November 30, 2012 00:00 By Yanyong Thammatucharee 4,107 Viewed
Under today's increasingly complex business conditions, it should come as no surprise to management if a long-effective business practice fails when applied to a new challenge. Fresh business models are constantly being introduced into a market that needs
One example of how modern-day business practice has become increasingly complex is in inventory. Many businesses make direct purchases of raw materials or finished goods to store at their warehouse facilities. Nowadays, the pressure to keep inventory levels low has led to the introduction of the consignment concept, whereby inventory is kept at the company’s warehouse but actually belongs to the vendors until it is used. Alternatively, the company may borrow material for use in the production facility from the vendors, who use the same inventory for other business purposes of their own. Introducing this new type of transaction requires the company to adjust its methods accordingly or even to set up fresh business practices.
Such fresh business practices may include:
The document flow within an organisation for domestic and overseas markets.
An information system designed for a different product line.
Separate budget rules for normal business operations and for project-based operations.
A special approval process for urgent situations.
Logistics operations tailor-made for different products.
It could be argued that, on grounds of efficiency, a company should maintain one standard business practice. However, when that standard fails to meet the requirements of all customers, it is worth considering the wasted actions inherent in that standard. To force everyone to follow the same standard practice without taking into account different rules and cultures can be harmful to the overall performance of the company. For example:
For a Thai business that spreads overseas, existing business procedures in Thailand may need to be modified so as to suit local laws and regulations. Differences that need to be addressed in such a case include tax issues and levels of business development (the information system may not be fully developed in the new country).
Difference in cultures can be another factor that requires adaptation of business methods. Setting up operations in a new country merely by cloning existing procedures may not be the best solution. Problems usually become evident at the implementation phase when such an approach is taken.
For example, regulations governing shipping clearance differ across the world, with the length of time spent in clearing longer in some countries than others. It is not practical to assume that a quick and efficient process here will be the same in another jurisdiction.
In order to keep up with a fast-moving business expansion, management needs to be open to the new challenge and adaptive to different business regulations and conditions. Cultivating an approach of listening to front-line employees and being open to their comments and criticism is a good start towards positive change.
The challenging question if we want to maintain competitiveness is, “Can we have another, different business practice to deal with a new type of business within the same organisation?”
Yanyong Thammatucharee is senior vice president for accounting and finance at Central Marketing Group.