A whole-company approach is what master strategist Grant Howard recommends for distributors who want to excel in a competitive marketplace. In this exclusive interview with TheUserGroup.org, he lists four steps executives can take to keep their businesses focused, productive, and strong.
Keep Your Customers at the Forefront
A company’s major objectives are profitability, longevity, and growth. But when distributors put all their emphasis on gross margin and return on assets, “it often leads into poor directions for the longevity of our company,” Howard warns.
“What often happens is that we’re so focused on the bottom line that we forget about the customers who actually keep us in business.” Executives can balance their objectives by turning their attention to vendor performance, employee productivity and, most important, the customer experience.
“The big areas we talk about today are the elements of a perfect order,” he says. “What is our fill rate? Do we have the right inventory when they need it? What’s our on-time delivery? And can we do this accurately, delivering the right product, the right quantity, and the right price?”
Metrics and Measurement: Too Much, Not Enough, or Just Right?
Distributors have access to far better business intelligence (BI) and business analytics (BA) than ever before, but Howard says many of them are still struggling to make good use of the tools that are available to them.
“A lot of companies just don’t measure, or they put out their objectives and go back at the end of the year to see if they’ve hit them,” rather than measuring more frequently and issuing course corrections as needed.
At the other end of the spectrum are the companies that “measure too much, or measure the wrong things,” he says. “They’re so overloaded with data and analysis that they lose sight of what their measurement is telling them,” going on an “unguided fishing trip” rather than “knowing what they’re looking for and checking their results.”
Infor has done its part by delivering the right software tools for BI and BA. TheUserGroup.org does the rest, creating a forum for members to learn from each other while bringing in podium presenters like Howard for expert guidance.
“You often see a company that says, ‘no, we can’t do that, it’s too hard,’ and then they meet someone who’s doing it,” Howard says. “When you talk to someone who’s successful, they’re excited about the results, and they tell you how it helped change their company, that gives you the impetus to do it yourself. Companies get to share at TUG, and that gets them on the path.”
Standardize Before You Optimize
There’s no point trying to optimize business processes that are already holding your business back. “Many companies think they can buy some technology, push the button, and it fixes whatever they’re trying to fix,” Howard says, but “technology just speeds up whatever you apply it to. If it’s a good process, technology will improve its accuracy, speed, and efficiency.” But with a poor process, or no process at all, “it only speeds up how quickly we can mess it up.”
The solution is to review and refresh business processes, get the right technology in place to support them, and make sure every employee knows how to make best use of the system. “Education is the key that ties our processes together with our technology, all leading to better accuracy, consistency, and efficiency within our companies,” Howard stresses. Which means the many distributors that lack formalized training and education programs are losing efficiencies and leaving money on the table.
Technology from End to End
In a bid to cut costs, many distributors have eliminated the technology operations staff who could take an end-to-end view of the enterprise and optimize business processes. Howard says that’s unfortunate, but “it’s not that we don’t have that body on payroll. It’s that we don’t have that way of thinking,” with the result that companies “chase fires, chase symptoms, rather than chasing root issues.”
Too many executives are so busy doing their business that they’ve forgotten how to look at their businesses, he adds. “They need to put together the right processes, utilize the right technology, and make sure employees know how to do it. It’s magical when that comes together.”
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