Tag Archive: staffing

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.

 

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Manufacturing Expands at Fastest Rate Since 2010

February 15th, 2017

According to the Institute for Supply Management’s Manufacturing Purchasing Managers’ Index, manufacturing is on an upswing. The composite index rose in January, making it the fifth straight monthly expansion. New orders and production grew strongly! And the Dallas Federal Reserve Bank reported that manufacturing activity expanded at its fastest pace since April 2010 — more importantly, leaders are positive about the next six months. In fact, the forward-looking outlook measure jumped to a level not seen in 12 years! Are you ready?

manufacturing growth

What Should We Consider and/or What Impacts Could Arise?

Although this is great news for manufacturing, we should make sure we are prepared for success. Do we have the capacity and staffing to meet our customer requirements? Do we have the skills and talent to grow successfully? And, are we building agility and flexibility into our systems? According to my recent outsourcing research, 70% of executives are considering near-sourcing and in-sourcing strategies. Thus, I expect these numbers to continue to grow.

Many of my clients struggle to find, retain and train talent. Thus, I have dusted off my Skills Gap research from late 2013 and am refreshing it. I’d appreciate your feedback and insights for my research. I’ll keep you in the loop on the results.

In the interim, start thinking about the skills gap. Are you partnering with community colleges? Trade associations like APICS? Other local companies? Even competitors? Consider involving top notch executive recruiters, partnering with temporary agencies and supplementing with consultants and contractors. Success will come to those companies ready to serve the customer when the customer wants it! We cannot afford to delay.

 



Keys to Successful Growth

April 29th, 2016
successful growth

Though gratifying, periods of business growth can be the most challenging to manage. The keys to successfully manage growth are people, simple project timelines and follow-up.

My clients across all manufacturing and distribution-related industries ranging from small, family-owned businesses to multi-billion dollar corporations have one item in common – growth. 

More than 80% are experiencing relatively substantial growth while the remaining 20% are muddling along with slight growth figures. When companies grow, projects can become even more critical. Cash is needed to fund growth. Customer service must remain intact, even though it can be more challenging to succeed during periods of significant growth. Profitability needs to continue to grow to support the growth and to leverage assets. Keeping up with the people requirements can be a challenge. Thus, we need to be stronger in periods of growth to ensure success. I’ve found that the key to success is to get back to the core: 1) Start with people. 2) Develop a simple project timeline. 3) Follow-up is vital.

  1. Start with people –The project leader is number one to whether your project will deliver the expected results. Your team is a close number two. Unfortunately, I often see project leaders and teams come up in the last position. In these cases, people are an after-thought. Often, the issue is that everyone has full-time jobs to do already. And, in times of growth, most top quality potential project leaders are already maxed out.

As a former VP of Operations, I fully understand this dilemma. Instead of assigning those who are available to what could be a project that could have far-reaching impacts that add up much faster than you’d ever think ($500,000 – $1,000,000 isn’t uncommon) and directly impact key customers, take a step back and think about the best person to lead the project. There are countless ways to handle the talent shortage, so don’t let these challenges dictate your decision. For example, you could reallocate work, bring in outside help, or provide tools to support the team. Don’t let this be an excuse for not staffing your critical project properly.

The project leader doesn’t have to be a full-time resource – it all depends on the project. And, do not get caught up in thinking that your project leader has to be a guru in creating complex project timelines, as it has little to do with success. Instead, ensure that your project leader has the leadership skills and experience to effectively lead the project team, collaborate with all related parties, and is organized and focused on the project outcomes/results. In my experience with multiple $1 million+ successful projects, this is will make or break success.

  1. Develop a simple project timeline– There is no need for complex project timelines that require a complicated software program to develop and a Ph.D. to understand. Instead, develop an understandable timeline with major milestones and accountabilities. Keeping it simple works!

In working on countless projects over the years, I’ve found the critical aspects of the timeline to be the following: 1) clarifying the key dependent tasks; 2) the critical path milestones; 3) clear, agreed-upon ownership and accountabilities. It is amazing how many times I’ve seen the timeline fall apart either by focusing on non-critical path tasks to the detriment of the critical path tasks or due to a lack of clarity about the accountabilities. An easy yet effective rule of thumb is that a team cannot own a task. Instead, assign the task to one task owner. This owner can coordinate with as many participants as needed to get the task done; however, there should be one, ultimate owner who is accountable.

  1. Follow-up is vital –Undoubtedly, my number one secret weapon to achieving success on-time, on-budget, and on-results on wide-ranging projects consistently is follow-up. This seemingly simple yet often overlooked action achieves amazing results. Does your project leader follow-up?

What are the keys to success with follow-up? And when should you follow-up? Follow-up with your project team on critical path milestones. Start by making sure they are clear and accountabilities are established.  Then, follow-up on critical path tasks and milestones just prior to the start of the task. Do what makes sense.  If resources are required, follow-up so that you have enough time to work through potential issues so that they can start on-time.  Do not waste time on non-critical path tasks, as they will become a major distraction to the detriment of the critical path. Keep the team focused on the critical path. Remind critical path task owners when their deadlines are approaching. Ask if they have questions, concerns, roadblocks, etc. Don’t wait until the project falls behind. Instead, proactively follow-up to ensure the critical path stays on schedule.

Aggressively tackle any roadblocks in the way of achieving the critical path. Encourage, appreciate and thank the project task owners. Remind them how their task fits into the big picture and how the project’s outcomes are of value to the organization. Follow-up on critical finances. Don’t get lost in a debate over a few dollars. However, be extremely vigilant on the critical expenditures and those related to the critical path.

Every executive wants to continue to grow.  Thus, they need projects to deliver results on-time and on-budget.  Instead of getting bogged down in the latest, complex project planning software and process, continually follow these three key steps, and you’ll achieve significant project results – and grow your business.

 

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The Good and Bad of Using Temps, Contractors and Consultants

September 22nd, 2015
staffing

When facing short-term staffing challenges, supplement your needs with temps, contractors or consultants. To be successful, be clear on the purpose and staff accordingly.

I find that almost every one of my clients and prospective clients are growing significantly. One complication of growth is to find, upgrade and keep your people. One way to supplement your resources short-term is to hire temps, contractors and consultants.

Each has a different purpose. Temps typically fill in for manufacturing and distribution resource gaps.  For example, if you need assemblers for your operation or machine operators, temps can be a great solution. Contractors and consultants can often be confused; however, I see contractors as highly-skilled resources that typically assist with specific tasks such as programming whereas consultants typically are looking at broad topics and providing recommendations for improvement. Contractors are more likely to fill in for missing positions or specific projects. As a consultant, I find that I typically provide design expertise for strategy, organizations, processes and systems and often fill the advisory and mentor role in implementing the designs.

Many of my clients use temps to fill short-term resource needs to cover spikes in demand, to cover dramatic swings of seasonality, and to support growth early in the cycle. The issue is that it is never as simple as it seems it should be. Certainly, hiring a temp is a great way to test out resources for full-time jobs. It is also a good way to find people with the required prerequisites intact rapidly; however, it doesn’t mean that training can be skipped. Ideally your temp agency is screening candidates to speed up the process and potentially is providing some level of training; however, some sort of training will be required on-the-job. Don’t forget to account for this need.

Temps should not be viewed as long-term resources. They have no loyalty by definition as they fill in for gaps at various companies. You also are not typically providing the same level of training and support to temps vs. full-time resources. Therefore, if you expect to keep temps long-term, you’ll want to transition them into full-time employees for optimal results. That way, efficiencies and quality will be built into the process.

Conceptually, the same holds true with contractors. They fill short-term gaps and can be a valuable way to test out potential employees if growth dictates the need for additional long-term assistance. With consultants, occasionally I’ve filled responsibilities for a role temporarily; however, never full-time. If full-time is required, hire a contractor interested in transitioning into a full-time employee. Typically consultants design improvements with specific objectives, measures and value for the organization, support the implementation from an advisory/mentoring standpoint and move to the next project/objective. This can be invaluable in shoring up talent rapidly without having to hire it upfront. 

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Can SIOP Replace Budgeting?

September 4th, 2015
Budget concept

SIOP can do the heavy lifting of the budgeting process by filling in the blanks on operations and inventory line items.

SIOP (sales, inventory & operations planning) can easily replace a good portion of the budgeting process – with better results! Why? Well, SIOP is a monthly process of reviewing and agreeing upon the latest sales forecast/demand plan for the next 12-72 months and the resulting master schedule (production plan). When you compare the master schedule vs. capacity and staffing levels, the required staffing needs will become clear. Options are reviewed as these gaps could be filled through promotions, temps, full-time hires, contractors, consultants or via off-load. Machine requirements will also emerge – upgrades, new machines, etc. Skill development needs will be unveiled. Based upon the demand and supply plan, an inventory plan will also be created. And the list goes on.

When you have a monthly executive review of this type of information, it becomes a great way to align the areas of the organization on the same page.  It also captures the same type of data that is the basis for a budget. Thus, the SIOP demand plan can be the basis of the budget. It could be tweaked from there with Board of Directors or other additions. The information captured as to the required staffing and capital needs will be captured in the budget. The inventory plan will provide a good basis for cash forecasting.

The areas that will have to be added into the mix will be those not directly related to operations. Thus, overhead rates might be affected by SIOP in that the need for additional support could arise, the specific budgets will need to be developed in additional detail. SIOP can also bring up the need for additional buildings or off-site storage; however, those specifics will need to be added in later. There will be other details which have to be developed separately; however, the budget basis could easily be 60-80% of the way to the desired state. Wouldn’t that be a great advantage! If you are interested in learning how to implement SIOP, email or call. 

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