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November 10, 2014 Previous day Next day

Fotolia_63966799_XS-300x216.jpgIt is interesting to sit back and watch as companies spend millions of dollars on strategy formulation, just to achieve minimal results due to poor execution. Yet, the process repeats constantly – more money is dumped into strategy formulation, 3 ring binders, fancy Power Point slides, etc. On the other hand, I’ve found that strategy doesn’t fail in formulation; it fails in execution.

So, why not focus the resources on execution? In my experience, it might be due to the fact that execution isn’t viewed as the exciting or “high-level manager” activity. Give me a company that is excellent at execution with an “ok” strategy anytime vs. a company with an awesome strategy with “ok” execution. This is the same reason that 70-80% of mergers and acquisitions fail to achieve the intended results – they typically fail in execution.

The key to successful execution is to align execution to strategy and keep that focus intact while also elevating the execution of the strategy as an executive priority.  So, what is the key to execution?  1) People 2) Process.

1. People: As my HR mentor says, “the ‘right’ people are your #1 asset”. In my experience, I’ve found that if the right people are in place, the execution of the strategy succeeds. It is as simple as that. Why? The right people fully understand the strategy – they ask questions, find out how it fits in with current processes, what it requires vs. current skill sets, roles, etc.

Once they understand the strategy and end state, they help the employees, customers, suppliers, and any other key parties understand the end state, why it is important to the company, how they fit in, etc. I’ve found that once people understand where they are going, why they are going there, how they fit in, and how they provide value to the vision, a successful execution follows. Who better to figure out the details of how to get to the vision end state than the people deeply involved in the day-to-day work required to achieve it? I’ve also found that company culture is a key to success, as the cultures that value people and see people as a #1 asset vs. a number, are the ones that will be better equipped to execute strategy successfully.

2. Process: Next, process is a close-linked second. People execute with processes. It is key that well thought out processes, systems and plans are utilized in execution. Otherwise, chaos ensues. For example, I worked with a team to reduce manufacturing waste in two, completely separate plant environments within the same company – one entrepreneurial with limited process knowledge and one highly process driven yet inflexible.

At first, the environment with limited processes had bouts of chaos – it is hard to figure out the cause of manufacturing issues if you have no systematic way of analyzing the situation. On the other hand, the highly process-oriented environment had significant issues in running a product typically run in the other plant, due to a lack of people with the skill sets and knowledge in the entrepreneurial aspects of running the product line. After a bit of trial and error and debate about people vs. process, we found that the “winning formula” was to value the right people/team (it was especially helpful to bring the two cultures together to leverage the best of both) “and” to value processes – develop standardized processes, document and measure, perform root cause analysis, adjust and start again. By combining the best people and solid processes, we were able to achieve significant waste reductions, which flowed straight to the bottom line.

By focusing on people and process vs. debating the fine points of strategy (in essence, go with the 80/20 of strategy formulation), you are much more likely to have a successful strategy execution. And, even if it isn’t as exciting as debating the fine points of strategy, it is what will give your company a leg up on the competition, which is becoming more and more critical in the current, global business environment.

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Execution: the Difference between Profit & Loss

Business Strategy – Execution is Key to Success

collaborate-300x216.jpgAt the APICS 2014 International Conference, one of the keynote speakers was a futurist.  He talked about the importance of a collaborative platform.  I say – finally! I still remember one of my colleagues who questioned me about my articles about collaboration; not because he didn’t agree (as he is the collaboration guru in purchasing and supplier management) but because he wondered if I had clients who actually believed in collaboration.

Collaboration will drive bottom line business results. If you look at collaboration as a way to combine 1+1 = 99, you’ll achieve dramatic improvements and happier employees and supply chain partners.

For example, at PaperPak, we collaborated with customers and suppliers in order to design new materials and new products that achieved a “win-win-win” – better product performance for the customer, better cost structure for us, and an innovative new material for our supplier. It led to over a million dollars in savings.

There are a few strategies to ensure success with collaboration:  1) Avoid being a know-it-all 2) Seek out diversity.  3) Look for the “and”.

1. Avoid being a know-it-all: Lately I’ve been working on several different projects.  It’s interesting how much more successful the project results are for those projects where the leader believes in collaboration than those where the leader “thinks he/she knows”.  Even good, smart people fall into the trap of thinking they already know and devaluing input from those who might be in lower positions. A key to the dramatic results I help clients achieve is to listen for and find those people with good ideas who are being ignored. Unfortunately, it is easy to do in the vast majority of clients.

For example, I remember one medium-sized manufacturing client who wanted to fire one of their only experts with knowledge on a few topic areas because his value seemed unclear. Luckily I convinced them to keep him, and he went on to be an integral team member on one of our improvement projects that delivered not only critical customer performance improvement but also millions of dollars of margin improvement.

2. Seek out diversity:  Look for people with different strengths to collaborate with. It might be more natural to look for people more similar to you and who you prefer to spend time with; however, if you find folks who can add value in areas where you are weak and vice-versa, you’ll deliver substantial results.

For example, in a middle-market, value-add distributor client, we developed a cross-functional team with participants from all sites. There were several different personalities and strengths in the room; however, the result was a 30% reduction in inventory levels which freed up millions of dollars of cash.

3. Look for the “and”:  One of the best ways to create a collaborative environment is to provide typically “either” “or” situations and ask the group to look for a way to achieve both.  I find that stretch goals spur out-of-the-box thinking and interactive discussion.

For example, on several client projects, I’ve helped my clients find ways to reduce inventory levels by millions of dollars while improving service.  Typically, this can be thought of as an either-or equation as if you have inventory to cover potential sales, you will likely increase service levels; however, we created an “and” by freeing up cash and improving our service levels by having the “right” inventory in place.

Collaboration is no longer a fluffy concept; it will drive accelerated cash flow, improved margins and business value and sales growth.

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Supply Chain Collaboration

Are You Working on the Right Priorities?

IveBeenThinkingBlog-1024x459.jpgIt just so happens that I’ve been on several trips this month for work and tourist stops/getting together with good friends. Seattle is the latest in a series of enjoyable long weekends.  It certainly has a different feel from New York and New Orleans, although wonderful in its own way. Instead of beignets, it has Starbucks. Rain or shine (which has a very good chance of leaning to rain), Seattleites seem to love Seattle. Do you have passion for where you live everyday?

Thanks to my best friend from high school and college, Sandi, we went on a wonderful chocolate tour of Seattle. Who wouldn’t like eating 16 or so different tastes of chocolate while learning about history? The tour guide was cheerful and passionate about Seattle and chocolate. She made the tour at least 5 times better than a chocolate tour would be – which should be quite good anyway! Do you have a passion for your job?

One tip to implement this week:

Think about the elements of your job. Which do you love to do? Is there a way you can do more of what you love to do? I find, sometimes it’s as easy as asking. Can you suggest ideas to your boss? Can you become more efficient so that you can spend more time focusing on new ways to do the parts you love?

How about those who have zero passion for their job? Give it a legitimate chance for a specified period of time. If you still feel the same way, CHANGE careers or change companies. That’s why we should all pursue continuous education so that we have freedom. Life is too short to be bogged down in something you dislike – or even hate.

Looking for more ideas to keep your supply chain talent? Access more tips and resources on my blog. And keep connected by subscribing to my newsletter and email feed of “I’ve Been Thinking…”

Fotolia_55377811_XS-300x204.jpgAs we head into the holiday season, I thought a few reminders might be in order:

1. Remember your relationships: It’s easy to get so busy that you go through the motions. Remember, relationships are #1 to business and personal success. The holidays are a good time to nurture them.

2. Don’t plan to 100%: By this, I mean do not plan every hour of your day. Instead, intentionally set aside time between meetings and calls. This allows for the unexpected – during the holidays, the unexpected should be expected (and planned). Give yourself time to breathe.

3. Find a way to help someone each day: If one of your goals is to find a way to help someone or provide value to someone, you’ll not only enjoy the holidays more but you’ll also make a difference.

4. Look at the bright side: Everyone has the relative, friend or even co-worker who jumps immediately to the worst possible conclusion or meaning of an innocuous statement. Instead, think positive first. I’ve found it to be rare that the negative meaning was intended yet it creates havoc. Jump to the positive!

5. A daily compliment: Be on the lookout for people and actions to compliment. You’ll be surprised how searching for someone to compliment each day will improve your holiday season – and theirs.

Did you like this article? Continue reading on how to Profit through People:

Are You Ready for Year-End?

Life Balance – What to Do?

success-300x199 (1).jpgAre you prepared for success? We worry so much about failure that I find most clients are not prepared for success.

You know what the lawyers say, “never go into a situation without knowing the answer and being prepared for anything that might come up”. It is proven that the well-prepared will perform far better than those scrambling to survive without a plan for success.

Think about success from both personal and professional standpoint. It seems strange that this would be necessary; however, in my experience, one of the contributing causes of failure is not being ready for success. I’ve found that if you expect success, you’ll achieve it; and, on the other hand, if you expect failure, you’ll achieve that as well. So, what are a few keys to successfully preparing for success?

1. First, Plan: Without planning, you must scramble. For example, if you are a manufacturer and your sales suddenly spike by 25%, are you prepared to ramp up within your lead time? Are raw materials readily available? Are your crews ready to begin production? Although scrambling could achieve the 25% sales spike, there’s no doubt it will be at a higher cost or lower quality. For example, without planning, it is likely you’ll not only need to go to alternate, higher cost, non-core suppliers in order to get raw materials but you’ll also need to use excessive overtime to produce the increased volume.

Instead, begin planning now. It is never too early. It does not need to be complex and time consuming. Consider what will happen if various success scenarios are achieved. Put together a plan. Add “what if” scenarios. Are there items you can implement now with minimal/no cost which will set you up for success? For example, can you cross-train your crews to prepare for various production alternatives?

2. Flexibility: Flexibility is a key to success. Build flexibility into not only your plans but every business process! For example, cross-training crews provides flexibility to produce multiple products with the same resources. Another example is to partner with your suppliers and internal partners to modify your product and/or manufacturing process so that you can use multiple, similar materials while meeting product specifications, which provides flexibility in terms of material supply.

3. Communication: There’s no doubt that most plans fail due to a lack of communication and execution. Preparing for success is no different! It is vital to communicate every step of the way.

Plans are useless if no one knows about them. Sound obvious? Then, why don’t our employees know our goals and plans? Have we shared critical supply chain “what if” scenarios with the appropriate supply chain partners (customers, suppliers, carriers, brokers, etc.)?

It doesn’t have to be complex or expensive to prepare for success; however, you will likely miss your best opportunities unless you are ready!

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How to Effectively Engage Employees and Achieve Results

The Power of Relationships

IveBeenThinkingBlog-1024x459.jpgAccording to today’s Wall Street Journal, UPS had robust growth in the third quarter, which was strongly influenced by the e-commerce boom. E-commerce now accounts for about 45% of U.S. packages. Is e-commerce on your radar?

I’m on the flight back from Phoenix as I went to meet with a potential ERP selection client and to see my parents. As I told my potential client, e-commerce is a must in any ERP selection project today. According to my recent Amazon Effect research report (which will be live shortly), e-commerce, websites, 24/7 accessibility and order status information have all become musts!

One tip to implement this week:

If you have influence on whether your company offers e-commerce, RACE towards it. If you don’t, you can still have an influence. Look up similar companies online. What do they offer?  Think about what might attract you to your company’s products and services. Provide suggestions to your boss, your marketing department, etc.

Also take a look at your system and your website, how appealing are they? Are they accessible 24/7? For example, can your customers or suppliers look up order status updates and purchase orders 24/7? Provide suggestions and ideas to your boss, I.T., etc.  In the vast majority of cases, employees at my clients’ are pleasantly surprised by how much influence they can have!

Looking for more ideas to keep your supply chain talent? Access more tips and resources on my blog. And keep connected by subscribing to my newsletter and email feed of “I’ve Been Thinking…”

SOPMetrics-266x300.pngWhich metrics are most crucial for SIOP (sometimes referred to as S&OP or sales and operations planning)?  The simple answer is that it is those metrics most vital to running your business.

SIOP aligns not only demand with supply but it also aligns the various business units and functional areas on one plan.  Therefore, there are standard metrics which are key to SIOP including:

1. Sales revenues – certainly one of the key elements of SIOP is to forecast demand.

2. Inventory turns – how quickly you are turning your inventory will have a direct impact on cash flow

3. Service levels – this metric will measure how well you satisfy your customers from on-time delivery, complete orders, etc. This is sometimes measured by the “perfect order”.

4. Lead time – the shorter your lead times vs. competition, the more likely you’ll be able to grow sales, assuming all else is equal.

5. Margins – how well you have aligned demand with supply and optimized your supply chain inclusive of operations, planning, purchasing, distribution etc. will correlate directly to efficiencies and margins.

In addition to these baseline metrics, it is important to also consider other metrics which can be important to your particular business or to your bottom line results.  These can include key customer performance, key customer sales vs. forecast, bookings, master schedule adherence, etc.

Start thinking about SIOP as a strategic priority, and dramatic results will follow.

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So You Need Systems for a Successful SIOP Rollout?

What Are the Benefits of SIOP?

ERP-Upgrade-300x200.jpgI’ve been talking with an increasing number of manufacturers and distributors who are beginning to think about upgrading technology and specifically their ERP (Enterprise Resource Planning) system. There are many ERP softwares to choose from and staying current is essential.

Selecting and implementing a new ERP system is no small endeavor; however, it can yield vast results in the right situation. A few reasons to consider an upgrade include:

1. Service: Your customers are more comfortable with your ability to service them. For example, one of my clients has a key customer who requires an ERP system to assure them that this start-up company will have the proper business processes and systems in place to succeed.

2. Platform for sales growth: How do you grow your business successfully and at a quick pace with already overloaded resources? Leverage systems and look for an ERP solution.

3. Customer need: In order to satisfy your customer’s needs without ballooning in size and increasing error rates, technology is required. For example, in today’s environment, e-commerce must be an assumption. Does your system handle it well?

4. Cash flow: Typically upgrading your ERP software will provide enhanced tools for inventory management. By implementing this best practice functionality, you have the opportunity to decrease inventory levels while maintaining/improving service levels.

5. Margins: ERP systems allow for numerous opportunities to improve efficiency. Additionally, there are robust reporting capabilities to slice and dice key data for management decision-making. Wouldn’t it be helpful to know which customer is most profitable or which item is least profitable?

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IveBeenThinkingBlog-1024x459.jpgI arrived in New Orleans to speak at APICS 2014 on empowering and engaging employees, and so I’m in the New Orleans state of mind. Certainly, as my bio confirms, one of my favorite spots anywhere is Cafe du Monde. Where else do you have so little selection yet it is jam packed almost anytime of the day? I consider it a “must”! They have created an iconic brand that no traveler can do without.

After beignets at Cafe du Monde, we walked by a parade with great music – at first we thought it was a funeral as they are quite the affair here; however, it turned out to be a wedding. The entire bridal party & guests looked like they were having a great time. Perhaps we should all take a page from the New Orleans handbook and make icons and fun out of everyday events and experiences.

One tip to implement this week: Take a step back from your everyday work life and “smell the flowers”. Take a day’s vacation or set aside time to reflect. It’s hard to have ideas when you are dealing with 1000’s of incoming messages every moment of the day.  Instead, think about how to create excitement with your business and/or teams as you reflect with a New Orleans state of mind.

What can you do that would be different and refreshing that might create a buzz about your company, you and/ or your products?  In essence, how might you stand out from the crowd? Ask your colleagues for ideas. Consider going to a new environment for the afternoon for brainstorming. Sometimes it takes shaking things up to stimulate new thinking. Give it a try and you’ll likely be surprised and pleased with the results.

Looking for more ideas to keep your supply chain talent? Access more tips and resources on my blog. And keep connected by subscribing to my newsletter and email feed of “I’ve Been Thinking…”