Oct 23, 2009 | Demand chains, Management, Operations, Sales, Small business
Demand chains are a representation of the drivers of “flow” through a supply chain, a concept familiar to those engaged in “lean” initiatives, when the motivator to the flow is demand rather than an ability to produce for inventory or against a forecast of sales.
Category management is a process of welding the drivers of demand, the consumer preferences and behavior to the supply of their preferred products, whilst maximizing the returns to the retailer, and others in the chain, as well as delighting the customer.
Few who claim to engage in category management would see the explicit link, as they are typically engrossed in the numbers, but it is there nevertheless, and the successful exponents recognise the link, and leverage the numbers for the sake of the outcome of the entire chain, not just for one link who happens to hold the power.
Oct 21, 2009 | Management, Sales, Small business
It is pretty obvious, although not always acted on that you should define the problem before you spend time trying to sell a solution.
There are many techniques to getting to the point where the sale can be made, libraries have been written, but in my experience, 3 simple questions will get you there. They are not easy to answer, but once you have, a sale is the easy bit.
- How can you help your prospect build sales?
- How can you help your prospect to decrease costs?
- How can you help your prospect to increase productivity?
Answer these, and you have the problem your product can solve defined, and the sell is easy, after all, who can say no to any of these being delivered. One of the rules I use, never go into a sales situation (as distinct from an information gathering situation) without at least 2 of these answered in some form.
Oct 20, 2009 | Leadership, Management, OE, Operations, Small business
Yesterday, I wrote about the process jig-saw that supports an implemented ERP system as it works to drive efficiency, but deliberately left out the hardest bit.
The most challenging changes necessary to make an ERP implementation deliver the value promised are the behavioural ones.
You can buy all the software in the world, but junk-in still generates junk-out.
Most ERP systems I have seen, if you take a wide view of what constitutes “ERP” is done on Excel. I have developed simple routines for SME clients using Excel, that whilst not fancy, automate parts of the operations planning processes, and generate substantial benefits.
Most sophisticated systems from the well known SAP to less fancied packages all have large chunks of data delivered by to them by a range of means, mostly spreadsheets, and the temptation for the individual is to leave well enough alone, and resist the dropping of their routines in favor of the expensive ERP package. Allowing this parallel system to survive beyond a short validation phase is always a mistake, as people revert to what they know as soon as there is an issue. When you jump in, you need to go all the way.
Oct 19, 2009 | Management, OE, Operations, Sales
Talking to a client last week about his S&OP processes, (or lack of them despite the software) I realised that we were both using English, but were talking a different language. This is often a challenge in S&OP implementations, and even amongst those who have successfully implemented in different businesses, as a local jargon usually emerges to accommodate the vagaries particular to the organisation, product type, and culture.
Following is a simplified list I gave to him as a basis from which the conversations could be translated, in the common order of S&OP preparation.
- Demand planning. A compilation of data (past sales, orders received & delivered, orders received and undelivered) and qualitative data from the marketplace (competitive activity, accounts won & lost, distribution changes, seasonal influence, and so on). This is not a forecast of what will be sold, it is a quantification of the influences on demand. This data is assembled in a huge variety of ways, often collated by the “Master Scheduler”, but not ideally to avoid capacity bias emerging too early, and the sales/customer management function, and operations management.
- Forecasts. A suite of forecasts for product families rolled into a consensus outlook based on the output of the demand planning process. At this stage it is unconstrained by questions of capacity & input availability. This is usually a specific role held by an individual, often titled “Master Scheduler” and is an ongoing responsibility, but signed off weekly for submission to the Capacity & planning meeting.
- Capacity & supply planning meeting, normally weekly. Puts the acid test of reality on the sales forecasts by adding the capacity and input availability constraints. The output is the daily/weekly production schedule to be executed based on the requirements and trade-offs/compromises that emerge from the more senior SOP processes.
- Pre-SOP. A meeting (normally bi-weekly) of the implementation level of management that makes the trade-offs and decisions that emerge from the Pre-SOP, ready for implementation, and identifies strategic resource allocation issues for resolution. This is the key meeting, and provides input to the senior S&OP meetings, and the capacity & supply planning meetings
- S&OP sign-off by senior management, normally monthly. Over time in successful implementations this becomes a rubber stamp on most occasions, but it retains the control of major decisions that need to be made that have more of a long term and capital utilisation impact than is available to the Pre-SOP management level. Things like new equipment, outsourcing, choices between major customers, contractual compliance, shift additions, and so on are usually signed off at this level.
Oct 18, 2009 | Demand chains, Management, OE
We can learn a lot about supply chain management from successful retailers.
To be successful, generally they have identified their logistics chains as a key source of competitive advantage and they work on it.
Their business model depends on having the stock on shelf when a consumer wants it, but with a minimum in reserve stock, and none “left over” that requires discounting or dumping to clear.
Li & Fung, the extraordinary Chinese supply chain manager who have had a key role in the boom in Asian sources fashion wear, Woolworths, the dominant Australian supermarket chain, and Spanish retailer Zara have all based their success on supply chain innovation supporting their service offer to customers.
A usual metaphor when explaining the Japanese Kanban system of managing “flow” through a process is of a supermarket shelf, a consumer takes one off, a replacement is delivered to the hole from a JIT flow from the supply chain. The appearance of a hole on a supermarket shelf is a physical representation of “pull” or demand, the basic building block of a chain that maximises demand chain efficiency, and builds a competitive advantage
