Tag Archive: customer expectations

Do You Know Your Demand?

October 23rd, 2019

This has been emerging as a hot topic. As clients are interested in meeting ever increasing and changing customer expectations while managing long supply chains, changing rules and regulations (including tariffs), and concerns over the cash flow implications of high inventory levels have resulted in discussion around the critical importance of demand. Do you have a handle on your demand plan over the next 12 months?

According to Gartner, every 1% improvement in forecast accuracy will result in 7% less finished goods inventory and 9% reduction in inventory obsolescence. A 1% improvement is imminently doable! Also, according to the experts, a 15% improvement in forecast accuracy will drive a 3%+ increase in pre-tax performance. Last but not least, in our experience, it is one of the best ways to drive a simultaneous improvement in customer service, cash flow and profit.

Every client we talk with says the same thing: Our sales are unpredictable. We have a custom business. We follow lean principles and produce in concert with customer demand. Or, our sales team is on top of it and are already doing everything they can to give us a heads up on demand. We don’t doubt that. However, we have also never come across a situation that couldn’t be improved. With the dramatic results that follow, it proves well-worth the effort.

Instead of brushing off the idea of focusing attention on demand, just think about what could be improved. It isn’t an exercise to beat up sales or planning. In the end, if that is what happens, there is no doubt that is part of the issue. The forecast must be collaborative with input from sales, marketing, customers, planning and anyone who interacts with customers or has input relevant to future demand. With that said, the best forecasts start with a simple statistical base. What do you do?

I’d be remiss if I didn’t point out that you should use your forecasts in your S&OP/SIOP process (sales, inventory, and operations planning) to align your demand with your supply so you can maximize your customer value and your bottom line. If you’d like to discuss your situation further, please contact us.

 

What bottlenecks exist in your organization?



The Amazon Effect Remains Hot

April 20th, 2018

Our marketing guru asked whether we should start talking about other topics aside from the Amazon Effect since there are a vast number of key topics occurring in manufacturing and distribution, and she wondered if it was becoming stale (and it’s her job to make us look at timely as possible). The answer came in from all angles – conference leaders continue to request this topic, news reporters continue to ask about it (including the Wall Street Journal in a recent conversation) and everyone is STILL talking about it.

For example, when the Ontario Chamber CEO mentioned this topic for Good Morning Ontario, it drew the largest audience to date!  Our Amazon Effect: Pass or Play: the New Sales & Distribution Game and How it Affect Manufacturers panel at the Manufacturers Summit was packed.  It was fun to participate with two heavyweights, BJ Patterson and Dan Vest talking about this hot topic.  Here is a short snippet from that panel:

                             

 Why is the Amazon Effect so compelling?

  1. We are in the year of the customer – According to the 2018 predictions by the Tech Girl in the Press Enterprise, the customer was a common theme.  You don’t have to read the paper to figure that out; just look around you. Every client talks about elevated customer expectations, stemming from Amazon-like offerings.  Even my Mom’s expectations have been raised significantly – 2 day deliveries are a bit slow in her mind now.
  2. Innovation trumps all – Amazon is constantly innovating and trying new ideas.  Testing drones, delivering food, leveraging technology (with their e-commerce site, in their warehouses and more), and even the classics such as Amazon Prime (one of the most successful subscription services). Are you innovating?
  3. Collaborating with strange bedfellows – From the start, we have been fascinated with Amazon’s collaboration strategies.  Starting with an entity known for the opposite of innovation, the U.S. Postal Service – Amazon has been partnering with them to provide deliveries. Did you ever think you’d see a U.S. Postal truck delivering on a Sunday? Whatever you think about the recent news on this topic, it is an interesting choice for a partner.  It has not stopped there. They are partnering with Kohl’s and Whole Foods – the Whole Foods CEO spoke at the APICS International conference (after the purchase) on the collaboration, etc.
  4.  Sheer size and impact – Amazon is bigger than most brick and mortar retailers put together.  As of Dec 2016, Amazon’s market value exceed Walmart, Target, Best Buy, Macy’s, Kohl’s, JC Penney, Nordstrom and Sears put together.  Currently their market value is $681 billion. In February, Amazon surpassed Microsoft for the first time. Thus, it is worth paying attention.

Are you paying attention to the Amazon effect?  You should be! If you’d like help in positioning your organization for success in today’s Amazonian environment and the year of the customer, contact us.

 

 



Time or Money – Which Gets the Priority?

July 11th, 2017
delivery

Customers have come to expect instantaneous delivery. Here are 7 questions to consider when weighing time vs. money.

In today’s Amazon-impacted world, we believe in instantaneous delivery. It has become an expectation. Even my mom who orders on Amazon by calling me believes a two-day delivery is a bit long. After all, she might not realize she needs something until the last minute. Thus, which is more important – time or money?

Here are a few questions to ponder when thinking about time vs. money:

1. Do you expect rapid deliveries across the board?

2. Are you willing to spend extra money for speed? Are your customers? Do you know this answer or are you guessing?

3. How important is cash flow to your business? How long is your supply chain? Regardless of how well inventory is managed, how much will be tied up by virtue of your supply chain design? How does that compare with delivery expectations?

4. Have you thought about investing in your demand plan instead of into inventory to be better prepared to deliver quickly without sinking cash into what is likely to become slow moving inventory?

5. Have you thought about investing money into strategically placed inventory? Having what your customer needs when they need it might be the difference between success and failure.

6. In your business, can you have time AND money?

7. What other types of time and money are you overlooking?  Get the full picture before jumping in.

 

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

Slashing Lead Times to Counter the ‘Amazon Effect’

Lean or No Lean, a Demand Plan is a Must