Language Matters – Purge Pesky Personal Pronouns

Introduction

This is the second in a series of vignettes about supply chain that I will be sharing as part of my experience as an Executive Supply Chain Partner for Gartner. Since I spend so much time traveling to and working with clients, I’m calling it “Sojourns of a Supply Chain Road Warrior.” The stories will all be real but will never identify the actual companies or individuals involved. In every story there will be a message about the challenges and successes of supply chain teams and leaders.

This piece is about the impact of the linguistics supply chain professionals use to discuss what they work on and what they need to change or fix. Language matters! If we cannot communicate effectively with our constituents in or outside of our company, we will fail miserably.

We were discussing metrics during recent supply chain assessment interviews with a client. I measure alignment of the CSCO’s top 3 metrics with his or her team’s view to gauge organizational consistency. When the question about forecast accuracy came up, the client said, “Their forecast accuracy is terrible, no wonder they don’t like when we measure it!”

Is It What You Say or How You Say It?

As I flew back home from the day of interviews, the forecast accuracy comment reverberated loudly in my mind. I’d seen that movie before and remembered how difficult it was to separate the intent from the personal attack implied in the wording.

I routinely share communications effectiveness advice with my clients. All too often, supply chain initiatives fail due to the inability of the team and its executives to influence constituents to buy-in and engage on great supply chain ideas, like S&OP improvements.

What causes some initiatives to never take hold? One contributing factor is what and how the messages are conveyed. If the supply chain team walks around telling everyone how much their asset utilization will improve or how excess inventory will be reduced or how factory efficiency will increase they are likely to get a significant amount of eye rolls by those who they corner to discuss the stuff. The listener can’t get out of there fast enough.

If you cannot speak the language of the business, your supply chain initiative will go over like a heavy rain during a picnic.

What they are saying makes sense. How they are saying it makes no sense … to the listeners. Language matters!

Are You Talking to Me?

In a prior role I witnessed an excessive use of personal pronouns during our supply and demand matching meetings. While the teams had worked together for a number of years, they were talking at each other and not with each other. The constant “you, your, yours, and I, me, mines” had slowly and steadily built a wall between the groups.

Who wants to work on an initiative when it starts with “Your forecast accuracy is why our inventory is too high!”? Not me, that’s for sure.

What they were saying is that forecast error was high and that it led to higher inventory in too many cases – even excess material that had to be written-off and discarded.

How they said it implied that the individual was performing poorly and was affecting their work. The conversation should have opened up a discussion about what drove the accuracy issues and how the teams could work better together to resolve it.  Instead, there was a stalemate as both sides acted defensively – meaning nothing got discussed or resolved.

If you are going to make a point about change or improvement, keep the other person out of it. Say something akin to “The forecast error is high.” Or, “The data show that excess inventory levels have increased as the forecasts have been above actual demand consistently.”

No-one is offended when there is no mention of I, me, you, your, they, theirs, and so on. That said, using “we” more often is definitely a way to build engagement and alignment.

Getting the Message Across

Something is definitely lost when the message comes across as a personal affront, even if it is not meant to be one.

During the assessment interviews I typically look for common themes or differences between what the various participants tell me. It’s rare I give advice directly at this juncture of the relationship. After the client made the comment above, I could not let it go.

“Do you speak to the demand planning or sales team like that? You call it ‘their forecast’?”

I got one of those “why are you asking me that question” looks.

I told him that asking it in a manner that the receiver will hear as personal, he’d never be able to drive resolution. He made it sound like the person was doing a poor job. It’s imperative that one separates the message from the recipient (or sender).

Whatever you do to ensure clarity and understanding of your messages, be sure to keep the focus on what is wrong or what needs to get addressed, not who’s part of it.

Does your supply chain clearly understand how to communicate issues and opportunities? Don’t let it get lost due to pesky personal pronouns!

Michael Massetti is an Executive Partner for Supply Chain with Gartner who really does enjoy being a supply chain professional! Seriously. All opinions are my own.

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So, you really enjoy being a supply chain professional? Part 2

Are Demand & Supply Driving Your Supply Chain Crazy?

Let’s face it, supply chain is a fascinating and pressure-filled field. Supply chains deliver the products that customers demand. The concept of a demand-driven supply chain was developed by Gartner (originally by Debra Hofman from AMR Research). It’s a great concept that the entire supply chain be driven by demand. Albeit, what it usually drives is the supply planners crazy. Don’t you wonder sometimes how and why you got into this field?

Through a series of articles and musings, I will share some thoughts through adages, quips, and comics that will look at supply chain with a tongue-in-cheek perspective. I look forward to comments and other perspectives.

This second article will look at the vagaries of demand and the vicissitudes of supply. Future story lines will include supplier management, inventory, supply chain risk, logistics, and managing numbers.

Supply Demand Comic 1 

Demand planning is the art of integrating multiple, independent, and inaccurate signals into one accurate signal.

Demand is the baseline for all things supply. Customers’ desire for a product drives the demand and is the foundation for business volumes. Without demand there is absolutely no need for supply and even less need for supply chain folks.

But, where does the demand signal come from? It’s a question that remains mysterious for supply chain professionals.

Demand planners have a plethora of signals available to them – point-of-sale (POS) data, macro market or economic trends, historic demand accuracy, promotional effects, seasonality, business targets, prior product launches, actual orders, and more. While these are options aplenty, by themselves, none of them are sufficient or accurate.

Shouldn’t demand planners be able to get it right with so many variables available to them?

The reality is that most of these signals are rear-view mirror perspectives. As financial planners say, “past performance may not be indicative of future results.” We all know that if you drive your car by looking solely at the rear-view mirror you will eventually go off of the road. Not a good thing.

While many solutions providers have developed amazing tools and statistical techniques for demand planning, the fundamental problem of keeping demand stable and accurate remains unsolved, at least from the supply planner’s viewpoint.

Could it be that there’s more art to demand planning than anyone wants to acknowledge? So maybe the key is to channel our inner Picasso rather than our inner Newton. Regardless, each cycle, whether weekly, monthly, or otherwise, the demand signal is passed on, like the hot potato it is, to the supply team to work with.

And it’s usually different than the last one submitted. 

Supply Demand Comic 2

Supply planning is the science of delivering that exact signal regardless of how much or often it changes.

The supply planning team has the unenviable job of taking that ever-changing signal and converting it to a very specific plan for their factories to deliver. Reducing the uncertainty in the ability to deliver the products required is of utmost importance.

Supply planners are evaluated on finding the ever elusive perfect balance between the triangle that is forecast accuracy, on-time delivery, and stock levels. What’s your business targets for on-time delivery to your customers? Methinks it is well over 90%. 95%? 98%?

Is that even relevant in this day and age? We’re just being measured on our ability to serve the next link in the demand chain. Want a real headache? Start integrating notions of on-shelf availability one or two levels down the chain.

Factories do not deal with ever-changing requirements very well. Shooting at moving targets is not manufacturing’s core competency. They expect to have clarity and stability to be most productive. Building the same exact products at the same volume every single day keeps factory GMs young, vital, and stress-free.

That’s just not the real world of demand and supply. Enter the necessary evil: Stock.

While the demand may move around a lot, supply has a few tricks up its sleeves to mitigate the variance. Buffer stock of inventory and manufacturing postponement techniques are just two of many tools that the supply side can employ to reduce the effects of demand uncertainty.

Regardless, the never-ending conflict to balance the vagaries of demand with the specificity of supply contributes to the sleep deprivation of supply chain practitioners.

Supply Demand Balance Lever

Balanced supply & demand is a rare event they are actually two mutually exclusive, independent signals that occasionally intersect in time and space.

The assertion remains that demand accuracy is fleeting and changes in the signal are frequent and sometimes severe.

The monthly S&OP was our venue to manage the long-term balance of supply and demand. The cycle commenced with an updated demand signal and the supply team would evaluate inventory, capacity, incoming materials, and any constraints to match supply to the demand.

Imagine a giddy set of supply geeks preparing to tell the CFO, COO, CSO, and other execs that we can support the revenue and demand plan. Yeah, baby!

Then, the sucker punch appears. “Actually, we have changed the demand signal for you to evaluate.” Thud.

I lost count of how many executive S&OP meetings that we would be presenting that seemingly perfectly balanced supply plan with the demand signal from the business when the head of demand would utter that sentence. Are you kidding me?

And you thought that Nadia Comăneci performed miracles on top of that 4” wide padded suede beam!

At a macro level, supply and demand balance is quite achievable. But, we all know that attaining that balance at the micro or SKU level is the Holy Grail of supply planning. In those S&OP meetings, the total supply would easily match the total demand. That said, we’d have a list of angst-inducing shortages accompanied by a list of Little Orphan Annie excess products.

Chasing demand is the never-ending pursuit of supply chain. Sort of like that little puppy going ‘round and ‘round after its tail for minutes on end, only infrequently getting to it.

Balanced SC Metric Chart 001

“Forecast accuracy is the biggest oxymoron in supply chain lexicon.

I’ve often quipped that supply chain personnel typically do not utter the words “forecast” and “accuracy” in the same sentence without including a few other colorful adjectives.

For many, forecast accuracy is seen as the sole responsibility of the demand team. For an organization to truly mature, it needs to be a shared responsibility with marketing, sales and finance. The more the merrier. It may not be more precise, but it does increase the odds of a kumbaya session in the next S&OP meeting.

The numbers tell it all: world class demand planning accuracy is ~80% but you get fired if your supply delivery or manufacturing output accuracy hovers anywhere near 80%.

OK, maybe this stretches it a bit. However, the point is valid. Best-in-class demand planning is typically in the 70% range and supply chains get measured on their ability to reach the “Perfect Order”. I’ve been with companies that have settled for 65% as an “aspirational” target.

What is the cost of poor forecast accuracy? Heck, what’s the cost of 65% forecast accuracy? There are only a few levers available to accommodate a 35% degree of uncertainty – carrying more inventory or reducing service levels are two.

If we take a look at Gartner’s “Hierarchy of Supply Chain Metrics” and modify it ever so slightly, demand accuracy, inventory (instead of supply chain cost), and service level (instead of perfect order) are inextricably linked. If demand accuracy is low, something else has to be traded off. Either you carry more inventory or you risk lower service levels. We all know that both can be detrimental to a business.

No wonder so many of our top-talent supply chain planners moved to the demand side of the business.

ciao…mam

Michael Massetti is a global high-tech supply chain executive who really does enjoy being a supply chain professional! Seriously.

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So, you really enjoy being a supply chain professional?

Let’s face it, supply chain is a fascinating and pressure-filled field. Supply chains exist to deliver goods and services to customers to allow their company to make money. Albeit, they are last on line, which means that all the fun begins and ends when supply enters the fray. It’s a great profession that spans myriad disciplines – procurement, manufacturing, supply/demand planning, logistics, and much more. There’s excitement in every corner waiting for you! Don’t you wonder sometimes how and why you got into this field?

Through a series of articles and musings, I will shed some thoughts through adages, quips, and comics that will look at supply chain with a tongue-in-cheek perspective. I look forward to comments and other perspectives.

This first article will look at supply chain itself. Future story lines will include supply and demand, supplier management, inventory, supply chain risk, logistics, and managing numbers

 

No matter how the problem starts, it always ends up as a supply issue.

the_broken_chain1

Remember the game we used to play as kids where we’d all line up and the leader would tell the first person something who in turn would tell the next person in line until it reached you at the end? How many times did the message you heard ever survive that journey?

Managing the supply chain is quite similar. No matter how or why a problem starts off, a demand error, a design error, a change in customer’s mind, an unforeseen holiday, a weather event, or a quality issue, it always becomes the job of the supply chain to deal with. Immediately.

I’ve lived through this type of hell before during a launch of a brand new product in a brand new technology that was a disaster. The company and customers were clamoring to get this highly innovative, disruptive device. It turned into 17 weeks of stress and being under a very bright and hot spotlight trying to get enough supply to meet the demand.The demand seemed to grow every day we said the supply was still in trouble. I saw my CEO, CFO and CSO more times in 17 weeks than all of the previous years in my career. Ugh.

It takes some backbone and a lot of mental fortitude to resolve issues, especially those that affect multiple customers, which means YOUR bottom line. Owning the issue, maintaining accountability, but working with a sense of urgency across all the organizations needed to fix the issue is essential for success.

You never know when the opportunity (right!) will prevent itself to the supply chain to deal with. Hold on tightly or you’ll be taken for a ride instead of driving it yourself.

unpopular_logo

Supply Chain people are only popular during their highest state of unpopularity.

How many times have you gotten that blank stare when you tell an inquirer that you are in supply chain as a field? Huh? And then you try to explain it. Not worth it. They just won’t get it.

Most of the time, that’s how everyone in the business world feels and thinks about supply chain. Who? What? Oh, those guys.

Until it hits the fan. And, it always seems to hit the fan. Suddenly, without notice, you are amazingly popular. Instantaneous infamy. What a pleasure!

Then all the help starts to come. Everyone’s an expert. “That is an easy problem to solve, just tell the supplier to fix it.” “How come you didn’t anticipate that the typhoon would hit when the shipments were due?” “Just expedite the manufacturing.” When you try to explain the few laws of physics that come to mind, that “deer in the headlights” look resurfaces. “Tomorrow?” they ask. Back to work, time to move on.

The redeeming value is that we get to be heroes. Hopefully, we weren’t the arsonists. Putting out a blazing fire is exhilarating but not what we aim to do on a daily basis. That is way too exhausting.

Once the problem is cleared, normalcy returns to the supply chain folks. Who?

build it and they will come

In “The Field of Dreams Kevin Costner was told “build it and they will come. In supply chain and manufacturing, if we build it they will order something different.

In the next article we’ll talk more about supply, demand, and the elusive balance of the two.

For now, we all know the supply chain financial drill. Drive to lower cost of manufacturing, increase asset utilization, improve cash flow, and the world will be great. Sufficient inventory to handle upside demand. The CFO will smile and the supply chain team can remain out of the limelight.

Right …

The build plan was vetted with marketing, with the business unit, with sales, with everyone during S&OP. Manufacturing is told to get the inventory in place – lead times are real, so you have to build in advance. Then the orders come in.

“I know we ordered that SKU but we need the other SKU now. How come you can’t give us the other SKU instead?” We hear it all the time. Other times you blow through all of the buffer inventory, expedite the new parts to replace the stock, and the order changes again.

Chasing demand is the never-ending story of supply chain. How much do you need? By when? OK, we’re on it.

ciao…mam

Michael Massetti is a global high-tech supply chain executive who really does enjoy being a supply chain professional! Seriously.

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