One Thing Can Make All The Difference

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 to 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?

© 2016 – Rick Pay – All Rights Reserved



Audi Has The Right Idea – Innovative Strategy

Audi knows that supply chain strategy can separate the best from the rest. Global sales are up 11.7% with an operating return of over 10%. In a recent article in the Wall Street Journal, the writer explains that part of Audi’s success is based on the idea of using modular design throughout the family: VW, Audi, Porsche and Bentley.

Modular design is a supply chain strategy that uses commonality among products that offers reduced costs and greater production efficiency. For example, there are three common wheel base lengths among the various SUV models in the family. At the same time, Audi engineers still bring in top of the line styling and finishing along with distinct engineering in the transmissions and engines.

Use of modularity is an example of innovative strategy in the supply chain. As you consider your supply chain architecture, don’t just focus on problem solving and cost reduction, but look for innovative approaches that will provide you with competitive advantage while producing world class profitability. Audi knows how to do this and is overtaking the other premium brands on the global stage.

© 2014 – Rick Pay – All Rights Reserved.

Change Happens: Forewarned is Forearmed

Change management is one of the popular buzzwords today in business. There is a plethora of articles on how to manage change, and change consultants are popping up like the dandelions in my lawn.

But in addition to planned change, there is also inadvertent change: change that happens unintentionally. It might be the result of market shifts, supply chain disruptions, commodity availability, or supplier failures. Change can thrust itself on you and your company without notice, and if you aren’t prepared, it can damage your ability to compete.

Developing a strong operations and supply chain strategy can help you prepare for inadvertent change. Building flexibility and agility into your strategies will prepare both your company and your outside partners for change – both intended and unintended.  Developing a vision and a strategy to attain that vision will keep the organization on course and help alleviate the impact of surprises.

Forewarned is forearmed. Having a strategy – even if you don’t plan to use it – can keep you competitive even when circumstances take a sudden turn.

© 2013 – Rick Pay – All Rights Reserved

Preventing Risk: Design for Supply Chain Management and Dual Sourcing the Technology

In recent posts I’ve discussed different kinds of supply chain interruptions, but how do we prevent interruptions from happening in the first place? A few years ago I attended an executive program at MIT on supply chain strategy, and they coined a new term: Design for Supply Chain Management (DSCM). In other words, you can design your products to allow for quick changes when necessary.

I was VP Operations of a company that made lock boxes – the ones real estate agents use. Our engineers designed four sixteen-cent screws into the lockbox. They had a special head that required a special screwdriver. Four screws multiplied by 330,000 lockboxes a year really adds up, and there was one supplier in the world that made them. DCSM suggested we should design that screw out of the product, and we redesigned it so that the two parts could snap together, eliminating the screw entirely.

Another prevention strategy is what I call sole sourcing the part, but dual sourcing the technology. Let’s say you have two aluminum extrusion parts. You could have one supplier for all of part A and another supplier that produces all of part B. Having one supplier per part eliminates natural variation, but having two suppliers that make similar parts allows you to be agile in the event of a crisis. If supplier A goes down for any reason, you have a ready back-up source in supplier B: you already have a relationship, and supplier B is ready to make aluminum extrusion parts.

You’ll notice that this strategy includes two suppliers, no more. Keeping the number of suppliers low enables you to better negotiate for price breaks, keeps administrative and accounting costs low, and fosters a collaborative relationship with your suppliers that goes beyond writing them a check.

© 2011 – Rick Pay – All Rights Reserved