Category: Profit through People

Is there an ROI on a Forecasting System?

September 12th, 2019

A Client Question
Since forecasting can deliver significant benefits with increased levels of service, inventory turnover and margin improvement, the question that inevitably arises is whether it makes sense to purchase a forecasting or demand planning system. Of course, the answer is: “It depends”.

In one client situation, goods were manufactured in Mexico and purchased from Asia. Key customers were large retail outlets. Demand seemed to change daily.  Yet, lead times were in the months if the ‘right’ stock wasn’t in the ‘right’ place at the ‘right’ time. Of course, they could cover some small changes by adding freight costs but that isn’t a recipe for profit. Improving the forecast would improve their success. So, the question turned to whether a system would have a ROI.

The Answer
In their case, they could achieve a rapid return on investment by using a forecasting system. However, let me say upfront that more often than not, I do not recommend a system. It completely depends on whether it will drive the appropriate level of improvement and associated results or not. In this case, we could easily drive dramatic forecast accuracy improvement since we started out at such a low level of accuracy due to the business environment, industry and key customers. The people understood the importance of the providing forecast feedback and although the key customers didn’t have “good” forecasts to provide, they could provide data we could analyze. In these types of situations, we are able to reduce inventory by a minimum of 20%.  It should be noted, though, that results can be far greater.

Food For Thought
Although forecasting systems can be a great idea to drive service, inventory and margin improvement, they do not always provide a return. Take a step back to understand your industry from a forecasting point-of-view:

  • Is demand constantly changing?
  • Are you supporting small numbers of customer/location points with less than 25 items or is it 100 fold?
  • Are you able to gain key customer input and/or point-of-sale data?
  • Do you have anyone familiar with demand planning and forecasting to be able to make sense of what a system is telling you?
  • And, last but definitely not least, have you found the appropriate scale for your forecasting system?

Trying to kill a fly with an assault rifle is overkill. If you are interested in running your situation by us, contact us.

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Strategy Isn’t Long Term!

September 6th, 2019

As I meet with countless CEOs and P&L leaders at clients, via connections, at speeches, etc., I pay attention to what is top of mind. Strategy is always top of mind for the most successful business leaders! After all, if a CEO makes in the millions (the top 10 paid CEOs from 2018 made between $66 million and >$500 million), he/she is being paid for more than just executing the plan. Certainly, strategy is integral to the future success of the organization.

Yet, I see a lot of confusion about strategy. It isn’t complex. Strategy is figuring out the ‘what’. Whereas, tactics is the ‘how’. Strategy isn’t necessarily long-term. Who says ‘what’ should be long-term? In fact, some of the most successful CEOs are now focusing on rapid and agile strategy. Isn’t that what we need to succeed in today’s Amazon-impacted, rapidly changing business environment?

Focusing on the ‘what’ focuses on the outcomes and goals. In essence, where should your business end up? As Peter Drucker would say, strategy is “doing the right things”; whereas tactics is “doing things right”. Take a step back and think about his profound thinking. It is easy to spend all your time “doing things right”, isn’t it? It certainly is for me, and I am an expert in strategy!

What do you think Jeff Bezos is thinking? How to execute the best logistics plan or how to control the logistics landscape, just like a chess game? Of course, strategists need managers who are good at both strategy and tactics to make any strategy come true. And it is also true that strategies rarely fail in composition. Yet, more often than not, they fail in execution. Thus, it seems we must have both! We better know which is which and not be thinking strategy and tactics are long-term vs. short-term, or we will go the way of Sears and Toys R’ Us. (Quite sad as I still remember going to Toys R’ Us as a child around Christmas to explore all the possibilities. It was truly an experience!)

Have you thought about your strategy lately? If not, you better get on it before the next Amazon passes you by. And, let’s not get cocky, Sears used to be the Amazon in my lifetime. You never know who the next Amazon will be. If you are interested in a strategic assessment, contact us.

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Should You Hold a Meeting?

September 3rd, 2019
There is no doubt about it.  More than 80%  of our clients hold too many meetings that don’t accomplish results. Does your company follow suit? Even if you are following a lean methodology with an odd start time and a standing meeting, the key question is whether anything is accomplished. How would you rate your last meeting?
In our experience, sometimes the ‘lean’ organizations actually accomplish less because people believe they are following “best practices”. Take a step back and map out last week’s meetings.
  • What was the objective of each meeting? Do you even know the reason you attended? Often-times, clients go to meetings because they ‘have to’, not because they get something from them.
  • Did you accomplish the objective?
  • Did the appropriate people attend the meeting? Or was an entire group of people waiting on a key person? Or, worse yet, waiting on a non-key person?
  • Did the meeting start on-time and end on-time?
  • Did you have an opportunity to share meaningful input?
  • Did you feel like it was a productive meeting or a waste of time?
There is a reason the book, “Death by Meeting” is popular. Yet without meetings, would we accomplish goals?
As often as we encourage clients to curtail or shorten meetings, we also encourage other clients to hold meetings. The bottom line is whether the meeting will create value. If you use this simple rule prior to scheduling a meeting, we guarantee you’ll be more successful and productive almost immediately.
Consider a few questions for your next meeting:
  1. Is there anyone on your attendee list that doesn’t need to attend? Perhaps think about the meeting invitees as people you are paying to be there. Instead of a fixed cost, assume their time is variable. Imagine what they can accomplish not sitting in an unnecessary meeting, and take them off the list!
  2. Is anyone missing from the attendee list? I cannot tell you how often I end up in a meeting with a client where a key person isn’t in the meeting, so nothing can be accomplished. Why not wait until that person is available, be more forceful to get that person to the meeting or empower a delegate?
  3. Do you have a clear agenda with outcomes? This is less about a physical piece of paper or an agenda on a meeting request and more about knowing what you will walk away accomplishing in the meeting. Think again before ‘hitting send’ on your meeting request.
  4. Will you encourage feedback to make the next meeting better? In my global strategy group, we have started to not only talk about how to improve the next meeting but we are giving each other feedback. We might not want to hear constructive feedback but we are more successful with it.
  5. Is there a mechanism to track actions? Some clients call this a RAIL (rolling action item list) or something like it. Consider not taking notes and instead focusing on action.
Meetings are necessary in driving results.  Yet, do you need as many as you have? And do they have to be as long? I challenge everyone to reduce their meeting time by 50%. Give it a try, and let us know how it goes and what strategies you find the most successful. Also, even more interesting, how many meetings did you cancel?
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Sequoia and the Power of Silence

August 8th, 2019

My best friend from high school and college was in town recently and we went to Sequoia National Park. First, I must say, what a ride to get to Sequoia on winding, mountainous roads! Once we arrived, we went to the ‘Trail of 100 Giants’, and it was impressive! These Sequoias were over 1500 years old, and gigantic. The largest tree has a diameter of 20 feet and is over 220 feet high.

Yet what stood out was the power of silence. You could hear the rustle of the wind in the trees. It sounded similar to sitting by the ocean. It certainly was a calming and humbling experience as the silence and the sounds of nature overpowered everything else.

Have you ever thought about the power of silence? Do you find it to be more effective than 1000 words? In a business setting, silence can speak volumes…

One tip to implement this week:
We all hear the advice to stop and listen.  Yet, how often are we thinking about silence? The most powerful speakers know the power of silence. The dramatic pause will emphasize just the right words. Certainly the best actors use this technique expertly, and we are putty in their hands!

Or have you thought about how not answering immediately answers the question? For example, at one client, I admit that after a particularly grumpy executive who didn’t want to support our project told me that he didn’t think consultants were valuable and didn’t want to talk to me to answer my questions, I was silent because I was thinking about how to respond that would be productive. Sometimes, it is better to be lucky than brilliant! In this case, since I didn’t respond quickly, he ended up filling the proverbial silence (since we weren’t communicating in person) and came back to me and agreed to do exactly what he just said he wouldn’t do. A light bulb went off that there is power in silence!

Silence is extremely valuable in negotiations. Have you noticed that whoever is silent gains the upper hand? That’s because we are typically uncomfortable with silence and rush to fill the gap. Next thing we know, we’ve given away more power and information than we intended, and we are behind in the negotiation. Yet I have to say, silence used as a manipulative strategy will not achieve your intended result. People will pick up on whether you are genuine or not.

Consider silence instead of a long response the next time you are going to open your mouth in a high stakes communication. Let me know how it turns out.



Dana Point and the Customers’ 1st Experience with Your Product or Service

August 2nd, 2019

Last week, I went to Dana Point for a good friend’s daughter’s wedding. It seemed like an opportunity for a mini-getaway.  So, I spent the night at the Marriott (pictured). Not only does Dana Point appear majestic with the view of the water, the lawn in front of this hotel provides a great first impression.

Your customers’ first impression can be very important. It gives them a “feeling” about your product or service. As my consulting mentor says, “Logic makes people think. Emotion makes them act.” In this case, it gave a calming and majestic feeling. Great for the end of a busy week!

What is the first impression of your product or service? Does it appear to be high quality? Or is your service welcoming and customer friendly? Mainly, is it what you would like it to be?

One tip to implement this week:
Start by taking a step back to think about your first impression. What would a customer experience? One idea is to ‘shop your business’. If you have a product, go to shipping to see what your next customer will receive as a first shipment.  Also, check on the carrier or truck to understand the delivery experience. Perhaps order your product for a family member (so your team doesn’t know it is for you), and see how it arrives. If your provide a service, call a customer upon your team’s first interaction.  Or go to the point of service and observe or test your service. Test your perceptions.

Once you gain an understanding of your first impression, consider ways to improve upon this first impression. Don’t just think about what you would want. Put your mind into your target customer’s experience.  What value could you add (that doesn’t have to cost anything) that they would appreciate and value? The clients that do this the best have a completely different relationship with their customers. It is worth pursuing if you’d like to increase your customer value and your bottom line!