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Business 101

Reflecting on the recent podcasts I have been involved with, I realised how frequently I made the statement, “The solution is really business 101”. (You can listen to them here)

There are many challenges facing business and senior executives at the moment. From supply chain disruptions, the current inflationary environment and the difficulty with getting good people, CEOs and CFOs have their hands full dealing with the disruption. If you read the business press, everyone is looking for the next magic bullet.

I can’t help thinking the image below sums up the current situation. You don’t need a new silver bullet; the answer to successfully managing this disruption is right under our noses.

How confident are you that your team has the following matters not only in hand but well positioned so they enhance your ability to manage the current challenges? Or are they potentially inhibiting your ability to manage in these disrupted times?

  • Lead times for all items and suppliers accurately reflect the current situation. When was the last time this was reviewed? I will suggest this is not a matter that receives regular attention, and the discipline around keeping this up to date and relevant is vital. 
  • Your demand planning forecast accuracy is at an accuracy level that helps the business rather than hindering it. Do you receive forecast demand feeds from your customers regularly? If not, why not?
  • That data collection and matters like production reporting are being carried out in real time.
  • Supplier collaboration. What level is your collaboration really at? Are you sharing your forecast demand? Are they helping you to innovate your product lines? Do you really understand what innovations are taking place in your supplier’s industry that you can leverage?
  • What steps are you taking to improve productivity? Have you fully leveraged real time data capture within your business?
  • How much additional capital and cash have you invested in creating the inventory buffers you feel you need? What steps have you considered that are designed to improve inventory turns when many suppliers are being unreliable? Has the cost of holding that inventory eaten away any benefit you gained by having it in stock? How do you know, and what measure are you using to reflect that position?
  • Have you fully leveraged the advantages barcoding brings to the table? Many businesses today still do not utilise barcodes. Are you using them on your production floor, for example?
  • Do you really know how many unprofitable customers you have? Many organisations have between 32% and 83% of their customers who are unprofitable. What’s your percentage?
  • When was the last time you reviewed the purpose of the benchmarks or KPIs you use? How many of them measure behaviour patterns in the business, and how many are open to being gamed?
  • How do you measure whether you are adding to or lowering the value of your business each month?

You don’t need to re-engineer your business to find improvement opportunities. The best thing about making small improvements is, that each of those benefits compounds on each other to generate significant improvements.

A recent project involved doing just this, making small adjustments to how they used their ERP. We introduced some real time data capture tools to improve the visibility of information in the system. We adjusted MRP configuration settings to bring them back to reflect the current state of play. We reworked the knowledge transfer method used with the vendor to help build capability within the team so that they now become self-sufficient and less reliant on the software vendor for day-to-day issues. We also implemented a daily cycle counting regime to help keep inventory accuracy at a very high level.

While long-term impacts take some time to flow through the supply chain, the business is in a much better place now to manage the disruptions and inventory shortages it was experiencing.

If you are interested in knowing how this might help you and your business, reach out either by calling me or booking a time for an initial chat and virtual coffee.

If you’re an executive or owner of a mid-sized or large company and want to discuss ideas on how you can use supply chain tools, business systems and technology to dramatically improve efficiency, decrease costs, increase profits and enhance scalability, give me a call.

© David Ogilvie

business management, supply chain, supply chain disruption

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