Data collection remains one of the cornerstones of success of a supply chain planning or scheduling implementation.  Though scores of data may exist in a company’s business, harnessing it to feed into a planning or scheduling model can be extremely complex and time consuming.  Interestingly, the data collection process often drives an elucidation of manufacturing practices and process flows, and clients learn what they do and don’t know about their business.  This may seem backwards and risky in terms of getting things out of order.  In a perfect world, a thorough understanding of manufacturing and business processes would pave the way towards building an Advanced Planning and/or Scheduling System.  In reality, they often happen in tandem and are evolutionary in nature.

Deciding how data will be housed, derived and propagated early on in an implementation will pay off in the long run.   Establishing a systematic, automated way to update and propagate data is equally important as the decision of what software system to use.  It is worth the investment to take the time to put this automation in place as a greater and greater number of products are added to a system the data will remain manageable and scalable.

From PC to Cloud, emails to tweets, networking happy hours to LinkedIn, it is nice to know some things stay the same.

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

While there are a number of reasons for engaging an outside consultant, those reasons fall into three broad categories which are

1) Resource capability

2) Resource availability

3) Training / Partnership

Resource Capability

In planning a project a key question to ask is “What skillsets are required to accomplish the work?” It may not be cost effective to maintain certain skillsets in-house if those skillsets

1) are not part of the core mission of your company and / or

2) are readily available at a reasonable cost on the outside.

Resource capability, though, can be thought of in broader terms than just expertise. An outside consultant can provide

1) a fresh perspective

2) objectivity

3) knowledge of best-in-class practices

4) political cover

In these kinds of situations, engaging outside resources makes eminent sense.

Resource Availability

Once you have settled on the skillsets required to accomplish the work, if those skillsets are not available in-house then obviously you’ll need to engage outside resources. But if they are available in-house you’ll need to determine if those in-house resources have enough capacity to accomplish the work within the required time frame.

If the resources needed are not available over the time frame required then an option is to make a permanent hire but there may not be enough time to do a proper search and after you hire someone presumably for the long term.

By engaging an outside consultant you can almost always get that resource working on your project sooner and will have that resource engaged for a limited time for a known cost up front (assuming fixed pricing).

Training / Partnership

Some of our customers want to have capable and available resources to do the work in house but do not currently. In those cases, an outside resource can help you build the capability in house via a partnership of training and / or mentoring. Here the clear end goal is to develop the long term in house resources to continue the work.

So whether it is to complement the capabilities of your organization supplement existing capacity or train and mentor new in house skills, consider how outside resources might help you meet your objectives.

So this year, we conducted a survey of supply chain and S&OP decision makers to learn more about their challenges, concerns and expectation for 2012. Business leaders from a variety of companies and industries were polled. Here’s what we learned:

• Many companies lack the metrics needed to capture the benefits from S&OP
• Scenario and sensitivity analysis is the tool of choice for S&OP planners who understand that sales forecasts are imperfect
• More companies are beginning to collaborate with suppliers and customers to improve S&OP
• For many companies, point-of-sale (POS) data may be the key to effective sales and operations planning

To read the complete report, including our conclusions, click the link below:

Download the S&OP Survey

To learn more about Profit Point’s S&OP services and S&OP software, call (866) 347-1130 or contact us here.

Collapsed Souffle

In the businesses that I help, change comes for several reasons. It may be thrust upon the business from the outside, a change in the competitive landscape for instance, or a new regulation.   It may come from some innovative source within the company, looking for cost savings to increase profitability of productivity, or a new process or product with increased productivity. Change can come from the top down, or from the bottom up. Change can come in a directed way, as part of a larger program, or organically as part of a larger cultural shift.  Change can come that makes your work easier, or harder, and may even eliminate a portion (or all) of the job that you were doing. Change can come to increase the bottom line or the top line. But primarily change comes to continue the adaptation of the company to the business environment.  Change is the response to the Darwinian selector for businesses.  Adapt or decline. Change is necessary.  It is clear to me from my experience that businesses need to change to stay relevant.

This may seem trite or trivial, but accepting that change is not only inevitable, but that it is good, is the shift in attitude that separates the best companies (and best employees) from the others.

So, you say, I see the need to change, it is not the change itself that is so difficult, but rather the way that it is inflicted upon us that makes it hard.  So, why does it have to be so hard?  Good question.

Effective managers know that change is necessary but hard. They are wary of making changes, and rightly so.  Most change projects fail. People generally just don’t like it.  Netflix is a great example.  Recently, Netflix separated their streaming movie service from their DVD rental business. After what I am sure must have been careful planning, they announced the change, and formed Quikster, the DVD rental site, and the response from the customer base was awful. As you likely know, Netflix, faced with the terrible reception from their customer base and stockholders, reversed their decision to separate streaming from DVDs. What was likely planned as a very important change, failed dead. Dead, dead, dead. Change can be risky too.

If change is necessary, but hard and risky… how can you tame this unruly beast?

The secret of change is that it relies on three things: People, Process, and Technology. I name them in the order in which they are important.

People are the most important agents relative to change, since they are the one who decide on the success or failure of the change. People decided that the Netflix change was dead. People decide all the time about whether to adopt change. And people can be capricious and fickle. People are sensitive to the delivery of the change.  They peer into the future to try to understand the affect it will have on them, and if they do not like what they see…  It is the real people in the organization who have to live with the change, who have to make it work, and learn the new, and unlearn the old. It is likely the very same people who have proudly constructed the current situation that will have to let go of their ‘old’ way of doing things to adopt to the new. Barriers to change exist in many directions in the minds of people.  I know this to be true… in making change happen, if you are not sensitive to the people who you are asking to change, and address their fears and concerns, the change will never be accepted.  If you do not give them a clear sense of the future state and where they will be in it, and why it is a better place, they will resist the change and have a very high likely hood of stopping the change, either openly, or more likely passively and quietly, and you may never know why the fabulously planned for change project failed.

Process is the next aspect of a change project that matters.  A better business process is what drives costs down. Avoiding duplication of efforts, and removing extra steps. Looking at alternatives in a ‘what-if’ manner, in order to make better decisions, these are what make businesses smarter, faster, better.  A better business process is like getting a better recipe for the kitchen. Yet, no matter how good a recipe; it still relies on the chef to execute it and the ovens to perform properly. Every business is looking for better business processes, just as every Chef is looking for new recipes.   But putting an expert soufflé recipe, where the soufflé riser higher, in the hands of an inexperienced Chef does not always yield a better soufflé.  People really do matter more than the process.

Technology is the last aspect of the three that effect change. Better technology enables better processes. A better oven does not make a Chef better.  The Chef gets better when they learn to use the new oven in better ways, when they change the way they make the soufflé, since the oven can do it.  A better oven does not do it by itself.  An oven is just an oven. In the same way, better technology is still just technology.  It by itself changes nothing.  New processes can be built that use it, and people can be encouraged to use it in the new process.  Technology changes are the least difficult to implement, and it is likely due to this fact that they are often fixed upon as the simple answer to what are complex business problems requiring a comprehensive approach to changing the business via it people, process, and technology.

Nice Souffle

Change is necessary, but hard and risky. Without change businesses will miss opportunities to adapt to the unforgiving business world, and decline. However, change can be tamed if the attitude towards it is changed to be considered a good thing, and is addressed with a focus on people, process and technology, in that order.  Done right, you can implement the change that will increase the bottom line and avoid a collapse of your soufflé.

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

Consider food and water. There are about 23 locations along the route (about 1 per mile starting at mile 3), where mostly volunteer staff is responsible for “stocking” cups of water, Gatoraide, and PowerGel (only available at mile 18). In the past, certain of the less desirable stations have been undermanned, while at others as the day drags along some of the volunteers simply up and leave; “I’m a volunteer, so fire me”. And of course, once the race is over, the staff that remains need to perform the thankless and definitely unglamorous job of cleaning up (at least to some extent) the litter that has been created.

And then there is security. The race attracts a number of world-class runners and security precautions need to taken to make sure that fans and paparazzi do not become too intrusive. To insure that these individuals return year after year, the organizers make sure that these athletes are able to start the race at the head of the pack so that they don’t have to dodge other slower amateurs. In addition, a large number of people typically run the race (and utilize the services) without having officially registered and paid any money. This year, there were about 140,000 applications for the 62,000 slots in the race. This means that about 78,000 people were rejected, and it is estimated that about 15% of these will run the race anyway. The Road Runners Club does not try to prevent any of these unofficial entrants due to the chaotic nature of the race start. However, security is in place at the finish, when the runners are strung-out, so that these “bandits” as they’re called, do not receive any of the available memorabilia.

Finally there’s transportation. Since the race is a “point to point” one, where the finish is at a different location than the start, runners are provided transportation to the beginning of the race. About 20,000 participants will take 522 chartered buses to the starting line. And they’ll all need this service in the space of about 2.5 hours. Since there is only 1 available bridge, if one of the buses were to breakdown at a critical location, a major traffic jam could result delaying many more runners than just those on the one disabled vehicle. Alternatively, approximately 21,100 entrants are expected to use the Staten Island ferry system. Between 5:30am and 8:30am, there will be a ferry leaving Manhattan every 15 minutes. Although the largest of these can accommodate 6,500, the organizers will try to limit each individual trip to half of the ship’s capacity. Again, this is an attempt to make sure that in the event of a breakdown, the number of runners affected (either delayed in Manhattan or stuck on a boat in the middle of the harbor) will be minimized. In fact, one of the ferries did experience mechanical problems in 2010. And when the runners disembark the ferry, a fleet of 70 buses will shuttle them the 2 or 3 miles to the starting line: 10 buses will load simultaneously at the St. George Terminal for the short trip. Last year the average load time for each group of 10 was 4 minutes, 22 seconds.

The New York Road Runners Club typically receives wide praise on blogs and other feedback forums from participants, for how well the Marathon is organized and run. In light of the unique circumstances of such an event, they have learned how to run their logistics operation like clockwork, always anticipating and planning for the worst that might happen. They’ve figured out how to manage a supply chain that is spread over a wide area and with a “work force” that presents its own unique challenges. Many businesses would do well to study their methods and take a page from the same playbook.

As a logistics industry leader since 1946, TBB Global Logistics has the knowledge and expertise to develop and manage the most complex supply chain strategies for your company. Together Profit Point and TBBGL can deliver a complete solution to provide increased efficiency, lower total costs, superior customer service and a more competitive position in a dynamic global marketplace. TBB Global Logistics is a non-asset based, supply chain management company that relies on superior, web-based technology and relevant expertise to enable clients’ ability to effectively and profitably compete in a global marketplace.

“Large domestic and international clients are pursuing deeper integration of their supply chain strategies into their day–to-day operations,” noted Dr. Alan Kosansky, Profit Point’s CEO. “Partnering with a company like TBB, provides our clients the ability to develop a seamless transportation and distribution strategy and implementation plan.

Profit Point now has access to global transportation data resources and 3PL expertise insight to deliver the entire package: the strategic supply chain plan along with an operational solution covering supply chain distribution, logistics and transportation engagements. Together, the two companies deliver a unified team of dedicated professionals to meet the demands of global manufacturers and distributors by helping customers design and implement an optimal supply chain.

To learn more about Profit Point’s supply chain software and services, call us at (866) 347-1130 or contact us here.

About Profit Point:

Profit Point Inc. was founded in 1995 and is now a global leader in supply chain optimization. The company’s team of supply chain consultants includes industry leaders in the fields infrastructure planning, green operations, supply chain planning, distribution, scheduling, transportation, warehouse improvement and business optimization. Profit Point’s has combined software and service solutions that have been successfully applied across a breadth of industries and by a diverse set of companies, including Dow Chemical, Coca-Cola, Toys “R” Us, Logitech and Toyota.

About TBB Global Logistics:

Founded in Baltimore in 1946, TBB Global Logistics provides complete supply chain management services. TBB provides domestic and international transportation management and supply chain solutions through its Supply Chain Guardian^SM brand. Supply chain support services include sourcing, procurement, customized warehouse logistics, inventory management and reverse logistics. TBB offers web-based supply chain management applications and supply chain consulting. Headquartered in New Freedom, Pennsylvania, TBB Global Logistics also has offices in Maryland, located in Hanover by BWI Airport and sales teams throughout the United States. TBB Global maintains a network of agents in countries around the world. TBB is a third generation, family-owned company.

To compete effectively in a dynamic business environment, continuous evaluation of the marketplace is a critical success factor. Once knowledge is in-hand, your supply chain must be built in an agile manner allowing for efficient shifts to accommodate expected and unexpected change.

I recently spoke to the owner of a U.S. manufacturing company that dates back to the early 20^th century. He was explaining how he was in the final stages of divesting the company of all its hard assets. They had long ago moved manufacturing offshore. They had evolved into a substantial importer managing a series of company-owned distribution centers. Today, all of the distribution is outsourced and the old company headquarters building is up for sale. The shift to a virtual company is near complete. The executives are now free to work on product innovation and the related sales and marketing. They still compete effectively but with higher margins and more agility. This old line company has adapted and overcome, multiple times, aligning and realigning supply chain process with strategic business objectives and changing marketplace conditions. The results are higher profits, supply chain flexibility and happier customers.

Establishing and using key performance indicators will serve as confirmation of effective supply chain process or as a red flag requiring attention. Aligning supply chain with strategic business objectives and keeping your finger on the pulse of the customer will propel you forward on the road to prosperity.