Build a Roadmap - Time to Change Your ERP!
We're Not Going to Change, EVER !
“When my grandfather started this business, he always used silk thread, linen, and brass grommets to make flags. We’re not going to change, ever!” declared Priscilla, the CEO who had ‘inherited’ the position from her father, who had inherited the position from his father.
“You have to admire her respect for her grandfather,” whispered Angelo, the Head of Procurement, to Jennifer, the VP for Supply Chain as they stood to the side in the large conference room.
“Yeah, but no one wants linen flags anymore – I’ve seen more returns on those than on the ones made from nylon. Priscilla is living in the past!” remarked Jennifer.
Meanwhile, Priscilla was at the part in her long-winded talk about her grandfather that referred to his patriotic spirit and the way he'd fought in WWII to secure freedom in the world. He'd returned from the war and started this flag and pole company that now produced flags for countries all over the world.
Jennifer couldn’t hold back, and she interrupted Priscilla. “We are losing money on every flag made from linen and even more from those made with cotton. It’s time to change!”
The room went still.
Jennifer had a knack for blurting out the truth at inappropriate times. But she had a point. The company’s gross margins were slipping with the rising cost of linen, and net sales were down, reflecting the heavy number of returns the company was experiencing.
Yet Priscilla looked at Jennifer blankly. “What are you talking about?”
Jennifer straightened and said, “We used to be great. We were number one. Now we are lucky to be in the top 25. You know that is not good enough. We have to plan better. The customers are ordering nylon flags, and yet we keep producing linen flags. We are stockpiling product that we can no longer sell. We are buying the same amount of linen every month from the same suppliers even though we are trying to fully switch to nylon. Also, we are selling in ‘eaches’ even though we now sell mostly to big-box stores in ‘grosses.’ We are doing everything the way we used to 20 years ago! The market is moving quickly. We need to upgrade to using EDI, we need to have a customer portal, and we need to use Demand Planning. And while we're at it, our website is embarrassing! We’ve got to change!”
The room was heavy with tension. Everyone was interested in this showdown between the CEO and the VP of Supply Chain.
Priscilla walked over to Jennifer. “Let’s go to the warehouse. Show me this excess inventory.”
A caravan of people followed Priscilla and Jennifer as they walked out of the office complex and into the warehouse. Sure enough, there were hundreds of boxes marked “Grade A Linen,” each filled with bolts of linen. Arrival dates on the boxes went back every month for over 30 months. The raw materials were just not moving into production.
“Why didn’t anybody tell me about this?” demanded Priscilla.
"We’ve tried,” ventured Angelo. “But you won’t approve the full switch-over to nylon, and you insist that we maintain the standing orders for linen with our long-time suppliers. So, we keep doing it the way we’ve always done it." Angelo shrugged his shoulders, as if asking ‘what can we do?’
“OK, so we’ll stop right away.” Priscilla shocked everyone. Only minutes ago, she'd been giving her annual speech about how they’d never change, and now suddenly she was up for moving into the 21st century!
Everyone started talking at once, throwing out the suggestions that they had bottled up for years.
“We need a Warehouse Management System,” called out one person.
“We need a better Manufacturing System,” called out another.
“Our Logistics Management is a joke,” stated another.
“We need to upgrade our Financial System,” chimed in the CFO.
“Hold on.” Priscilla spun around. “You can’t all be serious! That’s too much change.”
Jennifer took back Priscilla’s attention by speaking softly. “It’s just the beginning, Priscilla. We need a plan, a big plan for how to evolve our company – systems, procedures, and even product.”
Priscilla didn’t object, so Jennifer continued, “The greatness of the legacy of the company is that we CAN change, while still preserving what is dearest, our reputation for excellent product and service. We can take the first step by designing our future with an honorable nod to the past.”
Priscilla had to absorb all of this, but Jennifer didn't hold back, as was her style. “Let’s bring in some outside people who can look at us critically. They can map out what we do to service our customers, analyze what we are selling, and engage us in developing a sustainable vision for our future.”
“Wait.” Priscilla wanted to slow this mini-mutiny. “It will cost an arm and a leg. We can’t afford all these consultants and new systems.” She said it adamantly, hoping to end the conversation.
But Angelo had done just such an exercise at his prior job, and so he added to the idea generation. “I’ve been part of a project like this. It wasn’t that expensive, and it made us a more focused group. Common vision and all that. The consultants produced what they called a ‘roadmap’ to make it all happen! Budget, time commitment - you know, the usual stuff.”
Priscilla was overwhelmed. First, she had to think about the legacy of the company, then the bottom-line impact, and then how to get gross margins rising again. Most importantly, how to keep these people. She felt proud that she had a team that cared so much about how to run the company. She realized that this was her big chance. The team wanted change. Maybe it was time to stop ‘doing it the way they always did it.’
“Fine.” Priscilla allowed herself to smile, actually starting to feel excited and eager to keep the energy of the moment going. “Put together a list of management consultants who know operations and systems and financial reporting. We’ll choose one to help us think through our future.”
Jennifer, always pushing the envelope, asked, “And will you commit to making changes in our systems?”
“We’ll see,” said Priscilla.
Angelo felt emboldened by Jennifer’s persistent questions, so he blurted out, “Without the right systems, we’ll revert to old ways again, and nothing will really change!”
Priscilla took a deep breath and turned to Angelo. “We can change if it will make our company great again. I owe that to my grandfather.”
And so, the project began. Jennifer championed the project, assembling a team from the staff and bringing in consultants. Even Priscilla occasionally participated in the team meetings.
The recommendations included changes to bring in Demand Planning, new processes for Order Entry Management, and using the system (instead of slips of paper) for Returns Management. The CFO got his wish for new Financial Systems.
A year later, a new website was launched with a Customer Portal.
Two years later, Sales were up over 50% and Gross Margin was inching up as well.
Priscilla had stepped into the future and brought the company up to the present.
She still gave her annual speech on Memorial Day, but now she said, “We remember the hard work that our founder put into creating this company. We all enjoy the success of working together. Today we honor his legacy by improving the company every day. Thank you for your ideas and teamwork!”
Are you wondering how to start a project to evaluate operations and systems?
We take care of all the details. It will be easier than you think. Your team will thank you because every day of the project gives them a voice where the good ideas rise to the top. We guide the shaping of a design for the future, preparing a roadmap, a logical plan, and a sensible budget.
Who are you going to bring on board to manage the project? Call us. We are perfect for the job!
We work with you and your team to understand what you need to support your company’s operations, to re-imagine your financial reports, and to give you more insights into your business results.
We are experts at understanding your unique needs, finding perfect solutions, and fast-tracking your company to improve operations. We are your Project Manager to select and implement the right systems and enhance internal idea exchange so that you can keep pace with the growth of your company.
Give us a call at 310-445-5300.
We will guide your Project Team to success.
We are waiting to talk to you.
Rubenstein / Justman Management Consultants (RJMC) assists mid-market companies to improve operations and to evaluate, select, and implement ERP solutions including Financials, Manufacturing, Distribution, Warehouse Management, Supply-Chain Solutions, CRM, HCM, Trade Promotion, Demand Planning, and Data Analytics. We are skilled and experienced consultants who provide the Project Management that gets the project done. To start the dialogue, email us at RJMC@RJMC.net or give us a call at 310-445-5300
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