Blog Posts

7 Reasons Warren Buffett Would Probably Use S&OP

9/15/2015

Blog post written by Jim Scarlata, COO, SMB Value Partners, Inc.

“Someone’s sitting in the shade today because someone planted a tree a long time ago” – Warren Buffett

This certainly speaks to the importance of planning, doesn’t it? I’d like to speak to a business process that can yield significant value: S&OP. In this first post I’ll define, describe and explain it, and in the next post I’ll answer the “so what” you’ll probably be asking.

S&OP stands for Sales and Operations Planning, and it is a business process developed several years ago, now used by many organizations across many different industries, business types, and organization structures (including for-profit and non-profit entities).

At its basic function, the S&OP process allows an organization to:

Regularly review its consumer/client demand
Review performance against prior plan, understanding key misses
Construct short-term forecasts using historical sales as a basis
Review the short term (usually 3 and 6 month) production plans
Examine overall inventory levels and any backlogs of key products or SKUs (typically using an “A,B,C” designator based on volumes)
Agree upon customer lead times for key products
Set manufacturing staffing/production levels for the current period under review

You’ll note that while these S&OP functions may appear to be more relevant to SMB manufacturing and/or distribution companies, we find that savvy non-profits/associations utilize S&OP as part of their larger portfolio management processes. S&OP plans and measures the key inputs and outputs of the value creation process.

One of the key points we stress with our clients is that there is no one single “best” way to implement an S&OP process in their organization. Every organization will define and manage S&OP in a different manner. I learned this by personally managing the demand forecasting and S&OP processes at two different organizations.

In general, S&OP best practices include the following:

Retrieve relevant information:
1. Sales (sales, web hits, new memberships), and with Marketing (forecasts), and
2. Operations and other business functions (inventory creation/procurement, program execution, promotions, advertising, etc.), and
3. Analyze trends in support of the forecasts submitted during the current process
Review and agree upon the forecasts while revising inventory if needed
Align available organization capabilities (e.g. production, sourcing, ads, promotions, etc.) to meet the forecast
Review all decisions made to finalize the plan for implementation as part of the current review
Participation in the process requires the active participation of the key business managers and the related members of the senior leadership team. This is required as the process output and performance monitoring are key to the short-term success of the overall organization

Finally, the process cycle and planning horizon of S&OP is dependent on the specifics of the organization and industry. Short product life cycles, high demand environments and volatility require more frequent S&OP planning than steadily consumed products and services.

Our experience shows that at a minimum, a quarterly S&OP cycle would be relevant for a smaller organization with lower volatility, while monthly meetings are an absolute necessity for a higher volume, dynamic business.

The most important benefit of the S&OP process, however, is its ability to connect all company functions on the periodic basis of its comprehensive business review structure, and normally includes sales, marketing, membership, web/blog teams, engineering, manufacturing, finance, supply chain/sourcing and human resources. Just think of all those processes and connections that resulted in someone sitting in the shade under that tree, because that’s what it takes to plan and operate a business. Warren Buffett certainly knows the value of that process.

Well, that’s the short version of the “What” about S&OP. In my next post I’ll discuss the “Why” or “So What” about this business process. Feel free to contact SMB Value Partners with any questions you may have about implementing S&OP within your organization.

Jim Scarlata, COO, SMB Value Partners, Inc.

Click here to read the next post in the S&OP Bolg Series

See also the related Posts: Beware of What You Reward: Part-One
and Part-Two

Click here: see our other SMB Value Partners blog posts

Your COMMENTS and LIKES are always appreciated.

Lessons Learned from Donald Trump, Lesson-3 “Set the Standard”

9/14/2015

By Deb Dietz
SMB Value Partners

In the blog post: “Lessons Learned from Donald Trump – Lesson #1, we discussed the importance of business tempo.
In Lesson #2, the focus was being positive, and that we should discover and live our lives with purpose.

Our new lesson is to “Set the Standard”.

Consider Ralph Waldo Emerson: “Freedom is not the right to live as we please, but the right to find how we ought to live in order to fulfill our potential”.

We’ve learned the importance of being agile in the business world and being positive from the inside-out, but an organization’s leadership should be setting the standard of getting things done in a timely and positive manner. They are the ones who set the standards for performance and the methods used to achieve that performance.

Trump talks about how he attracts people.
He surrounds himself with others who have the same work ethic. He says that the people who work with him not only enjoy the daily challenges, but they set their own standards to meet those challenges, and those standards, and patterns of thinking, match his. They have a common ground objective of accomplishing more.

Think BIG.
Trump tells us that you need a combination of vision, courage, and discipline to realize the possibilities and that if you think too small, you might miss them. He encourages us to learn to think big. Are you thinking big? What standard would you like to be known for? Only you can set that standard for yourself. The best way to do a job is living by this standard; “Get in, get it done, get it done right, and get out”.

What do you have to offer?
What is your creative capital? What have you acquired in your experience that makes you valuable? Are you aware of your own potential? Will you be equipped to make a difference when the time comes for you to step forward? Start thinking along these lines and your worth will have already been multiplied!

How are you getting in, getting it done, getting it right, and getting out? Have you set your own standards? Have you acknowledged your own value? Have you remained positive from the insight out?

We welcome your thoughts and experiences in the Comments section below. Let us know how "Setting the Standard" has helped you head in the right direction.

Click to: Read Lesson #1 or Read Lesson #2, the first and second posts in this series. You can find our other blog posts on the SMB VALUE PARTNERS site.

LESSONS LEARNED FROM DONALD TRUMP, LESSON-2

8/17/2015

By Deb Dietz
SMB Value Partners

In blog post, “Lessons Learned from Donald Trump, Lesson #1”,
we discussed the importance of business tempo and that organizations that do not move quickly, that are not agile, will get left behind in today’s competitive business environment. The next lesson we can learn from Trump is that we should discover and live our lives with purpose.

Consider Ralph Waldo Emerson:
“Do not go where the path may lead, go instead where there is no path and leave a trail”.

Trump also talks about Albert Einstein, who said “the mind that opens to a new idea never comes back to its original size”. Meaning we all have a purpose in life, and it’s our responsibility to do our best and live up to our potential. Sounds simple, doesn’t it? All we have to do is to tune into our talents and capabilities. But, how do we tune in? I’m sure you’re like most people flying through your day. Busy, busy, busy, with no time to think about the path you’re on. But, without quiet reflection, you’ll fly through the days and those days turn into weeks, months, years. Trump talks about the need to find that quiet time so that you can plan your own path, and find your own purpose.

In addition to finding that quiet time, Trump also talks about the need to be positive and he considers himself a positive person, from the inside out. He has big ideas and a big enough energy resource to act on those ideas. He talks about positivity as being contagious and those around him understand that being positive drives the energy level, which is how his organization gets things done. He says he sets a standard and everyone on his team follows suit.

We’ll discuss the notion of ‘setting the standard’ in “Lessons Learned from Donald Trump – Lesson #3”, but for now the take-away is that:

"In order for us all to get where we want to go we need a combination of vision, courage, and discipline".

If we all acknowledge our own value and remain positive from the inside out, perhaps we’ll get on the path that leads us in the right direction.

Are you finding the time to be still? Are you consciously planning your own path? How do you remain positive and optimistic? Do you find that remaining positive increases your energy level? Share your process and what works for you in the comments section below.

To read the first post in this series, and our other SMB Value Partners blog posts, go to SMB Value Partners.

We welcome your comments

An Approach to Better Project Results

8/17/2015

By Charles Dietz,
SMB Value Partners

As you think about how to staff and successfully execute your next important project, consider bringing in a fractional leader to head up your project. I’m not talking just someone with PM skills, but a lot more. Read further to learn a bit more and see if the role and advantages resonate as a viable solution.

Fractional Leadership is using an experienced, senior, outside resource(s) to supplement your existing leader and employee resources. With today’s lean organizations and the competitive pressure to deliver new and improved products and processes, many organizations find themselves unable to meet the business challenges of larger, cross-functional projects. In some business areas, the department leader is often a technical or hands-on resource, lacking the breadth and depth of management experience and expertise needed on your major project.

Many small to-mid-sized businesses (SMB) and associations / non-profits have found Fractional Leadership to be a viable solution to addressing their business challenges: bringing in an outside leader / expert for a critical / cross-functional project. The advantages include:

Services of a senior leader with broad industry and cross-discipline experience.
No “on-the-job” learning, as happens in many smaller organizations, with the ability to achieve planned results sooner, rather than later.
The fractional leader’s experience and successes gain respect from the organization’s senior management.
Clarity of focus on the project-at-hand, not entangled in day-to-day issues and silo boundaries.
No organizational bias on what the right answer would be. Able to challenge teams to constructively evaluate alternatives.
On projects where a solution supplier is actively participating, it is important that your project leader not be controlled by that vendor. The fractional leader is an independent voice with primary focus on collaborating with your business and delivering your business success.

There are a lot of “pain-points” that keep organizations from achieving full results from cross-functional projects. Often issues in areas like Information Technology, Marketing, Sales, Operations, Planning, and Finance (to name a few) can hinder or misdirect progress to a successful project. Using the Fractional Leadership solution gives your organization use of a resource that will identify and cut through issues to improve your success. You have the benefit of a senior leader that you may not need / afford as a full-time employee, as you only have to pay for the expertise and time associated with your top priority: your results-focused business project.

To learn more about Fractional Leadership for your key projects, please visit: SMB Value Partners
Reposted with updates from April 29th.

Your comments welcomed.

Lessons Learned from Donald Trump, Lesson-1

8/12/2015

Blog post written by Deb Dietz

You can’t open a newspaper or log onto your computer these days without reading something about Donald Trump, his views, his opinions or his politics. Regardless how you feel about him as a presidential candidate, you can’t ignore the fact that he is an extraordinarily successful businessman. He’s written many books which have been best sellers, extolling how he became a self-made man, but many of his business principles are simple and straight-forward; principles learned from such greats as Henry Ford, Napoleon, Confucius, Oscar Wilde, Franklin D. Roosevelt, and even concepts defined in Webster’s Dictionary. Let’s discuss one of Trump’s lessons, “Tempo”.

“Tempo: the rate of motion or activity” – Webster’s Dictionary.

In one of Trumps discussions about leadership, he talks about the job of a CEO. He said CEOs are business leaders and must act like generals leading an army of employees. But CEOs are also conductors, ensuring the tempo and the team all work well together to ensure a wonderful performance.

This notion of tempo is of critical importance in today’s business environment. Organizations that do not move quickly, that are not agile, will get left behind in today’s competitive landscape. As a leader in your business, would you define yourself and that of your team as “moving quickly”? In conductor-speak, that would signify that your tempo is set at an ‘allegro’ pace. Mr. Trump said his team takes their cues from him, so they work at the tempo that he himself sets. He calls it his inner metronome that keeps consistent time no matter what’s going on around him and his team adjusts to his tempo. It’s also referred to as “being in the zone”. We all know the feeling, when perhaps you’ve procrastinated about a project and a deadline is approaching and all of a sudden you get a spurt of energy, get in the zone, and get the project done. Something takes over and the work evolves.

If you find yourself and your team not working “in the zone”, perhaps you need an adjustment to your tempo-meter, or your speedometer. You can’t achieve your objectives if you’re moving at an anti-allegro pace. SMB Value Partners can support your efforts to meet your business objectives. We can fill in your orchestra with our resources and ensure your team is working at the right tempo!

Be sure to see our other SMB Value Partners blog posts at: http://smbvaluepartners.com/our-blog-postings.html

Beware of What You Reward (Part 2)

7/22/2015

by Charlie Dietz, CIO at SMB Value Partners, Inc.

I had a very wise boss once, and I still remember his point today:

“Beware of what you reward, as you will get a lot more of it”. Sounds trivial doesn’t it, but this is an important business concept and a corollary to the “you get what you measure”. Check out our popular, first post on this theme HERE

Here are some additional examples on how proper measures support your business goals and drive accountability:

In one large distribution operation, the item picker had an option to bypass picking a particular customer’s order line item. The intent was to allow them to move on if an item wasn’t found. But it also allowed the picker to bypass a difficult pick that would slow down their pick rate and move on to the “easy” picks. (To the detriment of customer service). Once realized, a revised measure was instituted to segregate inventory / location issues from “dropped” picks, and catch anyone “gaming” the system.
In another organization, an important business objective was to improve customer service, and a “daily orders and shipments” report was being used as the measure. In the first iteration of the report, the numbers looked good month after month, but the company was still getting complaints from the customers. After some re-thinking, the group realized that they were:
a) taking a too high-level view (dollars); and
b) were not taking into account all of the customer’s expectations.

What the customer wanted was 100% on-time, 100% complete first order shipments. In the second iteration of the report, they added new measures that also looked at the percent complete and percent on-time calculated at both the order / shipment and line levels, rolled up into two reports. One report summarized by customer types and regions, and the other summarized by product classes, distribution centers, and manufacturing plants. A separate detail listing of all of the “misses” went to the planners for analysis. The added measures made a big difference in service performance.

In these examples, we see that measures are important, and they need to cover all the aspects of an operation, and not allow for gaps. Proceed thoughtfully when setting measures for your business goals, and
“beware of what you reward (or allow), as you will get a lot more of it”.

Be sure to see our wide-ranging SMB Value Partners blog posts in our BLOG ARCHIVES by Month FOUND HERE

How to Build a Brand Dynamics Model: Measuring and Achieving Awareness, Visibility and Value

7/1/2015

By Deb Dietz, President and CEO of SMB Value Partners, Inc.

How to Build a Brand Dynamics Model: Measuring and Achieving Awareness, Visibility and Value

Any growth-oriented marketing strategy involves communicating your company’s value proposition to your existing customers. In addition, it includes communicating to prospects, with the goal of converting those prospects to customers. Do you have a baseline measure of brand awareness for those prospects? That’s your starting point. Once you know your baseline Brand Dynamics, you can implement your marketing and communication campaigns and then measure the impact of those campaigns in moving those prospects from awareness to engagement with your brand, and your company.

Traditionally, there are three pathways for measuring awareness or visibility:
Pathway 1 – Customer-Based Brand Metrics
Pathway 2 – Incremental Brand Sales/Revenue – financial impact metrics
Pathway 3 – Branded Business Value – financial impact metrics

We will focus here on developing a strategy for Pathway 1. This consists of determining quantitative and qualitative measurement approaches to understand the market’s current brand awareness. This approach tracks changes in prospect / customer awareness and perception over time.

Initial Value Chain Metrics Include:
Presence – does the marketplace you serve know about your brand?
Relevance – does your company fulfill a need/offer the market something of value?
Performance – can your company deliver?
Advantage – does your company offer the marketplace something better than others do?
Bonding – nothing beats your company in this market (you want to be here!)

A critical success factor to ‘move’ a prospect/customer along the value chain above is to be able to see changes in the relationship between the prospect / customer and your company that can be traced to various marketing, communication and delivery activities. Further, we can also include methods to identify and track customer value drivers, customer satisfaction and customer perceptions of quality.

How-To Steps in Creating Your Brand Dynamics Model:
Survey the marketplace to determine baseline metrics about your brand. This approach will define the base level of awareness, or relationship, with your brand.
Develop an integrated marketing and communication strategy whose objective is to move prospects and customers along the value chain; from presence, to relevance, to performance, to advantage, to bonding.
Then, conduct a second survey 3-6 months out to determine changes in the relationships and trace those changes back to the marketing and communication programs that have been implemented during that time frame.
Then, measure the ‘net change’ in scores for each value metric.
Over time, implement other marketing and communication programs that are tied to moving prospects and customers further along the value chain to drive customer retention, engagement and loyalty.

Once your baseline metrics are in place, your organization can consider movement towards Pathways 2 and 3. Pathway 1 would be considered the ‘soft’ measures, while Pathways 2 and 3 actually measure incremental customer revenue, product sales, and other income flows which could be considered incremental growth for your business and the economic worth of your brand to your company and customers.

As with most things in life and business, the devil is in the details. From our years of experience, SMB Value Partners can help you achieve the success from these processes.

Be sure to see our other SMB Value Partners blog posts at: http://smbvaluepartners.com/our-blog-postings.html

SMB Learnings from “The Marketing 2020 Study”

6/29/2015

By Deb Dietz, President and CEO of SMB Value Partners, Inc.

SMB Learnings from the "Marketing 2020 Study”

“The Marketing 2020 Study” is the most comprehensive marketing leadership study ever undertaken, recently conducted by the Association of National Advertisers, the World Federation of Advertisers, Spencer Stuart, Forbes, and more. There are several key learnings / takeaways that every sized company leader must pay attention to. The study found that companies that are sophisticated in their use of data grow faster and that these organizations understand that the Marketing function is no longer a back office, operational entity but a driver of revenue growth, extending their reach throughout the firm, engaging virtually every department.

The study uncovered the winning characteristics of successful firms; success being described in the study as over performers on the basis of their companies’ three-year revenue growth relative to their competitors’. The winning characteristics of these over performers are:

Data focus, deep insights. The high performers were distinguished by their ability to integrate data on what customers are doing, with knowledge of why they’re doing it.

Purposeful positioning. Top companies excel at delivering on their brand benefits. These benefits lie at the heart of their brand strategies, but also their employee and operational strategies.

Total experience. Companies are increasingly enhancing the value of their products by creating customer experiences; long-term, highly engaging customer experiences.

The study also resulted in an understanding that Marketing has become far too important to be left just to the ‘marketers’ in the company. To deliver a seamless experience, one informed by data and instilled with brand purpose, all employees in the company must share a common vision. These successful firms connect a full spectrum Marketing function to the company goals while bridging organizational silos by integrating marketing and other functional areas, and ensuring the marketing leaders don’t just plug in some operational services with the company’s plan, they actively engage in creating those plans.

If your organization’s Marketing department is siloed and not engaging in cross-functional strategic alignment, you may want to consider a different organizational structure that will support your company growth goals. If most of your Marketing resources are strictly communications-focused, consider adding/shifting to more strategic marketing resources. Strategic marketing initiatives will help achieve the company’s growth goals by connecting cross-functional teams, ensuring those teams are working towards common objectives and being held jointly accountable for results.

Portfolio Management: Taking a Profit-Focused Look at your Products and Services

5/19/2015

By Deb Dietz, President and CEO of SMB Value Partners, Inc.

Why do customers do business with you? It’s because you are offering them something of value, something they need and will willingly pay for. But as time passes, you may be noticing some things happening (and not good things). If you are paying attention to your sales and margin growth, and reviewing your product lines accordingly, you’re probably making adjustments in offering what your customers value (aka Portfolio Management). If your portfolio mix is appropriate and relevant, customers will willingly pay for that value. If not, you’re losing in a big way (revenue, profitability and customers).

Many organizations are uncertain as to who is responsible for portfolio management and how to do it. I’ve heard Finance point to Marketing, and vice-versa. But, to do portfolio management effectively, a partnership is required between Marketing, Finance, Sales Management and IT. As Marketing is the steward of your organization’s brand, they should take the lead.

Unfortunately, many Marketing teams are sole-focused on Marketing Communications (MarCom), ignoring / not understanding Strategic Marketing. If this is your organization, you should consider stepping back from the day to day Marcom and think about your brand. What’s the point in spending dollars on campaigns if the value you’re offering is increasingly irrelevant? You need to start an internal process where you are periodically reviewing your value proposition through a product portfolio review.

A product portfolio review is an analytical approach that identifies / classifies products or services in quadrants for action:

Invest in for the future
Maintain at the existing investment levels
Investment should be limited
Retire the offering

By classifying the portfolio of products in this way, an organization will be able to identify gaps in their product line so that existing products might be repositioned or new ones might be developed and introduced. By determining which products in the portfolio an organization should no longer invest in, an organization could potentially reallocate those investment dollars into other existing, or potentially new, product and services that are more relevant to customers and that would provide a greater financial return.

This approach classifies products and services as well as other operational assets of the organization that contribute to sales or revenue. Such operating assets could include membership dues, product sales, educational programs/events sales, registration fees, exhibit sales, revenue generated from e‑commerce websites, and more.

In order to conduct such a review, an organization should ideally use five groups of analytical techniques:

Analysis of industry and market size
Analysis of product life cycle
Market segmentation
Financial performance relating to sales growth and profitability over at least a 3-year period of time
Utilize learnings gained from other research such as post-event evaluations, product satisfaction scorecards, member needs assessments, and more

The portfolio review process is facilitated by conducting a workshop that utilizes data and information to identify how specific products and services should be categorized into four quadrants: Invest and Grow, Maintain, Turnaround, or Exit. Other exercises included in this workshop include the identification of core capabilities and competencies, growth strategies, and recommended top priorities. The organization can then develop an integrated product management strategy for each prioritized product complete with growth objectives, sales forecasts, marketing strategies, deliverables, budget recommendations and associated metrics. Ideally, dollars saved by no longer investing in ‘exit’ products/services could be redeployed to develop and implement a product/portfolio strategy that can result in incremental margin and sales growth for your organization.

In order to do this effectively, consider resources that have expertise and broad experience in Strategic Marketing; resources that you can leverage to jump start your value growth engine.

explore the value of a fractional leader

4/27/2015

By Charlie Dietz, CIO of SMB Value Partners.

As you think about how to staff and successfully execute your next important project, consider bringing in a fractional leader as your project leader. Why consider such a resource?

Fractional Leadership is using an experienced, senior, outside resource(s) to supplement your existing leader and employee resources. With today’s lean organizations and the competitive pressure to deliver new and improved products and processes, many organizations find themselves unable to meet the business challenges of larger, cross-functional projects. In some business areas, the department leader is often a technical resource, lacking the breadth and depth of management experience and expertise needed on your project.

Many small to-mid-sized businesses (SMB) and associations / non-profits have found Fractional Leadership to be a viable solution to addressing their business challenges: bringing in an outside leader / expert. The advantages include:
Services of a senior leader with broad industry and cross-discipline experience.
No “on-the-job” learning, as happens in many smaller organizations, with the ability to achieve planned results sooner, rather than later.
The fractional leader’s experience and successes gain respect from the organization’s senior management.
Clarity of focus on the project-at-hand, not entangled in day-to-day issues and silo boundaries.
No organizational bias on what the right answer would be. Able to challenge teams to constructively evaluate alternatives.
On projects where a solution supplier is actively participating, it is important that your project leader not be controlled by that vendor. The fractional leader is an independent voice with primary focus on collaborating with your business and delivering your business success.

There are a lot of “pain-points” that keep organizations from achieving full results from cross-functional projects. Often issues in areas like Information Technology, Marketing, Sales, Operations, Planning, and Finance (to name a few) can hinder or misdirect progress to a successful project. Using the Fractional Leadership solution gives your organization use of a resource that will identify and cut through issues to improve your success. You have the benefit of a senior leader that you may not be able to afford as a full-time employee, as you only have to pay for the expertise and time associated with your top priority: your results-focused business project.

To learn more about Fractional Leadership for your key projects, please visit http://www.smbvaluepartners.com/smb-fractional-leadership.html.

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