Method - Interview

THE WALL STREET JOURNAL ON TONY FERNANDES OF AIRASIA AIRASIA FOUNDER LIKES WORKERS TO SPEAK UP (From THE WALL STREET JOURNAL ASIA )
Malaysian Tony Fernandes founded AirAsia, Asia 's first low-cost carrier, in 2001 and expanded the company by setting up joint-venture airlines in Thailand and Indonesia . Mr. Fernandes, 42 years old, graduated from the University of London in 1987 with a finance degree and in 1992 moved back to Malaysia, where he became managing director of Warner Music Malaysia, and later, vice-president of Warner's Southeast Asian operations. He quit in 2001 to start AirAsia.

One of Malaysia 's most outspoken business executives, Mr. Fernandes not only has strong ideas on the way airlines should be run, but also how Southeast Asia 's top-down corporate culture should change. He spoke to reporter Cris Prystay about his style.

WSJ: What was your first job and what did you learn from it?
Mr. Fernandes: My first job was a waiter in London at the Cavendish Hotel. I was 17. I learned that working was hard and you had to be professional, even as a waiter. You had other colleagues. If my performance was poor, it let down the whole team. My first [career] job was as an accountant at an auditor in London . It was mind-blowingly boring. I was a junior auditor and was photocopying and adding up rows of columns. The big lesson there: make sure you go into a job that you enjoy. Otherwise, you don't give any value to your employer, and you certainly don't add any value to your own mind.

WSJ: Who gave you the best business advice?
Mr. Fernandes: It was probably Stephen Shrimpton (the former chief executive officer of Warner Music International) at Warner. I was a man in a rush. I was 28 when I became the managing director of Warner Music Malaysia , and I wanted to be the regional MD. I wanted to take over the world. One night, Steve talked to me outside the Sheraton Hotel in Hong Kong for three hours. He told me there's no need to rush and that it's about developing my own personality and making sure I'm ready for the next job. I see that now: No matter how bright someone is at 25, there's nothing like experience. He slowed me down, and made me understand that you need to take time to understand the business better, to understand your people better.

WSJ: What's the one thing you wish every new hire knew?
Mr. Fernandes: Humility -- and knowing what the real world is like. The new generation is coming in pretty soft. A lot of these young guys haven't lived through a recession. There are plenty of jobs out there and they think, "I can always walk into another job." The hunger and determination to do their best is sometimes not there.

WSJ: Is there a difference between the management culture in Asia and the West?
Mr. Fernandes: The management culture here is very top-down. There's less creativity and fewer people who are willing to speak out. They're more implementers than doers. There's less freedom of speech, and that impacts the business world. Even when they know things are not right, they won't speak out. They just do what they're told to do.

WSJ: What's the biggest management challenge you face?
Mr. Fernandes: To get people to think. At AirAsia, we want 4,000 brains working for us. My biggest challenge is to get people to talk, to express themselves, to get people to challenge me and say " Tony, you're talking rubbish. " T hat's what I want, not people who say "Yes, sir." The senior management doesn't have all the answers. I want the guy on the ramp to have the confidence to tell me what's wrong.

WSJ: What are you doing to clear that hurdle?
Mr. Fernandes: We have no offices. We dress down. You wear a suit, and you put distance between you and your staff. We're on a first-name basis. I go around the office, around the check-in desks, the planes constantly, talking to people. Fifty percent of my job is managing people in the company. You get people to open up to you by just asking them to do it, and then responding to them. You don't send a memo, or do some "speak up" incentive program. It's got to be from the heart.

WSJ: What was the most satisfying decision you've made as a manager?
Mr. Fernandes: Once a month, I carry bags with the ramp boys, or I'm cabin crew, or at the check-in. I do this to get close to the operation. I also want to know my people. When I first started this, I met all these bright kids at the check-in or carrying bags. We were starting this cadet pilot program, and I said, "Let's open it up to anyone. Let some of these kids apply." They have the brains, but they just didn't have the money to get the education. Out of the first batch of 19 cadets, 11 came from within the company. Some of these boys got the highest marks ever in the flying academy. There was one kid who joined us to carry bags, and 18 months later he was a First Officer of a 737. Can you imagine what that does for the motivation in the company? Everyone talks about developing human capital, but we did it.

Supply Chain Outsourcing: More Choices, Tougher Decisions

By Patrick M. Byrne Logistics Management May 1, 2006

Increasingly, organizations are outsourcing part, or even all, of their supply chains. Most often, they're looking to reduce operating costs and more effectively deploy working capital. But in a recent survey, Accenture found that 86 percent of decision makers also believe that outsourcing gives them more control over their operations. And 55 percent believe outsourcing helps them implement changes faster and more effectively.
Supply chain outsourcing used to focus mainly on transportation and warehousing. Now it encompasses anything from demand planning to procurement and reverse logistics.
With so many functions being outsourced and so many third-party providers, it's harder than ever to align structures, requirements, strategies, and capabilities with a prospective third party's offerings. The following framework can help executives make some of these tough decisions.
1. Am I a good candidate for outsourcing?
The only guidelines or clues for answering this question are internal problems, pressures, or shortcomings, such as insufficient planning, alignment, or control; limited visibility; poor process integration; or lack of coordination across multiple supply chain channels. The table above contains a more comprehensive list of issues and warning signs.
2. What function(s) should be outsourced?
Outsourcing can address one, several, or all components of a company's supply chain. The challenge is to know which function(s) would perform more effectively in an outsourced environment and how the outsourcing of one or more functions would benefit the entire supply chain. Key decision criteria for frequently outsourced functions might include:
Transportation. Inability to capture volume discounts; unacceptable or inconsistent delivery performance; insufficient carrier capacity; poor shipment visibility.
Warehousing. High employee turnover; excessive inventories; low productivity; a surfeit or shortage of warehouses or space; a network that hasn't kept pace with service or inventory changes; a need for new warehouse management technology or additional process skills.
Network planning. Increased supply chain costs, insufficient synergies or degraded service following a merger or acquisition; operational shifts, such as new technologies and business changes.
Procurement. Need for new technology or expertise; high levels of "rogue" spending; too many/too few suppliers; inconsistent processes across units and geographies.
High-quality relationships increase the value of the processes and functions a company opts to outsource as well as those it keeps in house or outsources in the future. This layering of services is key to achieving continuous improvement and building a supply chain that accommodates new opportunities.
3. What kind of organization should handle outsourced function(s)?
Outsourcing options used to be limited to third-party logistics providers (3PLs), most of which developed solutions to complement their assets. But another kind of provider has emerged: integrated-services coordinators. These global, "asset-agnostic" organizations manage clients' supply chains by synchronizing the services of 3PLs, functional providers, and internal business owners.
Companies should expect either type of outsourcing provider to demonstrate mastery of appropriate functional domains. Each should also be able to demonstrate its understanding of the shipper's business, its change management capabilities, command of metrics-driven behaviors, scalability of services, ability to leverage best practices from multiple functions/industries, and record of innovation.
Outsourcing relationships should also address the totality of a shipper's supply chain goals. This is where integrated-services coordinators have the advantage. Because their core competence is aligning and maximizing the contributions of multiple parties, they often are better able to help clients capture synergies. They may also be better equipped to help increase visibility across the entire supply chain, improve alignment of supply and demand, and identify improvement opportunities.
Some companies may find that integrated-services coordinators offer more capabilities than they need. But regardless of which type of partner it chooses, the potential for continuous improvement should be every outsourcer's first line of inquiry: "Does my prospective partner offer new opportunities for sustained, global improvement, or is its value proposition simply a fresh coat of paint that will quickly fade?"

© 2006, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.