Presentation Rationale:
To the best of my knowledge, the two worlds of corporate operations and small business operations are almost completely separate. Small business owners struggle with trying to run the whole business with little or no help in the operations area unless they happen to find small business coaches or consultants with some operational background. Even if this happens, it is a costly proposition at best and perhaps some misguided advice at worst. Even government supported activities such as SCORE, run by the General Services Administration do not focus on key operations skills except for financial tools like a business plan. A look at Amazon (for example) yields no better results. There are big company “how to” books on inventory management for example but nada for the small business.
My risk is that small businesses will not realize the need exists or that there are tools and concepts available. My presentations are designed to fill that void in a non-technical easy to understand manner.
The Presentations:
Five Key Concepts of Operations Management
Executive Summary:
An expert in Operations Management with a variety of industry experience shows you how to make key operational concepts work for you in your small business. Tested daily in the running of Corporate America, now you can learn how to apply this knowledge to running your own successful company. The techniques are easy to grasp and apply to your individual situation.
Expanded Description:
In the area of corporate operations management there are five key disciplines that companies use to insure they are supporting the overall growth, profitability, and success of the business. Briefly stated these are:
1. Good Inventory Management & Control
2. Being a Smart Buyer of Goods and Services
3. Partnering with Suppliers and Customers
4. Matching Resources to Demand
5. Understanding Value
Although the details vary from business to business, the common concepts are fundamental to success. This set of presentations will devote a discussion to each of these concepts using different business types to demonstrate the concept. The session will have an introduction of the concept, an example of how the concept can improve growth, profitability and success, and some suggestions on other ways to apply the concept. A partial speech topic follows.
Partial Presentation: Being a Smart Buyer of Goods and Services
What do I mean when I say you should be a smart buyer? Some would be tempted to say “buy cheap” some would say “take volume discounts”, and still others would have other criteria. Being smart means looking at the true bottom line and how you’re buying choices affect it. There is more to the cost of services or materials than what you pay a supplier. For example, is delivery timely and consistent, is quality always good, and are your suppliers flexible if the need arises? Do they value me as a customer (more about that later in presentation# 3)? Here is an example of smart and not so smart buying. I will use a typical hair styling salon as my example.
The Salon owner’s choices:
As a beauty salon owner you need to buy supplies for your operators, or to sell to your operators if that is your model. Thanks to business to business (B2B) e-commerce, you now have multiple channels of supply. At a minimum you now have the local supply distributor who calls on you regularly as well as direct purchase internet source(s). Which should you choose? The internet source is available 24/7, ships quickly, and is possibly cheaper. It’s a done deal, right? Has to be the right choice…..or is it? What does the local ‘bricks and mortar” distributor have going for his or her channel? They know your business, they call on you frequently, they could hold stock for you in their facility, and they could even do your ordering! How about co-operative advertising? How about special terms of payment? How about friendly and prompt returns? To be sure there is no obvious one answer for you, but there certainly are a lot of tangible and intangible factors to consider, and this is how you will become that “smart” buyer that you need to be for your business. It should be obvious by now that the lowest purchase price is not the goal, it’s the best value for your efforts.
I used the beauty salon example because of some past secondhand experience in that industry, but many small independents would have similar choices like veterinarians, barber shops, shoe repair shops, exercise studios, tax preparers, CPA’s , handymen, and so on.
Layout:
Five Presentations:
1. Good Inventory management and Control
2. Being a Smart Buyer of Goods and Services
3. Partnering with Suppliers and Customers
4. Matching Resources to Demand
5. Understanding Value
Future Series?
I do not see this as the first of a linear series of topics. I do envision that there may well be subsequent updated “presentations” in the future.
Contact me if the concept of presenting this type of material to your organization is of interest to you. ralthaus44@hotmail.com
Thank you for your Consideration!
Showing posts with label operations. Show all posts
Showing posts with label operations. Show all posts
Sunday, August 30, 2009
Five Key Operations Concepts for the Small Business Person
Friday, June 12, 2009
Silent Seasonality
Silent Seasonality
Ronald Althaus, CFPIM, CIRM, CSCP, CPM
My life in manufacturing has been plagued by silent seasonality. As a practitioner, it plagued me regularly and years later, as an instructor, I can tell from the nods and groans of my students that silent seasonality still stalks their factories. In a best case scenario, customer demand is beautifully uniform resulting in stabilized production schedules, uniform supplier requirements and a constant takt time. Capacity requirements and utilization are stable and waste is minimal. It is the production environment of our dreams. But, even in such an ideal manufacturing environment, short-sighted managers will destroy it with their desire to beat the monthly shipping targets. This is silent seasonality. Top managers can sense when the stress level of operations people is low. It usually means making the monthly shipping numbers is in the bag so, if some of next month’s orders can be shipped this month, we will exceed the monthly target, look good to our corporate parents and, perhaps, increase quarterly bonuses. But shipping orders early may mean giving the customer a break on payment terms or something similar. Expediting purchased components leads to expensive supplier overtime and premium inbound freight. Our internal scheduling is disrupted with overtime and capacity constraints.
We may succeed at shipping some orders early but that eats into next month’s shipping targets. And we can seldom trust sales people to understand the impact of silent seasonality. If customer demand is five million a month and last month we scrambled to ship seven million, then the following month’s target should be three million because customer demand did not change. But sales will still set next month’s target at five million and tell us we are lucky it isn’t seven million since we proved we can accomplish that. The only way to ship five million the next month is to again pull orders up from the following month. This foolishness continues month after month until, at the end of the year, we have shipped the same amount in eleven months that we would have shipped in twelve. Except now we have experienced hundreds of thousands of dollars in various expediting costs and have a month of factory capacity to fill. And we gained no additional business or customer good-will doing any of it. Years ago there was a cartoon strip titled “Pogo”. The main character was quoted saying “We have met the enemy and they is us!” How true this is with silent seasonality.
I used an example of steady customer demand to make my point but it really doesn’t matter what the demand pattern is. Actual customer demand will often be supplemented by silent seasonality demand when managers attempt to exceed shipping targets by trashing other numbers that their bosses do not examine as carefully. Some readers will observe that lean processes make silent seasonality less onerous. The production flexibility imparted by the lean approach (flexible capacity, cross training, pull processes) make a factory more able to cope with variation in demand. But lean theory is very clear about demand variation. It challenges supply chain professionals to modify lean processes as customer demand changes. Silent seasonality is not customer demand so attempting to accommodate it results in waste.
There are certainly organizations out there that think in the long term and do not create silent seasonality. There are not enough of them and I toast them with the greatest respect. They understand that profitability results from long term thinking. If silent seasonality is common behavior at your company then I suggest your organization review and understand the associated costs. Then eliminate those costs or change the behavior. Don’t let Pogo’s famous quote describe your company. And, if you succeed in eliminating the costs of silent seasonality, you have really succeeded in reducing the leadtimes to your customers. Passing a leadtime reduction to your customer is likely to generate more sales. Constantly pulling shipments up, without reducing leadtimes, will only make you look good internally and briefly.
Ron Althaus is and independent instructor who teaches all APICS classes following a 25 year career in various manufacturing environments. He can be reached at 513-351-5005 or 513-703-6412 or ralthaus44@hotmail.com or http://www.althausconsulting.com/.
Ronald Althaus, CFPIM, CIRM, CSCP, CPM
My life in manufacturing has been plagued by silent seasonality. As a practitioner, it plagued me regularly and years later, as an instructor, I can tell from the nods and groans of my students that silent seasonality still stalks their factories. In a best case scenario, customer demand is beautifully uniform resulting in stabilized production schedules, uniform supplier requirements and a constant takt time. Capacity requirements and utilization are stable and waste is minimal. It is the production environment of our dreams. But, even in such an ideal manufacturing environment, short-sighted managers will destroy it with their desire to beat the monthly shipping targets. This is silent seasonality. Top managers can sense when the stress level of operations people is low. It usually means making the monthly shipping numbers is in the bag so, if some of next month’s orders can be shipped this month, we will exceed the monthly target, look good to our corporate parents and, perhaps, increase quarterly bonuses. But shipping orders early may mean giving the customer a break on payment terms or something similar. Expediting purchased components leads to expensive supplier overtime and premium inbound freight. Our internal scheduling is disrupted with overtime and capacity constraints.
We may succeed at shipping some orders early but that eats into next month’s shipping targets. And we can seldom trust sales people to understand the impact of silent seasonality. If customer demand is five million a month and last month we scrambled to ship seven million, then the following month’s target should be three million because customer demand did not change. But sales will still set next month’s target at five million and tell us we are lucky it isn’t seven million since we proved we can accomplish that. The only way to ship five million the next month is to again pull orders up from the following month. This foolishness continues month after month until, at the end of the year, we have shipped the same amount in eleven months that we would have shipped in twelve. Except now we have experienced hundreds of thousands of dollars in various expediting costs and have a month of factory capacity to fill. And we gained no additional business or customer good-will doing any of it. Years ago there was a cartoon strip titled “Pogo”. The main character was quoted saying “We have met the enemy and they is us!” How true this is with silent seasonality.
I used an example of steady customer demand to make my point but it really doesn’t matter what the demand pattern is. Actual customer demand will often be supplemented by silent seasonality demand when managers attempt to exceed shipping targets by trashing other numbers that their bosses do not examine as carefully. Some readers will observe that lean processes make silent seasonality less onerous. The production flexibility imparted by the lean approach (flexible capacity, cross training, pull processes) make a factory more able to cope with variation in demand. But lean theory is very clear about demand variation. It challenges supply chain professionals to modify lean processes as customer demand changes. Silent seasonality is not customer demand so attempting to accommodate it results in waste.
There are certainly organizations out there that think in the long term and do not create silent seasonality. There are not enough of them and I toast them with the greatest respect. They understand that profitability results from long term thinking. If silent seasonality is common behavior at your company then I suggest your organization review and understand the associated costs. Then eliminate those costs or change the behavior. Don’t let Pogo’s famous quote describe your company. And, if you succeed in eliminating the costs of silent seasonality, you have really succeeded in reducing the leadtimes to your customers. Passing a leadtime reduction to your customer is likely to generate more sales. Constantly pulling shipments up, without reducing leadtimes, will only make you look good internally and briefly.
Ron Althaus is and independent instructor who teaches all APICS classes following a 25 year career in various manufacturing environments. He can be reached at 513-351-5005 or 513-703-6412 or ralthaus44@hotmail.com or http://www.althausconsulting.com/.
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