Archive for the ‘Richard Guy’ Category

IDK (“I Don’t Know”)

After listening to a Freakonomics Radio podcast on NPR, the following question and blog comments emerged:

Why do people feel compelled to answer questions that they do not know the answer to?

What I’ve found in business is that we are all prone to hiding our ignorance when asked a question that we cannot answer. So even if someone absolutely has no idea what the answer is, if it’s within his or her realm of expertise, “faking” seems to be an essential part of the response.

My professor friend told me that she has learned the following from teaching MBA students: “One of the most  important things you learn as an MBA student is how to pretend you know the answer to any question even though you have absolutely no idea what you’re talking about. It’s really one of the most destructive factors in business. Everyone masquerades like they know the answer and no one will ever admit they don’t know the answer, which makes it almost impossible to discover the correct answer”.

I ask: Does every question need to be answered?

Everyone expects answers to every question, especially if the question comes from someone higher up in an organization. However, not every unknown question is worth the time and resources to research. If it comes down to the choice of making-up an answer or being saddled with a research project, many people will prefer to make-up an answer. Perhaps in some situations, combined with the ego/self-image issues, every question will be answered, regardless of the person’s knowledge.

I ask: Should IDK be a legitimate response?

Perhaps, if the question has minimal economic impact on the business, and you know something related to the question, then maybe a guesstimate (an estimate made without using adequate or complete information) is fine.

But then, for significant economic impact questions …maybe it’s better to say “IDK the answer to that question, but we are studying it”, and then do the study!

As an example, management asks: Will our delivered cost per SKU increase or decrease if we add more distribution centers to meet expected growth rates and satisfy customer service levels?

The first reaction guesstimate might be “yes they will increase”, although, this might not be true.

The smart analyst will say: “Hmmm, IDK! Give me a few hours (days) to do a quick analysis, and see what the true impact will be.”

A small spreadsheet study looking at the increase in production and distribution levels combined with the increase fixed and variable costs associated with adding a few new distribution centers may be surprising. It may indicate that the increase volume and revenues and lower transportation costs will offset the increased DC costs.

This small study may also be the first in a stage gate approach to perform a forward looking comprehensive supply chain infrastructure study. A detailed strategic infrastructure study can capture the manufacturing and distribution details, including costs and constraints, generating results that will allow management to make a reliable strategic economic decision.

No field is exempt from their know-it-alls, even when the correct answer really is IDK.

I submit, if you are in an uncertain position, try the IDK approach and then offer the following response “I can check into that and find an answer for you”. You may be surprised to learn that your credibility with management will improve.

“Every act of conscious learning requires the willingness to suffer an injury to one’s self-esteem. That is why young children, before they are aware of their own self-importance, learn so easily.”
–Thomas Szasz

Rich Guy

The rise of zombies in pop culture has given credence to the idea that a zombie apocalypse could happen. In a CFO zombie scenario, CFO’s would take over entire companies, roaming the halls eating anything living that got in their way. They would target the brains of supply chain managers and operations people. The proliferation of this idea has led many business people to wonder “How do I avoid a CFO zombie apocalypse?”

Supply chain managers are seeking and developing new and improved ways to exploit the volumes of data available from their ERP systems. They are choosing advanced analytics technologies to understand and design efficient sustainable supply chains. These advanced analytics technologies rely on the use of optimization technology. I am using the mathematical concept of “optimization” as opposed to non-mathematical process of making something better.

Mathematical optimization technology is at the heart of more than a few supply chain software applications. These applications “optimize” some process or decision. Optimization-base programs, for example, those frequently found in strategic supply chain network planning, factory scheduling, sales and operations planning and transportation logistics use well-known mathematical techniques such as linear programming to scientifically determine the “best” result. That “best solution” is usually defined as minimizing or maximizing a single, specific variable, such as cost or profit. However, in many cases the best solution must account for a number of variables or constraints. Advanced analytics technologies can improve a company’s bottom line – and it can improve revenue, too! CFO’s like this.

Advanced analytics technologies provide easy-to-use, optimization-based decision support solutions to solve complex supply chain and production problems.  And, these solutions can help companies quickly determine how to most effectively use limited resources and exploit opportunities.

So, from my perspective, there are seven practical reasons to embrace advanced analytics technologies:

1. Your company saves money, increases profits.
2. You get to use all your ERP system’s data.
3. It’s straightforward and uncomplicated.
4. You have the tools to discover great ideas and make better decisions.
5. At the end of the day, you know the total cost of those decisions.
6. You have a roadmap to make changes.
7. You avoid the CFO zombie apocalypse

We recently attended a discovery meeting that was focused on how to conduct a strategic optimization planning study of an existing distribution network. The company wanted to know what changes needed to be made to lower the distribution costs. Several members of the management team were present and there were many questions regarding the ideal business process, study approach and modeling tools to be used to insure a successful project.

What was interesting to me was the overwhelming focus on the modeling tool. Questions about who would be on the project, the timeline, the types of scenarios, data gathering and validation were secondary. It may be important to have the right tool to model your infrastructure, but the real focus should be on the experience and modeling capabilities of the users of the tool.

These are the Critical Success Factors

1. Full participation in data gathering and results review by the project team and management.
2. Clear definition of the key questions to be addressed and the related scenarios required by the Project Sponsor early in the project timeline.
3. Availability of leadership resources within the company throughout the project to review assumptions and to ensure integrity and quality of the input.
4. On time delivery of a complete set of all required data by Project Team members.
5. Acceptance and agreement on the variable, fixed and capital cost assumptions of existing and potential new facilities.
6. Availability, communication, and collaboration of the Project Team members, support staff, and consultant for all working sessions, conference calls, and follow-up between meetings.

It’s important that the optimization modeling tool can incorporate the variables and constraints associated with your supply chain, but the real focus should not be on the tool, but rather on the experience of the users of the tool and their ability to deliver the results of a project. If I were to set out on a network optimization planning project to model my entire supply chain, then my primary focus would be on developing an experienced team of individuals that had the skills to minimize the above risks.

Okay. I am an anomaly. I live in Utah and drink coffee. The majority of the people that live in Utah do not drink coffee, and that is OK, but I do. So, is there a shortage of coffee Cafés in Utah? No. There are many cafés and several that serve outstanding coffee.

We have an exceptional espresso café downtown, located on a side street off of Main. They roast their own coffee and use triple certified organic grown beans. It is the type of place the local coffee lovers go to hang out and have good conversation over a morning or afternoon latté or espresso. Possibly the best coffee I have ever had. What is interesting to me is that a large percentage of the residents in my area do not even know that this café exists.

So what is my point? When it comes to outstanding services or products most people are unaware of what is available, primarily because it does not fit into their lifestyle or what they’re accustomed to. I believe you can transfer this similarity to the business world. Manufacturing logistics and transportation people become accustomed to doing things a certain way. Over time they may become blind to ideas for improving the supply chain. They are unaware of an exceptional Supply Chain Café, even when it is located just seconds from a combination of keystrokes and Google.

It is not their fault they are missing the best latté available. We, as consultants, who prepare those delightful solutions from the Supply Chain Café menu, have probably not done the finest job of promoting our services and software to your neighborhood, but that is changing.

There are many empty cups in the supply chain, waiting to be filled with successful solutions. Supply Chain and Logistic managers tackle difficult supply chain problems every day, but they are so focused on getting their job done and making it through the day that they have little time to think of alternatives that may improve their processes and well being. I am not sure how we can help everyone, so let’s focus on the window shoppers. These are the ones that are aware of the café, but have never been inside. Maybe you are one?

If you are reading this blog, then you must be a window shopper. I am guessing you are looking for a better espresso. OK, you found “Profit Point”, although you may not know what we do. Guess what? Help is on its way. We can share our menu with you. We just published four videos that will introduce you to the Profit Point team and what we do. Embrace three minutes out of your day, select one of the videos, and watch it. Learn how we help companies improve their supply chain, by serving the best coffee with a smile.

Yes, you can improve your supply chain with our help. The supply chain solution that you are looking for, is about to be yours. And if you place an order, we can fill your cup to the top, with the “good triple certified” stuff. If you cannot seem to find that special item on our Supply Chain menu, then no fear, we love special orders.

So, is there a shortage of Supply Chain Cafés? No. You just need to find the one that serves the optimal latté. I know it’s out there somewhere.

To learn more about Profit Point’s Global Supply Chain Optimzation services, please contact us.

Many of us have worked with companies that provide large ERP solutions. Some of these experiences have been successful and others somewhat less than ideal. If you work in the manufacturing, supply chain, logistics areas, then you realize the vast importance of having access to meaningful data, although implementing a large ERP system does not necessarily mean you can get to that data. It has been my experience that having the data available and having the ability to get to that data and using it to perform strategic or tactical analyses may be challenging.

I recall a situation that happened to me many years ago. I was working for a large corporation that maintained a large database on its customers. All of this information was on a mainframe. To get access to the data so that we could perform analyses and generate reports required communication with the MIS department. We would schedule a meeting with one of the analyst to discuss what data we needed access to and what reports we required. The analyst would routinely tell us to fill out a job request form number 777. Then, this form need to go through several levels of management approval. If the request made it through the approval process it was put on the development schedule. Typically from start to end the process would take several months. In today’s world that would not be acceptable. Read the rest of this entry »

There is a better way to qualify consultants and software vendors and award business, rather than using the RFP process.

Request For Proposal’s (“RFP’s”) are used by many organizations to gather information and details about services and prices from various consultants and software vendors.  These organizations believe that this is an efficient (for the RFP issuer, at least) method and process to acquire the best possible services at the lowest price.  This is not true.

And what about government organizations that are often required by law to go through the RFP process?  They do so with the belief that the RFP effort will improve accountability and reduce favoritism, corruption, and nepotism.  Does it?  I am about to share with you some ideas and thoughts from a consultant’s viewpoint.  It is my belief that organizations can do better without the RFP process and even government agencies or businesses that do not have the flexibility, can take some steps that will enhance an out-dated process.

RFP’s do not create a healthy relationship

Initially, a majority of the effort involved with RFPs is creating an RFP instrument. The instrument is pushed from the issuer to the respondent, typically in a word document that is sent electronically with a deadline to respond. It is a one-way distribution channel.  From my experience, the RFP document does not capture all the thoughts of the business.  Some RFPs are rewritten and tweaked so many times, that sometimes it is actually difficult to uncover the true “needs” message from the final document.

There are also applications and services available that allows an organization to post an RFP on a website and ask for respondents to use this medium for their response. This may make sense if you are buying commoditized widgets, but not consulting services or special-use software. This may seem efficient in the organization’s viewpoint, but it is inherently one-sided. Many of these instruments set up communication rules that are rigid and sterile with the thought that they are being fair to all the vendors. What they ignore is the working relationship, which often has a major impact on the success of a consulting engagement.

Healthy, productive relationships start with healthy communications.  It has been my experience that organizations that take the time to engage in a conversation with a potential vendor to explore a possible relationship have a far better chance of developing a healthy and productive business relationship and get services and/or software at a much better price.

What comes out of this relationship are conference sessions that generate ideas, thoughts, and brain storming that focus on developing a methodology or application design that is on target and meets the needs of the organization. Projects that promote an open and dynamic communication style from the beginning will be more likely to succeed.  This communication process is powerful and creates a solid foundation for an ongoing business relationship.  Allocate more time to engage and verbally communicate with the potential consultant and you will truly understand whether they can add value to your organization.

RFPs attempt to get something for nothing

Or at least something for real cheap. As someone once said: There ain’t no such thing as a free lunch.  It is a law of economics. If you are searching for a business solution with a goal of the best possible outcome for you and your company, then think of this. You spend a few hours or days searching the Internet for companies that offer the type of services you are looking for. You may already be doing business with or have talked to a few companies, but want to compliment that list with several others. You sent out a standard formatted e-mail requesting more information about the company and their services. 60% of those e-mails go unanswered. You ask yourself why? Because, the busy companies will not waste their time with your solicitation. Why? Because they are busy helping other companies. Why are they busy? Because, they offer a solution that is in demand. A solution or service that is based on performance and price.

RFPs limit your options to those that are on your short list. RFPs limit your visibility to those solution providers that actually have the time and inclination (at that very moment) to respond. RFPs limit your responses to those that do not avoid RFPs, as is the case with many successful firms. The 40% of the e-mails that are answered are from companies that are sitting on the bench because no one is using their services. Hmmmm, I wonder why? Intelligent and professional organizations will not give you something for nothing. I am sure, they would be pleased to engage in a conversation with you or your team if there is a real opportunity for them to help you. You can get value and information from these companies, but not with an RFP.

Qualified suppliers ignore RFPs

Many suppliers of professional services believe that the RFP process is “fixed,” as in “rigged,” and another vendor has already been chosen. This may or may not be the case, but since the perception for many vendors is no hope to win the business, the smart allocation of their valuable resources is not to respond.

Surveys have been conducted to understand why qualified suppliers ignore RFPs. These are some of the responses from these surveys:

“…the winner is often decided before the RFP even goes out.” – J. H.

“…you can assume a presumptive winner has been chosen.” – M. H.

“…often RFPs are all but awarded when they go out.” – T. M.

Effective and experienced consultants know better than to waste their time on low-probability activities, so they typically read the request in part, and then trash it.  This process not only eliminates a significant number of consultants that might have been well-qualified for the project or application, but it is quite likely that it eliminates the best candidates for the project.

Consider the example of hiring a key executive or business manager. Posting a job opening and reviewing the resumes that are submitted will rarely, if ever, yield the best candidate. The best candidates are gleaned from a careful, personal vetting process.

RFPs reward the wrong things

Answer right, and win the business. Firms who are forced to respond to a lot of RFPs hire specialists who know little about the craft, but do know how to write RFP responses. In even more cases, RFPs reward “gamblers” who have the time to throw excessive man hours at responding to an RFP. These vendors are very successful in winning business through the RFP process. Someone pays for all of this work. The RFP costs are embedded in the rates the client pays. These rates are typically higher than their standard rates. You will pay the piper.

In addition, does the organization receive a solution or service that is best in class? What they receive is exactly what they asked for. They may receive all the deliverables outlined in the scope, but to add additional functionality to software, or expanded scope will cost more.  RFPs make everything a commodity. By definition, extraordinary work it is not.

RFPs provide a false sense of confidence

Just because you put a lot of time, energy and money into something does not make it great. It just helps you to convince yourself that it is great. If I managed to group, whether it was IT or operations, I would question why they always recommend an RFP p
rocess. Are they afraid to step out of the box and try something different? Are they so set in their ways that they resist change? Can the RFP process be a liability to your company and actually make you pay more for services than you should? I think so.

Is there a more efficient process?

Yes. Organizations need to follow the basics.  Ask questions such as:

• How much does this sorta thing cost?
• Do you have capacity?
• What is your approach?
• Are you qualified?
• What is an example of a similar problem that you have solved?

All of these questions can be answered through referrals, web site research, a couple phone calls, and emails. For example, if you are in charge of supply chain improvement at your company and do not already have a list of focused consultants that would likely be a good fit for your business, then you may be missing an opportunity to add significant value in your organization.

Personally solicit vendors who you would like to work with. Start by communicating with the sales and marketing people of vendors. You may look at them as “sales” people, but they play an important role and a good consulting firm has well-informed and experienced sales staff. They have the power and keys to provide you with valuable information about their company, their services, and their products. They also have direct links to others in the organization that will be useful to meet. Ask them to introduce you to the experts, meet the people who will be providing the consulting, the support services, etc. Ask to meet the management team. If you cannot get access to these people early on in the discovery process, then you certainly will not have access to them once a project starts. You never have access through an RFP.

RFP Die-hards

There are companies and agencies that have legitimate needs and are willing to pay for services and software, but are required by law, or policy, to submit RFP.  This may be a formality or a company policy, but this should not prohibit you from developing a relationship and internal process to provide you the best services or software to meet your budget.  The most successful projects are a collaborative effort between the company and the vendor or consultant.

A word for those that must follow an RFP process.  Since there is a general feeling in the suppler arena that RFPs are a big waste of time, is it any wonder that potential vendors do not respond? This leaves legitimate buyers for services and software in a pickle. Their reputation is soiled by those who issue bogus or pre-won RFPs. How can you prevent the hard work of your RFP from being greeted by the lonely silence of an uninterested vendor community? How do you get on the radar of capable suppliers? Sometimes just being aware of the problem gives you a solution. Knowing that vendors have this negative perception, you can take steps to remove their fears by following a few simple steps. First and foremost, make it personal, talk to potential vendors. Ask the important questions and prescreen their responses.

• Are they interested in developing a relationship with your company?
• What work have they delivered in this area?
• Are they flexible with their work process and approach to match your needs, or does their product do everything for everyone?
• What makes them different from other service or software providers?

Share your timeline. Share your concerns. Share your budget and asked if they can deliver a solution within these constraints. Be honest with the overview of your needs, and your questions and your feedback to the potential vendor. Be flexible with your process, and listen to the supplier. Most suppliers will respond in a like way, and provide you honest feedback on your RFP. There may be a faster, better, cheaper approach than you have so meticulously spelled out in the RFP.

If there does not appear to be a future relationship, then move on. It is also fair to ask vendors if they are aware of any companies that can provide you the services or software that you are looking for. You may be surprised at their answers. Most legitimate companies will recommend another company and sometimes even a competitor.

It is also helpful to let the vendor know if there is internal competition or not. This allows the vendor to assess whether this is a fishing expedition for your internal IT department to get ideas and a strategy, or if it is a real opportunity. In addition, if there is no external influence on the formulation of the RFP from another supplier, then declare that. Some RFPs are written with so much detail that it is fairly obvious that the document was prepared by third party for that party’s benefit. Do not let the vendor selection date slide. You have asked for a vendor to respond by a specific date, therefore you have a commitment to meet your decision date too. Not selecting a vendor by the selection date says much about the company. Keep the relationship professional and build trust with meeting deadlines.

Now, this does not guarantee that you will get an enthusiastic response from the most-qualified suppliers. You will, however, remove some of the chief fears that they have about you as a buyer. Anything that you can do to raise the vendors’ trust level will encourage them to respond.

Summary

There is a better way to award business and qualify consultants and software vendors, rather than using the RFP process. Engage and communicate with the consulting firm or vendor on a personal level, be honest and realistic on costs, dates, and deliverables. Build in some flexibility, and reasonableness, and follow a communicative and collaborative process. You will help your company improve, have more fun, and see some amazing results.

If you would like to learn more about our Supply Chain Optimization services, please contact us. And if you would like to receive future updates on the supply chain optimization industry, subscribe to our SCO Journal and our SCO Newsletter.

Contributed by Richard Guy, Profit Point’s Director of Sales.

This month’s issue of Supply & Demand Chain Executive features a supply chain “best practices” article entitled The Changing Landscape of Optimization Technology. The article, which was co-authored by Profit Point’s Director of Sales, Rich Guy, and the company’s President, Dr. Alan Kosansky, reviews the optimization tools that are empowering today’s leading supply chain decision makers.

If you would like to learn more about our Supply Chain Optimization services, please call (866) 347-1130 or contact us here.

People ask… What do you do? My response: “We help companies do things better.” Specifically we help supply chain and manufacturing executives “do things better”. It might be better planning, better scheduling, better processes, or several other areas of better. We receive calls and emails on a daily basis from executives, managers, analysts, and other consultants that want to share their business pain with us. Many want to improve their supply chain operations by reducing costs. Many executives have a fairly good idea of what keeps them up at night, and they want to share their challenges with us to see if we can offer any help. Almost all have an idea on how to make things better, but they are unclear on how to start the process or how to make the magic happen.

Sometimes we cannot help. Many times we can.

We listen. We ask questions. We ask for clarification. Then, we restate the “thing that they want to do better” in our vocabulary to get validation that we understand. They might be searching for software. They might be searching for services. Many times it’s a combination of both, but in all cases, people are searching for solutions.

Deliverables can take the form of improved technology with the tools that a company already owns, or with new tools. A good consultant does not promise the big “solve everything button.” A good consultant will understand the goal and match results with expectations.

Many times this takes the form of delivering services and software that is customized to individual clients needs. It could take the form of optimizing your supply chain. It’s not reinventing the wheel. It’s inflating the tire to the correct air pressure depending on the road conditions. When the economy get’s rocky, you might need better tires. So, when your problems become challenging, maybe it’s time to get a better approach.

So what do supply chain consultant’s offer? They help supply chain and manufacturing executives do things better.

If you would like to learn more about our Optimization services, please contact us. And if you would like to receive future updates on the supply chain optimization industry, subscribe to our SCO Journal and our SCO Newsletter.

Contributed by Richard Guy, Profit Point’s Director of Sales