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.
The pandemic was accompanied by an incremental increase in E-commerce. This was not a short-term blip; I believe we simply jumpstarted the inevitable. Therefore, we need to understand the strengths of E-commerce and maximize both the sales and marketing opportunities.
Let’s look at how E-commerce is changing the way consumers engage:
E-commerce sales are now estimated to be about 30-35% of retail sales. Amazon has grown from $28 billion in 2010 to almost $600 billion in 2021. Google ads grew from $28 billion in 2010 to $147 billion in 2020.
Other industries are also dramatically changing and shifting to digital systems. For example, according to Jamie Dimon from Chase, “From loans to payment systems to investing, they have done a great job in developing easy-to-use, intuitive, fast and smart products.”
Retail is facing extensive challenges. Stores are closing and many companies are shutting down altogether. They are also facing higher expenses, decreased traffic, and require higher margins than E-commerce. Personally, trips to places like Lord and Taylor, Pennies, Sears, and K-Mart are now only memories.
These changes are creating significant opportunities for E-commerce. For example:
E-commerce can be simpler and more efficient than regular retail. Delivery, security, and customer service have dramatically improved, which makes it a better experience.
Prices are generally lower as E-commerce doesn’t have the inventory, personnel, logistics, and real estate costs of a brick and mortar store. Additionally, retailers with E-commerce are struggling to balance the costs and prices of two different strategies.
Marketing for E-commerce can be quicker, more flexible, and less expensive than retail. You can quickly see results, test different programs, and compare different strategies with E-Commerce, and testing and comparisons are in their infancy.
Both marketing and sales can provide you a customer or potential customer’s name, e-mail, what they bought, what they considered, and other information. These names can provide low-cost marketing information for years.
Suppliers like Amazon and Google offer significant feedback and suggestions to improve performance and results.
E-commerce offers a much wider range of products including varieties, colors, competition, and promotions. They have a one or a few distribution centers while retailers have to stock multiple stores.
There are numerous marketing tools available including memberships, social media, e-mails, paid search, targeting, and follow up.
There is greater product information available including instructions, directions, ratings, reviews, videos, etc.
It can save time in terms of not going to a store, dealing with out of stocks and, most importantly, being available 24/7.
E-commerce offers a special advantage of being able to market to broader audiences including international and, at the same time, customizing messages to the individual.
A great opportunity for E-commerce is to improve search and information to better interact with consumers and provide a more personal experience. Research has shown that customers love personalized experiences, as it shows the business respects them enough to offer attention. It’s also proven to increase the customer conversion rate.
E-commerce can be especially beneficial to small retailers who can specialize and cater to local customers and competition.
E-commerce allows and encourages integration of sales, communication, branding, and marketing.
The potential growth of E-commerce is virtually unlimited. They key is spending the time to understand and take advantage of the opportunities. In particular, we need to better learn how to communicate with, market to, and provide assistance to the individual customer. Increasing efforts in communication, developing better E-commerce materials, and analyzing potential and results need as much attention as specific marketing efforts. Like most worthwhile endeavors, incorporating and/or improving your E-commerce offering may take some work and time to adjust, but the benefits can be a game changer for your business.
Dr. Bert Shlensky, President of 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 process 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
We all know what happens when we assume… And yet, how many of our decisions are based on untested information and assumptions? Have you ever been told to wait an hour after eating before swimming or you’ll drown? Where did this information come from and why do we accept it to be true?
Bubbe-meise is a Yiddish term used to describe old wives’ tales. Some examples include: It’s bad luck to open an umbrella in the house. Eat all your food—there are starving children in Europe! Chicken soup will cure anything!
In general, we tend to accept beliefs, data, news, teachers etc. as valid. Even putting aside lies, probabilities, bias, incompetence, etc., we accept a lot of bad information, assumptions, and suggestions. Why is this?
We need to question more, check resources, and test assumptions in order to make better decisions.
Frank and Ernest Comic
Perceptions and inherent patterns can also cause inadvertent actions. Recently, social scientists have focused on how we make seemingly obvious decisions. The results show most people tend to be risk adverse, avoid change, and accept the most comfortable alternatives. So, while we can work to change a bad decision at any time, we frequently avoid, delay, or defer change and, thus, draw out a negative situation. For example:
Denying the effectiveness of COVID vaccines is just unexplainable. For years, we have accepted seat belts, polio and various other vaccines, not driving while drunk, and many other safety measures. The vaccines are just a similar precaution to save lives.
Many economic proposals ignore that the k economy is getting even more evident. The k economy argues that economic recovery is experiencing different rates among the poor and the affluent. Specifically, the poor are experiencing even more problems while working class and the rich especially are experiencing exponential gains. Excluding this information is irresponsible and will only produce inaccurate conclusions.
Discussions about returning to work and school are frequently based on personal opinions and biases. Why can’t we recognize we lack perfect information and rely on and test the knowledge we have?
The solutions to these issues are not simple or obvious. However, we can pay more attention to alternatives, successful examples, and valid data while focusing less on personal opinions and bias. In particular, we need to include the parameters and process in our deliberations. Other helpful strategies include:
Get the politics of the issues out of the discussions. How many poor decisions are made because we think that’s what the boss wants? Or because “that’s the way it’s always done?” Or because we’re afraid to speak up? Or because we refuse to acknowledge that the situation has changed? Drop the ego and make fact-based decisions.
Utilize analytics. This is an incredible tool for improving success, developing alternatives, and measuring outcomes. However, analytics can be less reliable when the data is wrong, we assume invalid relationships, sampling is inappropriate, and risk is not considered.
Review and evaluate processes and decisions. It is unreal to me that objective testing mostly outperforms personal interviews in staffing decisions. But, the reason is mostly because of poor training and bias.
Stop using old or incorrect data. We need to check that our sources are correct and up-to-date. The pandemic has significantly affected data and trends using 2020 information. The census shows some dramatic changes in the population—in particular, we need to consider diversity. For example, different regions have significantly different ethnic characteristics.
Don’t ignore facts and tradeoffs. Going back to the office has many tradeoffs such as commuting time and communication among employees. We need to understand the issues, develop flexible solutions, and test various alternatives rather than relying on personal preferences of people.
Consider the conditions of a situation. Facts are frequently more independent than we think. If you flip a fair coin, the odds are still 50-50 (regardless of the last few flips because the flips are independent). However, sports analysts have proven that certain conditions, like left-handed batters hitting to right field, are more probable.
Don’t assume cause and effect. We frequently jump to conclusions before doing a proper analysis. Differing and multiple goals (such as short-term and long-term) can impact the understanding of cause and effect. Medical symptoms are often incorrectly diagnosed because a correlation was detected, which could be mere coincidence. Too often, an assumption is made and a diagnosis is given before things like environment, heredity, or psychological factors are even taken into consideration.
Check your biases. The biggest issue is probably bias, which is most evident in political and economic arguments. Questions like: Why are the poor are poor? What is the impact of IQ? How will the stock market perform? What are the causes of crime? These types of questions all involve a complex analysis of a variety of factors. And yet, everyone seems to chime in with an unchecked, biased opinion.
Bias is one of the greatest complications when it comes to accuracy in the scientific analysis of decisions. This includes statistical problems like sampling, measurement, and development of information. I also believe that social bias can be more impactful than statistical bias—this includes our preconceived perceptions and assumptions about factors affecting decisions. Cultural and environmental factors also affect bias.
Analytics, tradition, and experience are all valuable tools that help improve decision-making. However, we need to ensure that the assumptions behind those tools are accurate and reliable. In particular, our rapidly changing environment (especially in regard to issues like COVID) requires regular testing and validation. Similarly, creativity and intuition that defy some analyses are becoming increasingly necessary. Search alternative causes and solutions, test your assumptions, and always ask yourself: Why do I believe what I believe? How do I know my information is correct?
Dr. Bert Shlensky, President of www.startupconnection.net, offers experience, skills, and a team devoted to developing and executing winning strategies. This combination has been the key to client success. We welcome comments, suggestions, and questions. You can write him at: bshlensky@startupconnection.net or call at 914-632-6977
If someone offered you a million dollars, would you accept it? Some of us might be quick to answer yes, when in reality, we should be asking, “What are the conditions?” You need to know the parameters in order to make sound decisions and understand variables or analysis. Parameters describe specific characteristics of our population, market, and environment. They are critical because we frequently ignore aspects of a situation that are critical to our analysis.
For example, details of the 2020 census were just published and there are some clear trends that need to be considered. Most importantly: Diversity is not just some political issue. The growth of minority groups, urban population, the south, and the decline of the white population are actually critical factors in understanding marketing and analytical challenges.
Income inequality, diversity, global events, and the environment (including the pandemic) are key factors affecting even small businesses. Here are some parameters to consider that may help improve effectiveness:
Population: In 1990, the white population represented over 80% of the population compared to 57% today, and it will continue to decline.
Social changes: Women and minorities are not always treated with dignity as employees and consumers. Andrew Cuomo’s recent explanation of his behavior reminded my wife that she still remembers going to buy a car and being ignored by dealers and being called “honey.” We need to consider proper behavior towards all participants.
The Internet of Things: The Internet and its usage, especially among younger people, will continue to explode. Nearly every consumer-based market is dominated by businesses that are capitalizing on the Internet of Things, like Amazon and Google. Similarly, sharing services like Uber, Airbnb, Amazon, and thousands of other businesses are disrupting their individual markets.
Analytics: Chances are that your competitors are already taking advantage of a myriad of advanced analytical tools. CRM systems are completely changing the game and giving businesses new opportunities to understand their customer base.
Wealth distribution is becoming increasingly more unequal. 10% of the population control 80% of the wealth in this country. The pandemic has only accelerated this trend.
Our physical and social environments continue to shift. Climate change, political unrest and polarization, as well as other disruptions around the world are causing increased instability. We need to be ready to adjust accordingly and, therefore, these areas require significant new analysis and strategies. Recent rapid changes in areas like COVID, New York State, and Afghanistan illustrate the need to recognize both the speed of change and the need for new solutions.
Income: The reality is that the top 1% of the population accounts for about 80% of income (and this number continues to increase) while the lower 20-40% continues to struggle. Marketing to struggling service workers requires far different strategies than marketing to Silicon Valley millennials. We need to recognize the presence of the K-economy (one for the rich and one for the poor) and develop differentiated solutions.
The pandemic: Data from 2020 and 2021 needs to be carefully considered. For example, productivity is currently running 3-4% compared to a historic 2-3%. Is that permanent, a trend, or just a temporary result? There are presumably about 10 million unfilled jobs and there are 9 million people looking for work. How will that evolve? What are the permanent social impacts in areas like work from home, business travel, virtual education, entertainment, health care, etc.?
As you consider parameters, here are some suggestions to help you adjust:
Embrace diversity. We need to be aware of our environment and recognize where there is inequality. And then, work to create equitable change.
Improve measurement and understanding. Improved analytics gives us the capabilities to better understand populations and responses. For example, Hispanics represent 18% of the population and Asians 8%, while blacks represent an almost constant 12%. These segments are more concentrated in certain geographic regions, but need more attention in every focus. Hispanics also represent 17% of the under 18 population and only 4% of the over 70 population.
Remember that interacting parameters have as much impact as individual. Bias change, potential, etc. all affect decisions and outcomes. For example, analytics advises us to pursue the most likely outcomes. However, intuition, passion, and effort underscore most venture capital successes.
Manage changes in parameters. The best example is in finance where the economy has experienced low interest rates and inflation for the last several years. One outcome is that stocks have returned 10-15% while bonds only 2-5% over the last 10 years. However, financial advisors have been slow to change and investors have received lower returns.
Don’t ignore tools to understand parameters. While factors that may show relationships, don’t misunderstand cause and effect. Many algorithms assume linear distributions while information is frequently more complex. In particular, intuition and outside outcomes are more likely than we think. Probability and risk should always be considered in analysis.
Parameters need to be managed to improve decisions. Understanding the risk, the rewards, and the importance of issues can improve outcomes. Don’t allow fear, uncertainty, or tradition to lower your potential and prevent you from trying something new. This includes both analytical and social issues. The realities and changes in parameters like populations, the economy, political environment, and social values should all be reviewed and considered regularly. The most important thing to keep in mind is that many variables are changing faster and more often than ever before. So, not only do you need to understand parameters, you need to keep up with the latest ones!
Dr. Shlensky is a graduate of Sloan School of Management at M.I.T. He served as the president of WestPoint Pepperell’s apparel fabrics business & President and CEO of Sure Fit Products before starting StartupConnection. Having provided counseling to over 2,000 clients, he now focuses on working with select startups and small businesses.
When it comes to our business, we want to ensure we’re hiring quality employees who we can trust. Selecting and reviewing employees is a critical aspect of your business’ success—you’re choosing who you’ll work alongside, who will represent your brand, carry out day to day tasks, and interact with customers. How do you ensure that you’re selecting employees that are a good fit?
Although many of us consider ourselves experts on employee selection and evaluation, there are numerous objective reviews of the process that show significant opportunities to improve. The major issues usually revolve around what you are selecting and how and what you are measuring. In particular, personality and “fit” frequently receive too much attention while skills, experience, and motivation do not receive enough. I would also argue that the process is burdened with many complex efforts that produce minimal results.
The process of selecting and reviewing employees can be significantly improved with some simple tools that incorporate both the nature of the job and measuring the right factors correctly.
What are you really looking for? Looking for a car mechanic, surgeon, and other specialists is far different than looking for a social worker, manager, or other candidate that needs to fit in and support an organization.
Additionally, many efforts focus too much attention on long-term potential when many candidates will be gone in short periods. I think the interview question “where do you want be in five years?” is usually irrelevant. Many people won’t be there in five years, they don’t have a real answer to the question, and their answers are often based on interview training rather than validity.
In my opinion, skills, intelligence, experience, and motivation are far better predictors of success than social skills, common interests, and appearance. While this may seem like common knowledge, many decisions concerning selecting and reviewing employees are made in less than a minute (based mostly on appearance). This is a partial explanation for a well-proven theory that analysis can outperform interviews in predicting performance especially in well-defined situations.
How are you measuring what you’re looking for? In general, the process of selecting and reviewing employees is less effective with informal interviews, few criteria, too many data points, and less structure.In contrast, clear criteria, more structure, and trained interviewers can improve the process.
For example, the process of one person conducting multiple interviews with random people and averaging the evaluations has many potential concerns. In contrast, having different interviewers reviewing various relevant concerns and comparing the results can be highly beneficial to get valid perspectives. These initial evaluations should also be independent until all reviews are public to prevent results from being influenced by external factors.
Diversity should be an opportunity and not a burden. There is no denying that explicit and implicit discrimination are more common than we realize. In particular, when you review diversity in occupations, politics, business, etc. the progress is very slow. It will take aggressive and committed strategies to accelerate the process. Even programs like STEM (which attempt to get more women into science) do not fully understand the barriers and reluctance to accept more recruits.
Diversity is an opportunity: it increases the number of qualified and excellent people to select from and can increase organizational effectiveness. Areas like law, medicine, and the military have greatly benefited from increased diversity. Employee diversity also adds to the perspective of organizations. It can provide greater understanding of the strategies and needs of particular segments and audiences. We need to recognize that women make up about half the labor force and minorities currently make up over 50% of births. Fostering a company culture that focuses on inclusion will only make your business stronger.
Background information like skills, education, experience, and references are more important than you realize. Skills, education, and experience are fairly reliable determinants of the potential for success. In particular, education does show real accomplishment, maturity, and skills of candidates. However, it’s important that these factors don’t become the sole criteria so that other great people aren’t precluded from consideration. For example, how many great candidates are excluded due to professional organizations recruiting only at the top schools?
How do make a final decision when selecting employees? Frequently, the most significant barrier is bias. While simple predictors and sharing perceptions after interviews can be very helpful, we must be careful to avoid the trap of judging candidates after a minute or so on superficial criteria. We must also look for special characteristics that might make a candidate unique. Ask yourself: Am I looking for people who can just do the job, people who will be long-term employees, or someone who possesses something extra special?
The right fit depends on their needs as much as it does on yours.
Test and evaluate your results. Are you measuring your results and achieving your goals? Are your methods and processes effective? Are you attracting and reviewing the right candidates? For example, finding the right pool of candidates to choose from is a critical step in the process. This might mean you need to change where you’re advertising the job or expand the location you’re hiring in—is this a job that can be done remotely? You may need to consider out of state candidates. Perhaps, you need to rewrite the job listing—some excellent candidates may not apply if the listing has spelling errors or the description doesn’t sound enticing enough.
If you find that you’re not hiring effective candidates, take a look at your process. Are you differentiating between job requirements, candidates, and methods? It’s not a one size fits all process. For example, some jobs require great social skills and some do not. When interviewing candidates, make sure you’re focusing on the skills they possess that could make them great and not the skills they lack, if they aren’t essential to the position.
In general, objectivity, skills, structure, and alternative reviews can improve the hiring process while bias, subjective reviews, and poor information can detract from it. And keep in mind that great people don’t always make great employees. Therefore, in our efforts to be more effective in selecting employees, we must understand the process and acknowledge the difference between a candidate who is qualified on paper and an employee who is a valuable asset to our company.
Dr. Shlensky, President of StartupConnection.net, is a graduate of Sloan School of Management at M.I.T. He servedas the president of WestPoint Pepperell’s apparel fabrics business & President and CEO of Sure Fit Products. Having provided counseling to over 2,000 clients, he now focuses on working with select startups and small businesses.
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