In a recent blog post, Eric Collet wrote about the challenges that come with growth and success as a business. Challenges from growth and success make operational excellence seem like a pipe-dream when you’re dealing with the complexities of a growing business, client’s demands, new products, etc. Most leaders connect with the Run-Improve-Grow vision of an autonomous front line focused on the daily RUN, middle management primarily focused on how to IMPROVE processes, and an executive team focused on how to GROW the business. But many leaders can also feel like they are stuck or stalled on that path to excellence and are even stumped about where to start and what to do in order to get on track. What is a Run-Improve-Grow Roadmap and how is it built?
Insights & Perspectives
The great recession of 2008-2010 changed everything for US manufacturers. At the risk of sounding like Mr. Obvious the rapid decline in manufacturing orders, followed by the slow and sputtering recovery in new factory orders starting in 2010, has completely changed the landscape for US manufacturers. The old rules just don't seem to apply anymore, and nowhere is that more prominently seen than in how companies manage their Sales, Inventory, and Operations Planning (SIOP) process.
Recently, I listened to the COO of a client share why she pursued organizational transformation in her business; she felt as though the employees had lost their voice. The company that her father started nearly fifty years ago had transitioned from a very relaxed culture of close-knit people, to one where layers of complexity and management systems left no room for the personal feel of yesteryear.
I had the opportunity last week to meet with a really exciting business leader who is in what would appear to be, a pretty desirable position. It was the proverbial startup. They started out of their house, with an idea that solved a real need and aligned with a personal passion. People were interested and started buying, and buying, and buying.
GROWTH CAN BRING COMPLEXITY...
Fast-forward 5 years to our meeting last week. People are still buying, and buying and buying. But, things are getting much different. Success is bringing complexity, and along with it, challenges that are getting increasingly difficult to address with confidence.
- "We're outgrowing our supply chain" - Should we insource to retain control and flexibility, or try to improve or replace our outsource partnerships which have never given us confidence? This question leads to significant implications for the next two challenges:
- "Physical space is a risk" - Our current location was just sold, and not to us. It may work out okay; we might work out an arrangement with the new owner...or might not.
- "We don't know how to make our product" - If we head down the road of insourcing, which has appeal due to the custom nature of the product, we have a lot to learn about equipment and process control.
- "A big competitor has just entered our space" - We have a very strong brand and a vision to expand it with adjacent products, but we just lost a key channel to one of the big guys.
- "We're running the business manually" - While we have a system to keep the books, we're managing ever-increasing SKU and component variety without any formal system. We need a Warehouse Management System but don't know how to select the best one.
THE CHALLENGE OF TIME…
While these are very real challenges that many businesses face in various ways, the most concerning challenge that I heard during that conversation was "We don't have the time to work on these things and are prioritizing opportunities on a daily basis". Success can be defined in many ways, and the tangible accomplishment of exponential growth certainly fits the definition for many. However, the navigation of business challenges such as the ones described above will clearly chart the course of this business for the future.
When you last went through ERP selection and implementation, maybe 5- 7 years ago, how different was your business? For most manufacturers, customers have higher expectations and more complex requirements, material costs and lead times are higher and more volatile. Even if you compare your business to 1 or 2 years ago, your team may be different, you've launched new products, or brought on new suppliers. As the demands of the business morph, many leaders think they need to select and implement a new ERP system. This may be true in some cases, but more often going through an ERP Optimization can bring your ERP system back to a high-functioning, growth enabling tool for your team.