word picture of ideal future business model
STRATEGY game plan for success
KEY PERFORMANCE INDICATORS presentation of enterprise key / critical strategic objectives
BALANCED SCORECARD enterprise performance measures, goals / targets, initiatives
CASCADING MEASURES performance measures common to all businesses / functions aligned to enterprise objectives
GOALS DEPLOYMENT link balanced scorecard to business processes such as budgeting, reporting, compensation
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Operational Excellence BUSI Operational Excellence BUSI 7220 / 72267220 / 72261010
Statements created by inspiring leaders to clearly and concisely convey the direction of the enterprise include: • A MISSION STATEMENT defines organizational
purpose and primary business objectives. Its prime function is internal communication – to define key measures of success to the leadership team.
Make it as succinct as possible Make it memorable Make it unique to you Make it realistic Make sure it's current
Business Directional Statements Business Directional Statements
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 47801111Leadership in Business3Leadership in Business3
Transportation Strategy Transportation Strategy SCMN 4780SCMN 4780
COMPANY
PepsiWal-MartWalt Disney
Honda CyclesCoca Cola3M
ReebokNike
Sony
General Electric
MISSION
1. To solve unsolved problems innovatively2. To make people happy3. To experience the joy of advancing and applying
technology to benefit the public 4. Crush, squash and slaughter Yamaha5. Beat Coke6. Bring refreshment, value, joy and fun to our stakeholders,
then we will successfully nurture and protect our brands.
7. Crush Reebok8. Ignite a passion for winning, to do extraordinary and to
capture the customer’s heart and mind 9. Give ordinary folk the chance to buy the same things as
rich people 10. Boundaryless … Speed … Stretch
Mission Statement Match GameMission Statement Match GameMATC
H
592
461
87
3
10
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 47801313
Corporate Culture: What is it?Corporate Culture: What is it?Culture is a system of values, beliefs and attitudes that shape and influence perception and behavior; it is an abstract “mental blueprint” or “mental code” and must be assessed by the actions and customs of the group. It is … • Learned • Shared• Patterned • Mutually constructed • Symbolic • Arbitrary
It is the answer to the question “How do things get done around here?
Leadership in BusinessLeadership in Business
Transportation Strategy Transportation Strategy SCMN 4780SCMN 47801414
Corporate CultureCorporate CultureAt General Electric, corporate values are so important to the company that they are inscribed and distributed to all employees, at every level.
The sum is greater than its parts at GE as both business and people diversity is utilized in a most effective way. A massive American enterprise with a diverse group of large businesses, GE is steeped in a corporate culture and it is this fact that makes it unique.
"What sets GE apart is a culture that uses diversity as a limitless source of learning opportunities, a storehouse of ideas whose breadth and richness is unmatched in the world of business. At the heart of this culture is an understanding that an organization's ability to learn, and translate that learning into action rapidly, is the ultimate competitive business advantage.”
Jack Welsh, Retired CEO @ General Electric
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 47801515
Corporate Belief System Corporate Belief System
Corporate beliefs … • are a statement of its values • must meet its organizational and community goals • are a public / visible declaration of its expected outcomes • must be precise and practical • will guide the actions of employees • reflect the knowledge, philosophy and actions of all • are a key component of strategic planning
Leadership in BusinessLeadership in Business
Operational Excellence BUSI Operational Excellence BUSI 7220 / 72267220 / 72261616
Created by inspiring leaders to clearly and concisely convey the direction of the enterprise. • A MISSION STATEMENT defines organizational purpose and
primary business objectives. Its prime function is internal communication – to define key measures of success to the leadership team.
• A VISION STATEMENT defines organizational purpose in terms of values (belief system). It gives direction to external shareholders and internal stakeholders as to how they are expected to behave and inspires them to do their best .
Business Directional Statements Business Directional Statements
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 47801717
Management System Management System
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 47801818
Strategic Planning FrameworkStrategic Planning Framework
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 47801919
Importance of Strategic PlanningImportance of Strategic Planning
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 47802020
Strategic Vision ParametersStrategic Vision Parameters
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 47802121
Managerial Competencies Managerial Competencies Senior Management Primarily focused on the strategic, managing change, understanding power, reading cultures Middle ManagementGive up your area of expertise, manage areas that you know little or nothing about, solve problems and make critical decisions First-Line Manager Promoted because of expertise, people are complex and can be difficult to motivate and manage
0% 100%
STRATEGY
TACTICS
Manager Time Allocation
Senior
1st Line
Middle
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 47802222
People (Human Resources) management approaches: • Theory X: Assumes employees dislike / avoid work; managers
must use coercion, threats, control schemes to motivate workers • Theory Y: Assumes employees consider work as natural and
enjoy the satisfaction of esteem and self-actualization needs• Theory Z: Japanese team-based approach to motivate workers;
focus on trust, quality, collective decision making, cultural values
Managing People – MotivationManaging People – Motivation
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 47802323
Successful Managers Successful Managers Qualifications ●Ambitious●Made sacrifices ●Intelligent ●Good track record ●Identified early
Differentiators ●Diversified track record ●Able to maintain composure●Handle problems with poise ●Focus on problem solving ●Able to foster relationships
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 47802424
Ability to Influence People Ability to Influence People The boss has the power and/or influence through ….● Authority: legitimate hierarchical right to issue orders● Penalty: ability to cause discipline● Assignment: ability to influence future assignments● Budget: ability to authorize use of discretionary funds● Promotion: improve a worker's position (grade level) ● Money: increase a worker's pay and benefits● Friendship: facilitate relationships between team members● Work Challenge: assign work that capitalizes on a
employee’s enjoyment of doing a particular task● Expertise: use special knowledge deemed important
Diminishing importance
Increasing importance
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 47802525
Employee CompensationEmployee Compensation● Hourly: paid for hours worked (overtime / holiday rules) ● Individual Incentive (aka piece rate): employees paid
for the number of units they produce during the workday● Exempt vs. Non-Exempt: applies to eligibility to receive
overtime pay ● Salaried: compensated a fixed salary, common form of
payment for management employees ● Commissions: usually applied to sales and salespeople● Profit / Gain Sharing: compensate employees over and
above salary for team-based successes ● Bonus: quarterly, annual, long-term, stock options
Leadership in BusinessLeadership in Business
Transportation Strategy Transportation Strategy SCMN 4780SCMN 4780
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Business / Operating Strategy
Mission & Vision
Corporate
Management System
Sales & Ops Planning
New Product Planning
Sourcing Management
Transportation Management
Strategic Management Framework Strategic Management Framework
Leadership Model
Leadership in BusinessLeadership in Business
Transportation Strategy Transportation Strategy SCMN 4780SCMN 4780
Integrated Management FrameworkIntegrated Management Framework
MISSION core
purpose of the enterprise
VALUES timeless guiding principles
VISION word picture of ideal future business model
BUSINESS STRATEGY game plan for success
KEY PERFORMANCE INDICATORS presentation of enterprise key / critical strategic objectives
BALANCED SCORECARD enterprise performance measures, goals / targets, initiatives
CASCADING MEASURES performance measures common to all businesses / functions aligned to enterprise objectives
GOALS DEPLOYMENT link balanced scorecard to business processes such as budgeting, reporting, compensation
2727Leadership in BusinessLeadership in Business
Transportation Strategy Transportation Strategy SCMN 4780SCMN 4780
Plan Element Strategic Tactical
Operational Execution
Business Planning
Time “Bucket”Years
Months Weeks
Days / Hours
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Integrated Business Planning ModelIntegrated Business Planning Model
Horizon3 – 5
12 – 15 1 – 13
TBD
Transportation Strategy Transportation Strategy SCMN 4780SCMN 47802929Leadership in BusinessLeadership in Business
Transportation Strategy Transportation Strategy SCMN 4780SCMN 47803030
Strategy: SWOT Analysis Strategy: SWOT Analysis
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 4780
The benchmarking process provides … • a company's comparative performance to
that of other companies using both objective and subjective criteria
• the strategic positions of competitors for use as reference points in the formation of decisions and objectives
• A performance assessment for a specific activity relative to the methods of a competitor doing the same thing
• a comparative methodology for lowering costs, reducing defects, increasing quality, and / or improving outcomes linked to operational excellence
BenchmarkingBenchmarking
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 4780
● Benchmarking provides a competitive analysis and also creates the basis for company change
● Benchmarking commonly takes one of four forms: 1. Generic benchmarking investigates activities that are or can be
used in most businesses 2. Functional benchmarking looks at similar practices and processes
in organizations or companies in other industries 3. Competitive benchmarking compares the organization's processes
to those of direct competitors (peer group) 4. Internal benchmarking compares business processes and / or
practices over time in light of established goals
BenchmarkingBenchmarking
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Maturity will be reached when: ●industry best practices are incorporated into all the business processes, thus ensuring superiority
●benchmarking becomes an ongoing, essential and self-initiated facet of the management process
●benchmarking becomes institutionalized and is done at all levels of the organization (not by specialists)
Benchmarking Process Benchmarking Process
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Operational Excellence BUSI Operational Excellence BUSI 7220 / 72267220 / 72263434
• Competitive
• Best Practice
• Best-in-Class
• World-Class
Business ExcellenceBusiness Excellence Performance Descriptors Performance Descriptors
Leadership in BusinessLeadership in Business
Operational Excellence BUSI Operational Excellence BUSI 7220 / 72267220 / 7226
BusinessStrategy
OperatingStrategy
MarketingStrategy
Supply ChainStrategy
Business Strategy
Corporate Vision / Mission / Goals
Strategic Planning Strategic Planning
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 47803636Leadership in BusinessLeadership in Business
Key Performance Indicators (KPIs) Key Performance Indicators (KPIs)
Transportation Strategy Transportation Strategy SCMN 4780SCMN 47803737
Business measurements, agreed to beforehand, that: reflect the objectives / goals of an organization must be key to the enterprise’s success (critical success factor) must be quantifiable (measureable)
Focused on the long-term (strategic) considerations – the what’s and how’s do not change often
Number of KPIs is 3 – 5 at each organizational level (typ) Availability / ease of access to data to produce the KPIs is
critical in designing the system
Key Performance Indicators (KPIs) Key Performance Indicators (KPIs)
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Class Exercise – AU College of Business KPIs
Transportation Strategy Transportation Strategy SCMN 4780SCMN 47803838
Balanced Scorecard Balanced Scorecard A strategic planning and management system used
extensively in business to: align business activities to the vision and strategy improve internal and external communications monitor organization performance against strategic goals
Originated in 1990s by Drs. Robert Kaplan and David Norton as a performance measurement framework
Adds strategic non-financial performance measures to traditional financial metrics to give management a 'balanced' view of organizational performance
Roots of the BSC system were pioneered at GE in 1950’s
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 47803939
Balanced Scorecard Balanced Scorecard Financial Perspective
Strategy for growth, profitability and risk from the shareholder’s perspective
Customer Perspective Strategy for creating value and differentiation from the perspective of the customer
Internal Business Perspective Strategic priorities for various business processes that create customer and shareholder satisfaction
Learning and Growth Perspective Priorities to create a climate that supports organizational change, innovation and growth
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 47804040
Supply Chain DashboardSupply Chain Dashboard
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 47804141
Goals DeploymentGoals Deployment
Goals Deployment 1.) creates alignment and accountability; 2.) stops the leak between strategic plans and action plans; and 3.) ensures that we are realizing the full potential of our strategies.”
Steve Loranger, CEO ITT Corporation
Goals Deployment Process (GDP) includes: • Cascading goals through all levels of an organization • Involving all managers in the goal deployment process • Linking goals with performance management and appraisal systems • Extensive communication of goals throughout the organization
Leadership in BusinessLeadership in Business
Transportation Strategy Transportation Strategy SCMN 4780SCMN 47804242
Goals Deployment Process Goals Deployment Process
Identify critical issues and imperatives
Define strategic business goals
Deploy Goals: • Metrics • Targets • Ownership
Create and execute Action Plan to achieve targets
Achieve sustainable results
Performance Dialogue
Repeat Annually
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 4780
Operating Strategy – WalMartOperating Strategy – WalMart
Provide Value for Our Customer
Low Prices, Everyday
Reduced Cycle Time
Efficient Logistics System
Low Inventory Levels
Integrated Supply Chain
EDI Cross Docking Focused Sites RFID
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Transportation Strategy Transportation Strategy SCMN 4780SCMN 4780
1. Identify the company’s competitive essence
2. Establish the right structure 3. Out execute (the competition) 4. Balance structure and execution 5. Choose the right journey (strategy)
Hallmarks of Business Excellence Hallmarks of Business Excellence
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