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

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

 

Employee Motivation in Times of Change

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One of the four Dimensions of Executive Thought involves the use of human resources. Executives should consider whether they have the right people doing the right things, whether those resources should be internal or external, and how technology and innovative thinking might support them.

People want to know where they are going and why, so in order to motivate people to accept and implement dramatic change, you need to personalize the changes. What do the changes mean for their work? Having a clear road map for the change is the first step.

At one client, when we started making innovative shifts in how materials were managed and delivered to the end user, we needed to get the support of a unionized workforce with strict work rules for warehouse and inventory practices. By involving the warehouse staff early in the process, painting a clear picture of where we were going (and more importantly, why), and taking the time to show the workers that no jobs would be lost and that their work would be much easier, they embraced the changes quickly and the company saved over $20 million and reduced inventory by 60%.

The project participants included suppliers, warehouse personnel, supply chain management, buyers, and inventory analysts. The dramatic change in the organization’s culture improved customer service and productivity, and created a happier work environment.

Sometimes, motivation and productivity improvement come from activities that would never have been accepted unless the changes are personalized. That creates an environment of partnerships and true win/win relationships.

© 2018 – Rick Pay – All Rights Reserved

Destroying the Box

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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.

It All Comes Down to Cash

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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

 

Some of the Best Measures Aren’t Numbers

Most companies measure their progress in numbers – revenue growth, profit growth, EBITDA, shipped on time, market share and so on, but actually, some of the best measures are reputation, trust and relationships. In my book, 1 + 1 = 100: Achieving Breakthrough Results Through Partnerships, I propose that two keys to developing trust in partnerships are knowing what is expected and knowing how each partner is doing.

My friend and business confidant, Val Wright, suggests that one exercise to know how you’re doing is to list the three traits that set you apart from your competition, and the top sound bites or phrases that you’re known for.

Reputation speaks loudly for your partners both within your company and externally. Have you heard Ralph Waldo Emerson’s phrase, “What you are doing speaks so loudly, I cannot hear what you say?”

Trust and relationship are the foundations of strong partnerships. If you want to measure how you’re doing, check your reputation. It speaks volumes!

 

© 2017 – Rick Pay – All Rights Reserved.

 

Surprising Ways to Get the Best Pricing From Your Suppliers

Many companies start a supplier relationship with tough negotiating, driving down the price and asking for “give-aways to sweeten the pot,” like free freight. In my role as VP, Operations at a manufacturing company, our goal was to be our key suppliers’ most profitable account. But wait, isn’t that giving away money?

Not at all. Our suppliers gave us world class pricing, often much lower than our competitors. Here’s how we did it…

1) We researched industry cost structures to understand the components of cost – materials, labor, overhead and profit. We strove to leave profit alone (and actually added to it over time), but we were relentless in driving down the other costs through concurrent engineering (including the supplier in product design) and detailed understanding of shifts in commodities prices.

When we found savings in the product, or commodity prices moved in the market, we split the benefits with the supplier 50/50, so our profit and theirs would go up while bringing the overall cost down.

2) We required our suppliers to provide detailed cost structure information so we could both work on improving profitability. This required a high degree of trust, which is the foundation for mutually profitable partnerships. During frequent face-to-face meetings, we worked together to reduce total cost of ownership (TCO) of the item, again splitting the benefits between both parties.

Over time, the profit numbers grew while the total cost shrank – a win/win in a true supplier partnership. As a side benefit, when we needed extra effort from our suppliers, they were more than willing to go the extra mile because we were their most profitable account.

What kind of partnerships does your company have with its suppliers? Do they give you world class pricing?

© 2017 – Rick Pay – All Rights Reserved.

Finding Skilled Labor is Top Challenge for 2017

I’ve been interviewing company owners and CEOs for my next book, Moving Into The Express Lane: How to Rapidly Increase the Value of Your Company to learn about their concerns for the coming 12 to 24 months. Almost unanimously, the answer is the ability to find skilled workers. Many companies have had long standing employees running CNC machines, screw machines, wood products mills, conducting maintenance, and doing skilled work, but unfortunately these are often baby-boomers and many are approaching retirement.

There is a big gap to be filled and our schools and social environment aren’t encouraging younger people to prepare for these well paying jobs. I was walking through a metal fabrication shop recently with the owner and noticed that most of the workers appeared to be over 50 years of age, and some well beyond that. I asked the owner if he was concerned about that and he said, “I’m scared to death!”

Business needs to work with the community to develop public/private partnerships to train our youth to take these jobs. Reinforcing vocational training and community colleges to prepare people for these positions is critical for the future of our manufacturing base. I hope our politicians and school leaders wake up to the opportunity.

© – 2017 – 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