Archives for posts with tag: revenue growth

Maybe it is just me, but I am heartened to learn that LP sales (yes I said LP as in vinyl) have had another robust year in terms of sales.  It might just be time to go ahead and purchase another record player so I can listen to my vinyl (most of which has been digitized) once again.  With LP sales on the rise, I imagine that manufacturers of record players, record cleaning systems, needle manufacturers, etc are also doing well.  Enjoy the brief article and have a Great Thanksgiving…Gobble Gobble!

• Chart: Vinyl Comes Back From Near-Extinction | Statista.

Rindge Leaphart

http://www.linkedin.com/in/rindgeleaphart 

Ad of the Day: JCPenney’s Precocious Fashionista Gets Sassy for Back to School | Adweek.

If creative ads are a precursor to a business turnaround, then JC Penney is poised for a roaring comeback.  Take a second and watch the video.  It will make your day.  If JCP can get these ads in front of the right demographic via tv and the web, then who knows, maybe sales will improve.  With all of the negative news surrounding JCP they could use a win, but they are going to have to earn it.  Hopefully they will pull things together sooner rather than later.  It is so easy to quickly destroy value.   And as most of us should know, it takes quite awhile to turnaround a large corporate ship.  Hopefully this ad is a sign of things to come at JCP.

https://www.youtube.com/watch?v=sX6uTq-fe3Y&feature=player_embedded

Rindge Leaphart

http://www.linkedin.com/in/rindgeleaphart

How does your organization develop the annual sales plan?  I’m always interested in how different companies develop their sales plan.  I’ve drawn up  a couple of simple charts below to illustrate how sales plans are sometimes developed.  The top down method is straightforward and  fairly easy to develop.  The problem with this method is that you don’t get true buy in at the divisional level.  I also believe that the probability of success (i.e., hitting the plan) is low.

On the other hand the bottoms up method is quite different. While I believe the bottoms up method delivers better results, it is much more time consuming to develop.  No pain, no gain?  With the bottoms up plan, much more useful information is developed and can be used across the organization.  Outputs include:

  • A detailed sales plan by product line and sales person.  With a detailed plan, that is developed by the sales person, you have much more buy in and accountability.  Of course you have to make sure the sales person develops a plan that is challenging.  There is always a concern that someone might turn in an artificially low plan.  One has to be vigilant with the bottoms up plan.  When developed in a robust and transparent manner, the bottoms up plan has much better chance of success.  In cases where the bottoms up plan does not match the corporate growth directive, the divisional GM will have solid data to support their plan.  In these cases, the GM can negotiate from a position of strength – a detailed bottoms up plan.
  • Detailed data by product line, which then can be used to drive both capacity planning and materials planning.  Don’t underestimate the importance of capacity planning.  With detailed data you have  the needed support to determine if you should add people, machines, warehouse space, etc.  From a material planning perspective, you now have data that will allow you to better negotiate terms and delivery schedules with your vendors.

I am a fan of the bottoms up plan.  What method do you prefer?  What method does your company use?

Rindge Leaphart

Sales Process

 

This might be my last post on the particular subject.  I had a discussion the other day with an executive at a flexible packaging  / label firm.  The discussion reminded me of the fact that some industries can’t just add labor and more hours when trying to improve on-time delivery (OTD).  Industries that rely on labor for assembly / manufacturing can put in overtime to get back on schedule.  Some industries, though, that rely more on machinery and the capacity of that machinery find it harder to stay on schedule and especially get back on schedule.  Since I started off with a comment on the label company, let me expand.  In a printing or label industry you have to keep your presses running.  Changing over jobs on presses can take anywhere from 3-6 hours if not more depending on the complexity of the job.  In my experience it is particularly challenging to stay on track with the promises you have made customers.

The best way to stay on schedule is to stay on schedule.  What I mean by that, is that your operations team, especially your planners have to OWN the schedule.  You cannot let sales own the schedule.  Salespeople are typically concerned with what their customers want and may not be very concerned with the overall health (OTD) of the system and how the business is performing for other customers.  Customers always have unplanned needs.  That is the way the world works.  My view is that a business should do their best to assist with the unplanned needs of their customers.  Having flexibility (some excess capacity) in your system is key to responding to emergency needs.  But sometimes the emergency requests become normal and it throws the entire business off schedule.  Sales people should always feel free to call and jockey for improved deliveries or assistance with rush orders.  But, the planners should own the schedule and have final say with input from management.  If you fall into the trap of letting sales dictate your schedule, then your OTD and customer satisfaction will suffer.

Managing the business and rush orders is a delicate balance that is fraught with issues.  That is why management must coalesce around what the goals of the business are and who has what responsibility.  Once again, no knock on sales.  They are a lifeblood of an organization.  But once that job is dropped into the funnel, it is time for operations to do their thing and keep the business on schedule.

Rindge Leaphart

During my last post (http://wp.me/p2kKle-C), I discussed On-time Delivery (OTD), its importance, and a key step to improving OTD.  Let me take a quick step back.  The thoughts that I am sharing are not brilliant strategic insights.  They are insights learned over the years about how to significantly improve operational performance.  As stated in my earlier post, many small to medium sized companies don’t focus on these small ideas, which deliver outsized gains.  These posts are focused on doing the seemingly little things that need to be done to make sure the big things (revenue generation, customer satisfaction, etc) get done.  Now, back to our regularly scheduled programming.

So you have kicked of your production meeting.  What is next? Or more appropriately, what other activities should you be working in parallel?  Before I move on to answering that, I want to stress the importance of guidance, leadership, and behavior modelling to attendees of the production meeting.  If you have a need to put a meeting like this in place, there is a good probability that people are not accustomed to performing at the level your organization wants or needs.  People may not have an idea of what they should and shouldn’t do.  People may not be sure what to do when they reach a crossroad and have to make a decision to improve performance. With regards to crossroad, I am not referring to a moral dilemma, but instead a business dilemma.  This is where your leadership is most important.  At the early stages of the production meetings you have to consistently and constantly model the behavior you want them to emulate.  You have to demonstrate to them your thinking process when it comes to making decisions.  You have to show them how to do the right thing and not the easy thing.  You don’t want them to become clones of you, but you want them to think and do things differently than what they were doing.  Many people don’t need to be told what to do, but they do need to be taught how to fish.  I do believe this is quite important because it sets the tone for the organization. It also pushes people outside of their proverbial comfort zone and causes them to start thinking differently, and hopefully acting differently.

Okay, I’m off of my soap box.  In conjunction with the production meetings, you probably need to do things differently in your purchasing organization as well. Over time, I have come to find that organizations neglect the data in their ERP/MRP systems.  As such, the data is outdated and causes havoc within your system.  I strongly suggest that the purchasing team scrub the data in the system.  Specifically, scrub lead times to make sure they are accurate.  Scrub buyer codes and make sure each part has a valid buyer code for someone in the purchasing organization.  It never fails that an organization overlooks the purchase of a critical part because it had a buyer code of someone who no longer works for the company.  While you are at it, make sure the manufacturing group is also scrubbing your Bill of Materials (BOM) to insure that routings, revision numbers, etc are all correct.  Cleansing the data is a time consuming task, but it has to be done.  My view has always been to get it done as quickly as possible. Please do not overlook the importance of cleansing your system data.  It is neither fun nor easy, but it pays huge dividends.

I will discuss other steps in future posts.

Rindge Leaphart

The Operational Turnaround – what they don’t Teach you in Business School: Part 1

As my 15 year reunion looms, I decided to share my thoughts on operational turnarounds at manufacturing / assembly / distribution companies.  I learned a lot at business school, but I can’t say what I learned really helped with my first operational turnaround.  Don’t get me wrong, I picked up some great concepts at b-school, became more adept (like everyone else) at analyzing large amounts of data, and learned how to identify core issues to resolve.  And while those skills came in handy, they were not what brought the ultimate success at my first or latter turnarounds.  By no means am I disparaging business school or the valuable education experience one gets.  Is there more business schools can do in this area?  Maybe.  At business school, we tended to focus on broad strategic issues, which most of us want to go on to face someday.  I also took several operational strategy courses, but once again those focused on broad strategic issues.  There was no class on how do I deal with a $50 million manufacturing division that is A. not delivering product on-time, B. that has a host of angry customers, and C. is not collecting cash from customers in a timely basis and in fact has over $1 million of receivables older than 6 months.   How do I deal with a division where everything that can be broken is broken?  Fortunately, at business school I was forced to work harder than I ever did before and that skill came in handy with my first and latter turnarounds.

One of the keys areas that I have found that often gets overlooked with small to medium sized companies is on-time delivery (OTD). In several cases I have found that companies don’t even measure OTD.   From my perspective OTD is one of the most important keys to customer satisfaction, which is the key to revenue growth.  If you don’t deliver on-time, your customers will find someone else who will.  Some customers are loyal and will point out to you that you are not delivering on-time, but they eventually will leave if you don’t get it together.  Typically in this scenario you may also find a significant numbers of past due orders, which obviously translates into sales that haven’t been completed and thus cash that has not been collected.  So what do you do in this situation?  I have seen many companies initially focus on reducing past due orders.  My experience is that is the worst thing you can do.  By focusing on past dues you take your eye off of current orders, which will in turn go past due if you don’t have a mechanism for keeping orders from becoming delinquent.  This point was driven home to me with my first turnaround.  I had 3-5 material expediters chasing past due orders.  In a chance conversation with them, I asked: “if you guys are chasing past dues, who is focusing on keeping orders current?”  Their collective response was: “the system” aka MRP / ERP.  That is when the proverbial light went off in my head and we made major changes to our operational group.  If you find that your company is not delivering on-time, I suggest the ideas that follow.  Make sure you have a DAILY production meeting.  At that meeting make sure you have members from production, scheduling, purchasing and customer service.  If you don’t already have a daily production meeting be prepared for a lot of griping from team members.  Don’t be swayed.  Require them to meet every morning to discuss current and upcoming orders.  Require them to look at orders that are due to ship in the next 5-10 days.  Require people to discuss any material or production issues with the orders.  If there are issues, press them on their recovery plan.  Make sure you drive home the fact that there is an organizational wide focus on OTD and that they have to do their part in making sure orders ship on-time.  There is no magic to this, just plain old fashioned hard work.  If you are having issues with orders not shipping on-time, this is probably the most important step you can take to improving OTD and thus customer satisfaction.  In upcoming posts, I will describe other critical steps that one should consider in an operational turnaround.

Regards,

Rindge Leaphart