Partnerships – Not Just Outside the Organization

Companies often overlook their opportunities to develop  internal partnerships. How many times have you heard about functional silos, internal politics, ineffective teams and weak communications? Internal partnerships (between employees and departments within the company) often provide the greatest benefits to the organization:

  • Bridging the gaps between departments to improve communications
  • Breaking down functional silos to improve performance
  • Providing strong alignment to help achieve the vision
  • Improving product quality and performance
  • Driving innovation and speed
  • Maximizing profit and cash flow and overall company value

Internal partnerships, just like external ones, are founded on relationships and trust, which require frequent communication. For example, operations and sales representatives should be meeting at least weekly to discuss:

  • Changing market conditions
  • Sales forecasts and major customer commitments
  • Promotions and other impacts to smooth sales flow
  • Production and supply chain status and potential interruptions
  • Other issues or problems that need a planned response

Frequent communication is one of the key supporters of the golden rule of business – Let There Be No Surprises.

To find out more about partnerships both inside and outside the organization, see my book, 1+1=100: Achieving Breakthrough Results Through Partnerships.

 

© 2018 – Rick Pay – All Rights Reserved

Measuring Results, Not Activities

One of the benefits of key performance measures (KPMs) is that they help you and your team focus on results rather than activities, and prevent you from falling into the “busy trap.” Unfortunately, an element of human behavior is that when we don’t know what to do, we tend to run in circles, staying busy but accomplishing very little. Good leaders armed with solid KPMs get everyone to settle down, focus on priorities and get results.

Measuring results helps reinforce priorities and keeps the team focused on what is important. Mid-level managers in particular need to avoid the busy trap of day-to-day urgencies (the “putting out fires” phenomenon), and instead keep driving toward their goals.

Smart companies design their metrics to drive innovation as much as (or more than) efficiency. Often companies set targets for improvement that are too low and don’t drive revolutionary change. Don’t just ask for 2% – 3% improvement; ask for 10% or 20%. The only way to achieve that is to think outside the box and innovate.

© 2018 Rick Pay, all rights reserved.

Thinker-Uppers

FreeImages.com/barun patro

I was talking to a friend who is a retired senior partner in a very successful advertising agency. We were discussing what drives profit and growth acceleration in companies. He explained that there are three kinds of people in companies: doers, getter-doners, and thinker-uppers.

Doers are those who execute – important certainly, but you can find and develop doers relatively easily. Getter-doners are those who make sure the work gets accomplished, setting priorities and project managing to ensure quality goals and deadlines are met. These people are harder to find, but again, can be developed or hired as needed.

The third type is the rare breed, the thinker-uppers. These are the people who develop innovative approaches, generate imaginative ideas and often use disruptive thinking to create new ways of doing things. These people are hard to find.

Senior executives are responsible for assuring the presence of all three kinds of people in the organization. Without doers, the work never gets done. Without getter-doners, the priorities are lost and the work drifts. Without thinker-uppers, profit and growth won’t accelerate.

Do you have the right people on your team? If you lack thinker-uppers, do you use outside resources to help accelerate profit and growth?

© 2018 – Rick Pay – All Rights Reserved

Making the Most of the Supply Chain Revolution

CFO Magazine recently interviewed me for an article on how supply chains are changing and the cost reduction opportunities those changes will offer. Manufacturers and distributors have to be faster and more agile in their approaches. Supply chain innovations pioneered by Zara, Zappos and Amazon reveal the combined power of partnerships and speed, moving items from a designer’s desk to retail stores in as little as two weeks.

Here are four ways that supply chain thinking is evolving and offering significant opportunities for growth and profitability:

  1. Supply chains are moving from hard to soft
  2. Costs are becoming less flexible
  3. Transport is transforming
  4. Supplier partnerships and professional skills are changing

Flexible and innovative supply chain strategy is critical for your company’s ongoing growth and profitability. For more on this topic, check out my recent Growth Accelerator newsletter, or call me if you would like to explore how your company can be on the leading edge of this disruptive era in supply chain management.

503.781.2014

© 2017 Rick Pay, all rights reserved.

Destroying the Box

FreeImages.com/Antonio Marcos

To dramatically increase a company’s value, you can’t just think outside the box, you have to destroy the box. Many executives have (intentionally or not) created artificial boundaries for their company’s growth by limiting themselves to the way things have always been done, or through incremental, short-lived improvements through programs such as Lean, six-sigma, or theory of constraints. The way to achieve dramatic improvements of 20% to 40% (and more) is through innovation and disruptive ideas, like Amazon and Zara.

One way to innovative is through partnerships. Many companies collaborate, but true partnerships can provide results beyond the scope of incremental improvement. For example, in their effort to improve warehouse performance, Alaska Communications (ACS) turned operations over to the customers and boosted productivity by 75%. Here’s how they did it.

During the short summer construction season in Alaska, crews often work 20 hours per day, and sometimes around the clock, but ACS’s warehouse was open only 40 hours per week, causing expensive delays when crews couldn’t access the materials they needed. Because ACS had complete knowledge and control over what flowed into and out of the warehouse, they could turn operations over to the customers and let them have 24/7 access to materials. Using spot cycle counts, ACS had strong internals controls, which the accounting team accepted. The customers were happy and ACS achieved a 75% productivity improvement as a result; a great example of partnerships in action and disruptive, box-destroying innovation.

© 2017 Rick Pay, all right reserved.

This is an excerpt from Rick’s next book, Moving Into the Express Lanes, coming out in 2018 from Business Expert Press.

Measuring Results, Not Activities

FreeImages.com/Jason Antony

One of the key benefits of key performance measures (KPMs) is that they help you and your team focus on results rather than activities, and prevent you from falling into the “busy trap.” Unfortunately, an element of human behavior is that when we don’t know what to do, we tend to run in circles, staying busy but accomplishing very little. Good leaders armed with solid KPMs get everyone to settle down, focus on priorities and get results.

Measuring results helps reinforce priorities and keeps the team focused on what is important. Mid-level managers in particular need to avoid the busy trap of day-to-day urgencies (the “putting out fires” phenomenon), and instead keep driving toward their goals.

Smart companies design their metrics to drive innovation as much as (or more than) efficiency. Often companies set targets for improvement that are too low and don’t drive revolutionary change. Don’t just ask for 2% – 3% improvement; ask for 10% or 20%. The only way to achieve that is to think outside the box and innovate.

© 2017 Rick Pay, all rights reserved.

This is an excerpt from Rick’s next book, Moving Into the Express Lanes, coming out next year from Business Expert Press.

It All Comes Down to Cash

FreeImages.com/Aap Deluxe

Who in the organization drives the cash-to-cash cycle? Most company managers assume the CFO is managing cash, so they don’t think much about it. But in realty, how sales does their deals, how purchasing buys, how supply chain designs the distribution/warehouse network, how engineering designs products and how marketing and product management bring new products to market and retire old ones all play major roles in the cash-to-cash cycle.

For example, if purchasing makes large volume buys in an effort to get deeper discounts, or if they buy truck-load quantities in an effort to reduce freight, that can have a negative impact on inventory turns, which increases cash consumption. If product management focuses on new products and not on old or obsolete products, the warehouses can accumulate obsolete inventory, which also consumes cash.

To manage cash flow effectively, companies must do more than just improve efficiency and save a few days of cash flow; they need disruptive thinking and innovation to really move the needle. Techniques such as supplier partnerships, auto-replenishment systems, effective terms with suppliers and customers, product design for supply chain management (DFSCM), and just in time inventory and production can greatly reduce the need for cash and can be woven into the operations strategy.

© 2017 Rick Pay, All rights reserved.

 

This is an excerpt from Rick’s upcoming book, Moving Into the Express Lanes, being published in 2018 by Business Expert Press.

 

One Thing Can Make All the Difference

FreeImages.com/barun patro

Over the years I’ve helped many clients develop and implement innovative operations and supply chain strategy. One thing seems to make all the difference in their success:  key managers who have the passion to get things done.

I visited one client with whom I had an advisory relationship every other month, and we talked about implementing supplier partnerships, JIT inventory management and supply chain strategy. At my next visit, the Director of Supply Chain took me by the arm and said, “You’ve got to see this.” We went into the warehouse to see the latest ideas they implemented on their journey, and the results were really impressive. I asked myself, “Why is this client so successful when others aren’t?” They had the right people on the bus – those that drive change and have a passion for the ideas we developed to improve their operations.

The keys to implementing breakthrough Operations Strategy are:

  1. Innovative thinking creating a vision for success.
  2. Having the right people in place, particularly at the mid-level, who drive improvements with passion and discipline.
  3. Developing partnerships inside and outside the organization.

The vital element is having the right people who keep moving toward the vision of the future, not allowing roadblocks to impede their progress.

Do you have the right people on your bus? Are they passionate about your vision of the future? Do they break down barriers and move quickly? Do your results reflect that?

© 2017 – 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

Don’t Be Average

Are you and your company striving to be average, or to be industry leaders?

Many companies use bench marking as a means to drive process and productivity improvement. Most industries publish bench marking data including financial, productivity, asset, market growth, and other criteria for comparing your company to others of similar revenue or asset value in your industry. The most common measure is industry average.

The problem is, by comparing yourself to others and to industry averages, you’re accepting average as a goal. Shouldn’t we strive to be better than average?

Rather than emulating others, be innovative and adopt a strategy that moves you beyond what others are doing. And don’t just try to be better than average, be way above average. The Risk Management Association (RMA) book is a great source of comparative financial information, and provides not only averages, but also top quartile information. This way you can benchmark yourself against the top performers in your industry.

© 2017 – Rick Pay – All Rights Reserved