9 Easy Steps to Implement Customer Service Policies that Decreases Risk

Everybody loves good service. It makes us feel appreciated when patronizing a company that meets our service expectations.

Businesses understand the need to satisfy their customers and take great strides to provide helpful, friendly service.

However, not only is implementing structured customer service practices smart business, it has the potential to reduce risk management issues.

9 Easy Steps to Implement Customer Service Policies that Decreases Risk

By putting the following 9 steps into action, it's possible to improve customer service and reduce costly mistakes and accidents. Customer service practices can be woven into policy and procedures so that good customer service is achieved when following company policy.

Step 1. Identify areas of service that need improvement as well as potential risk. Implement policies that address these issues. Ask for the input of management and staff to create an atmosphere of teamwork.

Step 2. Create a policy and procedure manual that is easily read and understood. To encourage employee interest, be sure to explain how the procedures will benefit employees. Distribute the manuals to each employee or department manager. Ensure all management is committed to the education of their department.

Step 3. Hold staff meetings to discuss the new policies and customer service expectations. Make the meetings a positive experience and reinforce the benefits of implementing the policies. This may be as simple as giving certificates of recognition or as valuable as a raise (an idea to increase the perceived value of certificates of recognition is to allow employees to accumulate and trade them for gift certificates).

Step 4. Create a culture in which employees and staff show the same helpful respect to each other as they do customers (teach that we are all each other's customers). Empower staff to nominate each other for certificates of recognition. Invite customers to do the same.

Step 5. Ensure that each employee has read and understands the policy manual. Encourage its importance by having each employee take a written test and go over the results to fill in any gaps in understanding. Have the employee sign it and keep the results in the personnel file.

Step 6. Continually educate staff on the importance of each department and teamwork. Each month, choose one staff member to learn something new about another department and give a short inservice to the rest of the team (for example, have a payroll clerk take a couple hours to learn and share something about the shipping department). If employees have some understanding of the business processes, it will help staff identify ways they can indirectly help their co-workers in other departments.

Step 7. As time passes, continue to reinforce policies and good customer service practices. Look for ways to continue to involve staff (for example, form teams to create a new system, implement a new idea, solve a dilemma, etc.).

Step 8. Replace employees, according to termination guidelines, who continue to refuse to follow procedures. This will show your existing staff you are serious about the policies and you will help your staff by hiring employees that want to be part of the team.

Step 9. When hiring new employees, stress the value placed on teamwork and following procedures. Start during the interview process and make it a positive experience. Look for someone who can fill the position and is eager to learn. It's easier to train someone that it is to change someone.

A few of the benefits of implementing these steps are:

Better Service: Employees who are knowledgeable about their responsibilities and follow company procedure are better equipped to serve customers and each other (thus improving the bottom line).

Loyalty: Employees who are empowered to teach and help implement procedures feel that their efforts are worthwhile and that they are part of the team (this encourages loyalty, improves job satisfaction and less employee turnover).

Financial Rewards: Employees who understand that by following procedures, decreasing risk, and improving customer service, financial goals will be met and have a positive impact on their payroll and benefits.

The implementation of simple procedures can have a major impact on customer service, improve the workplace culture, and decrease mistakes and accidents. By fostering a knowledgeable team atmosphere, employee accountability and awareness will improve.

Keep the procedures simple and easy to follow so they can be remembered. Don't overload employees. Think of policies and procedures as guidelines. Hire someone to review your current policies and procedures and write a fresh manual that will speak to your employees and motivate them to follow procedures.

Company rules should be included and include employment/labor law, minimum wage laws and hours, State and Federal guidelines, safety issues, harassment issues, privacy issues and industry specific regulations. Purchase and post the mandatory employment posters and consult an attorney when in doubt.

9 Easy Steps to Implement Customer Service Policies that Decreases Risk
Check For The New Release in Health, Fitness & Dieting Category of Books NOW!
Check What Are The Top Cooking Books in Last 90 Days Best Cheap Deal!
Check For Cookbooks Best Sellers 2012 Discount OFFER!
Check for Top 100 Most Popular Books People Are Buying Daily Price Update!
Check For 100 New Release & BestSeller Books For Your Collection

Appreciate your customers and staff and watch for better service to bloom, less risk and an increase in the bottom line. For more information about policy and procedure manuals, contact cheryl@olmsteadwritesit.com or call (512) 508-0044 for more information.

The Strategic Importance of Supply Chain Management (SCM)

1 Introduction:

Logistics supply chain management is one of the most contemporary and challenging concept in today's business world. Due to increasing global demand of business; transportation, procurement, manufacturing, distribution activities increased tremendously. Now a day, major companies are focusing on SCM to reduce cost and constantly trying to develop new innovative strategy to meet consumer demand to achieve competitive advantage.

2 Definition of Supply Chain Management:

The Strategic Importance of Supply Chain Management (SCM)

In short, supply chain management means, right product at the right place at the right time at the right measure and at the right quantity. For example, in a supermarket, if the consumer found in a product shelves, there is tag for the product but no product in shelves; what you think? Yes, that is because of poor management of SCM. More precisely, SCM is the management of inbound and outbound logistics process to integrate from procurement, suppliers, manufacturers, warehouse, distributors, transportation, and store in order to meet consumer demands.

3 Why Supply Chain Management is Important?

As global competitions are increasing customer have different choices & needs to satisfy demands. For example, if there are demand for umbrella in rainy season and if you asked supplier to deliver 20,000 umbrellas in summer and expected to receive at the beginning of rainy season; what do think would probably happened?

According to this scenario, say for example, supplier response lately after two weeks, slowly starting procurement and then starting production and supply the goods at the end of rainy season. As a result, in this case the buyer will face tremendous losses.

Let's just think how can, we change our scenario with an effective strategy: consider the order of umbrella was given at the end of spring to deliver at the end of summer. Supplier response precisely, starting from procurement to distribution utmost efficiently and transported through freight within one week before ending summer. The delivery was on time and arrive within 30th days in summer. The buyer is happy to receive items on time and that allows the buyer to distribute products through distribution channel and, with the right forecasted of demand, buyer captures the market at the right time and making money.

In past manufacturers were known as the drivers of the supply chain as they were scrambling to meet customer demands at rapid pace but now customer is called the driving shots in a long term competitive advantage. To meet the customer demand accordingly, companies are shifting to customer oriented strategy (a bright example would be 'Dell computer'). Hence, to achieve competitive advantage in the market, it's necessary to deliver the product at the peak time.

4 Key Drivers of Logistics Supply Chain Management:

From the analysis different journal article, textbook, web research we found the key drivers are differ in according to different perspective, such as Globalisation, Sustainability, Cost-awareness, Customers, Suppliers, Technology and Transportation.

4.1 Globalization:

The external forces (i.e. political, economical, socio-cultural, technological, legal and environmental), local competition, continuous policy and regulations changes, pressure from international brands and all affects to meet the consumer demand in market. Thus, companies are facing huge challenges to meet the requirements globally. Through the product barriers are eliminated, no products are now considering domestic products but due to globalization forces companies tend to change policy and strategy regularly. Besides, with the benefits from globalization now, foreign investor are encouraged to invest in several countries which forces local companies to improve quality of existing products which create huge challenges in procurement, manufacturing, transportation and distribution activities for the companies.

For instance, a company can develop a product in the US, manufacture in China and sell in worldwide, i.e. Apple. This makes a complex and challenging activities for company. Thus, in order to maintain global demand Apple makes strategic choice to build global manufacturing and engineering infrastructure in California, Ireland and Singapore to capture market in US, Europe and Asia. This global strategy from Apple allows the company to take advantages of capturing large market. This strategy, allows Apple to become number ONE innovative company in the world.

4.2 Sustainability:

Creating sustainable chain has a major concern for companies. Constant variable pressure from regulations, geographic in nature, social-economic impact, international policies and principles in general is complex for managing SCM.

For example, green environment (i.e. carbon emission); local government are always imposing regulations which affect on the manufacturer. For instance, production and manufacturing in developed countries like in Europe is huge challenge as because of strict rules and policies of environmental issues compare to underdevelop countries like in Asia. For example, in automobile industry producing vehicles is challenging because of environmental issues in different countries.

4.3 Cost-Awareness:

There are four major decision areas in cost awareness:

4.3.1 a) Location: Convenient feasible location with availability resources including all facilities is the primary step of towards of creating strategic network. However, due to geographical distance and cost, companies often couldn't able to cope up with customer expectation.

4.3.2 b) Production: Cost fluctuation from production levels are critical issue for strategic decision, such as what product to produce, which plant to allocate and what supplies to get for production.

4.3.3 c) Inventory: Inventory cost varies at different level starting from raw materials to finished goods. Cost is also associated in buffer stock, safety stock or even days of inventory in hands as well as price increases during the periods of inflation affects.

4.3.4 d) Transportation: 30 percent of logistics cost associate with transportation that makes the companies to think about distribution channels about air, ship and road. Air shipment is fast, reliable but expensive while sea shipment is chap but time consuming.

4.4 Customers:

Customers are the most unpredictable variables to determine demand. Frequent changes of demand, new expectation, changing approach of existing product, influential behaviour attitude towards products are all determine to develop a customer-product innovation strategy. For example, Apples starts it business on the bases of computers but after understanding demand of consumer, they launched iPhone, iPad, iPod as means of innovations strategy which satisfy customer but not merely makes the customer delight but introducing facilities like ITunes, music, software application gradually capture the market the whole market.

The example here provides a key learning tool 'how the company understand its customer to achieve competitive advantage' which makes us to think what strategy they are following. In Apple strategy most of the iPhone and iPad items (i.e. parts) are outsourcing. More precisely speaking, very few components are created by Apple, hardware is supplied by contract manufacturer and software is supplied by millions of software developer to build various applications for the devices which minimize the cost.

4.5 Suppliers:

Supplier's motivation is important for quality, cost and delivery expectations of producing product with value as they have greater influential aspect of supplying item. For example, Dell's direct strategy requires processing orders direct from customer. Dell's pull strategy to build computers o customer's specifications and deliver within time. To support this model, Dell asked suppliers to keep inventories within 15 minutes of the manufacturing locations. Virtually all products are made to order. Every two hours, the factory planning system sends out a computerized message to suppliers detailing what parts the plant needs. That means there is almost no inventory of parts or products in the factory and this happen only because of healthy relationship with suppliers.

4.6 Technology:

With the benefit of technology, customer are now becoming more technological oriented focusing on online trading, online shipping, online payment, online information, online virtual chatting, and so on. This technological process has a greater impact on customers and now a day customers are constantly willing to get more information, answers, about their choice, preferences. Dell's could be an ideal example, how technology impact on business and increase revenue. The success of Dell's direct sells strategy depends mostly on continuous development of technological aspect as the customer willing to become more connected, assist them to develop cost effective quality product strategy.

4.7 Transportation:

Transport system is the most important economic activity among the components of business logistics systems. Around one third to two thirds of the expenses of enterprises logistics costs are spent on transportation. Beside good transportation is challenging issue to deliver product at right time. Thus, to enable flow of goods from one destination to another and to ensure on time delivery; companies needs to understand the right strategy of supply chain. However, unorganized transportation system, labour force, policies, laws and regulations, uncategorized rooting system is a big hindrance for supply chain solution. If there is suitable transportation network, delivery of the product to the market not ensured supply chain activities will be at risk.

5. Companies Prospective of Strategic Importance of Logistics Supply Chain Management:

5.1 IBM

IBM faces challenges on future supply chain are on cost containment, supply chain visibility, supply chain risk management, customer requirements and globalization. Here cost containment relate to shifting cost of operation rapidly, supply chain visibility includes information and collaboration with external partners where supply chain risk management describe as forecasting customer demands and higher costs, customer requirements influence to identifying customer demands, approach, attitudes towards of product and globalization relates to global issue like geographical distance, cultural barriers, transportation system, feasibility of resources, rules and regulations and so on. Thus, to tackle those issues IBM developed strategy on future supply chain based on "instrumentation", "interconnectedness" and "intelligence".

5.1.1 Instrumentation:

Developing RFID (i.e. radio frequency identification) tag, meter, GPS system, tracking reduce the inventory cost and increased visibility. That allows to witness actual fact occurred in supply chain activities. Besides, forecasting of demand becomes much easier as tracking production level and sales level estimated through technology. Again, production, distribution and transportation are controlled and monitored with smart devices to eliminate waste and increasing efficiency. So, with the force of technology IBM creates a sustainable global supply solution by focusing more on customer.

5.1.2 Interconnectedness:

Interconnect with global network i.e. suppliers, manufacturer facilities collaboration with external partners and bodies reduce global issues. Besides, shared decision making with and determine regulatory constitutes from local, regional and international enable to share the risk.

5.1.3 Intelligence:

Effective sophisticated modelling and simulation capabilities allow designing sustainability model, network transportation system, and distribution strategy for IBM. Thus, smarter supply chains allow intelligent modelling to the key driven force.

5.2 Woolworths

Woolworths is an Australian's largest retailer faces multiple turbulences to find an effective solution of supply chain at the beginning. It faces challenges on sustainability (environmental issues), customer focus, suppliers, transportation system and technology. However, after removing those barriers, it builds strong supply chain strategy not only to meet customer requirements but also expanding business in Australia and New Zealand and to achieve competitive advantage over the market.

The success stories build up with collaborating and strong networking relationship with suppliers, adopting policies, rules and regulations, technology and new innovation (i.e. fresh foods).

The strategy for sustainability point they come up with 'fresh foods' and carbon emission. For example, "announcing 40 percent reduction in carbon emissions on project growth levels by 2015, managed 13 percent reduction. This is an estimate saving of about 500,000 tonnes of carbon dioxide again 25 percent minimum reduction in carbon emissions per square meter for new stores Woolworths has now on average reduces in 25.08 percent carbon emissions per square meter" (Our planet, n.d). Besides, introducing new products in the market like Woolworths Pet Insurance, android application applies sustainability in market.

From supplier driving force, Woolworth's key strategy is to build strong and committed relationship with suppliers that involves in communication, continuous feedback to ensure quality product for customer.

In customer point of view strategy, they are more customers oriented to provide most enjoyable, quality shopping experience to fulfil the demand at the right time at the right place. For this, they focus on centralized distribution model for all inbound and outbound logistics.

In technological point of view, company adopted new technology with keeping pace of technological advancement. For example: EFTPOS system.

5.3 Procter & Gamble

Proctor & Gamble faces challenges on global alliances, constructive network distribution channel, healthy transportation system, inbound and outbound logistics support. For this, they build a supply chain strategy, first to understand target customer according to their satisfaction and loyalty level and then optimizing supply chain (i.e. ensuring product availability at all time). Side by side, focusing on technology like RFID which increases product visibility for better supply chain management. Besides, maintain strong relationship with retailers like Wall-mart and implementing online web support allow the customer to be connected with customer its build premium foundation for sustainable environment.

6 Conclusion:

Thus, globalization, sustainability, cost-awareness, technology, customer, suppliers, transportation are all related to supply chain activities. Now, opportunities of barriers has been minimized which encourage foreign investors to invest, implement and operation. Side by side, in terms of sustainability; collaborating, adopting policies, rules & regulations, technology, transportation allow to build constructive communicative strong relationship with external partners which could be an ideal solution for sustain in global market. Most importantly, focus on customer is vital to enhance growth and for this choosing right strategy for supply chain is essential to ensure right product at the right time at the right order with right measurement.

The Strategic Importance of Supply Chain Management (SCM)
Check For The New Release in Health, Fitness & Dieting Category of Books NOW!
Check What Are The Top Cooking Books in Last 90 Days Best Cheap Deal!
Check For Cookbooks Best Sellers 2012 Discount OFFER!
Check for Top 100 Most Popular Books People Are Buying Daily Price Update!
Check For 100 New Release & BestSeller Books For Your Collection

Our Planet, n.d., Viewed 14th September 2011, retrieved from, http://www.woolworths.com.au/wps/wcm/connect/Website/Woolworths/About+Us/Our+Planet

Understanding the Role of the Change Advisory Board in ITIL Change Management

The ITIL Change Management process is used to manage a Change through its entire lifecycle. A Change is defined as the addition, modification or removal of anything that could have an effect on IT Services. The scope should include items such as IT services, components that is used to support or deliver the services, processes and documentation.

Those new to ITIL will often think that the role of the CAB is to authorise the major or significant change. Well, yes and no.

The Change Advisory Board (CAB) is a concept defined in ITIL V2 and V3's Change Management process and is a body that exists to support the authorization of change and to assist Change Management in the assessment and prioritization of change. The CAB is usually consulted for significant change that have a broad or major impact to the organisation. The CAB may be asked to consider and recommend the adoption or rejection of change appropriate for higher level authorization and then recommendations will be submitted to the appropriate Change Authority.

Understanding the Role of the Change Advisory Board in ITIL Change Management

Similar in concept to the CAB is the Emergency Change Advisory Board (ECAB). This is done as part of the Emergency Change procedure which is used to process a change request related to fixing an error in the IT infrastructure that has major impact to the business if it is not fixed quickly, hence the Emergency Change. An ECAB is necessarily formed since there is often not enough time to convene a normal and larger scale CAB meeting.

So, who authorises change? ITIL defines the role of Change Authority that, as the name stated, authorises change. This is a role that may be given to a person (e.g. Change Manager, department manager) or a group of people (e.g. CAB or ECAB). The levels of authorization for a particular type of change should be determined by the type, size or risk. A major or significant change in a large enterprise that affects several distributed sites may need to be authorized by a higher-level authority such as the Board of Directors. A lesser one with limited scope and impact to the business or IT infrastructure may be authorised by a person. A simple, low risk change may even be pre-approved or pre-authorised.

Figure 4.5 in the ITIL V3 Service Transition book is misleading when taken out of context and often leads a reader to wrongly believe that the CAB or ECAB's role is to authorise Change. That figure only shows an example where the CAB or ECAB is given the role as a Change Authority.

In summary, a CAB or ECAB's main role is an advisory one, which is to support and assist the Change Authority in making to decision as to whether a request for change should be approved or rejected. The CAB or ECAB does not authorise a Change unless they are specifically given the role as a Change Authority as well.

Understanding the Role of the Change Advisory Board in ITIL Change Management
Check For The New Release in Health, Fitness & Dieting Category of Books NOW!
Check What Are The Top Cooking Books in Last 90 Days Best Cheap Deal!
Check For Cookbooks Best Sellers 2012 Discount OFFER!
Check for Top 100 Most Popular Books People Are Buying Daily Price Update!
Check For 100 New Release & BestSeller Books For Your Collection

Jeffrey Lee is a IT Service Management (ITSM) consultant and ITIL trainer

Visit his website at http://askme4itsm.blogspot.com for more articles on implementing ITSM and ITIL training

Human Resource Management and Responsibilities

The PHR and SPHR exams will thoroughly test your knowledge of the full Human Resources body of knowledge. The complexity of laws, regulations, employee training and leadership programs and employee management relations can catch some candidates off guard. You will come into the exam with the experience that you have gathering during your time in HR but there is a lot more related to the world of HR that you must be prepared for. To test you readiness for the exam and see what you need to focus your study efforts on more, consider taking an assessment exam online.

The HR responsibilities cover several areas of focus. Generally, HRM responsibilities fall into nine broad categories:

Organizational tasks - Design and structure groups and departments. Plan programs and processes. Identify job functions, skills and competencies. Review organizational functions and recommend improvements. Manage reorganization and change.

Human Resource Management and Responsibilities

Resources for the organization - Determine staffing needs. Recruit, hire, develop, review and reward staffers. Advertise positions, screen and interview applicants, test, check references, facilitate offers and present contracts. Manage orientation, retention and termination, whether by resignation, retirement or dismissal.

Performance management - Set performance standards and improvement objectives, assess performance and provide feedback. Monitor, measure, evaluate and document performance against expectations. Identify performance problems, propose solutions, facilitate feedback, and coordinate and document disciplinary action.

Employee development - Provide career development, training and coaching. Facilitate management succession (i.e. knowledge and skills training, experiential learning, on the job training, internal and external training, guided reading, computer-based or e-learning, video instruction, courses, role playing and other options). Monitor the learning process and its results, and evaluate teaching approaches.

Reward management - Establish fair pay systems and other financial rewards, such as profit sharing or pay based on incentives, performance, contributions, teamwork or competency. Develop and facilitate non-financial motivational programs. Implement bonuses, gain-sharing, flexible benefits, pensions and living allowances.

Employee relations - Work with the union, employee-supervisor mediation, negotiations, legal issues, feedback and grievances. Build relationships with employees through various policies, procedures and outreach (Intranet, newsletters and so on).

Health and safety - Provide a safe working environment. Comply with standards. This may mean dealing with hygiene, first aid, ergonomics, accident prevention, risk assessment, audits, safety training, removal of hazards and policies assuring health and safety, such as risk reduction and risk minimization programs.

Employee welfare - Help with individual services such as employee assistance, leaves of absence for long-term illnesses, family issues, issues of aging and the elderly, employment problems, death in the employee's family and counseling. Offer group activities, clubs, retiree events and wellness or support programs.

Administration - Manage HR policies, procedures, functions and systems. Develop, implement and direct the processes needed to capture, track, evaluate and report data, maintain records and comply with legal requirements.

Human Resource Management and Responsibilities
Check For The New Release in Health, Fitness & Dieting Category of Books NOW!
Check What Are The Top Cooking Books in Last 90 Days Best Cheap Deal!
Check For Cookbooks Best Sellers 2012 Discount OFFER!
Check for Top 100 Most Popular Books People Are Buying Daily Price Update!
Check For 100 New Release & BestSeller Books For Your Collection

Incredible unique video training course to help you gain PHR or SPHR certification. PHR study guides Yes, its affordable for anyone seeking certification. So many unique features visit our website for more. Thank you!

http://www.phrsphrtraining.com

special offer good for 10 days

Jay Dannen, SPHR

Risk Management - A Case Study on the Consequences of Bad Risk Management

Introduction

Risk in business is a reality. When these risks are successfully managed the rewards can be substantial. If not, a business can run into serious problems and even collapse. It is unnecessary (and stupid) to ignore risks.

Over more than a decade we advised and assisted companies in growing and managing their businesses. Over time we observed many companies that ran into trouble because they ignored specific risks. This case study focuses on a few companies that each ignored one important aspect of risk management and then paid the price. The discussion is done under the following headings:

Risk Management - A Case Study on the Consequences of Bad Risk Management

Insufficient planning; Bad relationships; No hedging; Lack of discipline.
Insufficient Planning

Risk is drastically reduced by proper preparation and detailed planning. Planning includes feasibilities studies, business planning, cashflow projections and financial planning.

We were recently approached by Hypothesis Toys to assist them with additional financing. At that stage they were already in dire straits and had invested a small fortune. The company was established to make one specific type of toy. The management made the following assumptions:

That customers would pay a premium (double the price) on their products compared to other existing products due to the fact that their products look different and was branded with the logos of professional sport bodies. That all the major supermarkets will sell their products. That the total market consists out of every toddler in the (developing) country that they operate in. That they would get 10% of this market within the first year and 50% by year three.

This company did not have a chance from the beginning. The haphazard way that they came to their assumptions was mind-boggling. The market penetration figures were absolutely unrealistic. No research was done to get the real facts (except for the number of toddlers in the country). The scary part of this story is that it is not an isolated incident. Many entrepreneurs, and even established companies, expose themselves to the unforgiving risk of not doing proper market research when they embark on a new venture.

Bad Relationships

Human relationships can never be ignored. It is potentially one of the most fatal risk factors in a business. Relationships should be nurtured with all stakeholders in a business - including the investors, financiers, suppliers, employees and customers.

A while back one of our clients asked us to handle a possible merger and acquisition on their behalf. They were approached by Fuzzy Manufacturers to buy out their total operations over a few years (they do a lot of business with this company).

The owners of Fuzzy Manufacturers managed some of their relationships during the negotiations as follows:

They never kept any commitments that they made with us or with our clients. They were not transparent with the relevant stakeholders - including the financiers. They did not involve their senior management with any aspect surrounding the proposed deal.

The negotiations were finally called of due to financiers that withdrew. Everybody lost their respect for the owners of Fuzzy Manufacturers and some companies are very uncomfortable to do business with them. Eventually some of their senior employees left and joined the competition. Their business became a shadow of what it used to be.

No Hedging

Financial risks (such as currency risk and commodity price risk) can often be hedged with sophisticated products. Operational hedging is also possible (to a large extent) by spreading the risk through a variety of suppliers, products, distribution channels, customers, back-up facilities, etc.

Focused Systems specialises in IT networks. They were exceptionally successful, especially after landing a big national concern. Thereafter they made some serious errors when they did not hedge their operational risks, including the following:

They focused on this client and regarded all other clients as less important. This client contribution grew to more than 35% of their turnover and they were responsible for most of their profits. They ceased to do any more international work.

The big national concern became the target of an international listed entity. This group had their own IT specialists and Focused Systems lost the account. The company nearly went under. Fortunately the owners learned from their mistakes and with a concerted effort they broadened their product and service offering, their customer base and their geographic representation. Today the company is really formidable. No customer can keep them ransom due to the fact that not one of them is responsible for more than 5% of the company's turnover.

Lack of Discipline

There is probably no better way to reduce risks in a business than to be properly prepared and to be well-disciplined. This is true for planning, relationships and hedging as well as for being disciplined in aspects such as keeping a lid on expenditure, to grow within sustainable levels, to not fall into the debt-trap and to manage cashflow with an iron fist.

About a decade ago Expansion Chemicals was very well known and respected in the industry that they operated in. Their vision was to be the market leader. Unfortunately they were not very disciplined and made the following serious mistakes:

They sold products at any price just to get the sale. Their actual gross profit margins were much lower than their projected margins and their net profitability were very low. They grew at an alarming rate that was not sustainable with internal financing or through debt. The expenses of the owners (who also managed the company) skyrocketed and it included luxuries such as private planes and sport cars.

Unfortunately this once profitable business failed. The owners are now employees in other companies.

Summary

The companies discussed above all basically ignored one specific type of risk. It can only take one unexpected claim against a company, a major customer that is lost or not enough cash to pay a big supplier, to cripple a company. When a business plan diligently, work on all its relationships, hedge its financial transactions and operations as far as possible and work in a disciplined way they reduce the risks in a company tremendously.

Copyright© 2008 - Wim Venter

Risk Management - A Case Study on the Consequences of Bad Risk Management
Check For The New Release in Health, Fitness & Dieting Category of Books NOW!
Check What Are The Top Cooking Books in Last 90 Days Best Cheap Deal!
Check For Cookbooks Best Sellers 2012 Discount OFFER!
Check for Top 100 Most Popular Books People Are Buying Daily Price Update!
Check For 100 New Release & BestSeller Books For Your Collection

Wim Venter is the founder of Ventex Consultants, a business development consultancy. To receive more information on how to start a new venture, to grow it sustainably and to finally harvest it successfully, you can contact us via our website.