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2015

Fotolia_49709142_XS.jpgAs we head into the New Year, remember your most valuable asset – people!  Start with your employees as customers, suppliers and others will not matter if your employees are not taking care of them. Tell them about their value. Say thank you. Notice what is important to them. Reward them with what is important to them. Celebrate successes. Provide training, mentoring and resources. Listen. It will cost you little to nothing yet achieve BIG results – and, more importantly, create happy employees.

 

Next, expand to your other business partners. Collaborate for success. Share your goals. Ask about their goals. Find win-win solutions. Even better – look for win-win-win solutions throughout your supply chain. Pick up the phone to say thank you. Find out how you can help with one of their objectives, whether or not it seems to relate to your collaboration. Small, meaningful steps forward with your relationships will add up to significant success.

 

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

 

On Pace with Strongest Job Growth in 15 Years – Think about Training

 

Profit through People: Making the Connection in Manufacturing

IveBeenThinkingBlog-1024x459.jpgThe New Year is known for resolutions and goals. However, I concur with my consulting mentor — what's the point of setting resolutions at the New Year? What is magical about doing it on 12/31? Absolutely nothing. If you set a resolution, stick to it for a few weeks and then give up, are you any better off? No! Instead, think about creating a continuous process. For example, when I was a VP of Operations for a mid-market manufacturer, we set 3 goals per quarter and continually reviewed and revised with changing business conditions. Why wait until the New Year to do what you should be doing continually?

 

One tip to implement this week:

 

The great news about following more of a logical path of setting goals and resolutions vs. making grandiose statements on the New Year is that the execution "sticks". Pick one to three things you'd like to accomplish (whether work or personal) and schedule them in your calendar. It might be unlikely you'll accomplish one of these with just one calendar occurrence. Start with what makes the most sense. Plan how you'll accomplish the goal or start with step one. Then, day by day, make sure you are moving forward on these 3 goals. Make it a part of the daily routine. Put it in your calendar. Soon, you'll accomplish far more than you ever did with a New Year's resolution!

 

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

teaching.jpgHave you ever heard the saying, "you'll learn more by teaching" than most other options? I can vouch for this first hand. I am President of the APICS Inland Empire Chapter (#1 trade association for supply chain and operations management professionals), and we offer highly respected and sought after certifications in the industry. Thus, we have several instructors teach courses on the fundamentals of manufacturing and distribution — and on advanced topics such as lean manufacturing. I have team-taught our CSCP (certified supply chain professional) classes, and I guarantee you learn more by teaching! Teaching can be hard work — the best instructors make the sessions interactive, provide real-world examples, engage the audience, etc.

 

The same is true with my clients. I have taught a session or one-on-one far more often to implement a particular best practice with a client than I have in a group setting like APICS classes. Either way, the class will ask questions and poke holes in your concepts. Thus, you have to be on your feet, experienced and able to think in the moment to be a successful teacher. It is well worth developing your skill set in teaching. You'll be surprised by what you lean. Try it out with your colleagues — pick your best topic and teach it. Ask your colleague to do the same. Ask for feedback. Adjust as it makes sense. Go to a class on communication and presentation skills. For example, in APICS we offer train-the-trainer courses and ask our instructors to re-take the class every few years. Ask for a mentor. Results will follow.

 

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

 

Never Stop Learning

 

Do You Have Engaged Employees?

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Collaboration has come into vogue. In my experience working with clients ranging in size from $4 million to multi-billion dollar enterprises across a multitude of industries, spanning building products to aerospace to consumer products, the more collaboration is valued, the better the company has performed over the long-term. Certainly, project results are directly tied to collaboration as the vast majority of projects are cross-functional and cross-company in nature.

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 the project leader as a “know-it-all” 2) Seek out diversity 3) Look for the "and".

  1. Avoid the project leader as a “know-it-all”: Since I work with a diversity of clients, it dictates significant project diversity. 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 they know it all". Even good, smart people fall into the trap of thinking they already know the answers, 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. Fortunately, it is easy to find multiple opportunities of undervalued and overlooked goldmines.

    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 he didn’t have an effective communication style. As important as communication is for leaders, it is also important that a leader recognize the strengths of their team and search for hidden value. Look for untapped value beyond how something is communicated. In this case, the employee had at least one million dollars of cost savings ideas and strategies that would support increased sales and customer satisfaction. This project leader would have been significantly less successful if he ignored this communication-challenged employee.

    With another client, there was an undervalued employee with significant ideas on how to dramatically improve service levels. Improved service levels would directly contribute to bottom line results and an enhanced collaborative environment with key customers. Even if you think you know the answer, do not voice it. Instead, ask your team members for ideas. Collaborate with customers, suppliers and other supply chain partners. Results will follow.
  2. Seek out diversity: Look for people with different strengths for your project team. 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 people who can add value in areas where you are weak and vice-versa, you'll deliver substantial results. The bottom line is to get out of your comfort zone and seek diverse ideas. Give them a chance. You’ll be pleased with the 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 with conflicting goals who saw different solutions for reducing inventory levels. However, by getting the diverse group together and providing common expectations of collaborating as a team, we found ideas that resulted in a 30% reduction in inventory, freeing up millions of dollars of cash flow.
  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 project team 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: 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 at the “right” time.

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

 

Did you like this article? Continue reading on how to become a Systems Pragmatist:

 

Employee Performance: Do Not Ignore Your Stars

 

Supply Chain Collaboration

IveBeenThinkingBlog-1024x459.jpgI've been working with a client recently on a SIOP (sales, inventory and operations planning) program. We are gaining access to powerful information that will help them hire at the "right" time (not too early – and, more importantly, not too late when considering growth & ramp up curves), train/cross-train at the right time (as growth requires new skills), upgrade and purchase machines at the "right" time (certainly, who wants to spend millions in capital too soon – or worse, too late as customers will be up in arms), buy new buildings at the "right" time and so on. 

 

Databases can have great power if you set up the "right" categories and access the "right" information at the "right" time! In essence, in SIOP, databases help us automate and access critical demand and supply information to make key decisions and visualize the current state/future state. At my client, although we are in the design stage of the process, we are using what makes sense immediately and have already received positive feedback from their #1 customer. Nice way to end my week!

 

One tip to implement this week:

 

Databases are powerful for countless business decisions and programs. You could be trying to determine pricing, where to focus your sales force, where to focus efforts in manufacturing, how to eliminate waste and so on. Think about what data is important to your company – and your role. 

 

If data is being tracked, gain access to it and think about how you could analyze the data. If it isn't being tracked, start by tracking a few key metrics. The nice thing about data and trends is that you'll have a trend after two days of tracking data. Eventually you'll be able to look at not only yesterday vs. today but last week vs. this week and last month vs. this month and last year vs. this year. Once you look at it this way, new ideas, opportunities and potential bottlenecks will naturally emerge.

 

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

 

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Keeping in Touch

Posted by lisaanderson Dec 21, 2015

IveBeenThinkingBlog-1024x459.jpgAs we are in the holiday season, it certainly seems like a good time to keep in touch with our family, friends, and colleagues. What are you doing to make sure your contacts know they are valued? For example, I have heard from several contacts I haven't talked to in a while. It is nice to catch up and remember the importance of people. As I say in my consulting business, people are #1 to success. And isn't it just a great time of year to keep in touch anyway?

 

One tip to implement this week:

 

The great news is that the holidays provide a great reason to keep in touch. I prefer to use the personal touch. Write a hand-written note in a holiday card. Pick up the phone to let them know you appreciate them. Schedule a time to get together and catch up. Send a personalized email or video card.

 

In my ProVisors group, we had a conversation about this topic. The key is to do something of high quality that stands out from the crowd vs. the non-personal touch. Think about something a little different. Don't just send something to check it off your list. Put thought into it to value the relationship. Don't worry if you haven't started. It is a fantastic opportunity through the New Year to leverage this opportunity.

 

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

 

process flow.jpgWhen the idea of The Systems Pragmatist service line popped to mind, I was thinking about the critical importance of systems and processes.  I had just left a strategy session with the former head of HR from Cisco, and she gave me a new respect for the value of process flows. Previous to that session, I saw them as just an assumed part of the process. It was great to gain a new appreciation for one of my strengths!

 

Thus, I thought I'd share the value of process flows. As much as we think we know our processes, we don't. I've yet to find a situation where we didn't learn something by creating and documenting process flows. For example, while working with a client on production scheduling, the supervisors and managers thought they knew what was being scheduled and the process to schedule it; however, they didn't. When we documented the production schedule and associated processes, we found several scheduling issues no one was addressing. This simple finding led to dramatic improvements in service levels as we could better identify root causes.

Lately, I've been working with several clients to design and implement SIOP (sales, inventory and operations planning) programs as it is a great way to align all functions of the organization on one plan that also balances demand with supply. We recently developed process flows to support the demand and supply processes, and it was enlightening.  At a minimum, it provided clarity to the process steps and accelerated our progress because it facilitated communication and collaboration.

 

Process flows provide clarity in several respects: 1) Which direction the process flows. 2) Who is responsible for the process step. 3) Whether a decision is required. 4) The sequence of process steps. 5) A visual representation of the process.

 

Contrary to popular opinion, process flows do not have to be complex. Although Visio creates perfect process flows, it does not have widespread use. In the SIOP example above, we went down the simple path and created them in Excel.  Being fancy isn't essential and can add complications. Consider what will facilitate communication, collaboration and aid in achieving results. Simplify and focus exclusively on what will provide value.

 

Did you like this article? Continue reading on how to become a Systems Pragmatist:

 

The Significant Value of Processes

 

Watching Metrics Trends

Fotolia_89418042_XS.jpgCompanies are in growth. Every single client is growing – many quite dramatically while others a bit slower, yet growth just the same. Although rapid growth is exciting, it can also be one of the most challenging. Systems can provide the perfect tool to leverage for success – and project management is your ticket to ensure success.

 

Growth can be challenging for companies both large and small. Whether the client is still relatively small and concerned with cash flow or whether they are much larger and trying to purchase buildings and machines, growth will bring growing pains. Customers do not care what you have to do to service them, whether they are large or small. They expect you’ll have what they need where they need it and when they need it. For example, Amazon has next day, same day and Sunday deliveries as options. E-commerce capabilities and mobile-friendly apps are expectations for all types of companies. Thus, a solid systems infrastructure is not only valuable but a requirement for survival to support growth.

Similarly, larger companies also can benefit from systems. One of the best ways to gain new customers, develop and sell new items, and to expand your product line by cross-selling is to upgrade your capabilities. You’ll need to leverage systems to be successful and efficient with these endeavors. There are a few reasons why: 1) Volume. 2) Best practices. 3) Automation.

Systems will provide access to volume. Certainly, one of the key advantages of growth is the ability to leverage additional volume over the same or minimally larger infrastructure. This brings profit to the bottom line. A system does not care whether you perform ten transactions (or calculations) or 10,000. A person does!

Systems also provide the ability to leverage best practice processes. These processes can be embedded in the system.

Unfortunately, I’ve seen clients (and people) who have the latest and greatest technology available to them yet they fail miserably. The reason this occurs is that they do not take the time to think through the optimal processes the system can utilize. One way to think about this is “garbage in, garbage out”. A system will only calculate errors faster if you don’t focus time and attention on your processes. How can you set up your daily, weekly and monthly routine to best support your business? Build these into your system, and your system will become invaluable to growth.

Systems provide the opportunity to automate. There are countless opportunities to automate in every business. I’ve yet to walk into a new client without significant potential to take steps out of processes by having the computer perform steps and calculations within a set of guidelines. For example, instead of manually calculating what you need to purchase in order to meet your customers’ needs, an ERP system will figure that out for you and provide you with a recommended plan for review. Then, our job becomes managing exceptions and adding value instead of performing routine tasks.

SOLID PROJECT MANAGEMENT ENSURES SYSTEMS SUCCESS

As valuable as a system can be in supporting growth, it will be meaningless if not backed by solid project management. Certainly, I’ve seen more issues arise in implementing and leveraging systems than almost every other type of project. Thus, it is of utmost importance to focus on the critical project management techniques required to ensure systems success.

Reviewing those successful systems implementations, upgrades and projects to further leverage existing functionality, the vast majority have these tenets in place:

  1. A strong project leader – it must begin and end with leadership as my HR mentor used to say. Interestingly, the best projects with weak leaders fail whereas the weakest projects with strong leaders succeed.
  2. A well thought-out project plan with a clearly defined critical path and milestones – it is easy to get lost in system implementations; thus, simplifying the focus to the critical path is essential to success.
  3. Tracking mechanisms – it is too late to discover an issue once 50% of the project has elapsed. Instead, find ways to build checkpoints into the project plan. Make sure there are plenty of short tests so that you can rapidly discover issues and plans can be adjusted.
  4. Senior leadership support – similarly to project leadership, no matter how strong the team and plan, it will fail without executive support. Undoubtedly, a conflict will arise that will require support from senior leaders. Be prepared upfront for this need.

There are countless reasons to consider implementing a new system, upgrading your system or further leveraging your system to support growth. First and foremost, consider whether you want to grow by 5% per year using your current infrastructure and systems or whether you want to take advantage of opportunities as they arise. Many of my clients have opportunities to grow by 20%, 50%, and 100%.

Next, why not increase cash flow and maximize profit while growing the business? Since it is often a no-brainer to further leverage systems, make sure you are prepared for success. Beef up your project management and success will follow.

Did you like this article? Continue reading on how to become a Systems Pragmatist:

 

6 Process & Systems Trends for Success

 

Uncommon Common Sense Project Management

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Sarbanes Oxley

Posted by lisaanderson Dec 17, 2015

sarbanes oxley.jpgThe 2002 Sarbanes Oxley legislation (new, enhanced standards for all U.S. public companies) was established in response to high-profile financial scandals (Enron, etc.) in order to protect shareholders and the general public from accounting errors and fraudulent practices. However, implementing SOX in a meaningful way for an organization is far from a no-brainer. A few tips include:

 

1. Understand your business - what are your key business processes? Understand and document those processes, from the financial risk and control perspective. Do not worry about the rest.
2. Materiality - this is another way of saying, focus on the 80/20. Focus on those areas that have a large potential financial impact on your business.
3. Understand risks - there are endless financial risks in any business. The critical element is to understand which risks are important to your business. Key controls are required for those risks.
4. Understand controls - how does your business mitigate the key risks? What options/tradeoffs exist to mitigate the risks?
5. Think about what makes sense - it is quite possible to throw out strict, irrelevant rules and instead think about what makes sense for your business – what is logical (remember risks, controls and tradeoffs). Then, it is just a matter of putting it into an appropriate communication format for SOX.
6. Evidence - a key word for SOX. Regardless of whether you have the best processes, it might not matter – evidence is the key. In many cases, if you execute effectively in your organization, your processes will not need to be changed. However, it is likely you'll have to add evidence so that you can prove it to your auditors.
7. Segregation of duties - although logical and part of other aspects of SOX, I've given this a separate bullet point because it is often one of the more challenging aspects for smaller, flexible organizations to achieve. Remember, logic works so long as it is backed by evidence!

 

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Become the Strongest Link in Your Supply Chain

 

The Significant Value of Processes

go live erp.jpgSince one of my clients is going live tomorrow on a new ERP system, I've been thinking about go-live. Every software supplier has their "go-live" process and typically touts it as "best"; however, what really matters is the fundamentals. 

In the last few years, I've been supporting many clients select the "right" ERP system to best support their business needs, and I've been sticking with them to ensure success with the design and to support the process from an expertise standpoint. A few of the keys include:

  1. Checklists: Remember the blocking and tackling steps. Having a checklist of items that have to be complete is cornerstone to success. It is easy to get side-tracked without a checklist.
  2. Cut-over: The cut-over process has to be planned well. Are you stopping all movement during the process? Certainly this is the easy way to success; however, it is not possible during most go-lives as customers will not wait. Make sure to have clean cut-off points. Reconcile. Balance. An accounting mindset can be a definite advantage.
  3. Support: Whether you think you'll need it or not, make sure you have plenty of support on hand. Ask employees to be flexible during go-live. Have extra experts available to run ideas by and to answer questions. Worst case — you'll have paid for insurance. As someone who had her house burn down, I highly recommend it!
  4. Training: Make sure to accompany go-live with plenty of training. No matter how much you think you know the process steps, you'll realize you don't know how to back out of mistakes or you'll forget a critical step. Training at go-live can accelerate your progress.
  5. Communication: This almost goes without saying but it is ridiculous how often communication can be forgotten as you get into the nitty gritty of go-live tasks. Assign someone to keep the communication flowing.

Did you like this article? Continue reading on how to become a Systems Pragmatist:

 

ERP Implementation: Secrets to Success

 

Watching Metrics Trends

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Interpret!

Posted by lisaanderson Dec 14, 2015


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My close friend's step-mom is a sharp-witted, amazing storyteller, and one of her famous lines is "interpret". Whether she said something completely wrong or somewhat close to what she wanted to communicate, she simply says "interpret" with a smile. Somehow with her, it works every time. If I tried it, somehow I doubt I'd have quite as much luck!

 

However, she is correct. I was listening to my nephew ask questions about his homework project, and he seems to think that if the exact situation hasn't occurred before, he wouldn't know the answer. It is a learning process as he is still young, but it reminds me of some work colleagues as well. Don't give up if the situation or problem isn't one you've experienced exactly the same previously. THINK and INTERPRET as Marjorie says. Take a 94-year old's wisdom to heart.


One tip to implement this week:

 

The next challenge you come across, interpret. Meaning, don't give up. Instead, think about how you could get the answer. Break the problem into pieces. Most likely you know at least one piece. Start there. Look on the Internet for an answer to the 2nd or 3rd piece. Ask a colleague. Soon, you will likely have enough of the problem understood to interpret successfully — and find your answer!

 

If you don't know why the system did what it did, stop and think about possible reasons. If you don't know why Shipping is requesting a change or concerned about the product you delivered to the warehouse, think about possible reasons. If your customer poses a challenge that seems out of your area of expertise, don't respond without thinking about whether it relates if you can break the problem down into smaller chunks. In essence, think before you leap to "no".

 

Looking for more ideas to keep your supply chain connected? 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_79408292_XS.jpgI received a note recently from one of my newsletter subscribers asking if inventory management is dead.  He stated that he didn’t think there was a single session on inventory management at APICS 2015 and wondered if the topic was dead. The answer is NO….at least not for successful companies!

 

Interestingly, I was asked specifically to talk about inventory management by the APICS Ventura chapter as their programs chair said that their members were interested in fundamentals topics – what really matters to success in the workplace. That is the reason why inventory management will never go out of style – similarly to the fact that your house will not stand up long term without a solid foundation, your company will not stand up long term without solid inventory management practices.

 

Start with the base fundamentals. You must start with systems transactions – timing, accuracy and separation of duties are all important. I’ve been called into significant messes including failed system implementations that I’ve been able to resolve largely stemming from these types of foundational elements. It is well worth paying attention to them! Next look at inventory levels – optimize the level of inventory, your supply chain network structure, your lead times, customer service levels, efficiencies and margins.  The right mix will result in business success – and optimal inventory and cash flow levels. For more advanced topics, evaluate collaborating with customers, suppliers and other supply chain partners to take inventory management practices to a new level only achieved by looking at the end-to-end supply chain. If you’d like to discuss options to dramatically improving your inventory management practices, contact me.

 

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Cycle Counting: The 5 Keys to Inventory Accuracy

 

Should We Always Aim to Reduce Inventory Levels?



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I've seen a few examples of the power of customer service this week, and it propelled me to write on what a huge impact it can have. For example, I participated in 3 full days of ERP demonstrations in order to provide expertise on which software would be the best fit for achieving business results. There was a person (Brian) assigned to stock the room with drinks and bring in food for breakfast and lunch each day as demos can be long days. He happened to notice on the first morning that I didn't drink the coffee and hadn't seen the cooler with water, and so I took out a can of Zevia (a diet coke without the bad sugars) from my briefcase. He asked about it, where they sell it, etc. The next morning there were several cans of Zevia in the cooler already chilled. How impressive!

 

I never would have asked him to do that but he went over and beyond with customer service. I asked about him later on and found out that he was in marketing and had told my colleague the story of how he was hired. He had always admired my client and so when he was between jobs, he stopped by to see about a job. The owner happened to see him in the lobby with a bunch of materials he had put together on them, and so he stopped to talk with him. The owner was impressed with what he had put together and hired him, even though there was no job posted at the time. I thought this was a great story as it is a perfect example of how it "begins and ends with leadership" and the impacts you have can extend in never-expected directions. Imagine if Brian goes over and beyond for my drink what he must do for their customers!

 

One tip to implement this week:


Think about what you can do like what Brian did. What simple thing can you do for your customer, your supplier, your colleague, your manager and the like. Pay attention to what would make a difference. In my case, I never would have thought to ask yet I was very appreciative and felt like a special customer/partner because of his gesture. Zevias are not expensive yet it was powerful. No matter your budget or position, there will be several ideas like this you could implement each day if you are looking for them. Do you think I am even more favorable about working with this client and more inclined to go the extra mile for them? Of course!

 

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


IveBeenThinkingBlog-1024x459.jpgSticking to priorities is always important; however, it can be especially challenging during the holiday season as there are so many demands on our time. For example, today I had a key priority that had to be completed for a client. I knew it would take substantial time, and I had been working on it for a while. I had postponed it in order to address personal priorities, and so I knew it had to be #1. 

 

There were countless distractions, seemingly important tasks and conflicting priorities. However instead of being deterred, I stuck to my priorities, completed the project, and then went on to the numerous other demands - including this newsletter. This sounds much easier than it is to accomplish - what are tricks of the trade to stick to your priorities?

 

One tip to implement this week:

 

The great news is that most of us have far too many priorities; thus, picking an important one shouldn't be difficult. Once we've chosen a top priority (do not worry about perfection; the worst case scenario is that we'll pick an important priority vs. the most important priority), take a step back to think about your plan to complete/address this priority. If it includes a task, plan it into your calendar. Talk is cheap; instead, start taking action.

 

Consider scheduling something you enjoy at a key milestone in the process. For example, I enjoy eating lunch outside, and so I might take an hour out of the schedule to go to one of my favorite restaurants as I reach a morning milestone. 

 

Communicate your goal verbally. I committed to a particular deadline and communicated that to several folks. If I started to go off-track, not only would these folks likely help steer me back on track but they also would help hold me accountable. Find partners. Business is a team sport!

 

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


mfg basics.jpgAs the year winds down, it seems like a great time to "take stock" — what is "hot"? I am not a fan of fads — although many fads such as lean manufacturing are right "on the money" from many respects, there is no magic pill in going down the lean path. That's true with most other touted manufacturing programs - Six Sigma, Theory of Constraints, SIOP, and the like. Instead, what really works? 

If I look across my clients which span $5 million dollar family-owned companies to $50 million multi-generation companies to $100 million dollar private equity backed companies to $25-250 million dollar facilities of multi-billion dollar companies, what's "hot" has much in common. As my mentor from early in my career used to say, he paid attention when I said "HUGE". I never realized I used that word until he pointed it out to me. Thus, here are those that consistently drive HUGE results:

  1. Blocking & tackling - Seems quite boring; however, it is consistently the most overlooked secret to success. Interestingly, one of my speeches this past year was requested solely for this reason — inventory accuracy never goes out of style! What are you doing to make sure your basics are in place?
  2. Planning - It is surprising how often I am brought in for this topic. Lucky for me, it is a definite strength — and often desperately needed across-the-board. Whether planning relates to demand planning (customer forecasts), master scheduling, detailed planning, kanban systems, planning the constraint, project planning, cross-functional planning, or just referred to as "make sure the right items are in the right places at the right time with minimal inventory, maximum efficiencies, excellent service levels and shortened lead times", it is hot!
  3. Leverage systems & data - Systems help to automate, reduce errors, improve efficiency, grow the business without adding hard-to-find and expensive resources and better support customer needs. As supply chains have become more complex, it is a "must" to properly leverage systems if you want to grow profitably. Also don't forget your data. Your system collects more data than imaginable. How can you analyze or utilize this data for success?
  4. Top talent - I'd be remiss if I didn't mention one of the tenets ALL of my clients have in common — the need for top talent. As supply chains have become more complex, global, surrounded by risk, tied down in rules and regulations, and the like, it has become even more important to retain, find, train and develop top talent. I mention them in this order because I cannot tell you how many clients I've run across that have a superstar employee that is overlooked. Perhaps they need a tool, or to be turned loose (empowered), given permission to focus on a particular project, or provided training or mentoring in enhanced communication skills or use of language. Provide it, and suddenly your profits skyrocket. Why not take a look around you or hire someone who can help you find these stars in your midst?  
  5. Metrics - I've also found that my best clients put the "right few" metrics in place. Are you tracking responsiveness, reliability, performance, agility and cost (return on your assets)? Which are important for your business? It is easy to get caught up in measuring useless metrics because we've always done it that way or because the boss requested it. But why? Metrics should provide us with a guide of how we are performing vs. what is important to success. Success is not the same across companies — or even industries. What does it mean for you? And can you tell whether you are making progress?

 

Although this list doesn't sound sexy, it can be extremely sexy to investors, Boards of Directors and employees on a bonus plan tied to performance. 

 

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Hot Supply Chain Trends

 

Leverage Supply Chain Trends for Success


navigate growth.jpgUnderstanding and controlling costs has always been a critical success factor for the majority of businesses; however, during times of growth, it is especially important to make sure to remain vigilant while also investing as needed.  Growth is exciting but it also can be harder than downsizing to navigate. Thus, keeping an eye on costs can be valuable to ensuring success.

 

So, how does one go about defining cost? It is as simple as defining the intersection and sweet spot of your organization's people, process and technology assets. It doesn't require complex solutions or significant capital investment; instead, it requires a focus on these three key variables - people, process and technology.

 

First, it all begins with people. As my HR mentor used to say, the right people are your #1 asset. And, I've never seen an example where this didn't turn out to be valid. From the perspective of defining and controlling costs, there are a few keys to success related to the people component:

 

  1. Explain the big picture - Since defining and controlling costs involves hard work, a strict process discipline and doesn't typically involve a new and exciting technology or the latest fad or program, it is not likely to win popularity contests. In my experience, most people want to be working on something considered interesting or leading edge; therefore, it is essential that leadership not only present the big picture vision behind this initiative including the why's to the company goals but they also must emphasize the importance and priority. The talent will be far more focused on delivering results if they understand how they are contributing to the company's success – and they know that their efforts are valued. When I was VP of Operations, I found it amazing how many times I received feedback about how this seemingly small communication step was not only appreciated but also a key reason for people feeling a part of something important.
  2. An accountability culture - Since controlling costs requires a rigorous process discipline combined with metric tracking, a culture of accountability is essential. This sounds far easier to achieve than it is in practice, yet, in my experience, it is the 80/20 of delivering results. So, it is worth it to invest the efforts upfront to achieve a significant return on investment. The keys steps involved in creating a culture of accountability include: jointly establishing performance goals, providing/seeking continual feedback and improvement, tracking progress to goals, revising based on changing business priorities, following up with an audit and acknowledgement of completion/success. I found that people resist at first as a culture of accountability is uncommon and uncomfortable (after all, being busy feels good and is easier to control than being accountable for results); however, when consistently applied, 80% of the people step up to the plate, the low performers leave (which further energizes the high achievers) and, in the end, the majority of people find more meaning in this culture and can no longer imagine going back.
  3. Value your people - As obvious as it sounds, people are cornerstone to achieving a successful end result. People are not only the thinking power of the organization but they also drive the bottom line results. With the clarity of goals and framework, people will rise to the occasion and contribute to success through involvement and participation. The key is for leadership to get out of the way of success; instead, if they provide support and tools, ask questions and encourage continual progress, you will accelerate your timeline to success.
  4. Cross-functional team - 80% of the time, a cross-functional team will not only accelerate the results but will also improve the quality of the results. For example, in one project, our goal was to define material usage and find a way to reduce back to standard levels. There were at least 10 possible scenarios of why material usage was higher than standard, ranging from high scrap levels to adding extra material during the process in order to speed up the run rate on the machine (which produced 5-10% additional parts) to receiving materials that weighed on the high side of tolerance. By including team members from Engineering, Operations, Maintenance, Quality, and Finance in the process, we were able to reduce the time required to identify and solve the problem.

 

In addition to prioritizing people, it is imperative to focus on process and technology. In the case of defining and controlling costs, the keys to success are interrelated and largely interdependent for process and technology. They include the following:

 

  1. Simplicity - I thought we'd start with this key to success because it is fundamental and often the lack of simplicity is a root cause of poor results. There is an intense pressure throughout organizations to add complexity – it is quite enticing, and most companies think it is essential to success so they create a never-ending web of complexity to supposedly provide them with "the latest and greatest" analytic tools (which few, if anyone, truly understands) and ways of tracking cost. For example, in multiple projects, I've worked with teams who thought that tracking material issued to the line, specific piece by specific piece or specific unit by specific unit was absolutely critical to understanding scrap per line crew, per supplier, etc. In each of these cases, there was some benefit to tracking this data; however, it was the 20% of the 80/20 rule. There was a cost associated with the extra level of detail tracked. And the data was only as good as the data going into the process (garbage in, garbage out). Therefore, aside from an industry or manufacturing processes that requires this level of complexity, you'll achieve exponentially better results with simplicity, just as we did in our projects. Actually, in one case, we invested extra resources and time in order to reverse the complexity and simplify the process, yielding an improved bottom line result. In another example, instead of investing in the latest and greatest software, we invested significantly less to develop reporting that separated the purchase price variance from the usage/volume variance. This report unscrambled the complexity. We then leveraged this information and focused exclusively on the controllable factors that could be modified or managed in order to have a direct impact on results. Why waste time with anything else? I've found repeatedly that the simplest, straight-forward, typically 'boring' solution yields the best results for less cost.
  2. Data integrity - Data integrity is one of the "simple" solutions which typically provides the most significant return on your investment in these types of projects. I equate a focus on data integrity to ensuring that your house's foundation is stable. Although widely popular, why do you want to spend significant resources, time and funds to implement complex systems (similar to installing just the right home theatre surround sound system) when you have a huge crack in the foundation of your house? It sounds ridiculous but it is common – my guess is that it is more exciting and interesting to talk with your friends and neighbors about your new surround sound system with the latest features instead of dealing with the builder to fix the boring yet structural problem in the foundation.
  3. Analysis, prioritization, and follow-up - in essence, process discipline. I consider this blocking and tackling – hard work yet essential to success. Typically there are endless opportunities to define and control costs. This is exactly why timely analysis and prioritization are key components in every successful cost initiative – no company can afford to staff every potential opportunity; instead, staff and prioritize those with the most potential impact to the bottom line or those affecting the critical product lines or key customers. Don't get stuck in analysis paralysis; instead take your best shot at prioritizing and then focus your efforts solely on execution. During execution, it is critical to track progress, identify root causes, resolve problems, test, re-test, follow-up – and repeat the process. On one project team, for every 1% reduction in line scrap, we would save one million dollars. We didn't find the "million dollar solution". Instead, we saved a few million dollars by identifying a series of anomalies, analyzing root causes and developing solutions with the cross-functional team. No fancy systems, no complexity, no significant capital investment. Instead the cross-functional team developed simple reports/metrics, analyzed, brainstormed, and instilled a rigorous process discipline – essentially worked hard and found a way to deliver more than a million dollars to the bottom line.
  4. Continuous improvement - Defining and controlling costs is not an event or project; instead, it is a process (a way of doing business). There are never-ending tweaks to the people, process and technology to optimize operational processes – thereby reducing cost. In the best organizations, optimizing the tradeoffs of line efficiency, line scrap and staffing levels is built into the daily routine. For example, in an operational turnaround project which resulted in a 20% gain in efficiencies, the key to success was focus. Each morning in the operations meeting, a cross-functional team met to review the prior day's key performance indicators (such as efficiencies, downtime, scrap levels, etc.), set today's priorities and develop simple action plans with associated resources to address. In a manufacturing environment, there is always an opportunity for improvement. Resolving the "low hanging fruit" opportunities alone doesn't propel an operation forward; it is the day-to-day discipline of tackling problems and identifying opportunities that achieves the result. In essence, a rigorous process discipline focused on continuous improvement was the key to delivering a successful operational turnaround.


Defining and controlling costs is not about the people, the process or the technology; instead, it is about leveraging the right combination of people, process and technology to catapult your organization to the next level.

 

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Business Process ROI

 

Leverage Systems for Growth


Fotolia_59536368_XS.jpgI’ve been focused on an ERP system go-live this week with one of my key clients, and it reminds me that it is easy to go down the rabbit hole in details and forget the big picture. Whether we are implementing a system, racing around to satisfy customer orders due to growth or service problems, rolling out new and improved processes and programs, or something else, remember to take a step back to keep the big picture in mind. For example, if you question your current workload, how much of it would be focused on what is essential to the big picture? Is it possible you’ve gotten off track? Of course! It happens all the time – and no one is immune!

 

Recently, I was working with a client on a project. We agreed on our strategy upfront. Then we got lost in the details. There was debate and confusion surrounding the details. This alone is not a note of concern as debate over how to best handle details can be productive and end up at a better result.  However, in this case, we got so lost in details that a strategy change was made without the full knowledge of the core team – it was well-intentioned but occurred without clarity and alignment.

 

It turned out that the strategy change had complexities (of course) and so frustration resulted. When talking about details, we each thought we were on the same page of the strategy but we weren’t. Somehow, we made our way through the details to a successful end result according to the new strategy even though we were still on two different pages. The new strategy was “better” from several respects but it created diversions from other critical tasks. Thus if some level of success resulted from this level of confusion, imagine what could have been achieved if we had taken a step back to review the big picture!

 

Hindsight is always 20/20 but the smart executives learn from all experiences.  In this case, remembering to check the big picture and sync up would have been a great benefit. The great news is that it is easy to turn around – schedule time in your calendar. Ask your team members to put reminders into the weekly process. Why not have a “win” that generates 10 fold the level of success by following one simple rule – remember your big picture.

 

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Put Your Eagle Eye on What’s Key to Success-Leadership

 

Project Failure: How to Avoid Top Causes

IveBeenThinkingBlog-1024x459.jpg

According to a recent KPMG survey on the Global Manufacturing Outlook, executives are thinking about innovation. 81% are altering their business models to encourage collaboration with customers, suppliers and other partners to "improve the value of their innovation investments". Speed is critical. Thus, a key question is how to speed up the innovation cycle – and how do we make sure results follow?

 

Are you collaborating with your customers and suppliers? How about internal resources? SIOP (sales, inventory and operations planning) is a great vehicle for ensuring this collaboration occurs. I've seen dramatic improvements in lead time, service levels, capacity preparedness for growth, margins and cash (inventory levels) as I partner with my clients to implement SIOP. 

 

One tip to implement this week:

The great news about collaboration is that we can all do something to improve collaboration. Start small. How about talking with your colleague in the next office over instead of sending an email? Can you find ways to collaborate with functions you interact with on a daily basis? Perhaps you can ask if there is something you can improve in your service/interactions with them that would help them? Then, expand to your customers, suppliers and other partners.

 

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

speed vs quality.jpgMy recent research report on the Amazon effect says that 67% of manufacturers and distributors feel customer service gaps when compared to Amazon-like offerings. One of those key areas is lead time. When looking across my clients, which resemble a well-diversified portfolio of manufacturing and distribution companies, customers are demanding a 20% decrease in lead time at minimum with expectations up to 50% reduction on average.

 

Time is one thing no one has! A few of my most successful and rapidly growing clients pride themselves on a 24-48 hour turnaround and prioritize their people, processes, systems, inventory strategy and the like on this objective. It certainly seems worthwhile to take note!

 

Lead time reduction is not something that can be dictated. Even high inventory levels do not mean you'll be able to successfully support short lead times on an ongoing basis. Instead, it means you need to have a process change somewhere in your supply chain to be sustainable. Have you taken time out of your manufacturing process? Perhaps you've implemented a few lean concepts. Or, it could mean that you have increased your collaboration with suppliers and customers to better support your supply chain needs. You could have used tools such as SIOP (sales, inventory and operations planning) to achieve this objective. Or, have you further leveraged or upgraded your ERP system and implemented functionality that allowed you to take out or minimize process steps? Or have you provided additional training and education for your planning team so that inventory, service and efficiencies can be optimized? 

 

There are countless ways to design your supply chain to slash lead times. Join me in Las Vegas for my presentation "Priming for Supply Chain for the Amazon Effect" at the APICS 2015 International Conference to learn more about how to prepare for success with topics including lead time reduction. The key is which is most effective for your particular situation and objectives. After all, there is no reason to run further and work harder than your competition to get to the same end goal!


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The Amazon Effect: Why We Must Pay Attention to Our Customers

 

The $1 Million Dollar Planner



siop.jpgSIOP (sales, inventory, & operations planning) taken to the best practice degree is often associated with integrated business planning. In some circles, they are seen as interchangeable. In others, it is seen as the "next step" for SIOP. It is nomenclature to me as I see fully leveraging SIOP as common sense.

 

Substantial results will follow. For example, several of my clients have achieved one or several of the following with SIOP/Integrated Business Planning: 1) successfully supported dramatic growth; 2) improved service levels; 3) slashed lead times; 4) improved margins; 5) accelerated cash flow; and 6) increased productivity.


Why not use SIOP as a core process to running the business? Wouldn't that be a common sense approach to success? As the famous William Occam said, "The simplest solution is often the best". This also syncs up with what I've found to be the most successful philosophy – start with the simple and expand with what will provide the most value to your organization. 

 

So, what are the common keys to success?

 

  1. Start with demand: It is always appropriate to start with demand. Focus in on your customers. What do you expect your customers to buy? Which products are most popular? What else can you offer your customers to go the extra mile? Getting a solid handle on demand is a great place to start.
  2. Forecast accuracy: The more predictable your sales, the less inventory you'll need to carry to meet customer expectations. How volatile are your customers' ordering patterns? 
  3. Rolling # of months or years: As each month goes by, you'll want to add a month to the end of your planning cycle. In essence, the concept of a rolling plan is essential to ensure you take the long-term, continually reviewed and updated view. I love the way one of my manufacturing clients describes this concept – it's like a conveyor system where one month drops off and the next one gets added on. 
  4. Inventory strategy: Your inventory strategy is one of the factors that will be used in the development of the master schedule. How many turns are achievable for your industry and in supporting your company strategy? Inventory is used to cover volatility and lead time. What is needed?
  5. Service level plans: What are your customer expectations? Where do you stand in the market? Should you shoot to be competitive, distinct or breakthrough on service and lead times? These factors will affect your resulting inventory expectations.
  6. Master schedule: Translate the demand into supply requirements. Combine demand, inventory strategy, level loading, and lot sizing into a master production schedule.  
  7. Purchase plans: Translate your master schedule into a purchase plan. Similar to the master schedule, combine the master schedule, inventory strategy, level loading and lot sizing into a purchase plan.
  8. Inventory plan: Once you know your demand plan, master schedule and purchase plans, the resulting inventory plan will follow.
  9. Capacity plans: How do your staffing and machine capacity plans align with your master schedule? Will you need to ramp up? Cross-train? Purchase machinery and equipment?
  10. Cost & margin plans: It only makes imminent sense to sync these plans with your cost improvement plans. Assuming you have a good handle on your pricing and mix, a margin plan will emerge.
  11. Cash flow plans: Once your inventory plan is known, it is achievable to estimate cash flow requirements and plan accordingly. Will you need financing? Can you support your growth and investment objectives with your inventory strategy?
  12. Make vs. buy decisions: Strategic decisions including make vs. buy options will arise through the SIOP process. The right people are together to evaluate what will provide the most value for the business.
  13. Capital plans: Certainly, capital plans will be a by-product of the SIOP process.
  14. Collaboration plans: How do your integrated business plans align with your customer and supplier programs? Share critical information and collaborate for success.  
  15. Communication & alignment: One of the key advantages of a SIOP process is to align ALL functions, customers and suppliers on one plan. Clarification rules!
  16. One plan: The concept of one plan is paramount to SIOP success as the 80/20 is in alignment, collaboration and execution with clarity.
  17. Action items: Let's not forget action items. Without solid execution and follow-up, no process will thrive.

 

If you follow these key factors for success, your monthly SIOP process will align resources and result in a rolling forecast that integrates with your financial plans and operational plans. In essence, you'll have the 80/20 of running a successful business in one place.

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The Benefits of SIOP

 

Are You Working on the Right Priorities?


make things better.jpgIt is interesting how effective the powers of observation can be! Take a step back and observe what is going on around you.

The Japanese are experts at this in lean manufacturing — they simply watch what is going on around them and ideas emerge. I also asked

an investment banker/turnaround expert for his top tips for success as he had a 99.9% hit ratio. He said, "Walk around the facility, observe, and the issues will pop out at you.” Talk about a multi-million dollar walk!

 

To hone in on your powers of observation, consider the following tips:

  • Focus: Distraction can be a deterrent to success. Stay focused on a topic or a work process until you've seen how it works. Eventually, ideas will emerge.
  • Pay attention to waste: Similar to lean thinking, pay attention to waste of all sorts. Just ask yourself common-sense questions. Why are you performing this step? Why are you checking? Why is scrap piling up?

  • Look for the bottleneck: What is the weakest link in your chain? If materials are moving through your facility, they cannot move faster than the slowest or weakest link. Identify it. How can you focus energies on just this step?
  • Watch trends: If you watch often enough and/or look at key metrics, trends will form. What is out of sync with the prior trend? Did something change? Is it an outlier? I've found more million dollar solutions by noticing trends earlier than the competition than any other method I can think of.
  • Ask: Business is not a solo act. You can learn vast amounts by simply asking your employees, peers, manager/Board, customers, suppliers, etc. Collaboration is cornerstone to success.

 

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The Hidden Benefit of Observation

 

Are You Working on the Right Priorities?