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3 End-of-Year Demand Planning Strategies to Use Right Now
Today’s episode offers 3 strategic year-end moves your supply chain planning team should make right now to close out 2019 with a bang.
Sven Aunapu, Director, LifeLine Services & Analytics at Blue Ridge and demand planning veteran Dan Craddock say these moves center around “The 3 Ps” – the areas of PROFITS, PRODUCTIVITY and PLANNING.
Sit back, relax and enjoy today’s show, hosted by Supply Chain Now host Will Haraway.
Episode 13 Show Notes
Will: Welcome back to our Planning Posts’ community. I’m Will Haraway from Supply Chain Radio and Back Beat Marketing, and I received a very special request to come in to the studio and get the podcast going and get it on the air!
The mail arrived, I quickly opened the envelope and began to read this invitation:
‘Twas the month before year-end…
And all through our community
Every planner was replenishing and prepared for opportunity!
All the orders were placed, with great service and care,
But there is a last chance for profits,
We need to make you aware!
This was the request to come in and help deliver a very special end-of-year podcast.
I have two guys sitting with me who have been telling me stories of what they used to do during the final weeks of the year. They make it sound like ‘The most wonderful time of the year’ in the inventory profession…
I don’t know, maybe it is!
They claim that the final weeks of the year are the ultimate chance for PROFITS, PRODUCTIVITY AND PLANNING.
Welcome back, Sven Aunapu and Dan Craddock.
(Thanks and hello)
Guys… PROFITS, PRODUCTIVITY and PLANNING? I would think this is more a time to kick back a bit and enjoy, but you suggest it is time to lean forward and take advantage of some opportunities.
Tell me more, and why those three specific words?
Dan: Will, it’s not just those three words.
It is those three words in THAT order:
Profits – Productivity – Planning
Sven: Dan, you have to start with PROFITS. Do you agree?
Dan: Absolutely, I do.
Sven: One of THE most popular podcasts on this show was the podcast on Forward Buying & Deal Buying. Everyone listened to Paul Rose of Henry Schein talk about how his team had that extra inspiration at the end of each year to approach those companies that had a chance to offer a deal if they received a larger order.
The end of each quarter is popular for this, but the end of the year is the grand finale. Sales people need to hit their numbers. Sales executives need to hit numbers. Production managers need to get product off of the floor.
Buying on deals is one of the most profitable inventory moves any retail or wholesale distributors can make. There is no question about that.
Dan: Will, Sven is really suggesting that our inventory community out there go pro-active.
I was an inventory replenishment buyer many years ago for a wholesale hardgoods distributor. I will admit that we were very guilty of sitting and waiting for the phone to ring. Who is going to offer us a deal this year?
That is actually what most inventory teams do. They sit and wait.
If they do make proactive calls, they often only call the companies that have offered deals in the past.
Look, here are 3 steps that we suggest to each inventory team, each leader and each executive. Yes, especially each executive and company owner:
- Learn the impact of a deal. In fact, that is a full podcast for another day.
- Choose 10 suppliers and pre-build and order for them. Example: For a 10% discount I have an order created for you which I am about to send over worth xxx thousand dollars.
- Determine who at the company will be most hungry and place the call… In fact send them a copy of the order to show that it is real.
Will: So what is the risk of doing this? Sounds like a great opportunity.
Sven: Will, here is the a critical thing to know… Nothing bad can happen. The worst thing is that they say ‘No’. What might happen is that they change your offer and make their own offer. “You know; what about 6% for xxx dollars?”
In fact, sometimes a ‘No’ is followed months later by a call to you. The time will come when they need to hit numbers and they will know that they have you to call first!
Dan: Sven, that is so true. Hey, when you were buying, did you ever return overstock in exchange for new product as sort of a swap-deal?
Sven: Yes, this is also a great time of year to print that ‘actionable overstock’ list and work it into your efforts with the supplier.
The key of course is to make it ‘actionable overstock’. You need to do the smart calculations to know that it is true overstock. And that there is a heavy carrying cost burden that you will incur if you don’t move it.
Will, there are more PROFIT-oriented items we could cover, but those two are so big that we would like to see our community really focus there.
Will: So I see why you started with PROFITs. So what is next, Productivity or Planning?
Dan: I think we need to go PRODUCTIVITY next.
You have to understand that inventory planners and buyers love any work day or any time of year when they can focus, put their heads down, and not be bothered by phone calls or tons of email requests.
Those requests slow down this time of year for many. In fact, the favorite day of the year for many in our profession is the day after Thanksgiving. What a great day! If you have to be at the office that day, you will likely have a nice quiet atmosphere and can work on projects or tasks that have been calling your name for a while.
Plus you go to a long lunch with buddies… It’s just a great day.
This overall time of year is often less busy from an inventory replenishment point of view because most of the season’s buying is done.
Now it is time to sharpen your tools and really refine your inventory components.
Sven, you start. What is an area which you took the time to enhance during these weeks?
Sven: That’s easy for me. Lead Times!
Winter lead times, including plant shut-downs and Chinese New Year, can really mess with your inventory if you are not on top of it. You need to grab any historic data you can. Grab data and see what suppliers are normally impacted.
The weather is also starting to impact lead times. Some companies go on plant shut-down in January.
Even if neither of those is a big deal for you, take the time to analyze your lead times and make sure this does not become the sleeper component!
Dan: Okay so you stole the good one, but I will hit one which we avoid too often. Seasonal Profiles…
We always say that ‘when we find the time’ we are going to get stronger at our seasonal profiling. Year-end is a great time of year to visit seasonal profiles. We suggest, don’t do it alone!
This is the last area which most inventory professionals truly master.
Start a group. Sit and refresh your education. Learn those key facts and steps you may have forgotten. See what others are doing. Learn from them. Build reports that show you your progress and your service results where you have applied seasonal profiles. ‘Tis the season to enhance your Seasonal Profiles.
Will: So in this area of PRODUCTIVITY, you are suggesting that inventory teams use the time to get stronger in their craft. Learn more, enhance their inventory components, and prepare to make the next year better.
Sven: Yes, exactly. Prepare to make the next year better. Make the next year your best results year ever.
Look, it is a great time of year to refine every area of your suppliers and their items.
Dan: Hey, now that you mention the idea of making next year the best results year ever, here is one which I think we forgot, and forget too often. Take the time this month to review and celebrate your victories!
- How was this year better than last year?
- What did you accomplish?
- What inventory planners excelled at certain areas?
Will: So are you saying that celebrating those victories is something that does not happen often?
Sven: That is an understatement, Will.
It is something we do very rarely. And yes, this is the perfect time of year to do it. There is a much better chance of next year being better if you take the time to point out, and celebrate, the victories from this year.
Will: Okay, so let’s say that the party just ended. We just celebrated these great results, but we still have time this year. What about your final suggestion: PLANNING?
So, start with Planning your Team’s Development! Always start there.
- What training will be offered?
- What coaching will be offered?
- What blend of system training and personal development will happen?
- Will this be in-house or will we bring in professionals?
- Live or online?
There are now so many opportunities.
Sven: Let’s take it a bit deeper. What peer companies will you visit to see what they are doing? What conferences will you attend? How will you team up with other departments? Do you know that some inventory Team Leaders have to visit other companies each year, and even each quarter, as a requirement? Learning from others is built in to the job task-list.
We see great things when companies come together.
Sven: Dan, what specific development areas do you like for inventory teams?
Dan: I know there are obvious ones like your own systems, or Excel or Analytics…. but I like to see personal and professional growth.
- Finance courses: How do we make money?
- Presentation skills: Build confidence and build the image of the team
- Leadership: True leadership through serving customers and team members
- Anything to do with People and learning the various styles, and learning how to apply your strengths
- You can find quite a bit online, even for free
- Also, pick a business book that the team will read together
Sven, what about you? If we look beyond planning for development, what bold goals do you like to see inventory planners set?
Sven: I have been thinking about this. Let me give you 3 obvious ones and 3 not-so-common ones:
First: Service, Inventory & Overstock
What inventory sectors do you need to enhance to increase service? What component adjustments and moves will reduce inventory and overstock? Those are obvious goals.
Then go beyond for these next 3:
- Become a champion or leader of some area of your solution. Sit and help others. I guarantee that it will make you stronger in that area.
- Tackle and become strong in analytics. Today’s supply chain analytics and BI benchmarking solutions are the new Excel and you don’t want to be left behind. Like anything, once you get started, the momentum will take over.
- Stand and present. Put yourself in uncomfortable situations of standing and presenting your business at period-end to your peers and other departments. Share the good the bad and the plans. You will grow in so many ways, and it could be career-impacting.
Dan: Ahhh, I like those!
Will: I like those also! Those are some uncommon goals. Those are goals that deliver all kinds of results for the company and the inventory professional.
So, ’tis the season for PROFIT, PRODUCTIVITY and PLANNING. I get it.
Guys, I’m glad that you sent out the urgent request. I hope the community responds with the same urgency. Only good things can come from it.
I want to thank everyone for tuning in and thanks as always to Sven and Dan. [Will closes]
Happy Holidays to you and your family!