On Time, On Cost, On Capital

Growing up in a small business family, I saw firsthand how my parents ran their business. Their higher education was learned firsthand by ensuring customers were serviced, they managed their expenses and invested in their people and business to keep driving forward.???

My Dad always placed the customer and their experience first. He was known to hand out his home phone number to widows and seniors who depended on him to keep their cars running. My Mom was the bookkeeper in addition to raising two sons. She kept track of all expenses and ran a tight ship. My Dad started his shop in 1971. Back then, there were zero computers on cars. Everything was mechanical. As technology evolved and vehicles became increasingly complex, he upgraded his equipment, trained his mechanics, and ensured that his business and personal capital grew with the times. From carburetors to computer chips, he did not miss a beat.??

When I studied to be a mechanical engineer, I was fascinated by data. Data was all over in the classes, experiments, and projects I learned from. I had a mindset that the more, the merrier. More data was always needed, and my goal was to find more to make the best data-driven decisions. I was in GE's leadership program and transitioned to a full-time job upon graduation. Back then, it was all about Six Sigma. Getting more data to run your processes within Six Sigma.??

At the same time, computers, the internet, and eventually the cloud came to reality. Processes were becoming increasingly complex, with increasingly sophisticated data structures reporting more significant insights. According to Bernard Marr - over the last two years alone, 90 percent of the data in the world was generated. Some other interesting facts:?

• ?More than 7 billion humans use the internet (that is a growth rate of 7.5 percent over 2016).?
• On average, Google processes more than 40,000 searches EVERY second (3.5 billion searches per day)?
• While 77% of searches are conducted on Google, it would be necessary to remember other search engines are also contributing to our daily data generation. Worldwide, there are 5 billion searches a day.?

Think about it: We have produced all this data and are still waiting to see tangible impacts from Language Learning Models.???

With all this information, Supply Chain Operations are crippled by the amount of data. What was meant to give more insights often has organizations focusing on the wrong things. Or worse, organizations are falling prey to analysis paralysis. Or detrimental, leaders are hiding behind or potentially manipulating data. It has often been said statistics do not lie, but liars use statistics.????

With all this in mind, as a leader who had the chance to work in fast-growing, dynamic businesses across different industries and verticals, I lead my teams with a simple premise –?????

• On-Time??
• On Cost and??
• On Capital???

OTCC. OTCC is our organization's North Star, managing us across time horizons, tactical to strategic, and across the organization.????

On Time. Any organization's success begins with the customer. The customer's journey and experience must be at your business's core. When working on a process, start it with the customer going backward. Understanding your customers – what they value and how they perceive your brand – helps ensure your supply chain operations are ready to deliver the brand promise. Finally, while cross-functions within an organization may be at odds over resources, processes, or responsibility, I have never seen a team that could not set differences aside when you place the customer at the center.??

On Cost. While it may be an unpopular stance, you cannot control your costs until your customer service (On-Time) is predictable, repeatable, and effective. Many organizations try to take both service and expenses at the same time. Admittedly, you can get some short-term gains by doing such. However, to build scalable, lasting organizations, something else is needed. Think about it from the customer's point of view. If you can deliver orders predictably, repeatably, and effectively, you will start saving costs because of poor customer service. By controlling your customer fulfillment costs, you can drive out other charges, including process-driven cost reductions. All these cost savings should be reinvested back into the business. Operations drive EBITA.??

On Capital. Capital can mean different things to different businesses. However, the three most commonly revolve around working capital, organizational knowledge, and human capital. In working capital, supply chain operations should be focused on inventory management, accounts payable, and accounts receivable. However, if you are not servicing your customer well at a competitive cost, you are not able to focus on working capital. One of the more significant inputs to an optimized inventory is customer collaboration. It is easier to achieve good customer engagement if fulfillment is standard. Customers are also less apt to pay on terms if they are not receiving good service. As our products are sold across more channels and modes, manufacturers must house the knowledge and data on their products. In today's high-paced e-commerce world, having accurate and readily available product information is critical. Finally, our people are also an essential part of our capital structures. I am not talking about capacity or capability; I am talking about investments in and encouraging our people to perform at their best.???

Today's business leaders are drowning in data. When I hear my team say, "We don't have this information," I always know there is an opportunity to recalibrate what we are working on by asking about the OTCC framework. Usually, this will bring us back to the center and start moving forward with momentum. Our jobs as leaders are to "step away from the data" and lead our organizations back to fundamentals.?