Tag Archive: lean

The Value of Demand Planning

February 13th, 2018

In supply chain circles, there are lots of exciting concepts to discuss and debate such as lean, master scheduling, theory of constraints and many more; however, we have found that our most successful clients start with the customer!  

If you concur that we are in an Amazon-impacted marketplace where the customer is king (no longer is it cash!), prioritizing demand planning is essential.  

Do you have a position focused on demand planning?  Or do you have someone who knows it is at least part of their focus?  Does anyone realize its importance?  Let’s discuss the value…

  1. Without customers, you have no company– understanding their needs and what will compel them to buy from you vs. the competition couldn’t be more important.
  2. Do you know how your forecast compares with the recent past?– Again, understanding your customers and why they are changing couldn’t be more important to positioning your business to succeed long-term.
  3. Let’s take a step back – do you have an idea of what you think you’ll sell this year?– Let’s hope so!  Imagine how hard it will be for your HR resources, your operations resources (to determine which machinery to prioritize, purchase and train on), your suppliers and more to run efficiently while serving you and your customers if everything is a surprise.
  4. Is your sales mix changing? – We’ve seen many clients who spiral into a mess not because they don’t have a forecast but because they have no idea that the product mix has changed.  Different products come with different materials, different skills, different complexity and different requirements overall.
  5. What is the timing?– We’ve also seen clients with predictable annual sales (actually incredibly predictable) yet the monthly, weekly and daily sales could be vastly different.  Operations couldn’t keep up.  The customer suffered.  Margins declined.  Timing matters!

We would venture to estimate that 99% of our clients can benefit from an increased focus on demand planning.  Why not give it a go?  If you would like an audit of your current process, please contact us.

 



Why Blame Doesn’t Work

September 19th, 2016

supply chain

I’ve been spending the majority of my time this week with two clients: one is preparing to go live on a new ERP system and the other is working to improve service levels by implementing improved planning and order flow processes. Although these specific objectives are nothing alike, they have much in common. Both have countless numbers of small issues arise on a daily basis — and some quite large ones thrown into the mix. It is just the nature of the beast in manufacturing environments. And so we need to uncover the root cause of the preponderance of the issues instead of playing the blame game!

Unfortunately, many of my clients are hard wired to worry about the blame game and related politics. Imagine how much quicker and better progress could be made if we focused on the root cause. Rarely if ever is that root cause due to a specific person. Instead, the likely categories include (in lean terms): method (process), machines, manpower (resource shortage, skills shortage, etc.), and material. If we think about our issues from this point-of-view, suddenly, we aren’t attacking each other; we are attacking the problem jointly.

And, I’d like to state boldly that it makes no difference if you are in a lean environment or whether you agree with lean principles. It is just common sense to just think of categories of causes unrelated to blaming specific people!

One tip to implement this week:

The good news is that there is VAST progress that can be made in a week. Simply stop blaming people. Instead, think about the root cause. Even if you think it comes back to a person, look for every other potential cause that could help that person be successful. If they had a new process and were trained on the new process, could they perform the job? If they were overloaded, would he/she have made the mistake?

Practice talking in these terms. Instead of complaining about Mary or Steve, how could you re-phrase your concern into a productive conversation? Hold off until you’ve thought about it. At a minimum, I bet you’ll waste less time.

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…”



Which Inventory Management Planning Method Is Best?

March 8th, 2016
inventory management planning

Use a combination approach to inventory management planning to promote growth, increase profits, free up cash flow and improve operational efficiency.

I’ve incorporated three planning method options into a presentation on inventory management best practices. I’ve been receiving more and more requests for this topic as executives experience the impact poor inventory management can have on an organization — it can stunt growth, weaken profits, tie up cash unnecessarily and negatively impact operational efficiency.

I run across conflicts frequently among these options. Unfortunately, the method is often dictated. Resources are not valued. And results struggle. On the other hand, my best clients view these as complementary options to be used at the “right” time in the “right” situation for the “right” products.

Briefly reviewing these methods:

  1. Lean: In lean circles, planning is seen as a Kanban process. In essence, the demand is pulled through the system by the customer. For example, when a customer consumes 5 pieces, the manufacturer produces 5 pieces. This type of process works effectively when demand is even.
  2. MPS/MRP: Master production schedules and material requirements planning are system tools and related processes that derive production requirements and purchase plans from a compilation of demand (sales orders, forecasts, independent demand), inventory levels, expected production plans and receipts, etc. This process looks at lead times and calculates what should be produced, regardless of the environment (make-to-order, make-to-stock, configure-to-order, etc.). This type of planning can work effectively with uneven demand.
  3. TOC: The theory of constraints focuses on subordinating all resources to the bottleneck or most overtaxed resource. The focus is often-times on throughput. Since throughput will be limited by the bottleneck, it makes sense to focus there.

I cannot tell you how many disagreements I’ve seen over the years on the optimal planning method. In some companies, executives have become purists to one method or another, and it created havoc — unhappy customers, high costs, etc. Instead, I’ve found it is well-worth it to evaluate what combination of methods makes the most sense for each particular company, product line, machine, team, etc. My most successful clients use a combination approach.

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Lessons Learned from a Genius Businessman

February 23rd, 2016
businessman

Harry used uncommon common sense to spot opportunities to turn around companies. His wisdom, integrity and generosity will be missed.

My best friend’s dad was as close to a business genius as I’ve stood. He made his employers rich beyond their wildest dreams yet he was happy with this outcome as he enjoyed what he did and lived to 98 including many travels to exotic places — not the ones you might think of but ones he enjoyed. For example, he went to Nicaragua and had many wonderful stories to tell about crocodile farms and uzis. Somehow, he and his wife managed to trust people they probably shouldn’t have, travel to a country not recommended, even by people they met along the way in the country, and come out of it in one piece — and with great stories and excitement.

In his work life, he spent many, many years working for the owner of Sealand, functioning as an investment banker and turnaround CEO. Thus, he’d source great deals and then if they weren’t living up to the expected value, he went in and had a 100% success ratio in ensuring they did. What else can you ask for??!! He could turn around transportation companies to banana growers. Uncommon common sense applies to more than you’d think! One day, I asked him what he thought was most important in turning around these companies, and here are some of the key points that pop to mind:

  1. Observe – Interesting that one of his top points is common sense (oh, wait, I actually think they all were uncommon common sense). He said it was amazing how much he saw in walking a facility that showed opportunities. It reminded me of what has become known as Lean — turns out it doesn’t have to be part of some fancy program; just observe and you’ll uncover gems.
  2. Watch the money – This next tip is unfortunately more common than it seems it should be. Too many companies have someone committing fraud or “on the take”. I certainly would never recommend implementing the cumbersome Sarbanes Oxley if not required by law; however, I would recommend implementing some uncommon common sense approaches to making sure you have the right checks and balances in place. I did a webinar for Financial Times’ ExecSense on this topic a while back, and it is scary how common this can be. My research found that a typical company loses 5% of annual revenue to fraudulent acts. Hard to believe!
  3. Deal with sacred cows – Again, do we really have to be a genius to realize this is a good idea? He said that there are obvious examples of this in family-owned businesses. Perhaps a son or daughter is creating havoc and wasting money but remains in position. Worse than the waste of money, it demotivates the rest of the team. Another example of a sacred cow is a ‘big’ customer we try desperately to keep even though money flies out the door at a faster rate than it flows in the door when this customer calls. There are countless examples. The key is to observe, find the sacred cows and be willing to address them head on.
  4. Persistence I’ve titled what he described as persistence. One of his doozy assignments was to go to Vietnam during the war and turn around a facility (this sounds quite appealing, doesn’t it?). He was the MacGyver of the business world. Leverage underutilized assets. Find new solutions for old problems. Treat people fairly. Don’t give up. He managed to turn the place around — of course.
  5. Integrity – I’m reminded of this quality since he spoke of it near the end. He felt that it was of critical importance. He isn’t alone. When I performed a survey of executives, it came out as a top quality for success.

Harry was a guru and knew more about almost any topic at 98 vs. anyone I know. He’ll be missed. We will help ensure your wisdom carries on!    

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10 Ways to Stay Focused on the Critical Path

February 19th, 2016
focus on the critical path

Maintaining focus on projects in the midst of business volatility is challenging, but preparing a road map with team strategies to concentrate on the critical path will ensure success.

Remaining focused on any one strategy, project or task can prove challenging in today’s new normal. Volatility is the new norm, and so it becomes easy to get caught up in the highs and lows of organizational life. For example, if your company is having a rough month due to volatility, management can begin to panic which causes deviations from the critical path to the latest crisis.

Soon, you are deterred from the project altogether as resources are lean and can only focus on so many places at once. Most major change initiatives, new product launches, cost savings programs, customer collaboration programs and the like are accomplished through projects. Thus, it behooves us to remain committed to the critical path – and ultimate project success.

What can you do to increase your chances of success? Stick to the critical path. It includes the essential tasks that have the ability to delay the entire project and make it veer off the path. Thus, my most successful clients find ways to ensure the focus remains on the critical path. Some of the successful approaches include the following:

  1. It starts at the top: As with success overall, it is most easily deterred from the top. Make sure your executives know the critical path. Often, by taking the step to make it clear to executives, the project has a significantly greater chance of success. For example, if a manager has a conflict with a critical path item, the executives will support the critical path it if they understand the importance.
  2. Communicate the critical path to the project team: Certainly the project team has to fully understand the it. When it comes to fighting the daily battles and focusing attention, the project team is in the thick of it. If they understand the priority of the critical path, the project has a much greater chance of success.
  3. Make it visual: As is popular in Lean circles, make the critical path visual. The more it is apparent to everyone what tasks are a part of the critical path and the progress on those tasks, the more likely they’ll be to gain attention and receive priority. Put them on the walls. Be creative in how you make it visual.
  4. Follow up with task owners prior to starting dates: The project manager should follow up with critical path task owners prior to their task starting. They should ask about resources, potential bottlenecks, etc. I find that critical path task owners know many of the likely issues ahead of time; however, if no one asks, they might not be communicating them. Ask questions in advance.
  5. Remind task owners just prior to start dates: Even if you engage with the task owner to talk through what is upcoming, doesn’t mean they will remember at the “right” time. Typically task owners have multiple jobs and responsibilities. If they aren’t thinking about the critical path at the time, they are likely to delay until the issue or project their boss is asking about is complete. A personal reminder can go a long way!
  6. Critical path transition: When moving from one critical path task to another, think about what would make it a smooth transition. Similar to running a relay race, it is important to have a code worked out in advance and to know each other well enough so that you can make up time or modify based upon the critical path task before or after you. Have you thought about the importance of collaboration?
  7. Critical path post completion follow-up: One way to ensure communications throughout the critical path is to complete a post-task follow-up. What was successful and helped to speed up progress or improve the result? What happened that could be improved? If you gain this type of feedback rapidly, you can incorporate it into later critical path tasks. Why wait until the next project?
  8. Monitor metrics: As with all projects and business, remember to focus on metrics. What core metrics should you measure to get a feel for whether the critical path is on track and whether the project team is achieving the objectives thus far? Put your heads together to identify these metrics and find a way to measure progress. It could be as simple as talking with critical path owners or talking with the recipients of these tasks. Or it could be slightly more complex with numerical metrics. Find something that is meaningful and measure progress.
  9. Critical path milestones: Although it is easy to get caught up in a maze of tasks and to-do lists, don’t take your eyes off of your critical path milestones. Which tasks are more important and signify an output? Keep them in mind and focus on those actions that will contribute specifically towards achieving these milestones.
  10. Final result: Last but not least, remember that you must be getting closer to the end result of the project. Whether you complete 2 or 200 tasks, it won’t matter unless the end result occurs.

Since executives consider projects a critical contributor to growing the business and delivering bottom line results, remaining focused on the most important tasks to achieving these end results is vital. Thus, leverage these strategies to keep focused on the critical path and continually search for additional options. Success will follow.

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