Which Science Do You Prefer?

FreeImages.com/Oliver Gruener

Recently there have been a number of issues in the news that seemingly have different ‘science.’ One side says that the science clearly shows that we are not ready to open schools in the fall. The other side says that the science as demonstrated in other countries shows that we are ready to open schools, at least at the high school and below levels.

In another case, one side says more whites have been killed by police than blacks, which based in raw numbers is true. The other side says more blacks have been killed than whites, which based on a percentage of their portion of the population is also true. Which “science” do you prefer? Remember that at one point in time the science clearly said the earth is flat and is the center of the universe!

How many meetings have you sat in where there is debate as to which sales forecast is correct or whether to take supply offshore? Is it cheaper or more expensive?

In operations, the solution is threefold:

1. Tie everything to your strategy – this gives context
2. Develop contingency plans – things never follow the plan
3. Become as agile as possible to respond quickly to the present reality

You can create your own ‘science’ and achieve competitive advantage.

 

© 2020 Rick Pay, all rights reserved.

Choose One: Strategic Drivers in Manufacturing

Strategy is the framework that helps guide the choices company executives make as they move toward their vision. These choices often guide critical decisions relating to capital, capacity, vertical integration, resources, IT and the other components of operations strategy.

The Five Frames

In manufacturing companies, there are five potential strategic frames, and while many companies want them all, only one (with a potential secondary) should be chosen to drive the company. They are:

  • Cost
  • Quality
  • Delivery/service
  • Innovation
  • Agility

Low Cost

Many manufacturers try to become the low cost producer and either sell cheap or force their competitors out of business. Lean initiatives are often driven by cost reduction, and at times purchasing will try to beat up their suppliers to lower costs. Low cost strategy frames drove many of the off-shoring initiatives of the 1990s and early 2000s.

High Quality

Making the best of the best can be a very effective strategy, especially for markets driven by prestige or highly technical products. BMW, Mercedes, Lexus and other high-end car makers developed high quality strategies and used them to approach a higher-priced market.

Delivery/Service

Speed to market is also a key driver in manufacturing. Short delivery cycles, quick manufacturing techniques and high levels of service can drive competitiveness. Amazon, Dell and Federal Express all built highly successful companies using this driver.

Innovation

Companies that can roll out new innovative products can drive competition crazy. The primary example of this is Apple.

Agility

The ability to quickly customize products can also drive competitors crazy. Toyota says it can deliver any car, customized to your liking (from their assortments of accessories) in twelve days or less.

For strategy to be useful, it has to provide the clarity and guidance that people need for decision making. The five frames can prioritize activities in a way that’s more influential than the rest of your business. Picking more than one (or two) confuses the issue and often results in lack of implementation, which is why strategy fails.

© 2017 – Rick Pay – All Rights Reserved

Agility and Speed: Two Keys To Successful Operations

Watching the Rose Bowl earlier this month I saw Penn State’s impressive running back, Saquon Barkley, who has a great combination of agility and speed. The agility allowed him to avoid tacklers close to the line of scrimmage by rapidly changing direction, often several times. Then, once past the first five yards or so, his speed allowed him to outrun the defensive backs to make a touch down. That combination of agility and speed should provide Penn State fans with many good game-watching experiences.

In your business, agility and speed can be significant competitive factors driving growth, profitability and cash flow. Agility relates to how fast you can change. For example, can you respond to short-term changes in the sales forecast, or changes in labor such as sickness or unexpected turnover, or to a crisis?

Speed relates to how fast things get done, how short lead times are, how responsive your organization is to customers, and how soon your customers get their products. Many customers will pay more for speed.

I’ve always said that the key for operations is to keep sales in the critical path. Agility and speed contribute greatly to that.

© 2017 – Rick Pay – All Rights Reserved

What Got You Here Won’t Get You There

This famous saying and book title by Marshall Goldsmith, the consummate management coach, applies to many things in our business lives, not the least of which is supply chain management strategy. I recently received a survey from a marketing company seeking to find out how companies were addressing performance improvement and risk mitigation in their supply chains. As I reviewed the survey, two things jumped out.

  1. Most of the issues were internally focused.
  2. The ideas they proposed as “leading edge” had to do with information, communication, tracking, improving current processes, and collaboration; the same old, same old.

If companies want to move to the next level of performance in their supply chains, they need to think differently as they develop their strategies. Otherwise, they’re trying to out-perform their competitors by doing the same things better. To reach world class, top 10% performance, companies need to think differently. How can they partner (not just collaborate) to improve supply chain performance? How can they become more agile to allow quick, dramatic improvements to take place? How can they leverage speed in everything they do?

Companies don’t need to just think outside the box, they need to do away with the box. Trying to do the same things better won’t get your there. Using the power of partnerships and world class thinking will.

© 2016 – Rick Pay – All Rights Reserved

Time To Be Flexible and Agile

Image by Sten, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=2226973

Recent economic reports suggest a rougher road ahead. The May jobs report showed only 38,000 jobs created with almost half a million people leaving the work force and the US unemployment rate was over 9%. At the same time, according to Mergers and Acquisitions, the magazine of the Association for Corporate Growth, middle market mergers and acquisitions 2015 activity was lower than 2014, and the fourth quarter showed “a dramatic dip.”

It’s not time to panic, but it is time to check on your plan for the next three years and  become as flexible and agile as possible. With the political head winds, events in China and other global issues, business leaders need to be fleet of foot and able to change course quickly, both intentionally and in response to events.

The third element of Rick’s Four Dimensions of Executive Thought is Resources, which includes human resources, partnerships with suppliers and customers, and whether to develop capabilities internally or externally. Agility is one of the elements of the Executive Command Center, and executives should reconsider their business model for flexibility and agility in these rough times to be sure they can react quickly, whether the market turns up or down. Take a look at how your workforce is structured, how your relationships with suppliers work and how your supply chains flexibly move materials from suppliers to customers. With some planning, you should be able to be flexible and agile in response to rough patches ahead.

© 2016 – Rick Pay – All Rights Reserved

Creating Innovative Operations

One of the four key elements of a successful operations and supply chain architecture is creating innovative operations. Innovative operations leads to world class performance, which puts companies in the top 10% of performance. It requires different thinking, not just increased efficiency.

Bending without breaking

The two vital elements of innovative operations are agility and flexibility, which help to avoid performance plateaus. Agility helps managers think quickly, execute swiftly, and change strategies when needed to respond to market forces. Flexibility is the ability to bend without breaking, to be willing to change while maintaining focus on the future vision for the company.

To develop innovative approaches, companies must make revolutionary changes before evolutionary ones. They must be agile before implementing continuous improvement. They must be quick on their feet and manage dramatic change successfully. These traits lead to world-class performance through creating innovative operations.

© 2016 – Rick Pay – All Rights Reserved

It Pays To Be Agile

I had exciting plans to take a fishing trip in Alaska to catch Arctic Grayling. I had never even seen an Arctic Grayling before and I had planned the trip with a client for about six months, including a day drift on a river with a guide. But when I got to Alaska, it started to rain. And rain, and rain!

It was a 100-year event across a large portion of the state. The rivers flooded (which is unheard of in June) and they even had to evacuate much of Denali National Park. On the day of our planned adventure, we arrived to meet the guide and the boat ramp was under many feet of water. The river was chocolate brown and our trip was flooded out.

We called every guide we could find between Fairbanks and Anchorage. They all told us that the rivers were wiped out and they didn’t want to take our money for nothing. We appreciated that. But then we spoke to the guides at Chavey Lakes. They said the fish were biting and no one was there. We told them we would be there in two hours. I’ve never caught rainbow trout that big in my life. We had a great time and I even caught my first Arctic Grayling.

Businesses need to be agile in their operations and supply chain as well. Unexpected events – both good and bad – happen all the time. That big order you didn’t expect, a key employee leaving, supply chain interruptions, or a product quality problem can flood out your day. Building in the capability to be agile should be part of your operations and supply chain strategy.

Is your business agile? Do you have a plan to make it so?

© 2014 – Rick Pay – All Rights Reserved

The Advantages of Partnerships

Supplier partnerships are much more than just working closely with suppliers. They’re built on a foundation of trust and communication that enables both parties to get better results than they would have in a typical supplier relationship.

True partnerships offer several advantages, all at the same time:

  • World class pricing and competitiveness
  • Greater profitability for both parties
  • Shorter lead times with more flexibility and agility
  • Enhanced quality
  • Increased inventory turns

If you want to reach a world-class level of performance, examine your relationships with your key suppliers to make sure they are partnerships that yield win/win results.

© 2014 – Rick Pay – All Rights Reserved

Foregrounding Your Value as a Small Business Supplier

Some small companies think they can’t become suppliers to large corporations, but in truth, small companies offer advantages their larger competitors can’t match. By highlighting the value you provide and the agility you offer as a small company, you can become a supplier to large corporations.

I was quoted on this topic in an article on NFIB.com, the website of the National Federation of Independent Business. Click here to read the full article.

© 2014 Rick Pay – All rights reserved.

Creating Innovative Operations

One of the four key elements of a successful operations and supply chain architecture is creating innovative operations. Innovative operations leads to world class performance, which puts companies in the top 10% of performance. It requires different thinking, not just increased efficiency.

The two vital elements of innovative operations are agility and flexibility, which help to avoid performance plateaus. Agility helps managers think quickly, execute swiftly, and change strategies when needed to respond to market forces. Flexibility is the ability to bend without breaking, to be willing to change while maintaining focus on the future vision for the company.

To develop innovative approaches, companies must make revolutionary changes before evolutionary ones. They must be agile before implementing continuous improvement. They must be quick on their feet and manage dramatic change successfully. These traits lead to world-class performance through creating innovative operations.

© 2013 – Rick Pay – All Rights Reserved