Saturday Feb 28, 2009

Relative vs. Absolute Strength

In his classic work first published in the U.S. in 1982, Kenichi Ohmae outlines the general approach of a strategy analyst. He draws a distinction between absolute vs. relative strength and  explains why strategic thinking puts a particular emphasis on relative strength: 

I make the distinction between relative and absolute strength because there is a great difference between the two with respect to the degree of urgency. Internal weaknesses or inefficiencies can usually be tolerated, at least for a time. By contrast, deterioration of a company's position relative to that of its competitors may endanger the very existence of the enterprise. In effect, it will allow the company's profitability to be controlled by its competitors, a situation in which sound management of the enterprise will no longer be possible.

The Mind of the Strategist: The Art of the Japanese Business, Kenichi Ohmae

Sunday Aug 31, 2008

Time Delays

In Competing Against Time: How Time-Based Competition is Reshaping Global Markets, George Stalk, Jr. and Thomas M. Hout wrote:

Distortion between actual demand and perceived demand plague most businesses today. To escape them, companies have a choice. They can produce to forecast and try to ignore the reverberation that would cause them to do otherwise, or they can reduce the time delays in the flow of information and product through the system. The traditional solution is to produce to forecast...The new solution is to reduce the consumption of time throughout the system.

Managing time and information in supply chains have improved considerably since Stalk and Hout wrote their 1990 book. Bullwhip effect remains universally and as well-recognized (starting with ideas rooted in Jay W. Forrester's work) as in 1990. It is also known that even in the case of perfect information flow up a supply chain, some amplification of oscillations will continue to propagate upstream of any supply chain, and the only control action that remains (in a world of "perfect" information flow) is still the reduction of time delays, some of which will continue to survive due to the physical conditions of lived time and space. It still takes time to transport goods from point A to point B.

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