Category Management

It’s been described as one of the most scientific approaches to decision-making in retailing because of its reliance on data. Grocery retailers across the world were the earliest to adopt it, but over the last few years retailers in all categories have looked at it as a tool for seeking sustainable competitive differentiation and advantage. The ‘it’ here is category management. And for the retailer striving to bring greater focus to the store and improve its management and measurement processes, category management is most often the answer.

So, just what is category management? Quite simply category management involves organising and managing promotions, merchandising and distribution activity around the way consumers view and buy a product. A more formal definition would be ‘Category management is a retailer-supplier process of managing categories as strategic business units (SBUs), producing enhanced results by focusing on delivering consumer value’. Which then brings us to the question – what is a category?

A ‘category’ is a distinct, manageable group of products or services that consumers perceive to be inter- related and\or substitutable. It must be noted here that the focus of both the category and category management is the consumer and providing her with a range of products and services that offer more value. Category management must not be run contrary to the will and interests of the consumer and should favour the consumer if need be: This is the Holy Grail of this aspect of retail management. Thus, the aims of category management are to:

• Satisfy the consumer
• Grow the category
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Interactive Marketing

Interactive Marketing refers to the evolving trend in marketing whereby marketing has moved from a transaction-based effort to a conversation. The definition of interactive marketing comes from John Deighton at Harvard, who says interactive marketing is the ability to address the customer, remember what the customer says and address the customer again in a way that illustrates that we remember what the customer has told us (Deighton 1996). Interactive marketing is not synonymous with online marketing, although interactive marketing processes are facilitated by internet technology. The ability to remember what the customer has said is made easier when we can collect customer information online and we can communicate with our customer more easily using the speed of the internet. Amazon.com is an excellent example of the use of interactive marketing, as customers record their preferences and are shown book selections that match not only their preferences but recent purchases.
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Supply Chain Risk: It is Time to Measure It

The recent Toyota brake pedal disaster is an example of a massive failure in product design magnified by supply chain lead time. Current cost estimates total at least two billion dollars, not including future lost sales from the damage to consumer confidence.

When quality problems like this occur, supply chain lead time often determines the time required to resolve the problem. The cycle times in a vast global supply chain like that of Toyota further increase the problem.

The supply chain is the lifeblood of the corporation; it determines the overall health of your business. Sales revenue depends on the supply chain delivering product availability. Sixty to seventy percent of a firm's cost is typically controlled by the extended supply chain. Inventory is managed by the supply chain, and is at the heart of working capital levels. The supply chain also determines levels of physical capital by managing the utilization of factories, warehouses, and space in retail stores.

It follows that it's essential to have a disciplined process in place to identify, prioritize, and manage the wide range of risks that can impact you supply chain. But many supply chain executives often find themselves at the center of the storm, striving to balance very demanding operational objectives with the need to satisfy customers, cut costs and help grow revenue. They must find ways to operate successfully today, yet also improve rapidly to be competitive in the future. Improvement basically means getting projects done efficiently and fast, leaving little time to consider risk.

Since the life blood of the corporation flows through its supply chain, changes to it can carry huge risks. Supply chain disruptions can result in a devastating impact on shareholder value; with one study showing an average 40 percent decline in share price due to supply chain disruptions.

Clearly, it is extremely important that a supply chain outsourcing strategy identify risks. But in the research done by HBS, they find a lack of any process to identify, prioritize, manage, and mitigate risks. In our database of hundreds of companies, we frankly find that most firms ignore risks, sometimes with dire consequences. Our data show that when companies analyze global outsourcing decisions, they fall into three categories. Those who:

- add a risk assessment, 10%
- look at unit cost plus transportation only, 35%
- include inventory as part of the assessment, 55%

In other words, 90 percent of the firms do not conduct a risk assessment when outsourcing production. Yet, sourcing offshore carries myriad additional risks such as political instability, port disruptions, currency swings, demand swings, and more. Unforeseen events occur more frequently in very long global supply chains.

And it is not just the global environment that creates supply risk. There is plenty of it in almost every major initiative. For example, a supply chain professional from a toy retailer told of trying to implement a new fulfillment system that went far over schedule and budget. The Christmas spike exploded before the fulfillment system was complete, resulting in an inability to process orders. People throughout the company worked 50 days straight, including Sundays, to try to stay ahead, yet the firm was forced to send thousands of letters saying, "Sorry your toy order will not arrive before Christmas."

The evidence is overwhelming: Supply chain strategy demands formal risk assessments. So the question is ‘Do you have a supply chain risk management process in place?’
(Source: Harvard Business Review)
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One More Look at Layoffs During the Great Recession

Here's a brief update on some research that have been done on layoff practices.

For a decade it has been tracked who was likely to be fired in Europe during an economic downturn. Surprisingly, it was not generally the least productive managers. Over 40% of European managers said they would layoff an older manager even if that manager was a high performer. Twenty eight percent said they would fire younger workers even if they were cheaper or better performers than others. Less than a third of the Europeans surveyed since 1999 said they would fire the employee being called the "weak link," the older, expensive, average performer.

But the Great Recession seems to have changed Europe's attitudes to layoffs. Over the summer of 2009, it has been asked to 700 international managers the same set of questions. This time, nearly half of respondents targeted the weak link, the older, expensive, average performer. Second, 42% said they would choose to fire a younger manager, even if he was cheaper or better. The older, more expensive but high-performing managers were targeted for layoff the least, by only 10% of the responding executives.

Notably, younger managers were always more likely to fire older managers. But respondents over age thirty-five were about twice as likely as younger managers to fire a young, good, and cheap employee. The overall message seems to be: Work well, don't cost too much, and avoid middle age.

A close look has been taken at layoff practices across cultures. In the previous research, it has been found managers in Anglo-Saxon cultures typically fired the weak links, the least productive, mid-career stage managers. Germanic countries overwhelmingly laid off the youngest managers even if they were cheaper or better performers. Latin countries preferred to fire older managers, even if they were excellent.

In this most recent round of research, though, things have changed. Average performers are being targeted more across all cultures. The top two targets for layoff this time around were the older, expensive, average performer and the younger average performer.

Drilling down, the Dutch, Indians, and Germans are the most likely to target the average performers. The Italians, French, Austrians, and Polish were less likely to fire the so-called weak links. Americans, previously noted for ruthlessness in firing weak performers, now fall in the middle.

When it came to laying off high performers, though, cultures diverged. The younger excellent manager was the more common target in Germany, the U.S., Poland, and France. The older excellent manager was the more common target in Italy and India. If you're young and/or good, head for Holland or Italy.

Comparing these results to the previous results, the Great Recession seems to have focused businesses' firing practices more on performance, and less on age and cost. Lless divergence was seen in layoff attitudes and more agreement (though not total agreement) that weak links — highly paid average performers, especially older ones — should be the first to be laid off. More managers were willing to retain high-priced employees if those employees were high performers.
(Source: Harvard Business Review)
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The Concept of Continuous Improvement

TQM is primarily related with constant development and perfection in all work, from top level to the shop floor. It stops from that errors or it can be prevented from various tools or measures. It direct towards continuous improvement in the out come, in all aspects of work, as an effect of continuous improvement of capable people, more and continuous improved processes, and technology and machine capabilities can be achieved for zero defects.

Continuous improvement must goes not only with get better results, but further significantly with enhancing competencies to produce better outcomes in the future. Demand initiation, supply generation, technology, operations and people capability are the five most important areas of focus for competency improvement. Here mistakes made by people, by any fault process can be identified and eliminated and replication can be prevented by varying the process.
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The spectre that haunts Europe

A bail-out for Greece will not be the end of the euro area’s fiscal troubles

AS FINANCE ministers from the European Union gathered in Brussels for a two-day “informal” summit on February 11th, there was only one topic on the agenda: how best to help Greece avoid defaulting on its debts while, at the same time, reassuring bond markets that other euro-area countries with big budget deficits, such as Ireland, Portugal and Spain, were still safe bets.

As The Economist went to press, only the basic elements of a possible backstop for Greece had emerged. Pride is at stake, so it will be a “European solution”, with the IMF limited to an advisory role. It will be a joint effort led by France and a somewhat reluctant Germany, the country with the deepest pockets. Berlin frets that a rescue will only encourage further profligacy.

Acting in concert limits the political fallout that comes from rescuing countries. It helps put pressure on Greece for more reforms and cuts in public spending as conditions of the bail-out. But the need for co-ordination makes it hard to act decisively, and leaves bond markets nervous. Funding will be limited, perhaps just enough to help Greece meet its immediate obligations (€20 billion of its debts fall due in April and May). Help may take the form of a guarantee on refinancing bonds or an outright purchase of those bonds by Greece’s rescuers.

There is talk that one reason to keep the IMF out is that its chief, Dominque Strauss-Kahn, may be a rival to President Nicolas Sarkozy in the French elections in 2012 (see article). If Europe snubs the IMF, it may eventually need to set up a clone—a European Monetary Fund—to deal with future funding crises. That idea has little support for now, it seems. The ad hoc response to the Greek crisis may partly reflect a fear that a formal set-up with a staff, budget and the ability to raise funds in capital markets would be too close to a fiscal union for many countries to stomach.

For some, the rescue of Greece marks a new wave of the global financial crisis. The first was about the solvency of banks; this one is about the solvency of sovereign countries. Yet Greece’s public-finance problems were brewing long before the rich world’s banks started to falter. When it joined the euro in 2001, its public debt was already more than 100% of GDP. Despite a long boom spurred by low interest rates inside the euro, Greece did little to tackle its persistent deficits.

After its new government admitted, last October, that its budget shortfall would be 13% of GDP, more than twice previous forecasts, Greece’s cost of borrowing started to pick up. Bond investors were further unnerved by the revelation that Greece’s debt had been understated by keeping unpaid bills off the books. With the country’s credibility shot, even the tough austerity programme announced earlier this month could not rally confidence.

Talk of a bail-out brought some calm to financial markets, though there is a risk that the lack of detail may trigger fresh paroxysms. The yield on ten-year Greek bonds fell below 6% the day before the EU gathering: in late January it had risen above 7%. The euro, which had been falling steadily against the dollar, perked up a bit.

Some euro-crats (and more than a few people in Greece) feel the euro zone has been picked on by speculators. They point out that its debt burden is no worse than in other parts of the rich world. The OECD reckons public debt in Britain and America will be higher than in the euro zone by 2011, as a proportion of GDP. The problem for the euro area is that it has trouble-spots, like Greece, with worse than average finances, and no means (until now) to tap the credit of their thriftier brethren.

Even that may be too kind a comparison. Bond investors have worried most about countries with big borrowing needs adding to an already high stock of debt. In future, they may fret more about the longer-term prospects for GDP growth. Sluggish economies cannot sustain a big debt burden for ever; and the euro-zone countries with the most bloated debt burdens also face severe obstacles to growth. Fixing public finances is just the beginning of a much-needed programme of reforms.
(Source: The Economist)

5S Concept

Total Productive Maintenance is established with 5S concept. Difficulty cannot be obviously observed when the work place is unorganized, so clean-up it to find out problems. Creating troubles noticeable is the first step of development.

Japanese Term & Equivalent 'S' term
 Seiri - Sort ( Organizing )
 Seiton - Systematize (Neatness)
 Seiso - Sweep (Cleaning )
 Seiketsu - Standardize (Standardization)
 Shitsuke - Self–Discipline (Discipline)

Seiri - Sort out

This denotes categorizing and organizing the items as significant, regularly utilized items, inadequate, or items that are not required as of at the present moment. Useless items can be put away. Significant items should be set aside for the use nearby and items that are not be utilized in near future, should be stocked at other place. So, here the worth of the item should be determined according to the usefulness and not cost. As an out come, the hunting time is reduced.

Preference & The use
- Less (Once per year) Store it to different place from the workplace other wise dispose off it
- Average (Once per month/ week) Store order wise according to the need
- Frequent use (Once per Day) Make sure that at the workplace easily locatable

Seiton - Organize

It states that "Each and every item has a place and just only and only one place". The items after utilizing for work should be to be found back at similar place. To spot out items without difficulty, name plates and colored tags has to be utilized.

Seiso – Cleaning up workplace

This entails cleaning the work place must be free of dust, grease, oil, waste etc which means housekeeping.

Seiketsu - Standardization

Employees have to talk about mutually and putted in the practice some standards for maintaining the work place, machines and roads neat and clean. These standards are executed for whole organization and are checked arbitrarily.

Shitsuke - Self-discipline

Taking into account of 5S as a manner of life and made self-discipline amongst the employees of the organization. This covers wearing badges, following work methods, punctuality, devotion to the organization etc.
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Let Your Employees Succeed by Letting Them Fail

Good management is somewhere between controlling and ignoring; your job as a manager is to figure out the right balance. When you see an employee making a mistake, you may want to intervene. But, people don't learn by being told how to do something right. Stop yourself from interfering. Let your employee make the mistake and then help her adjust to get it right the next time. Of course, you do need to assess the risks and the consequences of failure — if your employee is about to present a flawed report to the CEO, intervene. But when the risks are lower, be prepared to watch and endure more failing than you might be comfortable with.
(Source: Harvard Business Review)
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The business opportunity in water conservation

For many companies, water efficiency is a long-term requirement for staying in business, a big commercial opportunity, or both.

In a world where demand for water is on the road to outstripping supply, many companies are struggling to find the water they need to run their businesses. In 2004, for instance, Pepsi Bottling and Coca-Cola closed down plants in India that local farmers and urban interests believed were competing with them for water. In 2007, a drought forced the US Tennessee Valley Authority to reduce its hydropower generation by nearly a third. Some $300 million in power generation was lost.

Businesses everywhere could face similar challenges during the next few years. A larger global population and growing economies are placing bigger demands on already-depleted water supplies. Agricultural runoff and other forms of pollution are exacerbating the scarcity of water that is clean enough for human and industrial use in some regions, and changes in climate may worsen the problem. Scarcity is raising prices and increasing the level of regulation and competition among stakeholders for access to water. To continue operating, companies in most sectors must learn how to do more with less.

Achieving that goal is an opportunity as well as a necessity. Many of these same companies are developing products and services that can help business customers raise their water productivity. In agriculture, improved irrigation technologies and plant-management techniques are yielding “more crops per drop.” New approaches now rolling out will help oil companies, mines, utilities, beverage companies, technology producers, and others use water more efficiently. Closing the gap between supply and demand by deploying water productivity improvements across regions and sectors around the world could cost, by our estimate, about $50 billion to $60 billion annually over the next two decades. Private-sector companies will account for about half of this spending, government for the rest. Many of these investments yield positive returns in just three years.
(Source: McKinsey Quarterly)

The Looming Deleveraging Challenge

Several major economies are likely to face imminent deleveraging. If history is any guide, it will be a lengthy and painful process.

The specter of deleveraging has been haunting the global economy since the credit crunch reached crisis proportions in 2008. The fear: an unwinding of unsustainable debt burdens will drag down growth rates for years to come. So far, reality has been more benign, with economic growth recovering sooner than expected in some countries, even though the financial sector is still cleaning up its balance sheets and consumer demand remains weak.

New research from the McKinsey Global Institute (MGI), though, suggests that the deleveraging process may just be getting under way and is likely to exert a significant drag on GDP growth.1 Our study of debt and leverage2 in ten mature and four emerging economies3 indicates that some sectors of the economies of five countries—Canada, South Korea, Spain, the United Kingdom, and the United States—will very probably experience deleveraging.

What’s more, our analysis of deleveraging episodes since 1930 shows that virtually every major financial crisis after World War II was followed by a prolonged period in which the ratio of total debt to GDP declined significantly. The one exception was Japan, whose bursting asset bubbles in the early 1990s touched off a financial crisis followed by many years when rising government debt offset deleveraging by the private sector. The “lost decade” of sluggish GDP growth that followed is a cautionary tale for policy makers hoping to somehow avoid the painful process of deleveraging.

Business executives too will face challenges: they may have to adapt to an environment in which credit is tighter and costlier and consumer spending could be slower than trend over the medium term in countries where household debt has built up. Our findings underscore the likelihood that growth will be stronger in emerging markets, which are far less leveraged, than in mature ones. To cope, companies should build the potential impact of “pockets” of deleveraging into their market outlooks.
(Source: McKinsey Quarterly)

Some developing economies are rich but crude, while others are poor but sophisticated

ONCE a sleepy fishing port, the industrial city of Yanbu, on Saudi Arabia’s Red Sea coast, is now a monument to the country’s efforts to diversify its economy. Its petrochemical plant is a sprawling palace of pipes. Propane tanks and cracking towers shimmer in the heat like domes and minarets. The facility’s engineers live with their families nearby in a leafy enclave, their shady balconies reminiscent of the traditional rowshan windows of old Jeddah. At the local mall, shoppers can buy any flavour of Holsten Pils they like (strawberry, apple, pomegranate), so long as it is non-alcoholic.

Like many developing countries, Saudi Arabia has long struggled to wean itself off its dependence on a handful of commodities, in this case oil. Yanbu was built by a royal commission, set up in 1975 as part of a concerted effort to move the Saudi economy beyond crude into downstream industries, such as refined petroleum and petrochemicals. The policy has enjoyed some success: Saudi petrochemical exports exceeded $14 billion in 2008. The kingdom is more ambivalent about some of its other forays. It is, for example, now phasing out efforts to grow wheat in the desert.

Saudi Arabia’s obsession with its industrial mix is not shared by most development economists. They traditionally judge the success of an economy by the volume, not the variety, of output per head. Two exceptions are Ricardo Hausmann of Harvard and his colleague, Cesar Hidalgo, a physicist. In a series of papers with various collaborators, they have explored the composition, as well as the quantity, of production, and have taken into account what countries produce, as well as how much.

Just as economies differ in size, the two authors show, they also vary in complexity. Some are eclectic, making a wide range of products. Others are esoteric, producing idiosyncratic goods that few other countries can make. The authors have created a measure of the sophistication of an economy based on two criteria. How many products does a country export successfully? And how many other countries also export those products? Sophisticated economies, by the pair’s definition, export a large variety of “exclusive” products that few other countries can make.

Income and sophistication tend to rise in tandem, as you would expect. But some economies are surprisingly sophisticated, given their level of income. They tend to grow quickly, perhaps because they have mastered industries that are mostly the preserve of richer, and therefore costlier, rivals. Other economies, by contrast, are surprisingly crude, given their prosperity. Saudi Arabia, for example, ranks below the Philippines and Indonesia in sophistication, despite having a higher income per head.

In its recent efforts to diversify, Saudi Arabia has placed less faith in royal commissions and more in entrepreneurs. It is busy cutting red tape and streamlining procedures in a bid to become one of the world’s ten most “competitive” economies by 2010, as ranked by the World Economic Forum and the World Bank’s “Doing Business” league tables. Saudi Arabia hopes that the private sector, newly unencumbered, will sniff out fresh opportunities, diversifying the economy in response to market signals rather than royal decrees. The work of Messrs Hausmann and Hidalgo, however, suggests that the kingdom’s entrepreneurs have their work cut out for them. As they point out, economies find it easier to master new products that are similar to ones they already make. It is easier to graduate from assembling toys to assembling televisions than to jump from textiles to laptops.

The two authors measure the proximity of one product to another based on the probability that a country makes both. In other words, if an economy that makes T-shirts is also likely to make bedsheets, the authors infer that T-shirts and bedsheets are closely related. They have displayed their results on an ingenious map of the industrial landscape, in which similar products cluster tightly together and unrelated products stand apart.

The territory their map reveals is far from uniform. It resembles a woodland, in which isolated knots of trees surround a few dense thickets of forest. An economy that already exports a few products in the thickest clusters can diversify quickly, hopping from one closely related product to the next. Saudi Arabia, by contrast, is stranded on one of those lonely clumps of products that seem only distantly related to anything else.

To cross these gaps, entrepreneurs need help. But royal commissions are not the answer. In work with Dani Rodrik of Harvard and Charles Sabel of Columbia University, Mr Hausmann argues that governments should emulate venture funds, backing new enterprises in the hope that one will make the leap into a more densely forested area. They should spread their bets widely, monitor progress closely, and cut losses promptly.
(Source: The Economist)

GET THE RIGHT WORK DONE

How to Mitigate the Urgent to Focus on the Important
Offers simple techniques to help you get to the work that furthers your personal and professional goals — rather than getting caught up by the brush fires and busywork that can consume your time.

How to Write To-Do Lists That Work
Warns against confusing to-dos with goals or projects. A to-do is one specific action, like "call Jim." When you break a task down to its smallest steps, you'll move through that list more effectively.

The Art of the Self-Imposed Deadline
Suggests ways to structure your workload — start your day as early as possible, do similar tasks back-to-back, and break big projects up so that you finish the longest part first.

Manage Your Energy, Not Your Time
Emphasizes that time is a limited resource, so you run out of it, become exhausted, even quit. Energy, however, is renewable. The body, emotions, mind, and spirit can all be renewed.

Management Time: Who's Got the Monkey?
Explains how to avoid taking on "monkeys" — your subordinates' problems. Focus on developing and empowering your direct reports and free yourself to focus on your real job.
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Given the changes in the economy there are noticeable changes in sourcing

Except for China, where the government artificially controls exchange rates, the weak dollar has had a big effect in making U.S more attractive than some Asian suppliers. Retailers are continuing to re-evaluate their sourcing models. U.S are seeing more "comeback sourcing," where programs are returning to this hemisphere from Asia. Customers are finally calculating the real value of creativity and response time, and they are realising cheap prices alone are not the answer. It is believed that U.S has seen the bottom, and that U.S. consumption of cotton and other textile fibres will recover from here forward.
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Chinese Retail Sector got the rhythm back

The retail sector in China was an impermeable one, allowing almost no entries from overseas. The trend is being reversed with increasing activities in mergers and acquisitions (M&A), consolidating new and emerging retail trading businesses. Retailers have realised that the future lies in linking each other gives a cutting-edge advantage on achieving buying power over suppliers; besides, the global trend goes in the same direction. Consolidating markets which were previously scattered in bits and pieces has resulted in the creation of several investment opportunities: whether for multinationals or local corporate and private investors.

Investors cannot help relishing at new opportunities that are created as the need for capital increases with the growing rush to acquire strategic locations for the purpose of establishing national business outlets. The operational framework is now more relaxed, providing multinationals with an unequal breathing space in their manoeuvres. Still, those who came in during those tight regulations face delicate issues in their quest to integrate or acquire Chinese businesses. New comers, on their side, can choose to directly acquire existing retail businesses or set up their own local sales network.
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