May 23, 2013 · 3:42 pm

Temps Should Be Part of the Team

Many companies use temporary workers either as a supplement to the regular labor force to help cover seasonality or spikes in demand, or as a way to “test drive” people for potential future employment. The problem is that those companies often treat their temps like second-class citizens. They don’t include the temps in team meetings or celebrations of attaining and exceeding business goals, or holiday parties, etc. The temps can feel that they aren’t part of the team and often their work ethic reflects that.

Companies should treat everyone on the team as a member of the team regardless of their employee status. It is important that all members are pulling together to attain the team’s vision and goals to the greatest possible extent. There shouldn’t be any second-class citizens on a team. Invite temps to team-related events and celebrations. Bonus programs and possibly special employee events such as holiday parties might be the only exceptions.

If companies expect maximum contribution from all team members, their employment status shouldn’t be part of the equation.

© 2013 – Rick Pay – All Rights Reserved

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May 21, 2013 · 12:43 pm

Change Happens: Forewarned is Forearmed

Change management is one of the popular buzzwords today in business. There is a plethora of articles on how to manage change, and change consultants are popping up like the dandelions in my lawn.

But in addition to planned change, there is also inadvertent change: change that happens unintentionally. It might be the result of market shifts, supply chain disruptions, commodity availability, or supplier failures. Change can thrust itself on you and your company without notice, and if you aren’t prepared, it can damage your ability to compete.

Developing a strong operations and supply chain strategy can help you prepare for inadvertent change. Building flexibility and agility into your strategies will prepare both your company and your outside partners for change – both intended and unintended.  Developing a vision and a strategy to attain that vision will keep the organization on course and help alleviate the impact of surprises.

Forewarned is forearmed. Having a strategy – even if you don’t plan to use it – can keep you competitive even when circumstances take a sudden turn.

© 2013 – Rick Pay – All Rights Reserved

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May 16, 2013 · 4:03 pm

The Sooner You Start…

…the sooner you get results. Many companies have great plans, ideas or desire to improve, but they put it off. Often when they make plans, they over analyze and set timeframes way out into the future (e.g., five years).

When they are considering making changes in the organization or using outside resources such as consultants, they often say something like, we need to wait for our sales to increase, or our cash flow to improve, or for better staff availability and so on. What happens is that any benefit they might achieve from the changes is delayed. What they don’t realize is that the competition is not waiting.

Why Wait?

Time and money are both a matter of priority. Companies have all the time there is, and the money or budget is simply a matter of prioritizing the results. If a project or other expenditure has a high return on investment, why wait?

I mentor consultants, and often hear consultants say that while they want to grow their practice, they think they’ll wait three months, or until they get the next project, or some other reason for delaying. What I find is that my fees are often paid back multiple times within the first couple of weeks of the mentoring relationship. Why postpone the opportunity for success and increased profit, especially when competitors are frequently moving forward with great enthusiasm? I suspect this has to do with low self-confidence, especially when they see that moving ahead has a high ROI.

The Time is Now

Many executives, managers and consultants fall into the trap of procrastination. If you have the opportunity for success, no matter the type or circumstances, don’t wait! Make it a priority. The time to take advantage of high ROI is now. The sooner you start, the sooner you get results.

© 2013 – Rick Pay – All Rights Reserved

For more information on my mentoring program, click here.

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May 14, 2013 · 1:36 pm

Moving Back Home: The Re-shoring Story Continues

Many manufacturers, both US based and foreign owned, are continuing to come to the United States. A recent article in IndustryWeek suggests it is because of low natural gas prices (US natural gas prices have dropped significantly, recently to as low as one quarter of those in Europe). Because natural gas is used for energy and as a raw material, lower prices have helped contribute to industrial growth in the US of 5% per year since 2009, double the rate of the overall economy.

person holding moving boxesFactors in the Off-shoring Decision

Many companies that moved production away from the US in the 80s and 90s did so pursuing low cost labor. When labor rates in Asia began to creep up, many decided that logistics and inventory costs to ship finished products back to the US weren’t worth the cheaper labor. Now, it could be low-cost energy that is prompting companies to reconsider the US.

A Wider Perspective

I believe companies have broadened their thinking and are taking a total cost of ownership (TCO) perspective, which takes into account not only the base materials, but also logistics, inventory, quality, reliable supply, energy, regulations, political climate and more. Innovative companies are looking at the total return on investment and assets as well as the impact on speed to market to determine where the base for their global supply chains should be.

I predict that the current wave of reshoring will continue for a number of years. Not only is US productivity the leader in the world, but also many elements of cost – like energy and reliability – are hard to match in other countries.

© 2013 – Rick Pay – All Rights Reserved

For more on TCO and how it applies specifically to purchasing, click here to read my article for eSide Supply Management magazine.

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May 10, 2013 · 8:31 am

Planning for Sales Growth; Avoiding Growing Pains

What good is sales growth if the supply chain can’t execute? In a recent article in The Globe and Mail, the authors share the great difficulties that smartphone companies are experiencing as they introduce new, very advanced technologies in their phones.

smartphonesDemand is high, and contract suppliers can’t keep up. It seems that capacity and technical capability have not caught up with the needs to produce and ship product. Many raw materials and parts aren’t available in the volumes needed and much of the technology is stressing production capabilities to meet quality requirements.

How Are These Companies Responding?

Quite typically, they are ramping up capital expenditures, buying new equipment and investing in more R&D. Some companies have decided to bring production in-house, believing they can control production better than companies whose total focus is on that sort of production. Such is the way large companies with lots of money often try to solve problems.

How to Avoid Growing Pains

What could these companies have done to prepare their supply chains to meet the demand they anticipated? A little pre-planning and communication could potentially have avoided this issue in the first place. There are three things companies can do to help support execution:

First, start communicating with suppliers early in the design phases. Many of these companies carefully protect their technology R&D, often cloaking it even from their “trusted” suppliers. If you can’t trust your suppliers, you need new ones. If you do trust them, bring them into the design process so they can prepare their capabilities early on to produce what is needed.

Second, look at several levels of the supply chain. Talk to the supplier’s suppliers, especially of materials that might be hard to get or are on allocation. If design changes are needed to help accommodate demand, early knowledge provides more time to make such changes.

Third, have a rigorous communication and planning process with the suppliers. Sales and Operations Planning (S&OP) should extend beyond the four walls of the company into the supply chain.

They say smart people learn from their mistakes, but really smart people learn from the mistakes of others. Smart supply chain management requires communication and planning to help avoid the kinds of supply problems the smartphone companies are experiencing. If you plan ahead and communicate, you can enjoy sales growth without the growing pains.

© 2013 – Rick Pay – All Rights Reserved.

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May 7, 2013 · 8:40 am

Can You Hear Me Now? Communication in an Electronic Age

In this age of internet technology, it can be tempting to over-rely on email, Facebook, Twitter and other electronic means of communication and neglect to use phone calls or face-to-face meetings. It’s important to communicate in a way that meets the receiver’s needs, but the more personal you can make it, the more effective it will be.

Having a MeetingFace-to-face meetings are always the platinum standard of communication. Not only is it much more personal, but body language and other non-verbal cues make it easier to avoid misunderstandings as to intent.

The gold standard is the phone call. A phone call is more personal than an email, and because fewer and fewer people seem to be making phone calls these days, you’ll stand out in the crowd. If having a written record of your conversation is important, you can always follow up with a short email summary.

Email is the silver standard. Some people travel a lot and email makes it more convenient for them to respond as their schedule allows, but beware: both verbal and non-verbal cues are non-existent in emails and people can easily misunderstand your meaning.

The platinum standard always outshines the rest. Face-to-face meetings, especially in professional services or with suppliers, not only help prevent misunderstanding, but also help develop the foundation for a strong relationship.

© 2013 – Rick Pay – All Rights Reserved

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May 2, 2013 · 2:48 pm

Supplier Partnerships – No Fuss, No Muss

An attorney once told me that you don’t really need a contract unless you plan to sue someone. That doesn’t sound like the basis for a good relationship to me.

In my prior life as VP, Operations for a rapidly growing manufacturer, we had an active supplier partner program with between 150 and 200 suppliers. We had a contract with only one supplier, and that was because their bank required it to help back up their line of credit. For the rest of our suppliers, we had terms and conditions on the purchase order as well as what we called a purchase accord.

Setting Expectations

The purchase accord was simply an agreement between the two of us (I suppose you could call it a contract) that spelled out our mutual expectations. We told the supplier that we would provide them with forecasts and purchase orders and how much of the forecast we would commit to. The supplier told us that they would ship to us in the quantities we requested with a specified lead-time. We also agreed on payment terms and quality and conformance standards. The document was typically two pages long.

Partnership-Oriented

When we first started talking to a new supplier and presented the purchase accord idea, their reactions were a combination of surprise and delight. Taking this approach was unusual for the suppliers and many often said they wished their other customers were as partnership-oriented as we were

Partnerships start with a foundation of trust and communication. Accountability for performance certainly needs to be maintained, but with close communication, issues can typically be resolved long before any legal action would need to take place. Starting on the right foot goes a long way in that direction. No fuss, No muss.

© 2013 – Rick Pay – All Rights Reserved

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