“Expect and Inspect” to Get the Results You Want

I recently asked a purchasing manager, “What’s not working?” His response was that suppliers weren’t delivering complete orders and they were often late. I asked him if his company measured supplier performance, and he said no. He went on to say that it seemed they were in business to serve the supplier, not the other way around.

Although this is a common malady in companies today, the solution is simpler than you might think. First, it’s important to establish clear objectives and accountabilities between the parties. This goes beyond terms and conditions, and includes objectives and joint accountabilities. For supplier partnerships, this is a two way street defining what each party commits to and how they’ll be held accountable. Then, measure the results to clearly communicate to both sides whether it is done.

As President Ronald Reagan said, “Expect and inspect.” Lay out the objectives of the relationship and measure the results. In a partnership based on clear communication and accountability, you can get what you really want.

© 2014 – Rick Pay – All Rights Reserved

Technology Alone Won’t Win The Day

I love to watch the Winter Olympics. Not only do I like winter, but I used to ski, both downhill and cross country, and really enjoy being out in the snow. The US Olympic team tried to use technology to win the day in both speed skating and bobsled. The speed skaters’ performance was disappointing even with suits made of high tech materials. Some people blamed the new suits for their substandard performance, but when the team changed back to their old suits – in which they did very well in the world skating competitions – their Olympic performance was still subpar.

The bobsledders’ story is much the same. BMW designed a space-age sled that was supposed to give the Americans a great advantage in their races. They ended up winning the bronze metal. Now, that’s still quite an accomplishment, but from the sounds of the pre-race talk, you would have thought the Americans had the gold medal in the bag.

All this goes to show you can’t win with technology alone. You still have to run the race and have the best athletes on your team to win. It’s the same in business. Investing in technology alone in an effort to win the day is folly. You need strong players on your management team, and they need to run the race with their best effort. That, in combination with good technology, will help your company reach the medal stand.

© 2014 – Rick Pay – All Rights Reserved

There is No Accountability Without Consequences

Recently I spoke to a very frustrated executive. His people weren’t doing what needed to be done. They often subverted their teammates and occasionally they would yell at him. As might be expected, the overall performance of the company was below par. As I examined the situation, I found that there was no accountability in the organization and there were no consequences for weak performance.

To establish a culture of accountability and strong performance, it is important to do four things:

  1. Make sure expectations are clear. Let people know what the vision and goals are and make sure they understand them clearly.
  2. Give people the resources they need to do the job. This might include training, staff, IT resources, etc.
  3. Measure results. Make sure people know how they are doing.
  4. Establish consequences for both good performance and for continued poor performance. Celebrate success. Take action on poor performance. Those actions might include retraining, reassignment or in particularly poor performance, consider termination.

Your actions related to performance speak loudly to the organization. Are you serious about your expectations? Doing nothing for either good or bad performance will tell your people what they need or don’t need to do.

© 2013 – Rick Pay – All Rights Reserved

Raise the Bar for Continuous Improvement

I often see companies become complacent to the degree that their improvement efforts stop and their performance eventually begins to decline. I have written about this in several posts (Profit Disease, Good or Great). In a recent issue of Bloomberg BusinessWeek (Dec. 10 – 16, 2012) Tim Cook, the CEO of Apple, said:

I think that anyone that thinks they have it all down is not looking hard enough, not looking deep enough, or not raising the bar. From our point of view, we don’t find zero issues. If we’re finding zero issues, our bar is in the wrong place. So we begin to raise the bar to find issues, and we keep doing this. If you’re doing that, you’re always finding something.

In the early days of JIT there was a saying that if you lower the water, the rocks show up and you can remove the rocks. In JIT this referred to that fact that having too much inventory (the water in this analogy) covers many sins in your organization, which, once exposed, can be eliminated. The point here is to keep raising the bar (or lowering the water) to find opportunities for improvement.

The moment you think you “have it all down” is the moment where you begin to lose momentum. If you can’t see the opportunities, get an outside perspective. For continuous improvement, one of the three legs of the Action Imperative™ stool, keep looking. There is always room for improvement.

 

© 2012 – Rick Pay – All Rights Reserved

Culture is Vital to an Action Imperative

One of the three legs of an Action Imperative™ is culture, the system of beliefs, behaviors, expectations and values that steer the company. In her recent article in Fast Company, Kelli Richards describes the culture at Apple that she experienced as Director of Music and Entertainment during the early 1990s.

Kelli describes five steps to help sustain culture in an organization: 1) autonomy of the individual, 2) reaching across boundaries to create teams, 3) decisions being made and leaders leading, 4) accountability, and 5) hiring the best.

Failing any one of these can result in substandard performance for any company. Apple actually faltered during the 90s because they didn’t live their own values. The return of Steve Jobs helped to rebuild the values and performance that have made Apple an icon of corporate performance.

To create an Action Imperative™ assess your own performance in those five areas and take action to create or maintain your culture.

© 2012 – Rick Pay – All Rights Reserved

Three Ways to Prevent “Profit Disease”

One of my favorite TV programs is CBS Sunday Morning. I enjoy having a cup of coffee and watching the topics they cover, often learning things I would have never expected.

A recent show covered the Metropolitan Opera in New York. The General Manager said, “If you are not pushing forward, you become swamped with your own history.” How true is that? I see many companies that get what I call “profit disease.” They become satisfied with their performance and stop pushing ahead. Over a relatively short period of time, the success they enjoyed disappears and they fall into the swamp.

There are three things you can do to avoid being swamped in your own history:

  1. Push for breakthrough results. Don’t be satisfied with basic improvement, but set stretch goals that push you to the next level. You will need to think differently to achieve breakthroughs. Forget being good; push to be great!
  2. Create an Action Imperative™.  An Action Imperative™ goes beyond basic problem solving toward innovation. It uses change management and culture development to move your people to levels of competitiveness that will help you become a leader in your industry.
  3. Exploit your success! Don’t just be great to be great. Use your greatness to increase market share, profitability and growth.

Push forward, hard, to new levels of performance. Don’t accept mediocrity or succumb to “profit disease.” The Metropolitan Opera remakes itself every year and attracts audiences beyond historical levels.

© 2012 – Rick Pay – All Rights Reserved

Using Communities to Improve Performance

For the past three days, I have been at a meeting of a dozen thought leaders from various consulting fields including leadership, coaching, operations, marketing, team building and auctions. The purpose was to share ideas, review progress, get input on various elements of our practices, and to grow and prosper. I’m leaving with many great new ideas, validation of plans, and excitement to continue my progress on my path for the future.

Developing communities and mastermind groups is a powerful way to improve performance no matter what your field or purpose is.  For people in all professions, getting together with thought leaders can generate ideas, feedback and input that will help take you to the next level. In particular, the accountability and road maps that you develop can help guide you on your way and prevent you from falling into the traps of procrastination and competing priorities that can keep you from reaching your goals.

There are industry groups and other communities of experts that you can join, or create your own by carefully selecting a group of thought leaders that can meet or talk by phone periodically to help you. They don’t have to be in the same area of expertise as you; some of my best ideas these past few days came from people who had little familiarity with what I do.

Try it. You may end up at a level of achievement beyond your expectations.

© 2012 – Rick Pay – All Rights Reserved

Be Proactive

If you want to be successful at just about anything, whether it be marketing, supplier management, cost reduction, revenue improvement, or innovation, it helps to know the situation and understand the details. Let’s take supplier management for example. For many companies, materials are the largest expense. Yet many materials professionals issue purchase orders to the low cost supplier and fail to follow up to see if the materials actually arrive. Supplier management is loose at best.

Know What You Want

There are three vital areas to knowing the situation and the details in supplier management. First, you have to know what you want. This involves clear specifications, expectations for performance in quality, delivery and cost, and knowing the supplier’s capability. Even knowing who the top suppliers are is a challenge for some companies.

As part of my supply chain evaluations, I analyze the supplier base using a descending year to date payments report. During the final presentation I ask executives who their top five suppliers are and you would be surprised how often they don’t know. That is knowing the details.

Measure It

Measuring supplier performance is the second key. For top suppliers, performance should be measured monthly on the metrics of delivery on time, quality, cost reduction and other subjective factors such as how easy it is to clear up invoice issues. I have often found that not only do companies not know how their suppliers are performing, but often the suppliers themselves don’t know either.

Sharing Information

This brings me to the third point which is communication. Internally, communication is comprised of clear specifications, clear expectations, and clear feedback. Externally, suppliers need to not only get their performance report, but quarterly review sessions should be held with top suppliers to review performance, new opportunities, cost and lead-time reduction activities, etc. In addition, annual supplier meetings should inform suppliers of planned new products and other opportunities for them to grow their business serving your company.

To improve supplier performance and relationships, know the situation and dig into the details. What you find may surprise you and save the company a lot of money.

© Rick Pay 2011 – All Rights Reserved

Keeping Operations Out of the Critical Path

I remember in college, which was longer ago than I care to admit, studying a technique called PERT. PERT stands for Program Evaluation and Review Technique. It is a method for controlling and analyzing a system or project using critical path analysis. Usually there are multiple paths through a project, with each step of each path requiring a certain amount of time and money.

Think of building a house. There is framing, plumbing, electrical, finishing etc. One of the paths takes the longest and is thus known as the critical path. Unless you shorten that specific path, you don’t change the completion date of the overall project. Managing the critical path is the key to improving the results of the process or project.

To me, a key objective of Operations is to not be in the critical path. Operations should not be the element that delays performance for customers. By creating and maintaining a flexible, Lean, effective Operation and Supply Chain, some other area of the organization becomes the critical path. Ideally, it should be Sales. That way, revenue and profitability can be maximized. So, a key objective for Operations is to be as flexible and effective as possible thus keeping Sales in the critical path.

© 2011 – Rick Pay – All Rights Reserved