Tag Archive: margins

What’s Ahead for Business?

January 26th, 2019

Thinking about our clients, colleagues and trade association/ trusted partner contacts from across multiple industries and company sizes, four overarching themes emerge in response to the question, “What’s ahead for business?”.

 

 

  1. The Customer Experience: It doesn’t matter whether we are talking about manufacturing, logistics, healthcare or services, the customer experience is of paramount importance. This is quite different from customer service! The customer experience relates to how the customer feels after interactions with you and your firm. Whether you achieved perfect OTIF (on-time-in-full) or not, if the customer doesn’t want to do business with you, you haven’t achieved a superior customer experience. What will you do to up the ante?
  2. The Holistic View: Although this is a common thread in our client conversations, it isn’t commonplace. Having a Holistic View has become a “must” as the global marketplace is more interconnected than ever before; systems and technology are more connected with everyday interactions; and, the customer and profit go hand-in-hand. Clients who address a singular topic such as running a kaizen instead of looking at the holistic view of what will dramatically improve their business performance will be left in the dust. Are you looking at what your executives or board are asking about or are you taking a step back to look at your business from the holistic view?
  3. Volatility is the New Norm: The stock markets and business performance are becoming less and less related to one another.  Yet, both are volatile. There is uncertainty in global trade, government shutdowns, the impact of artificial intelligence and robots, natural disasters like the California fires, what the disruptors such as Netflix and Uber will do next and much more. Are you thinking about how to create a resilient end-to-end supply chain?
  4. The Coming Power of Manufacturing and Supply Chain:No matter your industry, you better pay attention! For example, according to a Healthcare Finance article, by 2020, supply chain expenses will eclipse labor as the new number one cost in healthcare. Also, according to a Chairman at the City of Hope, the cure for several types of cancer is within reach but will be cost prohibitive unless manufacturers figure out how to produce in volume and less expensively. Certainly, Amazon is turning the world upside down, creating an entirely new relevance to the art of maximizing service, inventory and margins simultaneously. Re-shoring is on the rise, additive manufacturing is uniquely positioned to transform industries (customized, immediate products on demand) and bringing the customer closer to the source is a recipe for success. Do you still see manufacturing as outsourced to China or as a force?

Our most successful clients will be thinking about these trends to integrate into their strategy, their customer conversations and their employee and partner plans. Are you positioned to take advantage of the opportunities and avoid the risks? If you would like an expert to assess your situation, contact us.

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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.

 



Involve Your Supply Chain for SIOP Success

May 18th, 2016
Involve your supply chain for SIOP success

For greater success with your SIOP process reach out to your extended supply chain for collaborative ordering, product development opportunities, and logistics improvements.

The best SIOP (Sales, Inventory & Operations Planning) processes that deliver significant returns on investment involve the extended supply chain. Since SIOP is about how to align demand with supply – and align all the process owners and executives on one page, it has far reaching implications beyond any one project, person or result.

I find the most successful SIOP processes deliver the optimal combination of:

  • Business growth backed by operational readiness
  • Improved customer service levels
  • Accelerated cash flow
  • Increased margins

Thus, it is a worth-while endeavor for any business as not only a way to stay competitive but it is also a strategic process to grow the business and rise above your competitors with elevated business performance.

Although a certain level of success can be achieved within the “walls” of your company, far greater success will be achieved by involving your supply chain. Talk with your customers about demand. Consider collaborative ordering processes with them as you’ll gain a greater insight into your supply chain that can be utilized to achieve a win-win!  Find out which products are strategic and think through pricing and costing. Partner with suppliers to develop improved materials, to design products, to collaborate on inventory and ordering and more.  Go beyond the norm and tie your customers and suppliers together in a win-win-win endeavor. And, consider other supply chain and business partners – transportation providers, trusted advisors and the like.  Find a way to make 1+1=16.

If you’d like to learn more about how to implement these types of advanced SIOP techniques in your organization, our proprietary model, 4 EXCEL has proven effective.  Contact me to discuss further.

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Customer Collaboration on Orders = RESULTS

 

 



Why Marketing Shouldn’t be Overlooked with SIOP

November 18th, 2015

supply chainI’ve been partnering with clients to design and implement SIOP (sales, inventory and operations planning) programs the last several years as I’ve found them to be a GREAT way to achieve several results simultaneously: 1) Support growth, 2) Improved service levels/quicker turnaround of deliveries (shorter lead times), 3) Improved margins and efficiencies, 4) Accelerated cash flow; and 5) Improved employee morale and teamwork. Although the technical side plays an important role (figuring out future demand and aligning with manufacturing, staffing, suppliers, etc.), the aspect that generates the best results is that it aligns the executives and functions within the organization (and can even go to customers and suppliers).

We’ve achieved significant results in all sorts of industries and company sizes, and Marketing always plays a key role in the process. One of my innovative clients renamed the process SMIOP (with an added M for Marketing) as they wanted to highlight marketing. I thought that was a great idea. If you don’t have your marketing processes in full force, your demand plan will be lacking and you won’t be synced up with your supply side. Thus, I wanted to share the importance with you.

One tip to implement this week:

Many of you probably think you are not responsible for marketing; however, in the best companies, all employees relate to marketing. What is your brand and perception in the marketplace? Each employee can have an impact on that. Also, how well are you engaging your customers? Do they see you as the experts in your industry? If so, they will be more likely to partner with you. From a SIOP perspective, marketing has invaluable input into the demand plan.

Take a step back and think about how you affect your customer (even via internal customers on the way to the customer)? Start there. What ideas and suggestions do you have? Could you read up on industry news and share it with your supply chain team? It could be invaluable insights. One of my aerospace clients had a GURU when it came to knowing the industry. He was extremely valuable in areas that were related to his position but could be overlooked if his manager didn’t value marketing.

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…”

 



SIOP Metrics: 5 Key Baseline Measurements

October 23rd, 2014
analysis and metrics

Of all the overlapping metrics available to executives the best ones enhance SIOP and offer the most vital information for running a business.

Which metrics are most crucial for SIOP (sometimes referred to as S&OP or sales and operations planning)?  The simple answer is that it is those metrics most vital to running your business.

SIOP aligns not only demand with supply but it also aligns the various business units and functional areas on one plan.  Therefore, there are standard metrics which are key to SIOP including:

1. Sales revenues – certainly one of the key elements of SIOP is to forecast demand.

2. Inventory turns – how quickly you are turning your inventory will have a direct impact on cash flow

3. Service levels – this metric will measure how well you satisfy your customers from on-time delivery, complete orders, etc. This is sometimes measured by the “perfect order”.

4. Lead time – the shorter your lead times vs. competition, the more likely you’ll be able to grow sales, assuming all else is equal.

5. Margins – how well you have aligned demand with supply and optimized your supply chain inclusive of operations, planning, purchasing, distribution etc. will correlate directly to efficiencies and margins.

In addition to these baseline metrics, it is important to also consider other metrics which can be important to your particular business or to your bottom line results.  These can include key customer performance, key customer sales vs. forecast, bookings, master schedule adherence, etc.

Start thinking about SIOP as a strategic priority, and dramatic results will follow.

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