I once had the thrill of interviewing Jerry West on management. He was “The Logo” for the NBA, although back then they didn’t advertise him as such. Only the Laker followers knew for sure. In 1989 the “Showtime” Lakers were coming off back-to-back championships. Pat Riley was a year away from his first of three Coach of the Year awards.
Starting with the End in Mind – webinar for business owners and buyers May 16 at 1PM (EDT) If you have the following questions, this webinar is for you! How do I strategically think about my end game? In other words, how do I figure out what game I am playing? What makes a business hard to sell and limited in market value? What are some major value enhancement strategies available to my business? What are reasonable timeline considerations in growing, preparing, and selling my business and what capacity needs are required to be added? How do I build a team of advisors? Speakers include: Amanda A. Russo: CEO of Cornerstone Paradigm Consulting Ryan Goral: CEO of Gspire Group Paul Cronin: three-time founder and M&A Advisor at True North Advisors Group For event details and registration, click
The Red Sea disruption forcing ships to go around Africa creates a new Supply Chain reality. It can lead to late deliveries of inventory resulting in disruptions affecting business globally. One of the noticeable issues is the Reuters report, “Tesla, Volvo Car in Europe Pause Output of Certain Car’s models.” Besides the production disruptions, late inventory arrival can result in order cancellations, often creating excess inventory which affects the warehouse. Besides the additional labor cost, it often results in using a 3rd party warehouse or purchasing/leasing additional warehouse space. These disruptions can lower profit margins and cause cash flow issues. Today’s reality of business disruptions makes companies realize that their outdated ERP Software, should be replaced with new integrated ERP/WMS Software that has a Warehouse Management module enabling companies to avoid business disruptions by having the features below: • Inventory availability after it was allocated for production or future orders. • Real-time Analytic information reflecting sales activity, what products should be ordered, and when. • From which vendor to purchase based on analytic information of promised delivery dates. • Customers’ buying patterns of products ordered. If the customer’s current purchases are less than in the past, the reason for this should be investigated. • If the accounts receivable overdue payment days have increased, the customer’s financial stability should be evaluated. Selecting New Software Before the software selection search starts, a committee should be established. Its members should be key people from each department and a requirements list should be developed. • The end users can provide important information that will be needed when the demos are conducted and they will have emotional investment once the software implementation starts. • The developed requirements list should be addressed at each demo. • All the demos should be a “workshop style” rather than a “slide show” with “bells and whistles.” • Not having the “workshop style” demo often results in purchasing the wrong software that does not meet the business’s unique requirements. • Having to change the business model to meet the software requirements will result in business disruption and the end users having a large learning curve. • Software functions that are beyond the users’ ability to learn will result in long implementation, and the project might be eliminated. • Before the decision to purchase the software is made, a visit to the software provider’s client in the same industry should be arranged. • Three people should be met at the vendor’s client site: the CEO, CFO, and IT manager. • The main question the above people should be asked: “How good is the software house hotline support?” • This is a crucial factor that should be considered. Not having good hotline support will result in severe business disruptions when an issue occurs and immediate support is not provided. Issues Arising from Multiple Software Often companies that have legacy software choose rather than replace it with new integrated ERP/WMS Software that has Warehouse Management they choose to buy it from Warehouses Software Vendor and have it integrated with the legacy software. Doing it will result in the issues listed below. • Stand-alone warehouse software can result in integration issues resulting in inaccurate inventory. • Having multiple software platforms creates issues when it’s upgraded. • Excess user efforts accessing multiple software results in business disruptions. • Often when one of the vendors has a software upgrade it might result in integration issues. • When having to contact multiple hotlines, vendors often don’t take responsibility resulting in business disruption. Case Study: Multiple Software • Large Food Manufacturers/Distributors decided not to upgrade their legacy software and purchased four software platforms from different vendors hoping it would enable them to meet their business requirements. • It resulted in the users having to access multiple software platforms resulting in excess efforts retrieving the needed information. • When one of the software platforms was upgraded sometimes it affected the main software platform or the other platform resulting in business disruptions. • When connecting the software hotlines each vendor claimed it was the other software vendor that caused the issues. • After a few incidents the management team decided to purchase new single database software that will have all the software modules needed supported by one vendor. • Before starting the software, a search committee was established having key end users for each department and a requirements list was generated. • The list was presented to each software vendor who gave the demo and made sure that besides addressing the business requirements the end users could master it without a large learning curve. Benefits of Single Data Base ERP/WMS Software • The end users without having to access four different software platforms instantly find the information needed. • The customers were able to place orders on smartphones and have a web portal where they could view various needed information. • Inventory in the warehouse is picked by using Voice Pick which has multiple language capabilities addressing today’s labor reality and RF Guns. • Streamlining the operation resulted in lowering operating costs and improved customer satisfaction. Overseeing Software Implementation Manufacturers and Distributors, who had outdated software, experienced production, and inventory control issues. It resulted in shipment delays leading to products being returned, excess inventory in the warehouse, and penalties affecting the accounting department which had to issue credits and adjustments, often missing the vendor’s early payment discount date. When the shelves were consolidated to receive new inventory, products sometimes were misplaced and were not found until the physical inventory took place. This resulted in excess inventory becoming obsolete. To resolve these kinds of issues, new ERP/WMS Software was purchased from the company we represent. The computer manager designated to oversee the software implementation was related to the president. Unhappy with the decision, feeling that the 20-year-old software he developed met the company’s requirements, he decided that purchasing the new ERP/WMS Software was the wrong decision and became an obstacle to implementing the software. His behavior resulted in implementation delays. The users, seeing his attitude, lost interest in the project and did not practice what they were taught. The president, with whom I had a long-term working relationship, asked me to meet him for lunch and expressed his concerns about the ERP/WMS Software going live on the targeted date. I asked the president to assign a different person to oversee the project. To prevent a family rift resulting from this action, I suggested the person be called the computer manager’s “assistant.” Extensive individual training should be given to the manager to enable him to get over the fear of learning the new software. After the training ended, the manager got comfortable with the new ERP/WMS Software, assumed the project’s responsibilities and the end users practiced what they were taught every day. Case Study: Benefits of the New Software Twelve months after the company went live with the new ERP/WMS Software, the president invited me for lunch again and told me: “I would like to thank you for helping resolve the issue I had with my relative. It prevented a family rift. The new integrated ERP/WMS Software streamlined the production and enabled my company to ship the products the same day, The company operating costs were lowered and the inventory accuracy is 99.6%.” Key Person Overseeing Implementation The large Distributor who bought the ERP/WMS Software from the company we represent had a computer manager who was eager to learn the new software functions. As soon as the project started, he addressed the users’ concerns about learning the new software and made sure they practiced daily. It resulted in going live on the estimated date and budget. The end users, before having the new ERP/WMS Software, had to access multiple software platforms to retrieve needed information. They were happy being able to retrieve information instantly without having to access multiple screens. this resulted in decreasing their workload and improved customer service. Implementing Software without Parallel Run • Before the Software implementation is conducted, the business requirements study should be conducted and a test environment should be established. • The legacy software data should be downloaded to the test environment daily and verified for accuracy. • Data verification will eliminate the need to run parallel software. • The end users should be trained in a test environment that has the information they are familiar with. • Software vendor key personnel should be assigned to each department i.e. accounting, warehouse, and purchasing. Going Live with New Software • Company-wide tests should be conducted in which the end users create errors in the “test environment” and then be able to correct their mistakes. • If the users cannot correct their mistakes, the going live date should be postponed and additional training should be given. • After going live with the new ERP/WMS Software, the training and technical staff should remain on-site to assist with any issues that might arise. ERP/WMS Software Case Study Attending the event at a major accounting firm I met the large Food Manufacturer/Distributor CEO who was the keynote speaker describing his experience of going live with the new ERP/WMS Software he bought from the software company we represent. “I had a sleepless night before we went live with our new ERP/WMS Software concerned about shipping the daily 800 orders to our customers who depend on us. I was relieved that we didn’t have any issues because the ERP/WMS Software House training and technical team were at our location. If any of the users had an issue, it was immediately resolved. The training and technical team stayed at our location until they were convinced that our users were proficient. I was also pleased that our ERP/WMS Software house Hot Line support personnel are all technical. When my users call, they get an immediate response, and any issues they experience are immediately being resolved.” About SMC & Dani Kaplan: Since 1980, Dani Kaplan has worked with Manufacturers, Distributors, and Food companies as a trusted advisor helping them lower their operating costs, streamline their operations, and control the inventory. Dani can be reached at Dani.kaplan@smcdata.com
Onboarding isn’t just about shaking hands on day one or drowning your new hires in an ocean of paperwork and procedural manuals. FIREPOWER Teams is here to help you find and grow the right team to fuel success and sustainable growth in your small business. Reach out to Maria Forbes and discover the potential of people-powered change in your organization.
Homogeneity among your leadership team is like a decadent creamy chocolate cake: it feels tempting, but when you resist it, you get in much better shape. Increasing diversity on your leadership team leads to better decisions – and better financial results. However we have a natural tendency to surround ourselves with people similar to us: diversity is harder. How do you know whether your leadership team is diverse enough? Why is diversity important? Plenty of research has demonstrated that increasing diversity on your team enhances your top and bottom lines. Among others, as this
If the value of your company would suffer in your absence, the biggest threat to its marketability might be you. “Buyers generally aren’t interested in paying top dollar if the business is overly reliant on the owner for its success.” That excerpt from a long-ago IBG Business article (“article on industry rollups), the company may be worth its book value and little more. Solutions in Print. While Gerber does a masterful job of describing the problem, the real value of The E-Myth and its progeny is that they provide therapeutic steps that can help an entangled business owner execute a pivot, breaking free of their comfort zone and morphing into a more valuable leadership role, maximizing business viability and value separate from their incessant presence and hands-on involvement. In addition, Gerber’s 1995 sequel, The E-Myth Revisited, provides a business development process that serves as a framework for developing turn-key systems throughout an organization to produce predictable results and grow in a sustainable way. Guidance in Person. It should go without saying that we think the E-Myth series is a valuable read for business owners who, looking to sell some day, have decided to get serious about preparing their business to stand on its own two feet. And that’s where IBG often enters the story. For us, the business is the product. To help shape a good company into an attractive acquisition target, we often start our preparatory work two years before the company is ready to go on the market, focusing on such priorities as: cleaning up and recasting financial information; improving cash flows; selling off or disposing of unproductive assets, product/service lines, and inventory; diversifying client and vendor concentrations attracting and developing key employees and fostering an effective management team on which a new owner can rely; identifying and protecting intellectual property and other intangible assets (trademarks, patents, copyrights, and any other proprietary information) that set your company apart from competitors; documenting key processes; and identifying and building on the business’s competitive advantages and attractiveness to the best-fit buyer. In the process, we invariably invest time and energy in the owner, helping them prepare mentally and emotionally for the rigors of the sale experience, and identifying roles in the company’s management and operations that the owner should no longer fill if the business is to achieve optimum value. As a business owner, it’s important to recognize that the value of your company lies not just in its assets and profits, but in its ability to exist independently of its owner. This means taking steps to establish a structure, management environment, and culture that can thrive with or, ultimately, without you. That’s a tall order, one that you don’t need to tackle on your own. To find out how we might help, contact an
By Tim Jung As CFO, you have 60 months before the private equity firm sells your company again. And the newly installed CEO doesn’t like the company’s reports. Maybe the reporting isn’t timely or lacks the right numbers. Maybe it doesn’t tell a story from the progress that has been made, how you’re going to achieve higher revenues, who on the team are the right resources and when this will be realized. Executing this strategy will result in a higher sale valuation. If your lawn is green, you don’t think about it. But if your grass starts to turn brown, you start asking questions. In any case, you have already started the prep work for upgrading the Finance Department. You have a better understanding of where your team fits within the five buckets: People, Process, Technology, Culture and Governance. Now, it’s time to start a three-part process with overlapping stages. This system can take three to nine months depending on your needs. Stabilization This part of the process is mission critical. Stabilization is about making sure people know what they should be doing, what they need to do is being done correctly and when these actions need to be done so reports and analysis are readily available for timely review. Let’s say you make a sale and send the invoice. Was the sale recorded in a timely manner so that various stakeholders along the process could track, forecast and report sales, profitability and cash flow? These actions need to be documented and verified. The company is working hard at selling goods and/or services, however, it may be inefficient at reconciling goods or services sold with billing, accounts receivables and cash receipts. It all may work, but having timely processes, data flow and reports are important to manage the business. If your Finance Department is sending out invoices late due to antiquated manual processes, cash flows could bottle neck from purchase order fulfillment all the way to collections of accounts receivables. Are some of your customers still sending manual checks? Given the trend towards a hybrid working environment, if your team is only in the office once a week, incoming checks may sit uncashed for an entire week. Time is money. To establish an acceptable level of cash flow confidence, you must ask questions pertaining to resources, process and technology. Resources Are the resources capable (e.g., skills, integrity, training) of assuring that the cash flows are being compiled, reconciled and reporting completely, accurately and timely? Do the resources have the capacity to carry out the processes and controls? Processes Is the process coordinated (e.g., information hand off points) from stakeholder to stakeholder along the operational flow so that each stakeholder is receiving what they need? Is the stakeholder passing data to the next stakeholder based on what that person needs as compared to what the prior stakeholder believes the next needs? Are there information gaps that are filled with reasonable assumptions? Technology Does the current technology limit the resources and influence processes (e.g., manual, paper based, spreadsheet-based processes), but in a way that it functions with the basic controls, reviews and process integrity, be it not the most efficient? Are there technology capabilities available that would improve the process and control flow that drives efficiency, cost-effectiveness and allows resources to perform more value-added activities? Transform The second phase of shoring up a finance team—transformation—can begin once deficiencies and opportunities are identified while the stabilization phase is still in flight. During this time, resources can be presented and moved toward a better team-based cross-functionally coordinated approach. Processes can be retooled to remove unnecessary steps, so they provide each stakeholder with the necessary data needed to perform their function efficiently, effectively and timelier. In addition, technology can be enhanced to incorporate capabilities that are available, but not being utilized. Manual processes can be automated to save time and improve controls. In an earlier example discussed in the stabilization phase, several factors could cause your company to fall behind your competition, including uncoordinated processes, a lack of innovation and technology that does not leverage automation. For example, to speed up cash receipts, you could ask your customers to electronically debit your company’s bank account (e.g., ACH, wire transfer). Not only would you turn receivables into cash quicker, there would be less processing time for your finance and treasury teams. Embracing technology, such as utilizing AI functionality, will help the Finance Department with forecasting, which would yield better case management, analysis and decision-making. Leveraging technology may lead to an analysis of personnel and training, which are important variables in the equation. Transition The third and final stage in shoring up the Finance Department centers on transition. At this point, the finance operating platform is functioning, any significant deficiencies should be remediated and the road map to the target operating model has been prepared. If you are working with a third-party partner or an in-house committee, there will come a time when oversight of the program needs to be handed over to the permanent team members so they can carry on. Then, going forward, the finance team is set up for success. In some cases where new skills are required, the upgraded program could include existing resources and new ones. Retraining and, in some cases, recruiting resources that embrace change can continually enhance the process flow and controls to meet the changing business demands. Having the technical skills are the minimum standards. Possessing a forward-thinking attitude without fear of challenging the status quo will provide the framework to conquer whatever impact from the market, clients and accelerated technology. (This story originally appeared in
Methodology to Avoid Business Disruptions A business requirements study is conducted before the software implementation begins. The legacy software database is transferred to the test environment and verified daily for accuracy. Once test-environment data is verified for accuracy the step below will be taken. End users are trained in the test environment that has data with which they are familiar Software Implementation Project managers are assigned to each department i.e., accounting, warehouse, and purchasing. Data accuracy verification in the test environment eliminates the need to run parallel software. Prior to going live with the new ERP-Software, users’ proficiency is determined. To ensure successful going live with new software, training and technical staff remain on site. Client’s Return-on-Investment Imperial Dade: Foodservice and Janitorial Supply The business grew through M&A integrating the acquired company’s software into the VAI ERP Software 100% ROI Payback in 1.1 years Savings: $ 1,194,353 Black River: Produce Distributor 45% ROI, Payback in 2.3 years Savings: $ 1,188,529 Autumn Harp: Cosmetics Manufacturer Boosted Productivity and Reliability Saved $100,000 in one year Dorcy International: Warehouse Automation Increased Efficiencies and Productivity Dropped from a $170,000 variance to less than $5,000 in one year SMC Data Systems, Integrated ERP Software,
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The Steps Below Should be Taken to Prevent the Need for Running Parallel Software Before the project starts, a business requirements study should be conducted. At each day end, the data should be transferred to the new software test environment. Transferred data should be verified on daily basis for accuracy. This data verification eliminates the need to run parallel software. The end users should be trained in the test environment. Project managers should be assigned to each department. Prior to going live, users’ proficiency should be determined. The training and technical staff should remain on site to ensure successful going live. VAI Client’s Return-on-Investment Imperial Dade: Food service and Janitorial Supply Business grew through M&A integrating the acquired company’s software into the VAI ERP Software 100% ROI Payback in 1.1 years Savings: $ 1,194,353 Black River: Produce Distributor 45% ROI, Payback in 2.3 years Savings: $ 1,188,529 Autumn Harp: Cosmetics Manufacturer Boosted Productivity and Reliability Saved $100,000 in one year Dorcy International: Warehouse Automation Increased Efficiencies and Productivity Dropped from a $170,000 variance to less than $5,000 in one year ERP Software Benefits Cloud or Server Options are available VAI ERP software source code is provided and easily customized to meet your various business needs rather than changing your business model to meet the ERP Software requirements Ability to buy unlimited users Integrates with various vendors’ software applications lowering operating costs and improving bottom-line profit Designed for mid-market manufacturing, distribution, and food companies that need fully integrated ERP software Customers’ success stories
The Domino Effect of Having Out-Dated Software Systems. Not having real time information on the fast-moving products. Not having accurate information of the inventory level in multiple locations. No method of tracking Vendor Reliability of ON-TIME deliveries. What are the Results of Excess Inventory? Late shipments will result in production disruption. Order cancellations will result in excess inventory. Reduction of Profit from reduced sales price to move excess inventory. Cash on hand reduced as funds are tied up in unsold inventory. How to Manage the above issues! Replace the outdated software with real time software needed to: Better manage everything related to sales and inventory The Benefits Resulting from Real Time Software! Understanding inventory turns to maximize inventory at item levels. Knowing Vendor Reliability to achieve better product availability! Understanding the inventory availability when managing multiple locations. Customers’ success stories
🤔If your employees could choose their leader, would they choose you? 🎓This is one of the questions of “The CEO Test” by Adam Bryant and Kevin Sharer, which we will discuss at our free CEO Book Club on Tuesday, June 6 at noon EST / 6 pm CET on Zoom. Register
It felt like the only thing we could agree on, is that we couldn’t agree on anything. Have you been there before? We had been discussing our 10-year vision for 45 minutes with the board of directors, and the conversation was going in circles between two opposing views. I felt stuck. I was championing one of these views, I knew that my point of view was right, and I also knew that my emotions were clouding my judgment – I couldn’t see a way out of this deadlock. Why was the other side so stubborn? As the leader of the organization should I simply impose my point of view and be done with this? Arguing is not persuading As this experience illustrates, arguing to prove a point is not the best way to change the minds of other team members. “If anything, arguing makes people more intransigent,” explains
How to increase your EBITDA in Manufacturing; You have tried all cost cutting measures on your shop floor and still not where you want to be? After all initiatives taken, you feel that manufacturing floor looks and feels more chaotic than ever? Here is why it might be so: Every company at their very early stage of their life cycle are pretty lean. The product, the clients and process are as simple as they can be. But during the course of time the product lines, the clients increase and processes start getting complicated. It becomes hard to follow the product, catch the delivery dates etc. The cost starts building up in the parallel. It comes to a boiling point and EBITDA starts suffering. Company urges to take some actions. And most of the time, as a patient w/o seeing a specialist, looks for some shortcut cure to fix the problem. And guess what? instead of cutting the fat they start cutting from the muscle. Worse than that the lack of follow up on improvement measures due to the daily fire fighting activities starts not going hand in hand. Most of the time the improvements are the ones fall off. That’s when employee morale, trust in management that the problems will be solved starts suffering as well. People start leaving the company and know-how disappears with people leaving as it is in people brains instead of in the DNA of the company. The daily life of employees who decides to stay on board becomes even harder and heavier. So they give up and come to work just to come to work and do the job. The value they add gets limited in time. If this sounds similar to what you are going thru or your client has been facing a similar situation let’s discuss!
Managing Today’s Reality of Excess Inventory: The Domino Effect of Having Out-Dated Software Systems. Not having real time information on the fast-moving products. Not having accurate information of the inventory level in multiple locations. No method of tracking Vendor Reliability of ON-TIME deliveries. What are the Results of Excess Inventory? Late shipments will result in production disruption. Order cancellations will result in excess inventory. Reduction of Profit from reduced sales price to move excess inventory. Cash on hand reduced as funds are tied up in unsold inventory. How to Manage the above issues! Replace the outdated software with real time software needed to: Better manage everything related to sales and inventory The Benefits Resulting from Real Time Software! Understanding inventory turns to maximize inventory at item levels. Knowing Vendor Reliability to achieve better product availability! Understanding the inventory availability when managing multiple locations. For additional information visit our website
As an advisor, your role is to help clients prepare to exit their business, yet many people resist thinking about the future because it involves so many unknowns, decisions, and choices. And emotions typically complicate matters further, sometimes derailing the process altogether. Here are some questions that can help you establish rapport with your clients, learn more about their concerns, and move the conversation forward. How are you feeling about your work/profession/business these days? Which aspects of work are you still enjoying, and which are you ready to leave behind? Do you envision retiring from work at some point, or are you contemplating an encore career? What part of planning for your future feels most challenging? How do you imagine your life in retirement will be different from how it is now? What process are you using to figure out what you’ll do next after you retire? What would you like to see happen with your business long term? What options have you considered for the transfer of your business? What steps have you taken to make your business more attractive to a potential buyer? What are your concerns about transitioning your firm to new ownership? What would be your ideal scenario for transitioning out of your company? What topic(s) have we touched on today that we should put on our agenda to revisit? So, what happens after you pose a few of these questions and your clients open up about emotional matters? Remember, the most helpful thing you can do is to listen attentively. You’ve created a valuable opportunity for them to talk about things they may not share with other advisors. Here are some tips for managing the conversation when clients raise emotionally loaded topics: Don’t try to “fix things” by immediately offering suggestions. Doing so sends the message that you’re uncomfortable hearing their concern. You can offer suggestions but do so later. Don’t say anything that conveys the message that their feeling or concern is unwarranted. “There’s really no need to feel that way” or “I’m sure it will be just fine” may sound reassuring to you but could be experienced as dismissive by your client. Don’t immediately offer a logical counterpoint to your client’s emotion. Remember, feelings don’t have to make sense; they’re “as is”. Put another way, if feelings made sense, they would be thoughts. People report concerns and characterize their feelings differently from one another, so it’s in your best interest to seek amplification and clarification by inquiring as follows . . . “I want to make sure that I understand exactly what you mean by ___. Can you tell me more?” “People sometimes mean slightly different things when they talk about ___. What does ___ mean for you?” “Before I suggest anything, I’d like to learn more about it from your perspective.” It’s possible that during early conversations your client may hint at mixed feelings about exiting their business. That’s perfectly normal, but you need to bring it out into the open. You want to foster an atmosphere such that your client keeps you apprised about where they’re at. If they keep their ambivalence to themselves, it has greater potential to blindside you and complicate the sale. You can say: “In my experience, it’s normal to have some mixed emotions about selling. Those thoughts may not always be top of mind, but when they do pop up let’s be sure to talk about them. Believe it or not, they can help inform our process and alert us to aspects of the sale that are important to you.” You may also find that your client is overly risk averse. If so, consider saying the following: “Our work together won’t be comprehensive if we only plan for what could go wrong. That’s just half the equation. It’s fine to be conservative and err on the side of caution, but to be truly realistic we should also consider a range of possibilities both good and bad.” Author’s Note: The concepts in this article are derived from Robert Leahy’s book, Overcoming Resistance in Cognitive Therapy. New York: Guilford
For five decades, the southern United States has been an attractive location for automakers to open plants thanks to generous tax breaks and cheaper, non-union labor. However, after decades of failing to unionize automakers in the South, the United Auto Workers dealt a serious blow to that model by winning a landslide union victory at Volkswagen. In an effort to fight back, three southern states have gotten creative: they passed laws barring companies from receiving state grants, loans and tax incentives if the company voluntarily recognizes a union or voluntarily provides unions with employee information. The laws also allow the government to claw back incentive payments after they were made. While these laws are very similar, each law has unique nuances. If you are in an impacted state, you should seek local counsel. In 2023, Tennessee was the first state to pass such a law. This year, Georgia and Alabama followed suit. So why this push? In 2023, the American Legislative Exchange Council (“ALEC”), a nonprofit organization of conservative state legislators and private sector representatives who draft and share model legislation for distribution among state governments, adopted Tennessee’s law as model legislation. In fact, the primary sponsor of Tennessee’s bill was recognized as an ALEC Policy Champion in March 2023. ALEC’s push comes as voluntary recognition of unions gains popularity as an alternative to fighting unions. We recently saw this with the high-profile Ben & Jerry’s voluntary recognition. Will this Southern strategy work to push back against growing union successes? Time will tell. Brody and Associates regularly advises its clients on all labor management issues, including union-related matters, and provides union-free training. If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.
Almost since time began, the nimble small business has been axiomatic. Large corporations are like big ships, the common knowledge goes. They take a long time to change direction.
I once had the thrill of interviewing Jerry West on management. He was “The Logo” for the NBA, although back then they didn’t advertise him as such. Only the Laker followers knew for sure. In 1989 the “Showtime” Lakers were coming off back-to-back championships. Pat Riley was a year away from his first of three Coach of the Year awards.
Can you Offer Too Many SKUs to Your Customers? The short answer is YES! A SKU, or Stock Keeping Unit, defines each different product version that you sell and keep inventory of. There may be different SKUs of the same overall item based on size, color, capacity (think computer or cellphone memory), features, and many other parameters. For build to forecast businesses, that number of variations can quickly explode and become difficult to manage. Your customers are busy and want ordering simplified. Of course, they may need (or want) more than one variation of a product. That is reasonable and a common aspect of business – one size does not fit all! But there is a point where too offering too many SKUs is not value added either for your customer or your business. In his April 30, 2013 article “Successful Retailers Learn That Fewer Choices Trigger More Sales” in Forbes, Carmine Gallo discusses his experience and a study about “choice overload” by other authors. He writes about a retailer that “has discovered that giving a customer more than three choices at one time actually overwhelms customers and makes them frustrated…when the customer is faced with too many choices at once, it leaves the customer confused and less likely to buy from any of the choices!” Choice overload is well-documented in consumer studies but can apply in B2B as well. While customer satisfaction is important, another key concern is the often-hidden costs associated with a business offering and managing a large number of SKUs for a given product type. These costs include holding inventory, S&OP (Sales and Operations Planning) team time, small production runs, and scrapping inventory. Holding inventory takes up space, which may come with a cost or utilize racks that could be used for other products. Scheduled inventory counts take up employee time and may result in blackout periods when the warehouse is not shipping product. The more SKUs there are, including extra SKUS, the greater the potential impact. The Sales team’s forecasting and the Operations team’s purchasing reviews that are part of the S&OP process can occupy more of their valuable time if they need to consider these times. If small orders or forecasts require a new production run, this could be costly and create excess inventory. Whether from this new production or past builds, eventually it will make sense to write off and scrap old inventory, another cost impact to the company. How do you know which SKUs to focus on if you wish to look at reducing your total number of SKUs? Start by examining SKUs that have: Low historic sales over a period of time Small variations between SKUs that customers do not value Older technology or model when newer option SKUs are available This requires a true partnership between Sales and Operations. It starts with educating both teams on the costs involved – neither group may be aware of the money and time impact to the company. Periodic (such as quarterly) reviews of SKUs that meet the above descriptions should become a fixed part of the calendar. A review of the data and other available for sale options should result in the identification of SKUs which may not be needed. At that point, it is helpful to have a customer friendly EOL (End of Life) Notice process by which you inform customers of last time buy requirements for this SKU and alternates available. It is usually best to provide some time for the last time buy in the interest of customer satisfaction, although that may not always be necessary. At a company that designed and sold electronics, a robust SKU rationalization process was implemented to help address these issues. A representative from the Operations team analyzed SKUs that met a version of the above criteria and suggested candidates for the EOL process. Next, a member of the Sales team reviewed them and, where appropriate, issued product change or EOL notices to customers, providing them time for last time buy orders when needed. These steps helped reduce the work involved in maintaining these SKUs while not leading to any customer complaints. A final note – sometimes it makes sense to continue offering low selling SKUs – to support customers buying other items (hopefully in larger quantities). It may be worthwhile to encourage them to keep coming back to you for all of their product needs and this may be a way to accomplish that. But it helps to understand that this is truly the case and not assume that this customer would not be equally happy with another, more popular, SKU. Steven Lustig is founder and CEO of Lustig Global Consulting and an experienced Supply Chain Executive. He is a recognized thought leader in supply chain and risk mitigation, and serves on the Boards of Directors for Loh Medical and Atlanta Technology Angels.
When it comes to careers, business owners are a minority of the population. In conversations this week, I mentioned the statistics several times, and each owner I was discussing it with was surprised that they had so few peers. According to the Small Business Administration (SBA), there are over 33,000,000 businesses in the US. Let’s discount those with zero employees. Many are shell companies or real estate holding entities. Also, those with fewer than 5 employees, true “Mom and Pop” businesses, are hard to distinguish from a job. The North American Industry Classification System (NAICS) Association, lists businesses with 5 to 99 employees at about 3,300,000, and 123,000 have 100 to 500 employees (the SBA’s largest “small business” classification.) Overall, that means about 1% of the country are private employers. Owners are a small minority, a very small minority, of the population. Even if we only count working adults (161,000,000) business owners represent only a little more than 2% of that population. So What? Where am I going with this, and how does it relate to our recent discussions of purpose in business exit planning? It’s an important issue to consider when discussing an owner’s identity after transition. Whether or not individual owners know the statistics of their “rare species” status in society, they instinctively understand that they are different. They are identified with their owner status in every aspect of their business and personal life. At a social event, when asked “What do you do?” they will often respond “I own a business.” It’s an immediate differentiator from describing a job. “I am a carpenter.” or “I work in systems engineering,” describes a function. “I am a business owner” describes a life role. When asked for further information, the owner frequently replies in the Imperial first person plural. “We build multi-family housing,” is never mistaken for a personal role in the company. No one takes that answer to mean that the speaker swings a hammer all day. Owners are a Minority We process much of our information subconsciously. If a man enters a business gathering, for example, and the others in the room are 75% female, he will know instinctively, without consciously counting, that this business meeting or organization is different from others he attends. Similarly, business owners accept their minority status without thinking about it. They expect that the vast majority of the people they meet socially, who attend their church, or who have kids that play sports with theirs, work for someone else. There are places where owners congregate, but otherwise, they don’t expect to meet many other owners in the normal course of daily activity. This can be an issue after they exit the business. You see, telling people “I’m retired” has no distinction. Roughly 98% of the other people who say that never built an organization. They didn’t take the same risks. Others didn’t deal with the same broad variety of issues and challenges. Most didn’t have to personally live with the impact of every daily decision they made, or watch others suffer the consequences of their bad calls. That is why so many former owners suffer from a lack of identity after they leave. Subconsciously, they expect to stand out from the other 98%. “I’m retired” carries no such distinction. This article was originally published by John F. Dini, CBEC, CExP, CEPA on
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