There are many problems or opportunities in any business. There is an entire discipline in finance related to measuring the impact of individual projects and ranking those projects by their potential return on investment. And usually, the results are mathematically correct, but pure hogwash!
By hogwash, I mean the numbers are probably right for what is being measured, but the measurement is insignificant when compared to looking at devoting resources to improving enterprise value. While reducing picking times can be measured in fewer labor hours for that class of work, the impact is much greater than saving a few labor hours. The impact is potentially better shipping performance. Better shipping performance leads to a better reputation as a predictable supplier. That leads to higher top line and fewer cancelled orders. What looks like a, for example, ten percent reduction in picking labor, could be a zero reduction in picking labor but higher top line and better throughput.
Title 2 Business Services approaches solutions from an Enterprise Value perspective. Instead of looking at a bunch of “best practices” in particular areas, we want to look at the business from the top down. Our first look usually starts out looking at the following:
A. Predictability as a Supplier
1. Managing document dates accurately
2. Managing capacity
3. Managing an accurate forecast
4. Tools to do the job
B. Inventory Turns
1. Good visibility of demand
2. Risk-adjusted supply chain
3. Predictability in internal supply (manufacturing)
4. Tools to do the job
C. Order Dwell/Customer Inventory Turns
1. Actively managed backlog
2. Well managed shipping plan
3. Actively managed exceptions
4. Tools to do the job
D. Alignment of Resources
1. All activity is driven by a comprehensive plan
2. Separate plan creation from plan execution
3. Codified “tribal knowledge”
4. Tools to do the job
Being predictable improves your cost position, allowing you to be price competitive while also being the supplier of choice for those wanting a dependable supplier. Improving inventory turns requires you to have the right product at the right time and improves order fill rates while reducing cash requirements for the same level of sales. Reducing order dwell gets products on the retail shelves faster, improving the customer’s inventory turns and your sales volume. And aligning your resources keeps everyone moving in the same direction.
Of course, each of these groups requires the tools to do the job. We aren’t talking a full ERP implementation, necessarily. Sometimes, the tool is as simple as a scheduling tool in a spreadsheet.
We think the right solution always answers the best question. The best question is, at least to start, “what can I do to positively impact my enterprise value?”
If you are working through a strategic plan, trying to figure out how to improve your business before the next board meeting, or just trying to exit COVID-19 while making the most of the situation, give Title 2 Business Services a call. We would love to walk you through our approach and see what we can help you accomplish. Our initial consultation and our discovery are provided for no fees, so there is nothing to lose. But there is a lot to be gained from looking at your business from an EV perspective.