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?

© 2018 – Rick Pay – All Rights Reserved

 

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.

 

Reciprocity Between Strategy and Tactics

A holistic view of strategy creates a balance between the business strategy and the operations strategy. An integrated approach that addresses both simultaneously exploits core competencies, which can help the company achieve its vision. Many companies do the corporate strategy first, then the operations strategy. But by doing them in an integrated fashion, both can contribute to each other.

The business strategy pulls the business ahead while the operations strategy synergistically pushes it. I call this Rick’s Reciprocity Principle, and it functions like a freight train with engines in front that pull and additional engines in back that push. When they are well balanced and working together, this makes the train more efficient by reducing the pressure on the couplings between the cars and on the wheels’ interface with the track. The result is less wear, greater fuel efficiency and a better-running train. Business strategy and operations strategy work together in much the same way.

 

© 2017 Rick Pay – All rights reserved.

This post is an excerpt from my forthcoming book, Moving Into the Express Lanes, published 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

 

To Do Lean Or To Be Lean?

Being Lean achieves world-class performance. Doing Lean often only results in the deck chairs being reorganized just before the ship sinks.

Many companies spend months (if not years) doing Lean. In too many cases, they don’t achieve the results they set out to obtain, and the Lean effort slowly fades away. In fact, 70% or more of companies fail to get the results they wanted from their Lean initiatives. With the plethora of MEPs, Lean consultants and books available, why is that?

Doing Lean includes the tactical activities of training, implementing tools, shop floor and warehouse improvement projects, Kaizen events, and score keeping. If those activities aren’t driven by your operations strategy and company vision, there’s no alignment with your business objectives, and the ground level activities don’t get results or keep the interest of executives.

Being Lean

Being Lean is a whole different thing: it’s the context within which Lean activities occur. Being Lean provides the strategy for the Lean efforts, which help target activities to produce the greatest and most meaningful results. Being Lean changes the way products are designed, includes partnerships, eliminates superfluous activities, and changes the culture of the company. Being Lean provides breakthrough results.

An example is the implementation of a Kanban system. Kanban is a signal or trigger to do something, often associated with the movement and acquisition of materials. In the doing environment of Lean, safety stock and minimum order quantities are included in the calculation of Kanban size, and should be. But safety stock is a waste, and minimum order quantities optimize supplier performance at the expense of your company’s performance.

If you are doing Lean, once the calculation is set, the system is executed with good results, but safety stock and MOQs continue to impact overall performance. If you are being Lean, efforts to eliminate both of these issues take place, allowing you to achieve breakthrough results including turns over 12, 99.8% service levels, 20% annual materials cost reductions and more.

Wouldn’t you rather be than do?

© 2016 – Rick Pay – All Rights Reserved

Innovation Can Help Offset Negative Changes

The Wall Street Journal and Vistage recently conducted a survey of CEOs of small business ($1 million to $20 million) about the election’s impact on their businesses. As you’d expect, the CEOs saw both positive and negative potential outcomes, but they held an underlying assumption that the activities and practices of their businesses will remain more or less the same.

One issue is the impact of labor availability and increasing hourly labor costs (3.6% per year) on small businesses. The survey suggested that automation might be the solution, and it could certainly help. Unfortunately the survey didn’t explore changing the way labor is applied by eliminating processes that add little or no value, improving productivity in the remaining processes, and applying approaches such as Lean, Six Sigma, or World Class Manufacturing.

Another issue the survey addresses is changing trade practices under the new administration which could limit the availability of materials, create shortages increase costs. Once again, the authors didn’t consider the benefits of managing supply chains in partnership with suppliers to prepare for and respond to those changes in trade policy.

In my new book 1+1=100: Achieving Breakthrough Results Through Partnerships, I  devoted two chapters to supplier partnerships and how companies can more than offset the changing global trade environment through partnerships with their suppliers.

Is your company ready for change? Are you thinking innovatively to get ready for those changes? Do your operations strategies include disruptive ideas to keep you in the top 10% of your industry? To find out how you can make rapid innovations in your company to prepare for the future, give me a call.

 

© 2016 – Rick Pay – All Rights Reserved

Are You Ready?

Sutton Foster is a Tony Award winning Broadway star. She wasn’t always in that position, though. In a story on CBS Sunday Morning (Dec 12, 2016), she talked about her days as an understudy for Broadway shows. As understudy, she was the actress in waiting, preparing for her big chance. She learned all of the lines and the choreography, but never actually played in front of the audience unless something happened to the regular actress.

After years in this position, she got her big chance when a director called her to play the lead role in Thoroughly Modern Millie. She won her fist Tony Award for the role. She said, “One of the things I’m most proud of is that the opportunity came and I was ready!” That meant she was prepared, knew her stuff, had worked hard and could step in.

Is your business ready when the role of a lifetime comes? Can you take advantage of that big sale, new customer, or new product roll-out?

To be ready, 1) keep your vision in mind, 2) have a strong business strategy to attain the vision, and 3) have a solid operations strategy to ensure you have the capacity, cost structure, cash flow, speed and agility to meet the challenge.

Are you ready for the role? Can you respond in award-winning fashion when you get the call? If you would like an assessment of your readiness, let me know.

© 2016 – Rick Pay – All Rights Reserved

Operations Strategy – What Are Your Options?

At this time of year, many companies conduct the annual off site planning retreat to develop strategic plans for the next year. Then it’s back to work and the plan sits on the shelf until next year’s retreat. Strategy represents the means selected to achieve the vision, which sets the goals you are trying to achieve over a short period of time, usually two to three years. Strategic planning is actually an oxymoron, since strategy and planning are on different levels. Planning involves the tactics used to implement the strategy.

 

Operations strategy involves the specific operations and supply chain means that the company will use to help achieve the vision. There are five different strategies that could be selected, and you get to pick no more than two:

  • Low cost
  • High Quality
  • Speed/flexibility/responsiveness
  • Wide line/custom
  • Innovation

For example, part of what drove the offshoring trend in the 1980s and 1990s was the strategy of low cost. Then speed started the reshoring process. Tesla has a strategy of innovation, while Lexus is quality.

What is your company’s operations strategy? Do you have a clear vision that you want to support? Establishing a vision and then picking your strategy before you start the tactical activities allows you to prepare for the future and dramatically increase the value of your company.

 

© 2016 – Rick Pay – All Rights Reserved

How To Move To The Express Lanes

To move into the express lanes toward accelerated profit and growth, you need to develop a holistic view by connecting your operations strategy and your business vision. Many middle market company leaders focus too heavily on one or the other, forgetting that connecting the two can create the horsepower for success.

The corporate vision expresses what you’re trying to achieve in the next two to three years, and why. It provides focus to your employees and partners and serves as a measuring stick to assess progress. The operations strategy is comprised of 12 key factors including supplier partnerships, supply chain design, capacity, technology, work force and more.

If you have a strong vision and weak operations strategy, you can’t keep your promises. If you have a strong operations strategy and weak vision, you’re wandering in the wilderness. If both are weak, you are dying. If both elements are strong, you are accelerating toward profit and growth.

The holistic view provides balance between your corporate vision and operations strategy and enables you to accelerate to success.

© 2016 – Rick Pay – All Rights Reserved

Avoiding the “Busy” Trap

I’ve met many executives whose organizations are too busy to improve. I hear comments like, “We already have too many things going on to address this issue,” or, “We’re already working with too many outside resources to add another cook to the kitchen,” or, “I don’t have the resources to address another issue.” How did they get themselves into this trap?

This reminds me of the old Ed Sullivan Show where a man came out on stage and tried to spin a number of plates on sticks.

As he got more and more on the sticks, he couldn’t keep them all spinning, and some of them wobbled, fell, and broke. Interestingly, the plates that got the most of his attention were the ones that were wobbling.

Executives need to establish a few key priorities in order to accelerate profit and growth and stay ahead of their competitors. Those priorities need to be selected carefully. The only way to know what those priorities should be is to have a clear business strategy and an operations strategy that supports it. Then the short-range (12 – 18 month) vision provides a framework within which to set priorities.

Moving a few things forward a mile is much more effective than trying to move a hundred things forward an inch. Keep in mind, your competitors are moving forward. You should be too.

© 2016 – Rick Pay – All Rights Reserved