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Bill's Building Blocks March 2023 - What Do We Do Now?

Bill’s Building Blocks - March 2023
What Do We Do Now?

My grandson was excited to receive a Star Wars Death Star Trench Run Lego set for his birthday. He wanted to put it together right away. After opening the box and setting aside the 105 pages of instruction, he quickly dumped six bags containing 665 pieces into one pile on the table.  Then with a big smile to said to me, “What do we do now Grandpop?”

‘What do we do now?’ is a common theme in business today.  There are so many issues, problems, and risks jumbled together into a big pile on your desk. The old solutions may not work; the new solutions have not been invented. But here is a timeless three-part approach learned from HP that can begin to put your business back on track.

ONE. Your senior management team, especially the CEO, should visit ten key customers where they live. This should be a humbling listening experience rather than a high-pressure sales pitch. The CEO should learn first-hand the pain points your customer has with doing business with your company. Probably some pain points will be similar across several key customers. The objective upon returning home is to imagine some new solutions rather than promising a bunch of quick fixes.

TWO. Put a cross-functional supply chain team in place to analyze the end-to-end cash flow variabilities of your top three products. The cash-to-cash cycles for buying upstream and selling downstream have days of velocity and days of variability. When days of velocity can be reduced, the supply chain runs faster and the potential for more throughput, i.e. your revenue, is higher. When days of variability can be eliminated, more cash is available for investment and more time is available for risk management. Do not forget to analyze how many product returns are coming back at you.

THREE. Once the pain points are identified and the cash flow improvement opportunities are analyzed, realign your existing supply chain resources to take advantage of these opportunities. This may involve repositioning inventory to better match demand, rerouting process steps to better utilize capacity, and substituting logistics connections to improve predictability and reliability. 

HERE IS WHAT TO DO NEXT. Minimize, substitute, or eliminate customers who are slow to pay for their purchases, suppliers and their logistics connections who are unpredictable in their deliveries, and process equipment which is unreliable in its operation.

©2023 William T. Walker, CFPIM, CSCP-F, CLTD-F, CIRM has 42 years practitioner experience mostly with Hewlett-Packard, authored Supply Chain Construction and Supply Chain Architecture, and teaches Supply Chain Engineering at NYU Tandon in Brooklyn. He is a 40+year ASCM member and APICS E&R Foundation past president. email: [email protected]