It Doesn’t Work If You Don’t Do It

FreeImages.com photo by Jennifer Marr

Recently I was working a project for a client and I checked several references I’ve used over the years for manufacturing and distribution improvements. Four of the books I often refer to are:

These books guided many of the World Class transformations I worked on in the mid-1990s and beyond. They’re 25 years old (or more)!

The interesting thing is that many companies still aren’t doing what these books (and others) suggest. The ideas in them are extremely effective and produce extraordinary results, so why aren’t more companies using them?

  1. You can’t learn things by simply reading a book – you need guides to help you along the way and experience from trying things with the resulting mistakes/learning and successes. Would you want to read a book on how to ski and then go hit the black diamond slopes?
  2. It takes intentionality – you have to have a strategy and then execute.
  3. It takes leadership – What all of my successful clients have in common is an upper-middle level manager/champion who is driven to accomplish extraordinary things.

The foundational ideas of process and productivity improvement are immutable, but they only work if you use them.

© 2019 – Rick Pay – All Rights Reserved

The How and the Why of Operations Strategy

Many companies focus on the tactics of continuous improvement and are often disappointed with their lackluster results. They look at top line growth and see anemic improvement, and instead of bottom line profitability they see little or no growth. Because company value is often based on top line and bottom line growth as well as cash flow, a steep positive improvement curve helps rapidly increase your business’s value.

But isn’t it best to just move ahead with improvement efforts to get the quickest bang for your buck? Not if you really want exponential improvement. The problem with tactics is they focus on the how of improvement efforts without the context of why.

Why is powerful. Why:

  • Informs your employees of the purpose of their efforts and ultimately what’s in it for them.
  • Puts things in context so priorities are easy to set and decisions are easier.
  • Helps focus on what’s important to be sure your improvement efforts are targeted correctly.

Why is strategy, how is tactics. Putting tactics first is putting the cart before the horse. Do you have a strong operations strategy that aligns with your business model and vision? Are you achieving breakthrough results in your business?

© 2019 – Rick Pay – All Rights Reserved

Are You Postponing Profit?

FreeImages.com/Nick Benjaminsz

It seems like there’s always a better time to do something, and that time is “later.” Many companies believe that improvement initiatives – like Lean, supplier partner programs, global expansion, or new product launches – will wait. The trouble is that while they’re waiting, their competitors are moving forward.

What executives don’t always realize is that return on time (ROT) is often much greater than return on investment (ROI). Waiting until empty positions are filled or current priorities are completed before beginning a new, profit-boosting project doesn’t yield a very good ROT.

To move initiatives forward quickly, companies need a clear strategy and vision for improvement. A client recently told me that because of the strategy and roadmap we created, they achieved results far beyond their expectations in a very short time frame. In fact, the results were so quick and dramatic that a university studied the process to see how it was done. Vision is key to driving change and defines where the future state is.
In my latest Growth Accelerator newsletter, I shared ways that companies can get things done now, not later, and reap the profitable rewards. Click here to read more.
© 2018 Rick Pay, all rights reserved.

Operations Strategy – What Are Your Options?

At this time of year, many companies conduct their 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. Operations Strategy encompasses the means to achieve the vision, which sets your goals for the next 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.

 

There are five different operations strategies, 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.

 

© 2018 – Rick Pay – All Rights Reserved

Only the Paranoid Survive

FreeImages.com/Ramzi Hashisho

I subscribe to the theory of, “Only the paranoid survive.” Put forth by former Intel CEO Andrew Grove in his 1996 book, Only the Paranoid Survive: How to Exploit Crisis Points That Challenge Every Company, I believe this adage is a word to the wise in any business.

In his book, Grove talks about strategic inflection points, which drive fundamental change. When they occur, it’s time for the company to wake up and listen. Think of Sears and Amazon. Sears was once one of the leading retailers in the country; an example of companies built to last. But they missed the disruptive approach that Amazon brought to the market, the inflection points, and now appear to be on their last legs.

In my business, I believe three things will help me respond to inflection points: change, raising the bar, and expert advice. To read more about these approaches, check out this issue of my Growth Accelerator newsletter.

 

© 2018, Rick Pay. All rights reserved.

New Book: Moving Into the Express Lane

I’m pleased to announced that my new book is available on Amazon.

Moving into the Express Lane: How to Rapidly Increase the Value of Your Business, will show readers how to exponentially increase their company’s value by aligning operations strategy with the business model. Increasing a business’s value and potential sale price is important for business transitions as well as for ongoing operations to accelerate revenue growth, increase profits and cash flow, and to allow the company to increase capacity and grow without capital expense. Many companies focus on implementing tactics, such as lean, without a strategic framework, which renders their efforts fruitless. By taking a holistic operations-based view of strategy and tactics, executives can exponentially improve their company’s value.

© 2018 Rick Pay, all rights reserved.

Don’t Be Average

FreeImages.com/Jason Antony

Many companies use benchmarking as a means to drive process and productivity improvement. Most industries publish benchmarking 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.

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

© 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.

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

 

May The Forces Be With You!

In my forthcoming book, Moving Into the Express Lane: How To Rapidly Increase the Value of Your Company, I explore how to align your operations strategy with the business strategy. Why is that necessary?

The business strategy defines what the organization should be. It defines the scope and enables decision making for executives and management of the company. Some strategy developers use the theory of the driving force, which is the central concept that guides the strategy. Examples of driving forces include products or services offered, markets served, technology, method of sale, method of distribution, and production capability. There is usually one that is the key driver of the organization. Which one is what helps set the operations strategy.

Operations strategy is the ‘how’ of the business. How do we achieve the business strategy? What production methods, distribution network, supply chain strategy and other elements do we need to achieve our business strategy? As you can see, alignment is critical.

If the business strategy is the outer force of the business, the operations strategy is the inner force. Are your forces aligned?

 

© 2017, Rick Pay, All Rights Reserved