Category: CFO

Metrics Rule

March 4th, 2014
LMA Consulting Group - Metrics Rule

You can’t give attention to work priorities to grow a more profitable business if you aren’t collecting data, measuring variables and tracking trends.

I refer to one of my core service lines as “Eagle Eye” since I’ve found that selecting the right priorities to work on is half the battle (if not more) to succeeding in business.  After all, what’s the point of working long, tireless hours on the wrong priorities?  Formulating strategy is rarely the problem; instead, 80% of the time, the problem is one of the following: 1) You don’t have time to work on the critical priorities.  Perhaps you are not selecting well and/or you have too many priorities….  2) You don’t know how you’re doing on those critical few priorities.

How can you have an eagle eye to pick out priorities and actions required to thrive if you don’t know how you are performing?  You can’t.  Thus, metrics are vital to success.  A few keys to leveraging metrics to drive bottom line business results include:  1) Track only the essential metrics.  2) Understand trends.  3) Focus on corrective action.  

1.  Track only the essential metrics:  Just tracking metrics is useless; however, tracking and using the “right” metrics is a secret to success.  How many of us have metrics and spreadsheets being tracked that we do not use or do not understand?  I venture to guess ALL of us.  Why?  It is someone’s job to track the metrics.

It might seem radical to consider stopping all of your metrics for a day or a week.  Give it a try.  Find out which are missed.  Are they missed because they are important to success?  Put only the critical metrics back in place.  Can you see whether you are on track with key objectives by the metrics you have in place?  If not, you might need to add a few.  Once you’re finished with this exercise, you will undoubtedly have fewer metrics but you’ll be on top of how your business is performing.

2.  Understand trends: Even the “right” metrics are useless if you don’t understand how you are performing over time.  A single point in time could be a huge success, a horrible failure or average performance yet you’d have no idea which without a plan and trend data.  I’ve recently become aware of the term “bowling chart” which is the lean terminology for tracking performance on policy deployment objectives.  To me, it is a trend of key metrics.

When I think back to the clients where we’ve achieved significant business performance improvement, metrics have always been an essential piece of the puzzle.  What is the plan?  How did we perform?  (And let’s NOT wait too long to know!)  How do we know whether especially good or bad performance was an outlier?  Where should we focus resources?  Which action plans should we follow?  Impossible to know until you track performance trends.

3.  Focus on corrective action:  Let’s say you have the “right” metrics and have trending information; unfortunately, they can still be useless if you don’t DO anything with the information.  It might seem obvious that corrective action must follow; however, I find it is rarely done.

For example, one of my clients had to reduce past due and was able to trace the bottleneck to one of their operations.  The next step would be to devise a corrective action to resolve the bottleneck and bring past due down towards 0 to rapidly to resolve customer concerns.  So, why didn’t that happen quickly?  Corrective action requires the hard work of blocking and tackling and often is unpopular to boot.  In my experience, figuring out the appropriate corrective action isn’t rocket science; however, implementation can seem like rocket science.  It requires confronting reality, addressing issues upfront, and excellence in execution – a rarity in my view.

My clients who take metrics to heart and ensure they are integrated into the culture succeed.  My client who don’t flounder!  Which will you be?

Did you like this article?  Continue reading on this topic:

Scorecard/ Metrics – how to make a difference to your bottom line

Turning Data into Dollars

Eagle Eye Execution

 



The Skills Gap

January 28th, 2014
LMA Consulting Group Skills Gap

With an increasingly complex business environment, businesses need to know how to resolve skill gaps in their workplace.

The skills gap is a rapidly growing issue for manufacturers and distributors.  Almost every day that I go into a client, go to a trade association meeting or talk with colleagues, I hear of someone who has retired, decided to change careers, jumped ship for a better opportunity or I hear of a company with too few high-skilled resources for what’s required to succeed.  Worse yet, according to the survey my firm conducted in conjunction with APICS Inland Empire, 77% are struggling to fill these positions.

The business environment has increased in complexity. Just think of a few of the recent complexities:  1) global 2) extended supply chains 3) increased regulations, requirements & risks 4) the Amazon effect of the 24/7 customer expecting same-day delivery as commonplace 5) increased focus on sustainability.  Top talent is required to successfully simplify and navigate these waters.

What can executives do to proactively approach this skills gap dilemma?  Three of the top strategies include: 1) Retain your talent.  2) Develop your talent.  3) Attract top talent.

1.   Retain your talent:  Although this might seem obvious, it is the most often overlooked strategy for success.  As employees are gaining comfort with the recovery, they are pursuing opportunities that offer greater responsibility, opportunities for career progression, flexibility (including remote work and/or are closer to their home), and money – just to name a few.  Are you thinking about how to retain your top talent?

Of course there are a few reasons which are tough to avoid such as retirement and a dramatic reduction in the commute; however, in my experience, the vast majority of reasons can be avoided.  It boils down to leadership.  Do your leaders appreciate their employee’s value?  Do they hold folks accountable?  Interestingly enough, top talent will stay when they see that non-performers are being addressed.  Yes, you must make the tough decisions!  Do your leaders make time to talk with employees about goals?  Offer support?  Who do they prioritize?  The lack of time is not a resource; it’s a priority.

Don’t even think about training and development programs or recruiting if you don’t have solid retention programs in place.  You’ll be even busier and yet still fail.  Instead, you must start with this fundamental!

2.   Develop your talent: In my experience, there are two key ways to develop your people:  1) Training and development programs.  2) Mentor programs.  Exceptional leaders do not consider this an either-or situation but instead require both.

Training and development programs achieve the following goals:  1) Show the employees that you value them.  2) Provide training on specific skills.  3) Provide development opportunities required for career progression such as an international assignment or a cross-functional role.

These types of programs can be an essential element of a significant culture change such as the journey of lean, SIOP (sales, inventory & operations planning), an ERP upgrade and a merger and acquisition.  What better way to bring employees up-to-speed on new concepts?  In addition, these programs can be invaluable in training for new job skills.  As the business environment becomes more complex and employers are reluctant to hire up to pre-recession levels, a broader range of skills is no longer a nice-to-have.  It has become a “must”!

Mentor programs can be invaluable.  In order to develop new behaviors required for a job, there is no alternative.  Mentoring gives the employee a way to observe someone who has “been there and done that”.  Then, the employee can trial or test out new behaviors, and the mentor will provide feedback and guide them to success.

3.   Attract top talent:  This is third by design as it is often more successful to retain and develop than it is to hire new talent.  With that said, you must always be on the lookout for top talent – and ensuring your organization will attract top talent.  Would potential employees want to work for your company?  Your leaders?  What do they hear in the press?  What will their friends and colleagues tell them?  In today’s world, the best employees come via referral.

Hiring is a much tougher task than it seems.  I venture to guess that almost every hiring manager has “stunk” at the hiring process at one point in his/her career.  I certainly did!  How do you know the seemingly perfect candidate will deliver?  You must do the hard work to decide what you expect of the potential hire.  Don’t worry so much about the typical job description information – a compilation of tasks.  Instead, what results are you expecting?  How can you be assured your candidate will be the right one?

My colleague and friend Janet Boydell has an effective process that she calls the Fast Forward Resume which has proven highly effective.  It is well worth reading up on and pursuing – IF you want to hire the right person. She has two books on the topic – A Hire Connection and You’re Not the Person I Hired: A CEO’s Survival Guide to Hiring Top Talent.

My passion for my original brand Profit through People is not by accident.  I’ve always believed in pragmatic and tangible results.  These cannot be achieved without top talent.  Thus, you must circle back to the fundamentals.  Even in today’s complex world, these successful strategies of retaining, developing and hiring top talent are quite simple.  Simple but not easy to implement…….will you be one of the few to pursue?

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Critical Priority: Retaining Top Talent



How Do You Implement Lean for Project Management?

January 23rd, 2014
LMA Consulting Group, LEAN, project management, manufacturing

Apply lean methodologies to project management to gain a competitive advantage.

There’s no doubt that there is a vast amount of interest in lean principles.  I’ve had multiple client requests – both ones who are interested in doing the latest and greatest program that they think might be the answer to “all their issues” and those who are interested in implementing culture change.  I find that those clients who view lean as a culture change and are focused on long term fundamentals leapfrog the rest with bottom line results.

In today’s new normal business environment, sales are lackluster and resources are scarce yet customers expect more for less.  Thus, the traditional avenues to success will no longer yield the same results.   Instead, we must try new approaches and “think smart” to thrive in the new normal business environment.  As project results can be a significant contributor to the bottom line, there is no better time to think about how to succeed in new ways.  Why not incorporate the lean concepts that make sense to project management?

In my experience as a business consultant, a not-for-profit leader and a former VP of Operations, I’ve found that there are several lean principles which align with project management success.  The top three include the following:  1) Focus on the customer.  2) Eliminate waste.  3) It’s all about the people.

1. Focus on the customer:  Similar to implementing lean in manufacturing environments, first take a step back and think about the customer.  Who is the customer of your project?  Or, said another way: who will benefit from the project?

For example, one of my client projects is focused on reducing the past due metric. In this case, the customer connection is obvious – the fewer customer orders which are past due, the better service the customer will receive.  Yet, even in this case, truly understanding what the customers’ value is important.  Would the customers prefer a delivery date that is achievable and reliable or would they prefer a shorter lead time with less reliability?  I’ve yet to work with a client who didn’t have customers who value different aspects of service higher than other customers.  Find out and optimize based upon what each customer values.

In another example, another client project is to implement an inventory management system.  Who is the customer?  There could be several:  The end customer will likely receive better service with improved inventory accuracy.  The CEO will likely improve profitability as the inventory management processes are optimized.  The CFO will be much better equipped for a financial audit.  And the list goes on.  Although it is helpful to brainstorm all the benefits, it is vital to understand which is of value to your customer.

2. Eliminate waste:  There is a plethora of waste in project management.  First, look for waste.  Taking a step back, since it’s unlikely we’ll be looking for machine waste in project management, we should think about the best definition.  I like the following – waste is that which doesn’t add value to the customer (and that which the customer is willing to pay for).

It is interesting how often we become used to waste and don’t see it anymore.  Thus, you need to put on a new pair of glasses to see the waste all around you.  Can you accomplish the project in a fewer number of steps?  Are you following up on every task or focusing attention on the critical path?  What will provide a return on investment?  Are you asking the project team for input and ideas to eliminate waste?

3. It’s all about the people:  Last but not least, those who succeed with lean initiatives understand that it’s all about the people.  In essence, it is not an event; it is a culture change.  Do you engage your people in the project?  Do you ask for their input?  Do you explain the project scope and its value to the organization?  Do you do what you say you’ll do?  I find this is much harder to do than it sounds yet it is a secret to unleashing your project talent.  In my experience, an exceptional project team with a so-so project will beat a so-so project team with an excellent project every time!

Implementing lean for project management doesn’t require cash, capital or extra resources yet it can ensure that your project is delivered on time, on budget and with dramatic results.  Although it is a good idea anytime, it is a must in today’s new normal business environment.

 

Read more about Project Management:

Spice up Your Project Management

The Bottom Line to Project Management

Project Failure: How to Avoid Top Causes



The IT – Business Partnership

January 21st, 2014
Successful companies forge partnerships with their IT departments to create an ERP system that provides data to make good decisions and provide their customers with an exceptional experience.

Successful companies forge partnerships with their IT departments to create an ERP system that provides data to make good decisions and provide their customers with an exceptional experience.

Is IT viewed as a partner to your supply chain or manufacturing business? Or a necessary evil? Or something in-between? Successful companies go down the path of partner. After all, critical business processes (which drive profitable growth) are connected with systems – you cannot succeed with one and fail with the other. Thus, you must think about strengthening the link.

Larger companies have folks termed business analysts who understand business and help translate business needs into technical specs and systems analysts who come from the technical side and think through how to translate technology into business results. However, the vast majority of companies are considered small to mid-size businesses and might not have these positions. There’s no reason to despair…. I often times find people who are capable of performing this role for your critical business requirements. The key is to look for them. I’ve worked with a few of the BEST, and I guarantee that although often undervalued, these folks had a direct correlation to tangible business results.

Even if you have these folks identified, it might not matter if you don’t view IT as a strategic partner. You better! Your ERP system can make or break your ability to succeed (as witnessed by the resounding failures of some new system implementations we’ve all heard about in the news or from our network… and the dramatic negative customer consequences to follow).

No company can run without financials – at least not for long. Financial reporting is tied to your ERP system. I’ve seen really impressive manual systems; however, even in the best case I’ve ever seen (which also happens to be the only case I couldn’t recommend low-hanging fruit because their manual network was so extensive), the reason I was talking with this client is because they had to upgrade and better leverage the system to support growth plans and service requirements. It is no longer acceptable to not know order status at all times!

Do you consider your IT or ERP experts as strategic partners?

Did you like this article? Continue reading on this topic: Lean IT



7 Hot ERP Systems Trends

January 13th, 2014
Stay on top of hot ERP system trends to stay ahead of the competition.

Stay on top of hot ERP system trends to stay ahead of the competition.

Those who make a concerted effort to identify and leverage emerging trends outperform their counterparts. As I want to make sure my clients are at the forefront of this path, I pay attention to emerging trends among my best clients.

Anytime I’ve seen a common thread among the best, it has signaled a noteworthy change.

I’ve noticed that although executives are not completely comfortable with the current new normal business environment (as who knows what taxes, health care impacts or other items will be thrown into the mix tomorrow), they are starting to think about investing in select projects again – ones with a substantial return on investment and/or required to support their long-term strategy.

Thus, ERP system upgrades and new implementations are on the rise. Therefore, why not get ahead of the curve and think about the hot ERP trends. The top ones that pop to mind include: 1) The Amazon effect. 2) ERP in the Cloud. 3) Big data. 4) CRM. 5) Flexibility. 6) Mobility. 7) ERP for small business.

  1. The Amazon effect: Amazon has been making a splash everywhere you turn. There are distribution centers within a short proximity to key markets. Sunday deliveries. Reinvented publishing.  The bottom line is that customers expect 24/7 access and quicker delivery with exceptional service, and you must figure out how to make it happen! Thus, e-commerce is no longer a “nice-to-have”; instead, it is a “must-have” in your ERP system. Your customers will want to order, understand their order status and provide feedback at any time, any day of the week.
  2. ERP in the Cloud: People are becoming more comfortable with the idea of ERP in the cloud. There is less complexity, less work, less skills and often times less cost required while accessibility is increased and your ability to recover from a disaster is improved. The “big guys” like SAP and Oracle are going down this path and so they are seeing enough advantage to invest.
  3. Big data: Although big data is “old news,” it remains “new news” in terms of implementation and utilization. We are living in an information overloaded society, and so concepts like big data will be essential in making sense of it all. Business intelligence can be utilized to better understand customer trends and how to optimize inventory and margins – who wouldn’t consider this approach?
  4.  CRM: Since I’ve always focused part of my practice on ERP as it’s an essential tool for manufacturers and distributors, and I have a unique skill of zeroing in on connection points (which is cornerstone in selecting, designing and implementing systems), I’ve noticed that a particular connection point has arisen as a key contributor to bottom line business results – CRM (customer relationship management) functionality.  You must start with the customer to succeed; thus, better understanding your customer relationships is a great place to start (CRM).
  5. Flexibility: Old (often called legacy) systems are rarely flexible. To succeed in the fast pace of the new normal business environment, you must be flexible. Those who can introduce new products rapidly, adjust capacity rapidly, change items on the fly etc. will thrive. Your ERP system is the backbone.
  6. Mobility: Do you know anyone who doesn’t have a cell phone? Even my parents cannot remember how they survived without a cell phone. They don’t keep track of appointments, look up directions and utilize advanced functionality but they understand that it exists – and so they utilize their resources in those situations (call their kids). Being connected 24/7 requires mobility. It should be fundamental to your ERP system.
  7. ERP for Small Business: ERP is no longer just for medium to large size companies. In my recent experience with ERP selection projects, the cost is minimal vs. the automation and speed advantages it will provide to even a small business. Do customers care if you are small or big when they want an order status at 8 pm on a Sunday?

Of course, understanding these trends is a great first step; however, it is useless unless you put together a plan of action on what is noteworthy for your company and your situation. What will you do differently tomorrow? Many of the best inventions were invented by someone else long before the known inventor; however, they did not act upon the goldmine.

Did you like this article?  Continue reading on this topic:

Leverage Your ERP System for Bottom Line Business Results
ERP Fact Sheet – downloadable PDF