Have you ever watched one of those Cookery programmes on TV? These shows tend to focus on preparing dishes for a specific purpose, e.g. a dinner or party menu or, they focus on creating a number of dishes using a specific ingredient or device, e.g. Beef dishes or a range of dishes that can be prepared on the BBQ.

In all cases, they take the viewer through a series of mouth watering steps and end up with some very tasty looking creations.

So what has that got to do with you and how you manage your business?

Let’s walk through one of these cookery programmes.

Regardless of whether you are watching Rachel Allen, Jaimie Oliver, Gordon Ramsey or Bobbie Flay, all of these programmes follow the same process; they begin with the end in sight. At the start of each programme, you are told what these TV chefs intend to create. So before they begin, they already know their end goal. In business, as a manager or owner, you should always know what your end goal is.

What are you seeking to achieve from your actions today?

If you can’t answer that simple question, then why are you taking the actions?

I have never seen a TV chef start a programme scratching his/her head, looking blankly at the camera and saying, “Hmmm, I think I’ll make, ehm, well let’s just chop this and we’ll see…” So our chefs know exactly what they are going to do, before they start. On top of that, they hvae developed a strategy for how they will achieve their outcome. What else can we see?

One thing I notice is how everything the chef needs is ready for use; the meat, fruit, vegetables, spices and other ingredients are all measured out, within easy reach and ready for use. Also, the tools and equipment are clean and ready for use when needed, i.e. they are prepared. They know that they have the materials and equipment they need so when they start, they know they will be able to complete the task.

So, our celebruty chefs know what they want to achieve before they start and that allows them to gather the equipment and materials they will require that will help them to achieve their goals.

In Business, there have been numerous moves to achieve these techniques, but in the commercial world we don’t call it cooking. Instead, we use terms like ‘Demand Pull’ to signify a system where the end goal (customer demand) ‘pulls’ materials through a production and supply process. We use terms like Lean & Agile production or KanBans to signify ‘having what we need ready when we need it and in the quantities we need it’. Unfortunately, many companies see these commercial terms as distant dreams, unobtainable or “only for the big guys”. But if we see things more simply, are they really that much out of reach?

I must admit that I like cooking & baking and I regularly use a baking analogy to help students grasp the concept of more commonly used business terms.

Suppose you are inspired to create a special cake for that someone special in your life. Chances are, you have a cookery book by one of the celebrity chefs you have seen on TV. So your end goal is a beautiful cake, i.e. your production output to meet your customer’s (that special someone’s) requirement. What do you do next?

You probably find the recipe in a cookery book. But what is a recipe? It’s a list of ingredients that need to be combined which, if done correctly, will result in the cake you want to produce. In Business terms, the recipe is a Bill of Materials (BOM) that will be needed in order to achieve the output. Because this Bill of Materials tells you exactly what you need to produce a single output, it is a Lean process that, if followed correctly will result in no waste and has a ‘Right First Time‘ approach. One other thing, your recipe will tell you what equipment you will need, e.g. weighing scales, pots, cake tins, oven temperatures and cooking times, etc. In other words our cooking metaphor is helping your formulate your Manufacturing Resource Plan (MRP2). Finally, your recipe also gives you the sequence of steps required to make your cake, i.e. your Master Production Schedule (MPS).

So you know what you want to produce, what equipment and materials you need to produce it, the sequence with which to carry out the tasks. In business terms, you know the Actual Orders, the Materials Requirements, the Manufacturing Resources needed and the Master Production Schedule, all from a recipe in a cookery book!!

Do you see how Life imitates Business?

Do you see how you don’t have to be a Global company to understand (or experience) the key concepts of business organisation and to apply global concepts of business such as Lean principles, Production Planning, etc?

Let’s continue with our cake.

So, you have checked the recipe in the book. You have checked that you have the pots and pans needed. What’s next?

Well for me, the next step is to see what ingredients I already have and, which ingredients I will need to buy. Lo and behold, we are conducting an Inventory check. A warehouse doesn’t have to be a big industrial building with forklifts and racking. In the home, your warehouses are the presses (or larder) in which you store the food you eat. You even have specialist warehouses in the form of a Fridge and Freezer!

Based on your inventory check, you draw up your shopping list. In business terms, you develop your purchasing plan from your Materials Requrement Plan (MRP).

Now we are into the function of Purchasing, having started our journey in Sales & Marketing (deciding on which cake to bake), Planning – in conjunction with Production (to decide on the materials required, check available capacity, equipment and time) and Warehousing (to check our inventory situation). Regardless of the size of your business, you have involvement in each of these functions. I think the biggest mistake smaller business owners make is to fail to recognise the fact that they work in these areas. In larger organisations these functions are seperate and have teams managing them, whereas in smaller businesses all of these functions may fall to one person. Recognising the different facets of operations can help smaller business owners to maintain the focus they require to apply the same techniques as the larger organisations they may be jealous of.

So, back to our story and, what does Purchasing do?

Purchasing is the function responsible for sourcing and buying the materials required to ensure the company can produce its products and services. In our cake analogy, we know the ingredients we need. A check of the presses or larder will tell us what we have (or have not) from the required list. So in essence, we have conducted a GAP analysis to identify what we need to buy.

When you are looking to do your grocery shopping, why do you go to one supermarket instead of another? Do you order on line and have your groceries delivered or do you go and collect them yourself? How does grocery shopping relate to a business concept? Well, Purchasing is faced with the exact same thought processes every day as part of its role. Why does a Purchasing manager buy from one supplier over another; price, quality, service, availability of stock? Most companies have their orders delivered, however, in a effort to reduce costs and increase efficiencies, many are now looking to see if they can get one of their trucks call and collect purchased materials on route back to the factory. This reduces the cost of materials (by taking out the supplier’s delivery charges) while increasing the utilisation of vehicles that may already be on the road running with capacity to carry materials. The concept is known as Factory Gate trading. By deciding to collect groceries from a supermarket you are applying this very concept (you are not paying the delivery charge and may already have your car on the road as you travel from work).

So now you have all the materials you need to bake that special cake. You plan your production so that you will get the cake completed within a specific time and in advance of when you need it (exactly the same as in every production company on the face of the planet).

As you can see, you apply complex business techniques in your life. So why are they so difficult to apply in your business? You don’t buy a catering pack of flour when all you need is enough to bake a cake, so why do busines owners lose the run of themselves and blindly buy in bulk “to get a great price”, much of which ends up being written off.

Why do we confuse ourselves with the complexity of the fancy terms and concepts we come across in business when, in reality, they come naturally to most of us in our everyday lives?

Why do we not see how the planning and preparation of the cookery programmes we watch on TV can be applied to our own businesses, regardless of size or product?

Business is easy. It’s the people working in it who make it difficult.

Dumb it down and be successful!!!

Whether we want to or not, businesses are faced with continued pressures to survive today. While there are many reports of signs that the economies of the world are improving, on the ground businesses are still struggling to stay in business and cut costs while meeting the ever increasing demands of their customers. Unfortunately, this leads to some hard and often dramatic decisions such as reduced service, less opening hours, reduced staffing, or even closure. It is easy to be depressed in these challenging times. However, what amazes me is that there are things companies can do that will help. Simple things that (hopefully, when I list them below) will result in some of you saying “DOH!!”

In this short article, I want to suggest some possible approaches to help businesses reduce costs using some simple purchasing and supply chain techniques.

• Buying & Networking

Most small businesses today are involved in some form of networking. They may be formal members of networking groups or they may simply avail of networking opportunities organised by Chambers of Commerce or other bodies. What happens at these events? in general, you meet with other businesses in similar positions to you. You discuss your difficulties and hear that you are not alone. In fact, one of the most common feedback statements I have heard from Networking Functions relates to the fact that “it’s great to learn that others have the same problems as you”.

So we meet and we learn that other companies, some of whom are in similar business to us, have the same problems as us, but we do nothing at these events to proactively improve things.

So what can you do?

How about this? Next time you are at a networking event, why not discuss sourcing and purchasing of materials with the other businesses attending the event? Why not use the Networking event to establish a Purchasing Consortium, i.e. increase your purchasing power?

A Purchasing Consortium is a group of businesses who come together for the sole purpose of maximising the buying power of the group. They focus on common products (even focusing on ‘B’ and ‘C’ class products will result in savings) and spread the saving across all of the group members (rather than one company tying up large amounts of cash in bulk bought inventory).

I suggest that instead of arranging networking events for companies to meet ‘and do business together’, companies should be brought together to explore possible joint purchasing opportunities. By consolidating orders, purchasing and delivery costs will reduce. Members of the consortium will not have to tie up large amounts of cash in order to avail of the price breaks associated with higher volume orders, which frees up the cash for more operational requirements.

• Transport Networking

What about Transport? Many companies who are competitors transport their products to the same customers. How about networking transport. Companies need to recognise that they do not compete on the back of a truck.

While numerous companies already avail of consolidated transport of their products through 3PL operations, there are equally a large number who have their own fleet of vans/trucks that they need to fully utilise. Your transport fleet is only returning on your investment if it is adding value to your operation. Sending out a vehicle that is half full is not giving you that return.

Instead of running half empty vehicles, are there companies in your area that you can deliver for while running your own deliveries? Can your vehicles run a back load service for businesses in your area which would help with the previous point by negotiating for a factory gate price (eliminating the delivery cost)?

Large companies frequently seek the assistance of those delivering products to them in order to move products to other locations. It speeds up deliveries and reduces costs. Why can’t you and your fellow/neighbour businesses do the same?

• Buying Local

There is a myth that buying from local suppliers is too expensive and that products can be sourced cheaper from foreign markets. While it may be true that the unit cost of a product can be cheaper if sourced from one of the growing markets in Asia, I have continually come across companies who forget one of the most basic principles of purchasing; Total Cost of Ownership.

I had a client at one time who boasted how she was able to source a container for her product at a “ridiculously cheap” price from a supplier in China. When I heard that, alarm bells started ringing in my head. I asked her, how many did she have to buy to get the price that was so good. “A million”, she said. So I went for the jugular;

How many do you use per week? “1,000”

1,000?? That means that you have bought 1,000 week’s stock? “Yes”

Where are you going to store 1,000 week’s of stock? “Ahm…They’ll be coming on a container, won’t they?”

Yes, but the shipping company will want that container unloaded immediately and returned or they will charge you a daily/weekly rent. “Oh!…”

And so it went. In effect, this client had forgotten the basic concept of Total Cost of Ownership (TCO). Put simply, the TCO is the addition of ALL the costs that should be applied to the unit purchase price from the time of ordering to the time you take delivery of the product, i.e. the TCO is:

The cost of ordering + the purchase price + ALL Customs/Revenue Charges + Transport costs + unloading costs + Storage costs + insurance/security/lighting/heating/etc Costs + Obsolescence costs + + + +

The facts are simple (yet easily forgotten in the cloud of a cheap unit price); the longer the supply chain coupled with the higher the quantity required to order, the more expensive the TCO will be.

While the unit price can be a very tempting draw to purchase, let’s look at another simple fact; a longer supply chain means a longer lead time. This fact must be covered when ordering and holding stock. For example, if your lead time is 6 weeks, then you will always need to hold at least 6 weeks stock of materials to ensure your ability to supply the demand for your products.

If, however, you source your materials more locally, your lead time will be reduced, which means you will not have to hold as much inventory. Reduced inventory = less capital tied up in materials = greater operational potential.

• Conclusion

I know that after reading this, many will say “No Way!!” we can’t share vehicles with other businesses, especially those who are our competitors. Some will say that “Our products are so specialised that we could never enter a Purchasing Consortium”. The truth is that while there may be SOME products/materials that companies cannot partner up on either for purchasing or transport, I’ll bet that, with some honest consideration, there are equally a large number of products that could be jointly sourced and transported.

The payoff is in the fact that pulling together with other companies in your area has the potential to give your business numerous benefits including:

• increasing your buying power,
• reducing costs,
• increasing efficiency of transport utilisation,
• increasing employment,
• freeing up capital
• etc., etc.

Isn’t that what Networking is really all about???

Some time ago I was speaking with a Senior Executive from a local organisation. Our conversation moved to Life and Executive Coaching and of course the usual question; “what’s that all about?”. I set about explaining the concept of Coaching and when I finished he paused for a while and then said “I could do with that”. Of course I was thrilled to have a new client, but I was really amazed by his reason for opting to be coached.

He said that the position he holds (Managing Director) is an extremely lonely place, particularly in the current climate. He said that his staff were turning to him for security while the Board was putting him under pressure for the performance of the business. His big issue was; “Who does the MD/CEO turn to?” It was an eye opening question.

In the current economic climate, many senior executives are under pressure from all sides; staff want reassurances regarding job security, Boards want to see the business survive, maintain efficiencies, cut costs and make a profit and it falls to the senior executives to make it happen. With such pressure, it can be easy to lose focus or even to burn out. This is the last thing any organisation wants. Yet many fail to grasp the importance of helping the CEO (including the CEO!).

In business, we tend to see Senior Managers (not just CEOs and MDs) as strong people, captains of our organisational ship. We expect them to be focused on what affects us; namely, Security in the case of workers and, Return on our Investments in the case of the shareholders. Our business leaders must be stoic in the face of adversity, never flustered, always forward looking and able to deal with the immense pressures of their roles. After all, they are Senior Managers and they are being paid accordingly. We forget that these same managers are people. They are prone to the same worries and stresses that us mere mortals have. The only problem is; Senior Managers can feel that they are adrift in a sea of uncertainty. Alone. Many expectations from all angles and no one to share their personal worries with in case it shows weakness.

There is a solution though; Executive Coaching and NLP (Neuro Linguistic Programming). Coaching is a non-directive process that enables clients to take stock of their current situation (both in their private and working lives) and to re-focus and take control of their situation in a very proactive and effective way. NLP is a process that assists in meeting the desired outcomes by identifying barriers or obstacles (particularly unconscious ones) that are holding the client back.

Through the process, clients can set a new course that will ensure a new energy, greater awareness and openness to possibilities as well as a much more positive approach to the task at hand.

Basically the Coaching process will keep executives at all levels at the top of their game, which will have a positive impact on everyone in the organisation. We all know that if the boss is happy, everyone can be happy, right?

It is more common to hire a business coach to help analyse operational issues. However, companies should also begin to look at bringing in Executive Coaches for their senior staff. Suitably qualified and experienced Executive Coaches provide the safe space for Senior Managers to explore their situation. A great Executive Coach will be that “Who does the MD/CEO turn to?” person. They will be able to use tools and techniques from their Coaching/NLP/EQ and other Behavioural training as well as bringing their own commercial experience to the relationship so that they can ask the right questions and create the ideal environment for the Senior Manager.

In the Coaching environment, the Senior Manager has a safe space to vent their frustrations or concerns or fears. It is also an environment where these same managers can explore options to overcome these obstacles. The Coaching space is a place where the client is not facing the issues alone (the Coach is there to help them). It is a space where options can be explored in confidence and confidentiality. And the result?

Fears, frustrations, stresses and obstacles are effectively dealt with. Senior Managers develop the skills to deal with the issues they encounter and, more importantly they discover a space where they can release the pressures of their senior roles.

If you are a Senior Manager, can you afford NOT to have this life line available to you and your senior team?

InnoChan Solutions can help. With considerable commercial experience, who better will understand the pressures that today’s executives are experiencing. Using the change techniques mentioned earlier, you can retain your staff, improve performance and look to the future with confidence. Senior managers work hard, but they should have somewhere they can turn to when the going gets tough and the pressure becomes too much to handle.

Many of the world’s largest companies have already recognised the benefits of making Executive Coaches available for their Senior teams. This ensures the retention and development of the best minds in business. Don’t you deserve the same?

So what’s stopping you?

The behaviour of your staff is always motivated by something, e.g. the task, company culture, environment, etc, etc. As a Manager, if you can understand the motivation, you will understand the behaviour of each of your reports. As an extension of this, it makes sense that if you can manage the motivation of your staff, you will manage their behaviour. This makes management more effective.

iWAM (inventory for Work Attitudes and Motivators) is an EQ test that uses 48 cognitive patterns (known in NLP terms as Meta-programmes) to identify what motivates staff members in their work environment. The test is probably the most in depth analysis of motivational attitudes that exists today making it a vital tool for managers.

InnoChan Solutions is the only company in Ireland who is licensed to deliver certification training for the iWAM test to HR, Management and Coaching Professionals.

So where can iWAM help?

The iWAM test can be used at every level of Management and HR processes including:

• Recruitment
• Management
• Development

In Recruitment, iWAM can be used to identify the motivators required to successfully work in a vacant role. This knowledge will help identify the language needed in the job advert to attract the right candidates, thus reducing the cost and time reading through lots of unsuitable applications. Additionally, it is possible for companies to develop Models of Excellence in relation to specific roles within the organisation. The MoE will focus on the specific Motivators required to fulfill the role and can be used as a direct psychometric test to guage the suitability of applicants. In short, iWAM reduces the time and costs associated with recruitment while better ensuring that the selected person will be a better fit for the role (avoiding a repeat of the process in a few months).

In Management, iWAM will help managers, supervisors and team leaders to manage their teams in a more effective and engaging way. The days of the ‘one size fits all’ style of management are gone. In order to achieve maximum employee engagement a manager must know what motivates his/her reports and manage them accordingly. The iWAM Team report will provide this information. The result? A motivated team, targets met (and exceeded), improved staff retention, better working environment, greater use of individual staff skills, etc.

In Development, iWAM will help senior management to identify specific areas for employee improvement. It helps management decide on the promotion potential of supervisors, team leaders, etc. If your organisation is multinational, you may want to promote one of your managers to a role in a foreign division. It is time to unveil another  of iWAM’s powers; regional comparison. Unlike many other EQ tests which are run against global comparisons, the iWAM test is run against a geographical ‘Standard Group’. So, how does this help? Let’s imagine that you are recruiting for a management role in a division in the Asia. You want to select someone who will successfully fulfill the role as well as fit into their new working environment. The iWAM test can be run against the ‘Standard Group’ of the area/country that they will be working in. The report will quickly highlight any potential cultural issues that might be encountered. This will give the new manager time to address the issues or, give the company time to select someone who will better fit into the new culture.

iWAM is the new way to manage your business. It is an extermely powerful tool that will result in:

• Greater efficiency,
• Improved management effecitveness,
• Reduced costs,
• Greater Staff Retention

You can’t afford not to use iWAM.

As the ONLY company in Ireland licensed to train iWAM test administrators, InnoChan Solutions can administer the iWAM EQ test for your entire company from the most senior managers to floor staff. We can also train you and/or your HR department to take over the administration of the test so that you can do it yourself.

Contact us today at info@innochansol.com to arrange a no obligation discussion on how iWAM can work for you.