· 1 ·
uring 2008 the world changed in a precipitous way as the
global financial crisis hit and the ensuing global recession
affected people around the world. The flow of money froze, and so did
the corresponding flow of goods and services. What had been obvious
for some time became painfully obvious we need to move away
from the old static view of the world and embrace a new business
model. We must reinvigorate moribund supply chains by capturing
the dynamism that people bring to the flow of goods and services
inside and outside a business. We can do this by embracing a new def-
inition of supply chains that recognises they are living organisms
made up of living, active and dynamic people. All institutions have
supply chains (or pathways) running through them, connecting a
diverse range of human activities and needs. In fact, supply chains in
aggregate are the business, so, in effect, supply chains is a whole-of-
business concept. This chapter breaks with convention and
introduces the concept of ‘dynamic alignment’, which we think will
re-set our enterprises and equip them to cope with the volatile times
that surely lie ahead.
As I write this opening statement, the world is still experiencing the effects
of the Global Financial Crisis (GFC) of 2008–09, and I can’t help but feel
the importance of supply chains in our society has just gone up a notch
C H A P T E R 1
A new business model for
new and challenging times
Re-engaging with customers and suppliers
· 2 ·
or two. Too many companies are in trouble, and it’s their leadership (or
lack of) that has got them where they are today. The business models of
many overleveraged financial institutions are no longer sustainable in the
wake of the global credit crunch. The impact has spread throughout the
real economy, seriously affecting the many businesses that rely on the free
flow of capital and credit. When I have previously written articles about
the consequences for customers and the supply chains that serve them,
I have always received a heartfelt response of, ‘Yes, but what can we do
about it? People throughout the business world are seeking answers,
because they can see the knee-jerk way in which many companies have
been responding to the crisis. Supply chain research firm AMR Research
put it this way: ‘. . . the natural reaction in a downturn is to retreat, cancel
all new initiatives, pull back to the basics, and tighten up the ship. But the
smart companies across [all] industries will be much more strategic, tar-
geting areas that will not only see them through a rough economy [in the
short term], but help them thrive during and after it passes.’
Forget the
supposed actions’ of cancelling the daily newspapers and the flowers in
reception; that is mere posturing. Such measures will not save the enter-
prise we need something very much more fundamental at this pivotal
time. Suffice to say that now is the time for business leaders to adopt a
new model for the supply chain that will help firms get closer to their cus-
tomers and establish a new growth path for their business.
Indeed, investment columnist and author Dr David James couldn’t
have put it better in his column for Business Review Weekly magazine,
when he remarked that ‘. . . cost-cutting is not exactly the last refuge of a
scoundrel, but it is probably the first refuge of managers having difficulty
with direction’.
He was talking about the strategy of Australian retailer
Coles in 2006, which at the time was slashing costs in a last-ditched effort
to survive. This once iconic national firm has since been taken over, but
the accusation applies equally well to the businesses that were caught
unprepared in the ensuing credit crisis of 2008. We need look no further
than the attitude of General Motors, which went from being the world’s
largest automotive maker and the symbol of industrial innovation for most
of the twentieth century to financial collapse in 2008. After asset sales,
staff cuts and $50 billion in government loans, the new General Motors
Company of 2009 announced its rebirth with a vow to start listening
to its customers’.
After two weeks in the job, the new Chief Executive

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