Top Trending Client Request: Reduce Inventory

October 7th, 2019

More than 50% of client requests in the last several months have related to inventory. In fact, it seems to be a trending hot topic! In today’s era of the Amazon Effect where customers expect more and have ZERO patience to wait, there are challenges like a volatile environment with tariffs and concerns about space, costs and more, more inventory is needed to grow the business yet businesses cannot afford it. Learning how to reduce lead times and improve service levels while reducing inventory and costs is of utmost importance.

In partnering with several clients on just this topic, we’ve found the same ingredients to success yet the mix and proportions can be quite different. Several of the top contributors behind inventory success include:

  1. Demand planning: It turns out there is a lot to be said for fine tuning your demand plan (sales forecast). How well do you understand your customer requirements? We’ve seen that even in the best of clients, there is a gap between perception and reality. In 80% of our clients, there is a path to significantly improve the forecast with a direct correlation to inventory reduction
  2. Production &/or material planning: Not surprisingly, there is no ‘magic process’ that works for every client.  However, there are general themes that are identical. In every case, there is some sort of logical combination of master scheduling/material requirements planning (MPS/MRP) and kanban processes. How we figure out the right mix, proportions and formulas is the trick. It depends on the manufacturing/distribution type, people, processes, systems, customers, suppliers and related capabilities and more.
  3. Distribution planning: Similar to production and material planning, we’ve seen a significant opportunity with several clients to leverage a more proactive yet simpler distribution planning approach. The process will involve concepts from DRP (distribution requirements planning) and kanban. Often, this simple process can provide the visibility required to better manage inventory levels.
  4. Lead Times: Certainly, none of these can be viewed in isolation. Customer lead times will dictate the requirements of your network, whereas supplier lead times must be built into your planning processes. Distribution lead times and options (mode of transportation) could also make the difference between OTD (on-time delivery) or OTIF (on-time-in-full) and late delivery as well as profit and loss.
  5. Capacity: Understanding your capacity (skills, labor, machinery, space, and more) and how it relates to your requirements is of paramount importance. This process of aligning demand with supply across your organization and supply chain is termed SIOP (sales, inventory and operations planning).

In our experience, clients can reduce inventory by 20-30% on average without negatively impacting customer service. In fact, we often find that a win-win-win can be created: improved service, inventory turns and cost/margins simultaneously.

Read more in an upcoming article I’ve written for Distribution Trends.  Feel free contact us to discuss your situation in detail.

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

Will Inventory Matter Again?

Warehousing Strategies for Success

 



The Amazon Effect Won’t Die!

October 4th, 2019

We have been writing countless articles about the Amazon Effect for many years as customers have the upper hand. In essence, if you cannot provide rapid, customized service with easy returns and ‘extra value’, you will be left in the dust. The needs aren’t going away. If anything, Amazon continues to raise the bar. Several companies such as FedEx, Walmart and others have announced same day and next day delivery. Target is redesigning stores and pick up areas so that customers can conveniently pick up purchases same day. Walmart is evaluating delivering groceries inside a customers’ home while they are at work. And, Costco has established a chicken farm to grow, slaughter and distribute chickens in an effort to eliminate the middle man for quicker, cost effective deliveries. However, this isn’t just about B2C and traditional e-commerce companies typically in industries such as consumer products and food and beverage. B2B companies expect Amazon-like service as well! Behind every B2B company is a person who expects B2C customer service.

Executives are still intrigued by the Amazon Effect. The reason executives still care is because it is getting harder and harder to remain competitive and profitable. For example, at the Manufacturing Summit, we recorded a series of videos from an Amazon Effect panel talking about these issues. Countless CEOs are expressing concerns about how to navigate these troubled waters. On the other hand, there are a few who are taking advantage of the situation to stand out from the crowd by becoming the disruptor instead of the disruptee. Which are you?

The Amazon Effect also teaches us that innovation is cornerstone to success. Not only does Amazon continually innovate and test new ideas, but some of these new concepts ‘stick’. As the founder of Netflix said, it isn’t that you set out to get the idea for Netflix and it is success all the way. The reason we are still talking about 3M and the famous sticky pad innovation is that it doesn’t happen that often, and 3M sets aside time and money for innovation as a part of their culture. Thus, we must get comfortable with trial and error. Of course, the error part is the problem. No one likes failure. Yet, it is just a part of the process. In fact, if you aren’t failing, you won’t succeed. Even Amazon fails. They test new markets, are willing to lose money and shut down programs. We just don’t hear about them as often as we hear about the latest and greatest new service or drone delivery! Are we really pushing the envelope far enough?

Have you thought about whether you have a culture that supports innovation? Check out our video series on innovation to gain some ideas. Gather your team to brainstorm out of the box ideas. Ask an expert to poke holes. Deliberately stimulate debate and organize trials. In essence, why not encourage maverick behavior within reasonable guide posts so that you set your team up for a “win”?

If you are interested in an Amazon Effect assessment with ideas to break from the mold, check out our free resources and/or contact us.

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

The Amazon Effect is Still Going Strong

Eagle Eye Strategic Focus



The Skills Gap in the Modern Era

October 2nd, 2019

People are the #1 topic on our most successful clients’ executives minds. That’s because these clients realize that even the best strategies and plans will fail without people.

On the other hand, we have seen clients who appear the least likely to succeed, overcome great obstacles to not only become competitive but also to gain a strategic advantage in the marketplace. The secret ingredient is people. As a former VP of Operations and Supply Chain, there was no doubt that my success was directly correlated to the strength and attitude of my team.

Since it is such a key topic to ensuring growth and profitability, we wanted to dig into the current state of the skills gap. As a follow up to our research several years ago when we found that 87% of companies were experiencing a skills gap, we wanted to understand the current state of this topic and how it has evolved as we are knee deep in the technology era. For example, there is quite a bit of discussion on the topic of people vs. robots. Do we need to think about the skills gap if robots can take over? In other circles, the talk is all about artificial intelligence (AI). Will AI transform the industry? For example, there is a concern about this happening in the accounting profession. However, it might just mean that those trusted advisors must add value to what can be taken over by robots. That is certainly true in manufacturing environments. The skill requirements are changing. Perhaps we need people to interpret data? And how about to get people and technology to work together?

Please take our skills gap survey as we would appreciate your feedback into the following types of questions:

  • Which skills do you need the most?
  • Are technical skills enough? Do you need a savvy communicator as well?
  • How do you find your best talent?
  • Do you offer incentive to keep top talent such as rewards and recognition programs, performance management programs (tied with compensation systems) etc.?
  • How have you seen these requirements changing with the hot bed of technology?

A few highlights from what we’ve seen at a cross-section of clients across closely-held businesses to private equity backed companies to global enterprises:

  • Broad skills: Companies are looking for a broader base of skills. It is no longer sufficient to be an expert in a specialized area.
  • Presentation skills: Those who can present ideas effectively succeed whereas the most talented resources will struggle if they can’t get their ideas across.
  • Technology overload: Although everyone is interested in the latest technology, we are overwhelmed with all the options. Selecting just enough technology to advance a key point is often the best course of action.
  • Your network is your most valuable asset: It doesn’t matter if we are talking about a new hire, sourcing a supplier or getting just the ‘right’ trusted advisor at just the ‘right’ moment, the best way to find these resources is through your network. Are you nurturing your network?

The bottom line is that the most successful companies pay close attention to their #1 asset, their people. This idea extends to your customers, suppliers, trusted advisors and more since your face to your customer will be inclusive of each of these people. As the rubber meets the road, navigating your skills base will be of paramount importance.

Participate in our skills gap survey and we will ensure you are the first to receive the findings to help all of us successfully navigate the skills gap.

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

People and Robots Can Coexist Successfully

Profit Through People



Customer Care 1.01 & The SLURPY Method by Guest Blogger, Steve Weimar

October 1st, 2019

When we think of who’s responsible for developing and retaining the customer relationship business owners and CEO’s too often feel this is solely the role and responsibility of the Business Development or Sales team. I’m here to tell you that mindset is narrow-minded and can lead to a parade of lost business, sometimes in a very short time. Everyone in the company plays a role in customer retention!

When we think of why a customer buys from us and how to retain them we need to look at every aspect of our business, who adds value and who are the Contact Points or CP’s. We also need to adopt a simple company operating philosophy I call SLURPY, not the drink at 7-11, but a set of 6 basic principles that are critical to both customer and inter-departmental relationships.

 

S     Smile into the phone or in a meeting – it’s hard to communicate negatively when you smile

L     Leave your personal issues at home – distractions at work or in a meeting can derail your ability to concentrate and perform in a professional manner towards customers

U    Understand that the customers purchases are funding your compensation and benefits – no customer purchases, no job, no money

R    Respect your customer – business is people working with people. That means all types of people!

P     Problem Solving can be some of the most important customer and inter-departmental building and retention experiences – if handled improperly they can derail the relationship. Remember, in every problem lies the solution.

Y     You treat customers and your colleagues as you would want to be treated – think about the times you’ve had poor service. Is that what you want for your customer or colleague?

Now that we understand SLURPY, let’s see how understanding your company’s many CP’s are an extension of SLURPY and can make or break a company and customer retention.

CP1

Receptionist or Automated Attendant is usually the most common touch point in an on-going relationship but can be the first contact point ever for that prospect. This is where I see successful companies shine while others fail miserably. If this is the first CP at the company this position needs to be taken seriously and not considered an entry-level hire.

  • Live Attendants must come across as happy and cheerful on the phone and if they are really at the top of their game will be able to recognize those callers who regularly call the company and acknowledge them with either a “Hi (first name of caller) who would you like to talk to?” If they call for the same person or persons each time you should add that to your response such as “Hi (first name of caller), Sue is on a call right now, would you like to leave a voice mail or would you like to speak with someone else?” Invest in this position versus feeling this is an entry-level position in your company.
  • Automated Attendants can be a valuable tool or the kiss of death. What you want to have is a quick and easy means for inbound calls to reach their destination. This is accomplished by first recording a short but cheerful message with department code options and a method to enter extension numbers and/or a Directory (EXAMPL:E: Dial 1 for Customer Service, 2 for Sales, 3 for Accounts Receivable or 4 for the Company Directory). They should also have an option to reach a live person at any time to prevent customer frustration. I don’t know about you, but I’m not a big fan of Automated Attendants as many take too long to reach a live person. My recommendations if you have an Automated Attendant are…don’t go into a long-winded sales pitch or history lesson about the company on your recorded message. Use the KISS (Keep It Simple Stupid) method and help your customers reach their desired party quickly, just like you would want to be treated when you’re the caller.

CP2   

Customer Service typically has more CP’s with the customer than the Biz Dev or Sales Mgr. Customer Service can, and in many cases is, the most important CP in the customer relationship. A single call from a customer to an unhappy or rude Customer Service Rep can dismantle months and even years of customer relationship building. Ways to improve your customer relationship through Customer Service:

    Make sure to communicate back and confirm tasks, questions and order details before ending the call.

    • Follow up the call with a quick email detailing the topics and/or order details
  • Go the extra mile. EXAMPLE: An order is placed 30 minutes after shipping cut off. Don’t promise it will ship but work with Operations to see if this is possible then communicate to the customer. I’ve even seen the Customer Service Rep take the package to FedEx or UPS to make sure the customer is taken care of. Little things make a difference.
  • Make every attempt to diffuse friction and issues within reason. Remember, these are sometimes the most important calls and gives the Customer Service Rep and the company a chance to solve the problem and make it go away for the customer.
    • Advise the appropriate Sales Rep/Biz Dev person of any issues brought up during the call and what you plan of action you are undertaking

CP3       

Sales/Business Development is typically responsible for initiating and maintaining the on-going customer direct relationship but they also have some critical obligations and tasks to keep the customer happy, engaged and continuing to buy the company’s products or services.

  • The adage of Under Promise and Over Deliver is in some cases hard for the Sales/Biz Dev teams to adhere to. By being too optimistic and over promising you’ve established unrealistic expectations for the customer which can lead to loss of trust and a damaged customer relationship. In addition, it causes internal conflict between many departments within the company who are left with trying to pick up the pieces when the promise is not met.
  • Written confirmations of the offer, the company’s defined policies and procedures, product performance capabilities, shipping schedules, pricing, delays, product issues and more are ways to create and maintain a solid, trusting and long-term customer relationship. By sharing these with other departments you can make others feel included and informed.
  • Whenever possible, customers need to be pre-qualified to see if they are a fit with the company. Strange as this may seem to some readers not all prospects should be customers. For instance, a company known in the industry for violating MAP (Minimum Advertised Pricing) policies may do more harm than good to the company and its other customers. Same is true for prospects or customers who cause so much turmoil in other departments that they undermine the cohesive synergy of the company and its employees. You have to be willing to turn down or lose the customer if they aren’t a fit for the company.
  • Build on your customer relationships with regular contacts and meetings, meal events away from the office as customers are more relaxed and open in their discussions. Build relationships where possible that are long-term and go beyond business as those are harder to lose and typically less vulnerable to pirating by a competitor. But…don’t let down your guard.

CP4

Accounting, and specifically Accounts Receivable, plays a key role in a company’s success or lack thereof as cash flow is a critical component of survival. Sales and Biz Dev staff typically want to distance themselves as far away as possible from the role of collecting payments from customers and fail to realize the difficulty of this job. An over zealous and aggressive AR Rep or Manager can undermine the customer relationship. Some ways to improve this customer interface are:

  • The AR and Sales/Biz Dev teams have regular calls or face to face meetings to review problem accounts and work together to resolve the issues. Define a plan to improve.
  • Sales/Biz Dev can make sure AR is aware of extended terms and or pricing, disputes, customer cash flow issues, problems or anything that could stall on-time payments.
  • Get the Sales/Biz Dev person involved if AR is unsuccessful in collecting payment.

CP5

Operations is another opportunity to positively impact the customer relationship and the value to its customers. Additionally, Operations can add relationship value many ways:

  • Produce a quality product, package it properly to prevent shipping damage, ship the product on time and communicate any delays or issues to Sales and Customer Service.
  • Have some level of controlled flexibility in shipping lead times and order cut-off times.
  • Work as a team player with Sales and Customer Service to satisfy the customer.
  • If you deliver products to your customers in company owned trucks make sure the trucks are clean and the drivers are well groomed and courteous as they are representatives of the company. They should report back to the appropriate department whenever they hear of an issue with a customer or the delivery.
  • Meet regularly with Sales and Customer Service to discuss customer feedback, conflicts and issues and define a plan to improve.

CP6       

Marketing delivers your company’s messages to the world and strategically positions the company for success. They communicate the company’s value proposition and product or service differentiation in a consistent and strategic manner. Additionally, they should communicate your We Care customer philosophy as part of the many messages they deliver. Some added elements to support customer retention are:

  • They should have a direct connection to the company’s customers for research and feedback about the company, market channel, products, competitors, etc.
  • Be included in key customer and/or prospect meetings as needed to gain more direct input
  • Communicate their plans to the team in advance of launch
  • Track KPI’s for the various marketing programs and share them with the Team
  • Meet regularly with Sales and Biz Dev to discuss their marketing plans and programs

CP7

Technical / Warranty Support is your company’s 911 call center. They are either fielding problem calls or delivering answers regarding products. Your staff needs to be problem solvers and trained to diffuse conflicts. In addition, they should have in depth knowledge of all the company’s products and a general knowledge of competitive products and how they compare to yours.  Customers want quick answers and solutions but also want to feel you care. Some ways to go the extra mile are:

  • A quick follow-up email and/or phone call later in the day or the next day to see if the problem was resolved or to advise that a warranty replacement part or unit was shipped. You can add another layer of follow-up in 30 or 60 days, if warranted, to make sure all if well.
  • Advise the customers Sales Rep of any problems so they are in the loop.
  • Track technical and warranty support calls to create KPI’s that can be shared with the Team.

CP8

Engineering and Product Development are directly responsible for developing products of high quality that do what they say they will do as a bad product can damage, and in some cases ruin, the company’s reputation and damage customer relationships.

They also need to provide a solution to the customer’s needs and/or desires. In many successful companies the end-user and the target channel, or customer base, are included in pre-product planning and research. This allows companies to design what the customer needs and/or wants which leads to success.

Bottom line, every department and employee in the company is responsible for the company’s success. By harnessing the talent of the TEAM and creating a collaborative working environment, long term customer retention becomes part of the company’s DNA and operating personality.  This will be obvious to customers as they interact with the various departments and a sense of WE, not I, will permeate in every aspect of your business. I recommend developing KPI’s (Key Performance Indicators) to track major focus points and use those as a scorecard of your company’s performance. One additional method of grading your company’s performance can be gained through annual customer satisfaction surveys. If done correctly these can be quite eye-opening and a valuable self-improvement tool.

By: Steve Weimar STI Enterprises, Inc.



Summer Days and Back to School

September 30th, 2019

This summer, I was able to make a few weekend/long weekend jaunts including a trip to the wedding of my good friend Valerie’s daughter’s in Dana Point, a trip for the weekend in Sequoia with my two best friends (pictured with the big tree, not surprisingly), a trip to San Diego and Disneyland with my brothers and nephew (last two rows), and I just got back from helping my mom with several projects as well as helping my nephew move in for his freshman year at NAU. Whew! I need a vacation from my vacations!

As we think about how quickly the summer flew by and that we are quite literally ‘back to school’, it makes me wonder about the speed of life. Just as with Amazon (and now with Fed Ex, Home Depot, and B2B customers following suit), we want rapid response and quick results. Are we also taking the time to think? As a colleague says in her book, perhaps we need to “slow down to speed up“….

One Tip to Implement This Week:
Have you thought about “slowing down to speed up”? With that said, I also know some colleagues who appear to have “slowed down”, and that doesn’t cut it either. We are in interesting times. We must be quicker, more nimble and on top of our game with every interaction. What are you doing to rejuvenate, stimulate new ideas (as we don’t appear to be on top of our game if we are stretched too thin), meet new people and get one step quicker every day while not losing quality?  Perhaps you need a mentor, coach, strategy group or trusted colleague to collaborate?

Similarly to “slowing down to speed up”, how do we become more resilient while facing more disruption? Gain some ideas in videos, blogs and more…