Tag Archive: planning

The Value of Alignment: Sales, Operations & Finance

May 30th, 2019

Alignment might sound like a fluffy concept, but it delivers bottom line results. Our most successful clients have achieved the most substantial results from alignment. Although SIOP (Sales, Inventory, Operations Planning) gets a wrap as a technical topic, in our experience, it is the alignment portion of SIOP that delivers the bacon!

For example, in one client project, the Sales Leader was concerned about service levels. He knew that service was the differentiator in the marketplace, and if they didn’t have quick lead times and responsive customer service, it would negatively impact his ability to grow the business. On the other hand, planning knew that sales tended to come in dramatic spikes which were hard to predict in advance and so strategic inventory could make sense. Operations wasn’t too keen on inventory since they had a lean mentality with the view that inventory was ‘bad’, and they were concerned about capacity and staffing. Accounting set rules on overhead rates as a percentage of sales on a monthly basis which caused HR and Operations to hire and fire temps continually (and sometimes full-time resources). Overtime wasn’t used as a rule of thumb and was seen as costly by management, In fact, it was the only client we’ve ever worked with that didn’t use at least some percentage of overtime on a continual basis. And, of course, R&D created new products and had no idea about the volume and the impact on capacity and staffing. In essence, no one was on the same page!

We created a demand plan based on historical forecasts with sales input, confirmed the capacity and staffing levels required to meet that forecast and determined that if we level loaded the forecast over a quarter, we could create a win-win: improved service during the sales spikes with improved margins (lower temp turnover, improved efficiencies etc.). But it didn’t matter if we didn’t align the team. That was the 80/20 to creating success (and is ALWAYS the hardest part). Fast-forward 3-6 months down-the-road: We shortened service dips from the sales spikes, increased the service levels and reduced costs.

These types of client results are commonplace with alignment no matter your position in the supply chain or the world. Have you considered whether your teams are saying they are aligned or whether they are truly using the same playbook? It often will make the difference between a happy customer and a disgruntled one (which isn’t something anyone wants in today’s on-line era), let alone the profit impacts. If you are interested in an alignment assessment, please contact us.

 

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

The Strongest Link in Your Supply Chain

SIOP: How Collaboration & Judgement Can Achieve Wonders

What’s Ahead for Supply Chain?



Let’s Manage Inventory for Our Customers

May 16th, 2019

inventory managementAmazon is propelling this age-old topic into a new realm. Since the CEO of the Ontario Airport Authority used the phrase “last mile” has become “last minute” on a panel I facilitated last year, I have shamelessly reapplied his brillant quote.

If customers don’t even know what they want, how can we? Interestingly, we have found that many customers, even the seemingly most confused and  volatile ones, have a pattern to their demand. If we take a holistic view of their demand and inventory planning processes from beginning to end and from high level to the minute detail, solutions emerge.     

One strategy that has proven quite effective is to “remove the middleman”, the customer himself. Instead, with access to demand information direct from the customers’ customer or end user, you can not only manage the extended supply chain inventory better for a happier customer but you also can improve margins, efficiencies and cash flow to boot.

In consumer products circles, this strategy often termed, vendor managed inventory is usually dictated by the “big guys”.  In aerospace, it is also expected but termed differently, customer based ordering, min max and other names. It is also common in healthcare as we won “supplier of the year” for two years in a row because of what we accomplished with VMI for Cardinal Healthcare when I was VP of Operations at PaperPak. We decided to make it a strategy for key customers at PaperPak, even though Cardinal is the only one who requested it. Should you consider a strategy like this to get ahead of your customers’ demand?  It is just another aspect in creating a resilient supply chain. Check out our series on the topic.

 



Wildly Successful Exit Plans

December 12th, 2016

supply chain

Since I lead a group of top notch trusted advisors, I hear quite a bit about exit plans gone awry. Unfortunately, most business owners do not plan to exit the business far enough in advance. Of course, you can still exit; however, you will not get as strong a multiple for your sales price. On the other hand, I was fortunate to hear one of the rare stories of a business owner who achieved a wildly successful exit where he received double the industry norm.

He started planning for his exit 15 years ahead of time. Of course, this was one of the keys to success. Far more can be accomplished with this sort of lead time — and, as a side benefit, being ready and/or waiting for the “right” timing isn’t such a big deal in this case. He put together a plan and stuck with it. Not rocket science but wildly successful. He also paid top dollar for the best people — both employees and advisors. Have you taken stock on your exit plans (whether from the business, for your career etc.)?

plan ahead

One tip to implement this week:

As it apparent by reviewing this successful case study, it isn’t something that will be done in a week — or a year. However, you can get started this week. His first step was to figure out his end goal. Set aside time to determine your end goal for your company, your department, your career or whatever you’d like to address. Gain feedback from your trusted advisors and sources but think about YOUR goal — not someone else’s goal.

Next start thinking about the plan. His plan was not overly complex. He picked a FEW strategies to accomplish his exit plan. You can do the same — and you might be surprised as to what can be accomplished in a week. Your plan will take longer than a week but if you figure out your goal, there is no reason to wait. Get a jump on the next step.

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…”

 



Lean or No Lean, a Demand Plan is a MUST

June 16th, 2016
demand plan

Demand planning delivers such useful information on client demand that even Lean devotees will find data on longer-term forecasts, seasonal products and trending patterns useful.

Whether you are on the Lean journey or not, you need a demand plan! Prior to forming LMA Consulting Group, I was a VP of Operations and Supply Chain for a mid-market manufacturer. Our Board hired a lean consultant who insisted we had to be purists – there is no in-between. If we were to embrace lean (and, who wouldn’t want to be lean, after all?), there are some lean purists who say “no need for a demand plan”. Somehow, this is what was adopted as gospel at my company; however, it was NOT accurate — assuming you wanted to service customers. From this frustrating experience along with several others in working with clients, it is apparent that the demand plan is not dead!

If we take it back to the basics, I have to wonder why anyone would ever think they didn’t need a demand plan. In essence, it is like saying you don’t need to know what you’re likely to sell, use, and transfer to other facilities.  Why wouldn’t we want to understand this information? Well, the lean purists would say kanbans are connected directly to customer demand and pulls it through. Certainly that is a successful way of planning in many organizations and for “A” products especially those with those with relatively even demand.  However, it doesn’t mean you wouldn’t want a good feel for your demand. It is always helpful to provide longer-term forecasts to suppliers and to use internally for staffing, skills building, etc.

And, when it comes to B and C items, seasonal items and other trending patterns, understanding the demand plan isn’t a “nice-to-have”; it is critical to success. We estimate that at least 80% of our clients can gain significant bottom line results from focusing a bit more attention on the demand plan.  If you are interested in discussing further, contact us.

 

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

 

Where Should I Start to Ensure Demand Planning Success?

 

Why My Best Clients Focus on Responsiveness



Why Planning is at the Crux of Success

May 25th, 2016

IveBeenThinkingBlog-1024x459

I just had a brainstorming session with one of my key clients about the integrated planning process — in essence, how demand and supply match up to ensure customer service (which is #1 for every client in today’s environment), growth, and improved margins and cash flow. It almost doesn’t matter the reason I come into a client — and the reasons can be wide ranging — there is always opportunity to improve the integrated planning process, get everyone on one page with clarity and sync up demand with supply. It sounds much easier to do than it is in reality. Yet it is vital!

Some of the results I’ve seen with this focus include the following: 1) Improved service levels from the low 60%’s to the high 90%’s. 2) Reduced lead times by 30-70%. 3) Reduced inventory levels by 30-60% while maintaining service levels. 4) Improved margins and reduced costs substantially — by millions of dollars, 5-20% and so on. 5) Improved employee engagement — probably the most important of all as happy employees not only ensure happy customers but they also are much more likely to be innovative in growing the business with new products, increasing margins, etc.

One tip to implement this week:

The good news is that there is a LOT you can do this week to improve your integrated planning process. If you are a leader, simply ask questions about this process of the people involved in these areas, customers, suppliers, etc. Listen for common threads. Undoubtedly, you’ll uncover an opportunity or two, low hanging fruit and the like.

If you are “in” the process, take a step back and think about the inputs and outputs of your process. Of all the items on your to-do lists and priorities of customers (both internal and external), which inputs really matter — and are NEEDED to gain the right outputs (results)? Answering this question can be the 80/20 to success.

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…”