Solomon Bruce Consulting Blog

Wednesday, April 28, 2010

Do you have enough inventory for the sales season?

    The question, "Do you have enough inventory for the sales season" is one that is getting lots of ink currently in the business press.  Many companies, during the height of the business downturn elected to reduce inventory.  Now, with many customers gaining more confidence in the overall domestic and global economy, are spending more money, however, some have been faced with a nasty surprise.  The surprise?  The company does not have any product to sell!
    I talked about this matter earlier in the year.  At that time, I recommended that you be very careful when buying inventory, reviewing your sales data very carefully to insure that you had the right inventory, however not so much inventory that you were unable to turn it as you needed to.  After all, we talked about lean logistics, lean inventory principles and the fact that money tied up in inventory that was not moving is resources that are not working for you.
    However, 6-9 months later, we are seeing that many companies now don't have product and the manufacturing cycle is long enough that, at least for this sales cycle, vendors are foregoing sales that they otherwise could have made if they had product on the shelf.
    One of the most significant of these stories is with farm equipment manufacturer John Deere.  During the height of the economic downturn, Deere closed manufacturing plants, reduced inventory, reduced work in process and decreased the amount of product that were able to ship to their dealers.  Now, customers have gained greater faith in the economy and want to buy John Deere products, however, are finding that dealers don't have product because Deere did not make enough.  In some cases, tractors needed now will not be available until November/December 2010, 4 months past the useful growing season.
    What about your business?  Where are you?  Do you have enough inventory?  Do you have new, fresh, modern inventory that will allow you to fulfill customer demands today?  If not, you may wish to think real hard about getting products that customers are asking for and willing to spend money for.
    I have a friend who is a haberdasher.  He tells a very similiar story.  He wanted more inventory for the winter selling season, however, his manufacturer's representatives told him that the plant had either reduced their production, or had made only 1 or 2 runs of the product and then shut the line down.
    Now, we are all at the mercy of some "manufacturer" someplace.  However, careful planning, future forecasting as well as gut level instincts should allow you to have inventory when a customer walks into your store and wants to purchase your product.  This problem will not "go away"-- so don't dismiss it today.  This is where some futuristic projections and business knowledge will help you fill the customer's demand when he/she comes to buy from you!

Thursday, April 8, 2010

Breakdowns-- They ARE Preventable!

  I was visiting with a client this afternoon and he told me that "we had a breakdown".  I thought, "Ummm-- what is a breakdown?"
  The client told me that his store has had some customer service issues for the past few weeks.  In fact, I have noticed that was the case when I was in the store last week.  Interestingly, the client has two different facilities and his office is in one facility, where his retail space is in another facility, approximately 5 miles apart.  The key problem with this client was focused customer service.  When the client maintained his office in his retail space, he was always on the floor helping provide good customer service and teaching his staff what he expected with how his customers are treated.  When the business grew to the point where he had to move to the other facility, he was unable to provide the constant day to day supervision and thus, relied to a greater degree upon on his management team.
   As we discussed his breakdown, he identified to me that he had to "shake up things" a little and get everyone focused, once again, on their number one priority, the customer-- the individual who buys the product and pays the salaries.
   When I asked why the breakdown occurred, the client told me that he had not spent enough time reinforcing basic principles with his management team.  I asked if there was a policy and procedures manual, he told me that there was and that the management team knew about it and were familiar with it.
   Interestingly, another client  this week shared a very similiar story-- this client also had a "breakdown".  Surprisingly, the fact pattern is very similiar, client/owner geographically separated from the retail location, failure to follow policy and procedures by staff, serious embarrassment and loss of customer good will by the firm.
   In each instance, policies and procedures were in place, documented and understood by management personnel.  However, it appears that lack of frequent emphasis and reminding allowed the staff to "forget" exactly what was expected of them and they "took shortcuts".  Unfortunately, in each case, the shortcut ended up being the wrong way and problems occurred.
   We are all humans-- we all make errors.  However, as the business owner, you have a duty and responsibilty to constantly re-enforce all of the policies and procedures that define and characterize your business.  It makes no difference what kind of business it is, a breakdown is a breakdown.
   Make sure that you frequently, weekly, if not more, state and restate the policies that your firm has established.  Once a quarter, you should have an "all hands" meeting, going over not only the successes of the firm during the last quarter, but areas where improvement will allow the firm to achieve higher goals next quarter.  This is something that requires constant vigilance-- once the policies and procedures are developed, you must continually reinforce the policies with all staff members.  This is not totally goof proof, however, in most instances, the chance of a breakdown will be much less.

Tuesday, April 6, 2010

Workman's Comp-- Are you doing all you can to reduce your liability?

  I visited a building site the other day and talked with the foreman.  The work crew was installing and taping drywall on the interior of the building.  As I watched the crew use a new machine that easily mudded and taped the drywall, I noticed that several of the workers were wearing jewelery, specifically wedding rings.
  After having 30 years of Air Force safety training, rings and jewelery were items that were forbidden in or near electrical equipment or any type of mechanical devices.
  As I was talking to the construction foreman, I asked him about the rules on wearing jewelery at the construction site.  Interestingly, he told me that at the last place he worked, rings and watches were forbidden to be worn on any job site.  However, he told me that he was now working for himself and did not have such a rule.
   My curiosity was piqued by this statement.  The foreman did tell me that he had hooked his wedding ring several times on scaffolding and when working near construction equipment.  I asked why he continued to wear his ring-- he told me he just "forgets" to take it off when he is on the job site.
   Workplace and job site safety is one of the paramount concerns that we have as business consultants when we work with clients who have any type of risk exposure in the work place.  As the business owner, do you have a written safety manual?  Do you have daily, weekly and monthly safety meetings?  Is safety talked about each and every day, before and after task accomplishment?  If the answer is NO, then perhaps you may wish to rethink how you run your organization.  For the most part, safety is common sense.  Taking short cuts, using the wrong tool to accomplish a job, forgetting to use gloves, safety aprons, safety goggles, hard toe boots are just reasons for stupidity!  Indeed, safety is job 1.
   Whenever I am in an industrial environment, there are several items that I search for immediately.  Safety gear and proper safety appliances is the first item I always look to find.  I like to inspect the fire extinguishers and eye wash machines to see if they are current and up to date.  If I find that either have an expired inspection date, then I know that there are going to be other items that I will also find.  What this tells me is that the foreman, manager, superintendent, owner, has failed to pay attention to detail.  Attention to detail is the key to safety compliance.
   There is no reason to allow any of your workers to NOT FOLLOW proper safety procedures.  There is no reason not to have all of the proper safety equipment, i.e., gloves, eye goggles, eye wash machines, guards, shields, noise and hearing protection available and required for use by all employees.  The small cost of these appliances is inconsequential when compared to a serious injury or workman's compensation claim.
   Do not allow your workman's compensation rates to rise foolishly.  Take the proper action today to buy and require employees to use all of the proper safety equipment necessary for a safe job.  Safety is job 1 and it begins with you, the owner of the business.