Skip navigation
2013

Here is our continuing list of suggested New Year resolutions so that you don’t find yourself doing the same things as you did last year and expecting different results.

 

 

Resolve to Redefine Your Supply Chain from the Outside In

 

The only way you’re going to be able to create successful “Mafia offers” (see Part 1), is if you really start listening to your customers.

 

It’s time to forget what you think you know about your industry and your customers.

 

Real innovation means taking a fresh, new look at what your customers really need.

 

In many cases, they need exactly the same product you are supplying to them today, but they need it delivered in an entirely different way to help them be more successful.

 

Redefining your supply chain may mean “listening to your customers” by finding ways to get “shelf take-away” data every day and using that to drive production and shipments to your customers’ sites.

 

In any event, it will certainly mean not continuing to do business tomorrow like you did it last year.

 

Resolve to Introduce New Products and New Offers More Quickly and with a Lower Investment

 

 

Making a new “product” doesn’t necessarily mean re-engineering the hard-goods. Many times the new “product” is merely a change in the way the customer interacts with the product or the mode in which it is delivered.

 

Example: Goods were being shipped from point-to-point for centuries before FedEx introduced “guaranteed overnight delivery.” The basic service didn’t change at all. It was getting a parcel from point-A to point-B. But FedEx dramatically changed the mode and expectation of the customer.

 

Many products that are not presently learning, upgradeable or interactive in the past can be made so today. One major elevator manufacturer has installed diagnostic software and a cellular device into its elevator systems. Now the elevators can diagnose their own potential problems and call for their own service (in many cases) before the building managers even know that a problem is developing.

 

Use some of the earlier “resolutions” (from Part 1) to unleash your firm’s innovation to discover ways to redesign your offers and your supply chain around what your customers really need and want. Redesign everything from the outside in.

 

Resolve to Run a Different Race

 

 

Be honest with yourself.

 

Figure out where your company lies amongst the four quadrants in the diagram above.

  • Are you failing by remaining both undifferentiated and ineffective in addressing your market?
  • Are you risking by leading the way through differentiation while lacking effectiveness in delivering products and services on time and at a price your customers will continue to pay?
  • Are you competing—just running with the pack, trying to keep up?
  • Or, are you leading the way, unleashing all of your firm’s capabilities by unlocking market-differentiating, waste-eliminating, profit-improving differentiation and effectiveness?

 

If your firm is competing, risking or failing, you don’t get to decide which race to run. The course of the race is set by those who lead through differentiation and effectiveness.

 

Make a resolution today to find your way toward leadership in some market segment that you have identified and that builds on the core strengths of your enterprise..

 

Resolve to Excel in Execution

 

Resolve not to stay stuck in what worked last year or the year before.

 

Excellent companies—those who are clearly in the leading quadrant—have learned to change. They don’t run the same way as their competitors. They expect roles and responsibilities to change as the market changes and as customer expectations change.

 

Resolve to become more agile and more responsive to the changing culture, the changing world, and the changing nature of the economy.

 

Resolve to be willing to give up old metrics and to discover new ones—new metrics that unify your enterprise as a “system,” not divide it artificially into departments and functions each seeking their own performance goals. Too often these old KPIs have pitted sales against production, or production against finance, or finance against inventory management.

 

It doesn’t make any difference if production is “efficient” while your firm is losing money because lead times are too long or sales are being lost due to poor quality or high prices.

 

Resolve to discover that excellence in execution can only be measured, in the final analysis, by the performance of the whole system. It is the whole system that produces the bottom-line results—either profit or loss.

 

Resolve to Sustain the Transformation

 

Don’t let your resolve be for just 2014!

 

Above all, resolve that you will make 2014 the beginning, not of a campaign or management fad, but of a process of ongoing improvement—a POOGI!

 

We can help.

 


 

Let us hear your thoughts on this important topic. Contact us directly, or leave your comments and questions here.

Happy New Year!

If your business didn’t make as much money in 2013 as you would like to have made, then don’t do business in 2014 the same way you did business this year.

 

As is often said, “Insanity is doing the same thing and expecting different results.”

 

Focus on What You Can Control

 

You should focus on what you can control, and not attempt to control what is beyond your reach.

 

Nevertheless, you might be surprised at what is within your control (while you have, perhaps, long assumed that such things were beyond your control).

 

Many think that “costs” are within their control, while demand and prices are not.

 

However, in working with many companies over the last several years, we have found that the greater part of their costs are, in fact, not within their control. They have already reduced internal costs as far as they dare (and sometimes beyond). And, as for external costs, most of their suppliers have also already cut costs to the bone and are in jeopardy if they offer lower prices.

 

But, let’s look at some factors that are within your control as an executive and manager in your company:

  1. You are in control of unlocking the tribal knowledge within your company and your employees
  2. You are in control of leveraging tribal knowledge and creating from it innovative solutions that can help you reduce lead-times, increase Throughput, and hold the line on operating expenses while allowing your company to grow 30, 50 or even 100 percent
  3. You are in control of discovering the real—sometimes, hidden—needs of your customers (and customers you don’t even have, yet)
  4. You are in control of creating radically different “Mafia offers” that are so good that you customers cannot afford to refuse them and your competition is unwilling to match them.(Please don’t think this has anything to do with price-cutting and starting a price war. That is anything but “innovative.”)
  5. You are in control of how much effort and innovation you put into helping your key supply chain partners remain stable and even improve, so that both your profits and theirs increase as you become partners for success. You are in charge of cultivating durable, mutually-profitable relationships with both your suppliers and your customers.
  6. You are in control of uncovering the great treasure trove of success-provoking knowledge that is stored in the minds and intuition of your employees who have been working in your industry and your company for three, five, ten or more years.
  7. In short, you are in control of finding innovative ways compel customers to buy from you and dramatically increase your market share.

 

Leverage What You Can Control for Growth

 

Every time you reap the benefit of having unlocked tribal knowledge, reduced waste in a process and, simultaneously, increased your capacity for producing Throughput, you liberate cash-flow for growth.

 

You should have a plan for a next step. You should have in place a POOGI—a process of ongoing improvement

 

Making the most of the benefits reaped from one incremental step in a POOGI means taking a long-term view that is not haphazard nor based on guesses. The return on investment (ROI) for each incremental step should be calculated on a “approximately right, not precisely wrong” basis. (If you don’t know what that means, leave a comment and we’ll get back to you.)

 

Many companies have discovered that it is possible double, or even triple, their Throughput while holding operating expenses and even investment relatively constant.

 

Create a Compelling Vision for the Future

 

Create lasting success and maintain a durable advantage over your competition by creating a vision that resonates with your employees. Make your employees feel valued and let them know that their ideas are really heard and taken to heart by your managers and executives. (Please don’t think this means you need a “suggestion box.”)

 

Get to the place where everyone understands the roadmap to the firm’s success and growing profitability. Communicate and train until workers on the production floor are able to translate—and articulate with some precision—how their specific actions contribute directly to making more money.

 

Help individuals, functional units and departments understand how they can—indeed, must—work together as a unified system. Managers and executives must do away with old, outdated KPIs (key performance indicators) that sometimes tended to make one function work at cross-purposes to other functions. In place of these old KPIs, institute new KPIs that measure the productivity of the entire enterprise—the whole system—and its ability to produce Throughput and profit.

 


 

Watch for Part 2, coming soon!

 

Contact us with your comments or questions; or leave a comment here, if you prefer.

In Part 1 of this article, we talked about the inherent flaws in the ERP (and related technologies) industry whereby both the value-added resellers and their customers come to believe that new technologies are like an engine additive for your car. Without much further thought, both buyer and seller seem to come to the same unfounded conclusion:

“Yessiree!
Step right up!

Just pour our latest and greatest ‘Super ERP Solution’ into your company and you can rest assured that your company will run smoother, last longer and make more money!!”

We believe that there are lots of ways that you and your company can begin running smoother, and making more money—ways that do not involve replacing your ERP system. In fact, even though we sell technology, we think there may be dozens of ways your company can start making more money almost immediately without any further investment of cash at all.

 

Here are a few ideas.

 

Moving toward “inherent simplicity

 

In many of the companies with which we work, we find that there are times and situations in which they are attempting to apply automation and technology where the structure of the technology actually makes certain tasks more complex and more time consuming than they need to be.

 

In such cases, we frequently suggest that they just stop using technology and return to simpler manual methods. Sometimes simply passing work from one workstation to another is a more effective way to synchronize the flow of production than all the needless complexities of APS (advanced planning and scheduling).

 

Other times we might find that a simple three-bin kanban approach to replenishment—either internal or external—may be simpler and more effective than trying to find the just the right settings for achieving effective results with MRP (material requirements planning).

 

On occasion, we find that making simple, no-cost changes to business forms makes life simpler and the work flow more effective for everyone involved.

 

Leverage existing ERP functionality

 

It is not unusual at all for us to come into a new client’s facilities or come back to an existing client’s offices and discover that they are not making use of capabilities for which they have already made the investment in technologies.

 

There is so much to absorb during the relatively short training cycle on a new ERP system that it is not infrequent for users to not absorb functional concepts that are not immediately implemented. As a result, by the time the users have mastered the essentials for getting their new ERP system operational, they have already forgotten about additional functionality that could be leveraged to make day-to-day activities more effective as their business or business environment changes.

 

Redesign key business processes

 

Far too many firms try to minimize the changes that occur during the deployment of a new ERP system or other technologies. Rather than taking advantage of the change in technologies as a launching pad for improving business processes they, instead, try to hold onto existing business process and try to make them work—as well as possible—under the constraints and demands of the technologies.

 

We later find that these companies can harvest new capacity-increasing, profit-enhancing benefits by simply creating better alignment between their business processes and the technologies that now underlie the processes.

 

Implement new, high-value KPIs based on system thinking

 

Sometimes companies a bogged down in cost-world thinking and KPIs that actually pit one department or functional unit against another. We work with these companies to help them gain a system view, applying system thinking, to create new KPIs that unify actions across the entire organization—the entire system—thus driving new profits to the bottom-line.

 

Get started on a POOGI

 

It is not unusual at all for us to find that many of the companies we visit have no POOGI—no Process Of On-Going Improvement—in place. Their approach, usually quite unintentionally, is one of fire-fighting with occasional flashes of insight in the vain hope of at least staying competitive.

 

They do not have the tools, and generally do not believe that they have the time, to spend on POOGI activities or thinking.

 

Getting these executives and managers to see that they do not have time NOT to start thinking in a POOGI way breaths new life and profits into sometimes stagnant or otherwise struggling firms.

 

Summary

 

In short, we find time after time that companies that are presently considering new technology investment can frequently reap huge benefits by taking actions that have nothing to do with buying or implementing new software or systems.

 

And, if they actually do need some new technologies to support increased Throughput, or to help them hold the line on operating expenses while sustaining significant increases in Throughput, the non-technological changes (sampled above) can frequently help them liberate the cash-flow for the necessary investments in new technologies.

 


 

Please let us hear what you are thinking on this topic. Leave your comments here, or feel free to contact us directly.

 

We are a software reseller. In short, we make our living—for the most part—by selling and implementing ERP software and related “solutions.”

 

So, why would we be telling you NOT to buy a new ERP system?

 

The answer is simple.

 

We value our clients’ ongoing success as a contributor to our success far more than we value any one sale and the profits that might proceed from it.

 

We would like to save you $100,000 or more

 

And, we would like to make you more profitable while you save that money.

 

Every year, we read about or otherwise come across companies that have undertaken large traditional ERP projects that were totally unnecessary.

 

When we say “traditional ERP” we mean the traditional Everything Replacement Project.

 

Over-promise and under-deliver

 

We’ll fess up to it.

 

Many in our industry—so-called “value-added resellers” or VARs—tend to make no shortage of promises (or what sound like promises) about what their new technologies can do for your business.

 

Sadly, far too many folks on the buying end of the equation have swallowed these “rule-of-thumb” promises as though they were God’s honest truth.

 

Buyers of technologies have too frequently believed that if they just “poured in” a new ERP system (or other new technology), it would work like some kind of mystical engine additive for your company.

“Yes, sir! Just add this new ‘Super ERP Solution’ to your company today and we promise that your company will run smoother, last longer and make more money!!!

 

By and large, value-added resellers of various enterprise technologies have tended to over-promise and under-deliver—especially in the last decade. (In earlier years it was easier to deliver on the generic promises because many companies were making their first leap into more advanced technologies, and the markets were generally less demanding. Economic times make it far more challenging today.)

 

Calculating ROI (return on investment) for your IT dollars

 

Many VARs and technology sales folks will tell you it’s impossible to calculate hard ROI for the money you invest in information technologies.

 

While we agree that calculating the precise ROI of IT investments is probably not possible in most cases, we do believe that there is simple way to get to an “approximately right” calculation of your ROI for any given IT (or non-IT) improvement project.

 

And, we don’t use “rules of thumb” to get there!

 

We will take your management team through a process of estimating factors such as

  • Changes in Throughput
  • Changes in Operating Expenses
  • Changes in Inventory or other investment requirements

 

Then, applying these factors—in a way that has your management team’s full consensus—we will help you estimate the ROI for your proposed improvement project.

 

Making money while saving money

 

In fact, at many client firms, we have helped their management teams discover ways to begin making more money tomorrow than they are making today without any new investment of cash at all!

Doing this helps improve profitability immediately while liberating the cash to be spent on improvement projects that do require an investment.

 

This can be the beginning of a POOGIprocess of ongoing improvement—that helps create a virtuous cycle of improvement, growth and profitability to replace what is often a downward spiral of struggle, shrinking and stagnation.

 

We help companies discover the New ERP—Extended Readiness for Profit—without thinking they need to do an Everything Replacement Project to get the job done.

 


 

We would like to hear your thoughts on this matter. Please leave your comments here, or feel free to contact us directly, if you prefer.