Looking for a Few Good Customers? Take a Look at Yourself First
by Mike Starling
Supply Chain Leadership Challenge: WARNING - READ AT YOUR OWN RISK!
In these trying economic times, the natural tendency for a second- or third-generation, family-owned business would be to hunker down and just try to maintain the status quo. Some enlightened companies might even target revenue growth with aggressive sales plans. But what if you could grow revenue without growing the top line?
Possible? Yes! How?
⦁ Management: Look Inside Your Organization
⦁ Management: Be Honest With Yourself
⦁ Management: Identify Your Weak Links
⦁ Management: Seek Help
All too often the natural tendency of young, family-owned businesses is to think that survival = sales growth. Or even dodgier yet, survival = pushing the revenue lever full-tilt forward. Finding ways to improve operating cash flow from within your supply chain is the key to increasing revenue without increasing sales.
What are the biggest impediments to making this happen?
⦁ Lack of experience or expertise in front-line management
⦁ Piss-poor process execution
⦁ Unrecognized, flawed processes within the organization
Let’s face the facts. Many second and third-generation family-owned business are not that sophisticated, and understandably so. Operationally they are rookies, practicing their trade, working hard on procedural execution and pleasing the customer at any cost. But they often lack a comprehensive game plan and process clarity within the context of teamwork, which results in unnecessary operating expenses and inflated SG&A expense. This in turn hurts operating cash flow, lowers net profit, and generates a poor return on assets. They believe the road to success is to work harder; the greater the input the greater the output. Unfortunately, reality often fails to fulfill those expectations.
Second and third-generation, family-owned businesses typically have much of the following in common:
⦁ They are run from the top, with little or no MBO input from front-line management (understandably so).
⦁ They do not have a formalized, documented strategic business plan.
⦁ Their organizational growth is evolutionary in nature—i.e., there is a lack of planning and foresight.
⦁ They have no formal succession plan. Hey, it's all in the family, right?
⦁ They struggle to define and exploit their market niche.
⦁ They continually search for ways to generate more working capital.
⦁ They promote from within rather than hiring, making it difficult to match the right person to the right job - does this sound familiar?
⦁ They tolerate poor or sub-optimum performance from family members.
⦁ They rely on manual processes and tribal knowledge in daily operational execution. (Who is that person you can't do without because the have it all in their head?)
⦁ They lack documented processes of key tactical functions and procedures. (Try assessing your current processes using a cross-functional team to honestly assess how it really works and compare it to how it should work.)
⦁ They view the buy side and the sell side as two separate areas. (Do you treat Purchasing like a prima donna, and use Warehousing and Shipping as your whipping boy? I bet you even think of them as two separate organizations.)
⦁ They tolerate or excuse poor operational execution.
⦁ They view operational overtime as a “necessary evil” to get the job done. (How much is this costing you? Do you think your competition shares your attitude toward overtime?)
⦁ They lack key metrics to assess process execution. (Do you measure productivity? Are you measuring the right things?)
⦁ They don’t monitor or measure for operational performance improvement. (Do you have a baseline benchmark of your current operational productivity? What does it mean? Compared to what?)
⦁ They don’t think they need help. (This, my friend, is costing you money you can't afford to lose!)
⦁ And the list goes on, and on, and on.
What is the answer?
> Define your dreams: where do you want to take this business? What do you want to achieve from a personal perspective?
> Establish a timeline: where do you want to be at the end of year 1? Year 3? Year 5? Timelines help you to form strategic goals and objectives.
> Seek outside help: while you think you may know it all, perhaps seeking guidance and council from someone with broad cross-industry experience would bring perspective to your myopic view of your industry segment.
> Consider hiring a supply chain coach: coaches bring you solutions! Solutions for improving productivity internally, which in turn creates more return for your money, which leads to improved operating cash flow by optimizing your SG&A spend.
Yes, you can increase revenue by optimizing your internal operations without ever having to sell a carton. How much are you wasting due to flawed processes and ineffective management policies?
If you don’t hire a coach, at least have a conversation with one! Someone who has a clear understanding of what needs to be done to take you to the next level and knows how to develop and field a winning team.
How do rookies progress to become professionals? First they get an unbiased assessment of their performance and skill set to identify strengths and weaknesses. They come to grips with where they are lacking and seek out professional coaching to turn weaknesses into strengths. They have a dedicated coach who works with them on process and procedure execution, someone who helps put their role in context with the overall game plan, someone who helps them see how their role supports the team effort so that the team succeeds.
Do you see yourself in any of the above profile? Don't think the flaws in your operations are perceived by your customers? You might want to reflect on that a bit.
If you want to find and retain a few good customers, and you want to get there sooner rather than later…then seek professional help! The ROI will far exceed the investment!
Your very survival could depend upon it!
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