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Critical Success Factors are the 80/20 of ERP – and Business – Success

January 19th, 2015

supply chainOne of my clients had three sets of ERP system demos this week in a quest to select the best system to meet their business objectives. Not only is it a vital part of selecting the optimal system, I also find that it is always interesting to see how the software will meet the particular client’s needs – and what a big difference the people and presenters make in the process.

This week was no exception; being razor-focused on critical requirements paid off. In essence, what is unique about the industry or company? For example, is serial number tracking required? And/or what functionality is needed to support the company’s strategy, growth plans or profit drivers? For example, one that arose this week is that the company does an impressive job of forecasting manually to drive high service levels during rapid growth. Does the system support this need in an efficient way?

Are you thinking about your critical requirements? Whether selecting a system, thinking about your daily priorities or designing a new business process, it will be a worthwhile exercise.

One tip to implement this week:

Think about your critical success factors.  Whether you are selecting a system or not, you’ll make better decisions if you understand these factors. It depends on your position: 1) If you are an executive, think about what makes your company stand out from the competition? And think about what drives business growth and profitability. 2) If you aren’t an executive, think about what seems to be important in your sphere of influence. What might seem more important or be different from what you learned in school or experienced at other companies? Do those factors seem like contributing factors for success? Take ideas to your manager, owner or executive. I have no doubt it will be a “win”. These critical factors are more important to success than the rest. Thus, treat them as top priorities. Success will follow. 

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…”

 



Customer Collaboration on Orders = RESULTS

January 16th, 2015
collaborating with customers

Working in partnership with your customers delivers winning results on both ends.

Customer collaboration has become cornerstone to success in today’s supply chain driven world. We are all part of a supply chain, and so we must look for ways to thrive within our supply chains. Undoubtedly, those who collaborate with their supply chain partners will succeed whereas the rest will struggle. One simple yet impactful way to collaborate is with orders.

This concept is sometimes called consumption based ordering, sometimes VMI (vendor managed inventory), sometimes auto replenishment and the list goes on of possible names for order collaboration. The point is that it is a process where the supplier places orders for the customer based upon a mutually agreed upon process, data sharing strategy and metrics. The customer provides the appropriate data to the supplier to be able to develop orders aligned with the metrics.

Case Study:

During my tenure at PaperPak, we achieved the following successes with our #1 customer:

  • Recognized by #1 customer as “supplier of the year”
  • Increased sales
  • Became “part of the customers’ organization”
  • Doubled inventory turns
  • Improved customer service to 98%+
  • Reduced lead times and improved costs

These results occurred while supporting customers on VMI through several business condition changes:

  • Merger/acquisition
  • Turnaround & cash crisis
  • Private equity buyout
  • Several software, process, people and insource/outsource changes

As one would expect, there were trials and tribulations, yet we achieved great success overall.  The keys to success in this example were the 3 P’s: 1) People; 2) Process; 3) Partnership.

  1. People: The right people are your #1 asset. First, senior leadership makes or breaks any vendor-managed inventory program. Senior leadership must provide commitment and support, have a high level understanding of the value that can be achieved through a VMI program and be able to explain the whys. Understanding and being able to explain the whys behind a VMI program are key so that implementers’ individual goals are tied to the big picture and tools and support are provided. For example, since PaperPak had senior leadership support, the customer and bottom-line impacts were understood and valued, which resulted in the appropriate resources and funding allocations.

Second, the right VMI planner is critical. After putting the wrong person in the role, we quickly discovered the importance of finding the right person with the right skillsets for the VMI planner position. Our service levels suffered until we found a person with an analytical skillset. Ideally, the VMI planner will be analytical, enjoy the optimization game, be self-confident as he/she is “in the middle” of several competing priorities, customer focused, and be excellent at not only details but also the big picture.

Lastly, there are other people integral to VMI success – Customer service, Planning, Sales, and Information Technology. To achieve success, it takes a team.

  1. Partnerships: In essence, refer back to point #1 – the right people. In this case, we expand the concept to think about the right partnerships with customers and suppliers. My definition of how to achieve a successful partnership is simple – think ‘win-win’. To create a successful VMI program, it requires a close partnership with your customer. The ingredients for a successful partnership are trust, the ability to find and create win-win ideas, and a collaborative view on forecasts, goal setting, and metrics. The same holds true for your suppliers. View your customers and your suppliers as an extension of your company and supply chain. With a partnership, you should be able to turn 1 + 1 into 5; meaning, your returns will be exponential over what you would achieve on your own.
  2. Process: To ensure flawless execution and customer service, process is king. Rigorously following the traditional plan, do, check, act model can yield significant results. It has been shown that although most people spend the majority of their time on the “do” of plan do, check, act, the successful implementers spend a very small portion of time (10%) on “doing”. Instead, the optimum numbers are the following: plan (70%), do (10%), check (15%), and act (5%). As this implies, follow-up/audit is also essential for success. Without continual review and improvement/adjustments, the process lags.

Think about how you can implement customer collaboration strategies. If you are interested in freeing up cash, maximizing profit, growing sales and elevating your business performance, customer collaboration is a no-brainer. No capital investment with amazing results – not only bottom line results but also happier customers and engaged employees. Pick up the phone to your key customer to explore the possibilities.

Did you like this article? Continue reading on how to be the Strongest Link in your supply chain:

Catch The Wave on Customer Collaboration

Start with Your Customer

 



Cycle Counting Remains Core to Success

January 13th, 2015
cycle counting

Inventory management relies on fundamentals like cycle counting to catch discrepancies. But it has to be coupled with a focus on process disciplines or you’ll end up reliving the same problems every day.

I’ve started working with one of my clients on a cycle count program, and so I’m reminded of the critical importance of this supply chain fundamental. If you cannot find the right inventory in the right place at the right time, your customer will be negatively affected. This should be a sufficient reason to pay attention if you’d like to grow – or even maintain your customer base; however, it will also impact your profitability and cash flow if you need additional incentive.

Cycle counting is a measurement process; however, cycle counting alone will do NOTHING to fix your inventory accuracy issues. Count and adjust; count and adjust. If there is no root cause analysis, it becomes a vicious cycle with zero accomplished. Instead, you must focus on process disciplines. Does your company value process disciplines? Do NOT think about what is said. Instead, answer this question: If the employee responsible for work order transactions is near the end of the day and a machine breaks down, will you divert him/her from transactions (even if there is no backup) to help fix the machine? How about if you are being questioned by Finance about overtime and your resource already has worked “too much” overtime? Will you send him/her home and tell them to complete another task and finish the transactions tomorrow? What message does that send?

Did you like this article? Continue reading on how to be the Strongest Link in your supply chain:

Cycle Counting 

Tips for Physical Inventory Success

 



Leaders Must Be Strong!

January 12th, 2015

supply chainI started writing this about supply chain strategy, and I might go back to that topic next week as I was preparing to teach an APICS CSCP (certified supply chain professional) class tomorrow; however, I was diverted on a conference call that compelled me to change my topic to leadership. There is ZERO doubt in my mind that strong leaders will prevail in the worst of conditions whereas weak leaders can cause even the BEST people to fail. Leaders must be willing to confront problems and address reality. It is easy-sounding until you have an issue arise.

This has occurred several times this week already. Unfortunately, in three cases, the leader didn’t “stand strong”, and repercussions will follow. The problem is that the consequences don’t necessarily follow immediately but they will occur. On the other hand, in one or two cases, they did “stand strong”, and those leaders will be respected. I guarantee results will follow.

As we go into the New Year, no matter your position, build upon your leadership skills. It will pay back ten-fold vs. anything else you could do.

One tip to implement this week:

The good news is that there are countless ways to build your leadership skills, and you only have to choose one path for this week. Thus, I’ll provide a few options: 1) Read a good book on leadership skills. I find reading about examples of exceptional leaders provides ideas to try out. 2) Find a mentor – undoubtedly, this is your BEST option. It doesn’t have to be someone you work for. Seek out someone who has a few of the skills you want to develop and ask. Offer to do something to help them as well. 3) Join a trade association and volunteer. For example, my APICS Board of Directors seeks new people who are willing to support our events, and it’s a great way to build your skills in a safe environment. 

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…”

 



The Value of Execution

January 8th, 2015
value of execution

It starts with a plan, a strategy, but all business ventures must succeed in the execution.

I’ve asked my consulting clients how my value has most helped in driving bottom line results. They responded by saying the following: 1) Helping to select a few critical strategic focus areas that would deliver results in terms of growth or improving business performance. 2) Partnering with them to “make it happen”.

Undoubtedly, it boils down to execution. Those clients who are able to execute strategies and plans are those who are the most successful. For example, I’ve seen clients grow the business against all odds and improve profitability with a focus on execution. Yet, I’ve also seen the reverse – the best strategies and plans fail if execution is not valued.

The bottom line is that execution and pragmatic advice prevails. How will what we focus on today build the business and increase the value of the business? If you aren’t achieving those, you need to make sure you are working on the “right” things and that you are not overlooking the importance of execution.

  • Establish and encourage a culture of innovation – for more information on this topic, please refer to my recent articles and tips (Innovate or Die and Innovation).
  • Flawless execution – it achieves nothing to have good ideas (whether innovative, cost savings, etc.) if they are not implemented successfully.

As a former VP of Operations & Supply Chain and as a Business Consultant, I’ve found that there are a few keys to success in execution: 1) Clarify the objective. 2) Communicate, communicate, and communicate. 3) Follow-up.

  1. Clarify the objective: Simple yet overlooked. It isn’t enough to be a cheerleader for your team. Or, worse, a dictator, hoping to threaten to success. Instead, what works is to make sure everyone understands where you (and the company) are going, why you are going there, how they fit in, why it matters, etc. Of course, one of the reasons this is overlooked is that it can become difficult. You have to address the hard questions and roadblocks head on.

There are no fast, easy solutions. It requires hard work, integrity (you must do what you say you’ll do!), appreciating people’s value, leveraging strengths, and tackling issues head on. Not rocket science but it requires solid leadership.

  1. Communicate, communicate, and communicate: Similar to “location, location, location” in real estate, “communication, communication, communication” is vital in execution. Repetition is not only desired but proven as the only effective strategy. Try varying the modes of communication as people learn in different ways – via listening, seeing, through examples, etc.

Also, I’ve found another key to communication success is to be able to translate the objectives so that it’s meaningful for each team and individual. You don’t have to know everything; however, you must have baseline knowledge, be able to ask effective questions and be trusted.

  1. Follow-up: Last but not least, follow-up is cornerstone. Here is what follow-up is NOT – interrogating your team or employee, panic emails/ calls as a critical task is due. Instead, integrate follow-up into the daily culture. Ask questions – don’t waste people’s time with useless questions as it will ensure failure; however, think about and ask insightful questions.

Provide tools and support. This isn’t as easy as purchasing a software tool or voicing support. The key to success is that your support must be viewed as support by the receiver – and only then if it contributes to results. Does your support help them overcome roadblocks? Does it help them address issues? Do you thank employees for their efforts which contribute to company success?

I’ve yet to see a client who consistently delivered bottom line results with poor execution. If it will give you an advantage in the marketplace, why not consider a focus on execution? Call me if you’d like to talk more about this vital topic.

Continue reading on how to strengthen your Eagle Eye:

Execution: the Difference between Profit and Loss

Eagle Eye Execution