Are you frustrated with supply chain management? Join the club. It seems everyone is struggling with a similar dilemma: the more effort and care that is put in, the more complex and difficult it is to manage. This frustration is mostly due to change, complexity, and a focus on efficiency. The good news is that a few changes in supply chain parameters and practices can dramatically improve results.
It’s preferable to gather and analyze data that creates a straight-line supply chain forecast, but this only works well in stable and constant environments. As we all know, business (and the world) have become more volatile, uncertain, and disruptive in recent years. The pandemic caused data from 2020 and 2021 to be almost meaningless in predicting forecasts. As a result, the most recent data is the most reliable and, thus, we need to develop new models and plans based on new data and assumptions.
Furthermore, we are seeing a rise in instances of bottlenecking as a result of a drastic reduction in many businesses. Airlines and shipping companies laid off a significant number of employees with no perspective on how long it would take to rehire and retrain when the economy recovered. There are currently about 10 to 11 million job vacancies compared to a historical 5 to 7 million, which creates all kinds of personnel shortages.
Economic and political changes have also altered the ability to manage supply chain forecasts. Inflation, Ukraine, shortages, and changes in demand have all affected our assumptions. For example, staying at home during the pandemic escalated home furnishings. The demand surge has been somewhat satisfied and is currently declining. Inflation (especially regarding oil prices) has influenced dramatic changes in areas like venture capital, startups, interest rates, and the real estate market.
There has also been a focus on more precise analysis to improve efficiency, reduce inventory, and reduce lead and processing time. Some of these may have gone too far, especially in periods of uncertainty. Computer chips, baby formula, various food products, and shipping are examples where supply chain plans that were intended to make it “just in time” too often have resulted in “just never there.” These situations can be compounded by reduced suppliers in certain industries such as baby food, computer chips, and poultry production.
A caveat: We frequently ignore complexity and its impact on the supply chain. When it comes to our product offering, do we really need all those sizes, colors, and materials? We used to generally have good, better, and best. Now, we have so many variations, who understands them or what the differences are?
Overbuying or underbuying into shortages or excess supply can sometimes increase the disruptions as well. The panic of buying toilet paper during the pandemic caused more shortages because of hoarding. As suppliers catch up in these types of situations, surpluses can then occur that also fuel more shortages.
So, how do we effectively improve supply chain management?
Most importantly: Pay more attention. When developing new technologies and products, simply consider where, what, and when. For example, many new efforts require more involvement of various resources and need planning to integrate these inputs.
Consider simplification of products, processes, and strategies. Focus on high volume and profit opportunities. Cutting the right inventory is much more important than just general inventory reductions. In contrast, being in stock on key items is critical. Integrating retail and E-Commerce can facilitate this effort particularly in regards to using E-Commerce to ship low volume items. However, the delivery times must be short. In general, Amazon does an excellent job in these functions.
Focus on the critical aspects of the supply chain. Long lead times, bottlenecks, and shortages should all receive special considerations. Storing key component parts, air shipping, and developing alternative forecasting models are methods to consider in addressing key issues.
Collaborate with as many participants as possible. This can help you avoid problems and develop solutions. Learning suppliers lead times and response times can improve flexibility. Sharing forecasts with customers can differentiate inventory, seasonal sales, and other variations to provide more accurate demand models.
Supply chain and timing can be critical performance and cost-saving factors. And there is no shortage of factors you must consider in your distribution decisions. These include shipping and receiving points, lot sizes, shipping quantities, reducing lead times, using similar part components, scheduling components to reduce bottlenecks, and shipping and warehouse charges. Optimizing these areas can improve service and reduce inventory shortages, requirements, and risk. But remember that the decisions you make must balance customer fulfillment needs, inventory risk, terms, ownership, and replenishment.
While there are technical aspects to improving operations, it’s the thinking and integration of each component that paves the way to success. Take advantage of the opportunity to revitalize your supply chain management—in today’s market, it’s the key to improving sales, profit, and competitive positioning.
Dr. Bert Shlensky, president of Startup Connection, prides himself on his ability to define what is unique about each and every business. He works closely with individuals to develop a personalized approach that targets specific areas of concern and offers solutions based on his 40+ years of experience. His team of experts will address your particular needs while working to save you time and money.
When it comes to collaboration, words like support, positive feedback, communication, listening, and mentoring permeate the conversation. However, competition and conflict can also benefit collaboration. Being agreeable and complimentary are all well and good, but we also need counter arguments, constructive criticism, and ideas that challenge our way of thinking to ensure we aren’t getting stuck or creating a bubble of confirmation bias.
Conflict should be viewed as an opportunity and not a constraint in the collaboration process. The simplest strategy is to pursue win-win solutions wherever possible. Expanding information and understanding, reducing risk, and varying value for individuals are all tools to increase the win-win process. For example, many of the work at home discussions are based on historical perceptions rather than an analysis of a job’s structure and requirements. Coming up with solutions that benefit both parties is a great way to turn conflict into something positive.
When it comes to risk, it is well known that we underestimate the upside and overestimate the downside of decisions. Consider the fact that losses are limited to your investment while gains have almost no limits. Do we understand our risk in a situation? When can we and when should we pursue “out of the box” solutions rather than the most probable outcome?
Value can also increase by providing different costs and benefits. Most retail transactions offer mutual gains by providing benefits for the buyer and seller. Issues like service and quality can also increase the long-term value and satisfaction of the customer.
Further, it’s important to remember that conflict and competition are task oriented and not personal matters. For example, it is fine to reward all the participants in little league games. However, we should also give special recognition or rewards to participants who show excellence. The purpose is not to make anyone feel bad, but to acknowledge hard work and encourage improvement. We have all had coaches, mentors, and teachers who pushed us to do our best. That can be done in a positive way, but sugar coating doesn’t often help us improve. It may even hinder our progress. Constructive criticism is essential to learning and developing. And we need to know how to give and receive it effectively.
Conflict is often a result of miscommunication or an unwillingness to hear another side. Thus, listening is a great collaboration tool that can lead to mutual benefits that increase the value of a transaction. Many organizations are debating the effectiveness of working from home versus in office after the pandemic. Convenience, commuting time, cost, and freedom all favor working from home. Communication, interaction, and fewer distractions seem to favor working in the office. Much of the discussion seems to argue one side or the other rather than having an open discussion in an attempt to hear the other side, understand the parameters, and develop maximum solutions. And this often involves some sort of compromise.
Compromise is a common tool to reduce conflict and increase collaboration. However, you must understand the parameters, process and outcomes. For example, compromise can be a great tool in allocating scarce resources in a fair way like compromising on budget allocations to meet different needs. The effectiveness of compromises is also highly dependent on the situation. Issues like safety, security, and legality have little room for compromise. In contrast, uncertain decisions, like product development, almost always require the flexibility of compromise. For example, forecasting has lots of factors, is subject to change, and is seldom 100% accurate. You need the flexibility to compromise on the process, analytics, and risk of forecasts. In particular, using data from 2019, 2020, and 2021 can be highly uncertain because of the pandemic.
Collaboration also enables us to examine alternatives and potential challenges. We must ensure that diverse components and perspectives are included. This might mean welcoming criticism and ideas that challenge our own, but through this “conflict,” we may find greater success. A common challenge that arises here is integrating creative and analytic approaches. It may seem like these two are in conflict with one another, but finding a balance between them will help you develop stronger strategies and/or solutions. This might include discussions of integrating risk and intuition when assessing the probability of success.
Collaboration can be affected by organizational tradition and structure as well. Many large companies have tunnel vision, organizational constraints, and ignore emerging technologies and possibilities. They lack the flexibility to respond to the needs of the market and rely on the use of outdated solutions to deal with new opportunities. They fail to allow the vision, entrepreneurship, and risk necessary to succeed.
So, how do you collaborate in a zero-sum game? Collaboration assumes some mutual goals, which may or may not exist. Winning or losing a game, election, or bet are clearly win-lose situations. But a situation can change if the parameters change. I played high school football for a small private school. We practiced against one of the better large public-school teams. Our team got destroyed every time, but we got more out of the game because we were challenged and, thus, better prepared for the regular teams we played during the season. Sometimes the “win” for the loser is what you take away from the experience—that can be a lesson, practice, or the chance to test out a new strategy.
Expertise can also be a difficult issue to incorporate into a collaborative environment. We frequently rely (without question) on services and recommendations from people in healthcare or IT. How many times do we even question a doctor about alternative remedies? When possible, doing your own research is useful, but you also need to recognize when to accept an expert’s advice.
Conflict and competition exist everywhere. Whether it’s a rival sports team, a company that provides the same service as you, or a miscommunication with a friend, it’s something we will always have to deal with. So, next time you find yourself in conflict with someone or something, look at it from a different perspective. Can a competitor push you to be better? Can this argument with a family member encourage a conversation that helps you better understand each other’s needs and bring you closer? Can this conflict with a coworker inspire a collaboration that produces something even greater than your original ideas? Instead of feeling that conflict is a hindrance, try to think of it as an opportunity to see things differently and gain more input for decision-making. When handled effectively, conflict can increase collaboration and improve solutions.
Dr. Bert Shlensky, President of www.startupconnection.net, offers experience, skills, and a team devoted to developing and executing winning strategies. We guide your plans for business success and unlock your profits.Our strategy includes clear steps, and over 150 free articles and templates to facilitate your efforts and guide your process. We’re here to help you get on track and stay there as you move forward. We welcome comments, suggestions, and questions. You can write us at: bshlensky@startupconnection.net or call at 914-632-6977
Currently, everyone seems overwhelmed with stress, change, complexity, uncertainty, and disruption. The pandemic, inflation, politics, crime, and a general increase in depression are all taking a toll on us individually and as a society. With so much on our plates in the midst of all the chaos, how exactly can you improve your business?
There are a few simple strategies that can help improve your business (and your life). For starters, we could all stand to be a little nicer (to others and to ourselves) and we also must learn to reduce the stress, conflict, and uncertainty in our lives.
At Startup Connection, we’ve found that, when feeling stuck or overwhelmed, it often helps to get back to basics. We can all benefit from taking a step back and reminding ourselves of the good advice we’ve gained along the way. We hope the following suggestions challenge you, resonate with you, and help improve your business and life:
Find and maintain balance. Whether it’s passion and reality, Left Brain-Right Brain, qualitative versus quantitative, analytics versus intuition, these seemingly opposing concepts are actually more similar than different. The goal is to find balance and reduce the conflict that often permeates discussions about these ideas in order to develop a more integrated approach.
Practice more civil and positive behavior. This can have significant outcomes while being fairly simple to apply. Saying please, thank you, and asking, “How are you?” can go a long way. Ensure you understand other perspectives and alternatives, listen when others are talking, and work on remembering names and biographies. And, most importantly, be kind.
Understand goals and needs. This applies to your own goals and needs as well as those of your partner(s) in relationship (both personally and professionally). In particular, ask and learn about things like price, service, quality, and reliability in any relationship. Professional sports have done a great job adding entertainment (notice how she got a jersey in the photo) and better food to the consumer experience, which can mitigate the higher costs (and the possibility of your team losing 50% of the time).
Have clear priorities. As Lewis Carroll said, “If you don’t where you are going, any road will get you there.” Reassess and renew efforts on programs that have the most potential. But,it is equally important to eliminate unproductive efforts. Focus on what you’re good at and pay less attention to your weaknesses.
Utilize the 80-20 rule. Many operations and expert mathematicians have long promoted that 80% of sales are made up of 20% of your products. However, suppliers continue to proliferate styles, colors, sizes, and models to, presumably, serve more customers and provide more features. The tough economy has produced a great opportunity to reduce proliferation of products that just aren’t producing.
Always remember measurement. Measurement is simply the increased use of models, probability, risk, numbers, analysis, and even experience and intuition to improve decision-making. In some simple cases, it has proved to be a valuable tool to understand and improve decisions or simply validate prior intuition. The bigger the data and the more complex the circumstances, the more measuring can improve decisions.
Accept that change is accelerating and is more uncertain. Understand and incorporate change like inflation, the situation in Ukraine, changing goivernment, etc into your planning and management. Encourage out-of-the-box thinking and ideas, and avoid normal day-to-day problem solving. For example, you may develop solutions by better understanding underlying causes of issues rather than their characteristics. In other words, address the root cause and not the symptoms. One of the most significant opportunities may be understanding and reacting to demographics. The country is simply getting older, more diverse, more ethnic, and more educated.
Restructure relationships. If you communicate with partners, lots of win-win opportunities can occur. In my own experience, sharing forecasts, production plans, inventory quantities, etc. is one of the easiest and most inexpensive tools that can produce the greatest of outcomes.
Remember that failure ispart of success. Brian K. Mitchell said, “If you aren’t making mistakes, you aren’t trying hard enough.” The experiences of the following innovators best make this point:
Steve Jobs, co-founder of the original Apple Computer, was fired from the firm.
Thomas Edison, one of the greatest inventors of all time, had 10,000 failed trials with his light bulb.
Stephen Spielberg, famed movie director, went solo after being rejected three times from the University of California.
Bill Gates and Mark Zuckerberg, both college-dropouts, went on to, well you know what.
Be more open. Organizations need to be open to measurement, feedback, change, and anything else that comes along. This often starts with fostering an open culture, which includes sharing financials, operations reports, and sales reports.
Put more effort into customer service. While we always focus on product, marketing, finance, and customer service are just as critical. Remember: Anyone can put a product in a store or pictures on the Internet and attempt to sell it. It’s the differences in service that frequently differentiates businesses. Focus on expanding relationships with your ideal customers and the products they support, and give less marketing attention to declining customers and unprofitable products.
Maximize operations. Effective logistics and operations planning starts with determining key issues, understanding tradeoffs, and developing goals and standards. The recent supply shortages in diverse area like airlines, baby food, and computer chips that are crippling our economy exemplify its importance. Scheduling staff, services, and supplies correctly to meet customer needs without incurring excess expense is critical. Customers who wait or walk out of a business because of delays generate the most complaints. Reducing lead times, improving flexibility, and planning can improve effectiveness and lower costs.
There’s always room for improvement. What are some ways you’d like to improve your business? And what are you going to do to successfully accomplish those things?
Dr. Bert Shlensky, president of Startup Connection, prides himself on his ability to define what is unique about each and every business. He works closely with individuals to develop a personalized approach that targets specific areas of concern and offers solutions based on his 40+ years of experience. His expert team will address your particular needs while working to save you time and money.
When we consider risk, much of the discussion revolves around analytics, alternatives, probability, and bias. But, there are other important factors to consider, which are frequently excluded and, when dealt with properly, can create new opportunities. These include higher than normal results, lower than normal results, enablers, parameters for consideration, and excluding key unknowns.
Entrepreneurs generally advocate the untapped potential of their ideas without detailed analysis of parameters, requirements, and profitability. For example, Venture capital firms that take the risk of investing in several new companies only expect a few to perform with extraordinary results. Last year, they extended too far and many are in financial trouble today. However, the initial risk is appealing because, statistically, people do win the lottery, and companies like Zoom hit the jackpot and do well, especially when you consider the way they’ve evolved over the past few years.
The reverse is also occurring with unforeseen disruptions increasing risk. The slow pace of going back to work, success of tools like Zoom, supply shortages, and inflation are examples of factors not considered in much of our risk analysis. Political change, an increase in crime, and higher levels of stress are creating more uncertainty when assessing change and potential. These can all add to excessive losses beyond normal probabilities.
Another inhibitor of success are enablers. While experience and expertise can improve results, one of the worst strategies in our changing environment is tradition or the mindset that “we have always done it this way.” It simply ignores change, alternatives, and processes, and is frequently fueled by proponents who fear those same things. Sexual harassment, equal wages, and COVID vaccines are some examples where progress has been exceptionally slow due to people being unwilling to recognize the need for change and accept and implement new ideas.
Currently, everyone seems stressed and frustrated with issues like crime and inflation. However, enablers seem focused on short-term solutions rather than a true commitment to solving the problems. We must also recognize that many of these are worldwide issues. For example, both France and Israel are experiencing political disruption as well.
Additionally, inflation, oil prices, and supply shortages are all causing great disruption, which increases risk, but these unknowns will also create opportunities. Innovation in solutions like electric cars is a key area where there is ample opportunity.
Risk management is also affected by quantitative versus qualitative considerations. On one hand, quantitative measures are objective, comparable, and easier to document. However, we must ensure we are using the right measures and analyzing correctly. Qualitative data, on the other hand, can measure issues we don’t always consider and allows for intuition. But, these processes can be compromised easily or measure wrong factors. In particular, bias occurs much more frequently in qualitative analysis.
Risk analysis should also include the various impacts of diversity. The world is creating a significant amount of new wealth, yet income disparity is increasing, with 1% of U.S. households owning over 50% of the wealth. While there is more integration and assimilation, tensions have also risen in political, economic, and social structures.
When it comes to risk, we also need to consider ignorance and ways to manage it. Ignorance shows up in a number of ways, which require different approaches. Some ignorance is just the unknown—like the economy next year, the long-term pandemic impact, and potential new technologies (such as a longer lasting electric car battery). While we can’t assure certainty, we can research alternatives and their consequences.
Some ignorance comes from a lack of knowledge. Consequently, a focus on bias, parameters, and assumptions should be included in risk analysis. For example, we should understand our target audience and trends like the growing diversity and wealth in our country.
Ignorance can also be a function of pure denial. Assuming excess confidence or unilaterally accepting respected colleagues can affect risk assessments. We can avoid denial by embracing openness and searching for alternatives. Organizations need to welcome measurement and feedback. Observing, understanding, and sharing financials, operations reports, and sales reports are the first step. Simple research tools (which social media can provide) should be used regularly. A management style such as the “walk around” and simply asking, “How are you doing? Is there anything you need?” can be priceless. Look for alternatives and ‘what if’ discussions.
Viewing risk as an opportunity rather than an obstacle can help produce positive results. Change is occurring faster and faster and we must resist the urge to crave the comfort of consistency and reliability. We need to shift our mindset to one that expects risk. This might make you feel uneasy, but know that we are all in the same boat. Try to remember that staying flexible will make adapting easier. And implementing sound, proven strategies will not only set you up for success, but put you in a position to effectively and efficiently manage risk.
Dr. Bert Shlensky, president of Startup Connection, prides himself on his ability to define what is unique about each and every business. He works closely with individuals to develop a personalized approach that targets specific areas of concern and offers solutions based on his 40+ years of experience. His team of experts will address your particular needs while working to save you time and money.
What is success? It’s abstract, really. For some, it could be money and status. For others, it’s finding happiness. In business, we tend to measure success starting with profit.
In talking to entrepreneurs, I am always fascinated with the different perspectives of success. In general, they believe their ideas are incredible and the obstacles they need to overcome are constraints like finance, resources, marketing, and competition.
I argue that their potential barriers are actually achieving excellence in developing and executing great programs. Why do I think this? Well, 90% of new businesses fail withing five years, and that includes IPOs and venture capital efforts.
Consequently, there are several issues that need to be addressed in order for entrepreneurs to reach their full potential. When an entrepreneur thinks about starting a business, there are two distinct concepts that pop up time and again: Passion and Reality. These are both critical to success.
Passion was best described by Steve Jobs when he said, “Because the people who are crazy enough to think they can change the world are the ones who do.”
Reality is understanding the problems, limitations, and constraints associated with any undertaking. As Thomas Edison said, “A vision without execution is hallucination.” Passion is what gives us the drive to overcome these obstacles. It is the excitement and energy that drive a start-up. It is crucial to balance these two concepts if you want to execute a successful business.
You also need more than a good idea—they’re a dime a dozen. Your best friend might have the next million-dollar App idea. Ideas are great as they are the true engines of innovation. However, an entrepreneur needs to determine whether they can execute the idea and, ultimately, make enough sales to earn a profit. New businesses frequently fail because small (yet critical) issues are overlooked.
Here are some recommendations to help increase potential:
Plan smartly. Think of planning as a long arduous test with lots of work, incorrect assumptions, and missing analysis. For example, 2022 financial markets haveclearly made prior economic and financial assumptions in any plan highly uncertain. The solution is to make plans simple, flexible, and solely for the entrepreneur and not outside parties. It should be a guide, not a fixed template.
Keep plans current and active. A business plan is not a document to be stored on a shelf; it should establish parameters and be developed, tested, and continuously revised. Even with a “perfect” business plan, there will be hiccups and failures along the way.
Learn from failures. This is a critical component of the ongoing planning process.
Focus on passion. This will keep you going through the failures. Additionally, a successful business plan should express why you think the business is a good idea and why it will succeed. If you need to dress it up in a suit and tie to show to investors, do that later. A business plan should be YOUR vision.
Set realistic goals. While time frames, levels, and processes can vary, you need a plan to show profitability: the when and the how. You may do what you do for a number of reasons (passion, fun, fulfillment), but at the end of the day, a business needs to make money if it’s going to last. Make sure that you set your passion aside for a moment and make sure you’re on the path to profitability. What resources do you have and need? Many entrepreneurs follow guides related to large venture capital ideas while most small businesses earn less than $1 million per year. Be pragmatic in these matters.
Take risks. This is a critical part of every entrepreneurial win. Frankly, I think we all need more of it. We tend to think of risk as a taboo concept and it’s really not—once you understand it. In order to benefit from risk, you need to define what risk is to you. Some people view risk as the potential for harm or hazard (think bungee jumping). I view risk as an uncertain circumstance in which one manages to maximize the gains. But, how do accomplish this?
Utilize analytics. More analytics in sports is creating opportunities to assess strengths/weaknesses and create new winning strategies. It has enabled athletes to take more three-point shots, hit more home runs, longer golf drives, and score more touchdowns. More knowledge = more informed decision = less risk.
Consider value and probability. These should inform your goals and processes. For example, winning the lottery has an extremely high reward, but also has low probability. Purchasing investment bonds has lower return than buying stocks, but the risk and volatility of buying stocks is higher.
Be flexible. There are a lot of moving pieces involved in a business plan. And curve balls are inevitable as our world is constantly changing.
Remember it’s an ongoing process. It takes time, dedication, and consistent effort. Peloton, which was one of the hottest companies in the country, recently experienced over a 25% decline in sales. So, we need to constantly compare goals, risk, and the potential of alternatives.
Listen to your gut. Sometimes you just have to go for it. We tend to overthink things or let fear stop us from challenging the status quo. But, if your intuition is telling you something, it’s usually worth listening.
Just as there is no single definition of success, there isn’t a certain path to achieve it either. But, you can set yourself up to increase your chances by creating clear goals and understand the risk, the rewards, and the importance of developing a smart business plan. And don’t forget your passion—the reason you started your business in the first place. Success isn’t fun if you’re not enjoying what you’re doing.
Dr. Bert Shlensky, president of Startup Connection, prides himself on his ability to define what is unique about each and every business. He works closely with individuals to develop a personalized approach that targets specific areas of concern and offers solutions based on his 40+ years of experience. His expert team will address your particular needs while working to save you time and money.
When you want to stand out, reach out to Bert for the tools that will build your “sticky” brand. My focus is on understanding and analyzing your dilemmas and challenges, so your company becomes profitable faster.
Call (914) 632-6977 or email me at bshlensky@startupconnection.net. Don’t leave without signing up for our useful free eBook!
Feeling stumped or overwhelmed? Contact Bert at (914) 632-6977 or Email to start the process. Thanks!
