Monthly Archives: March 2012

Why are you forecasting?

In an earlier post I mentioned that forecasting is really only effective when everyone involved owns their part of the forecast and the processes that go into making and supporting it. By itself a forecast won’t help your business, and it certainly won’t fix any structural or logistical problems. But if you use your forecasts as the basis of a conversation with the people who are impacted by it, your forecasts can become a powerful tool for managing and growing your business. This is the value of the collaborative planning, forecasting and replenishment (CPFR) platform.

In my opinion a forecast has no value until it is shared with the all the people who may be impacted by it. And while we may not want to share all the factors that went into making a forecast, we should share with our partners as much information as possible about the timeframe, limitations, expectations and accuracy of our forecasts. If we are asking them to bet their business on our figures, we need to be up front with them about how confident we are in the numbers. We also need to teach them that they can trust us to share everything that we possibly can with them, so that they can be confident about working with us in the future.

 

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Coaching suppliers

In an earlier post I emphasized that treating your suppliers as customers was a good business practice. A further point is that most suppliers benefit from being coached on how to best support your business. If you make them guess as to how to best support you, you will very likely be disappointed in their performance. On the other hand, if you teach them how to help you succeed, both you and your suppliers can improve the processes and tactics that support business success and growth.

If your suppliers are not meeting your expectations or if their lack of performance is hurting your business, your first reaction is likely to be a desire to want to penalize them. Unless you have already gone through the process of discussing and defining the issue with them and agreeing on a plan for improvement and given them time to improve, you are only hurting yourself when you penalize them. By treating them badly you may scare them into complying, but that’s all you will get. You won’t be encouraging them to want to better learn how to support you.

In my 20+ years managing suppliers for 3 big box retailers, I know from experience that coaching suppliers can significantly improve their performance and their willingness to help you grow your business. Coaching suppliers effectively helps them better collaborate with you and also allows them to increase their emotional investment in your success. And you want to be the company that suppliers compete to support.

 

Suppliers as customers

Recently I organized a meeting with one of my key suppliers to discuss the next steps in building the business. In all the points we discussed the one that bothered me the most – and still bothers me today – is how this company’s employees were being treated by my company. I heard several stories about how these employees were routinely denied access to systems and inventory data that they needed to do their jobs, and how in some cases the retail employees simply ignored them. And these were people who had come into the store to help manage the inventory and merchandising of product!

What is interesting about this is if my company’s employees had treated a customer or another employee in this manner, they would have been disciplined. But somehow it was OK to abuse a supplier. I guess the policies governing proper associate behavior apply only in certain cases. Not very professional, in my opinion. Respect for the individual indeed!

Your suppliers deserve the same treatment as your best customers. You can’t do business without them. Abusing them isn’t going to help you in the long run. And all the talk about respect for individuals goes right out the window if the policies are not applied consistently.

I have been managing suppliers for major retailers for nearly 20 years and consistently I have been impressed with their willingness to support my business, even when we ask them to do outrageous things. My experience tells me that most suppliers really want to be good partners. They depend on others to distribute and market their products. So why can’t companies collaborate so both sides win?

I believe too many companies still see suppliers as a cost center and not a partner who also wants to grow the business. This attitude will undermine the relationship every time. If you see your suppliers as competitors for your profits, you won’t collaborate.

Want to grow your business? Take some time and really get to know your suppliers. Let them educate you about their business. Let them show you how they can better support you and offer you insights into their industry.

Want a competitive advantage? Be the company that your suppliers want to support. Treat them well so that when issues come up there will be no question that they will go out of their way to support you. I can tell you from experience that treating your suppliers well, knowing what they can offer, and giving them the chance to shine in supporting your business will build the kind of loyalty that your competitors will envy.

Soft Skill KPI’s

In an article in the current issue of CSCMP’s Supply Chain Quarterly the authors show that companies need to measure both business performance and employee interpersonal effectiveness when evaluating supply chain performance. And it makes sense that if we are going to measure one side of the business that we need to measure the other dimensions as well. While I agree with the idea that employee soft skills like leadership and communication can’t be measured in the same manner as fill rates and instocks, I believe there are significant issues when it comes to measuring these soft skills.

Evaluating interpersonal skills is difficult and frequently open to a wide range of interpretations. It’s hard to have an unbiased view of another’s behavior, especially if it deviates from what we might expect or how we might act in similar situations. A person who is demanding and harsh may actually need to act this way to get his/her job done to meet the business expectations. In this case saying that this behavior is not appropriate may be more a measure of the pressure to meet business goals than a valid interpretation of interpersonal skills. When push comes to shove, companies will care more about meeting their business goals and shareholder expectations than they will in developing nice people – even if nice people are more productive in the long run.

So what is the answer? In my view getting an accurate view of a person’s soft skills takes a lot of time. We need to observe the individual over an extended period of time and in a variety of situations. And we need to be experienced in objectively evaluating other’s behavior. In most cases the cost of doing proper evaluations is beyond the reach of most companies, and is usually reserved for the top levels of the company.

What about the rest of the employees? Here’s where I believe we have a structural problem: most managers are so busy trying to meet the expectations of their managers that they have little time to get to know their direct reports. And you can’t evaluate what you don’t know. To me this is a larger issue than how we evaluation soft skills, since these evaluations require a great deal of time and experience. If we make our managers’ jobs so demanding that they can’t take the time to develop the people under them, then I don’t see how we can expect these people to develop their soft skills. They will be too busy worrying about meeting the company’s financial and business goals.

Until this structural problem is resolved, I don’t see how we can expect much improvement in employees’ soft skills. Short-term business goals will always trump these, since business goals can be easily measured.

You can read the article here:

http://www.supplychainquarterly.com/topics/Strategy/201104people/

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