We make promises every day. We make promises to ourselves, to our children, our spouses and co-workers. Promises are commitments that we make to perform an action. The not so obvious promise is when we say “yes” to a request. When a co-worker, our boss, or even our neighbor asks us to perform a task or extends an invitation and we say, “yes,” we cannot nor should not take that “yes” lightly; we have effectively made a promise. A promise must include a performer and a customer. A good promise is:
- Voluntary
- Public
- Explicit
- Negotiable
As you read this, likely in the middle of your business day, this topic may sound irrelevant or “fluffy,” but actually, promises get to the very heart of what we expect as clients and deliver as service providers. Promises can be internal commitments (meet a sales goal or deadline) or external commitments (deliver a project on time, provide more information) that we are going to take action against. Intent with action results in accountability. Effective leadership and highly successful organizations understand that promises and the ability to execute on commitments are the building blocks for developing a positive culture and a successful business.
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Actions & Words
We have all heard the proverbial quote that “actions speak louder than words.” However, our outward speech and the way we communicate can and does create action. For example, when a manager gives an order to a subordinate, or a supplier makes a promise to a customer, that manager or supplier incites action with his or her words. The supplier is expected to follow the course of action by the customer. The manager expects the associate will follow up on the request. Fernando Flores, a PhD from the University of California, Berkeley, explains that many managers have been taught to believe that written or verbal communication is about describing, rather than doing. However, Flores argues that when managers speak or write to their associates, they are actually creating a web of requests, commitments, assertions and declarations that affect how people act in their organizations.
Unfortunately, when communication is hindered in organizations, so too is much needed action. Many retailers (if not most) are run as merchant-centric organizations with numerous organizational silos. As a result, processes are oftentimes routine and optimized within the silo (functional business unit), but communication and collaboration across business units and an approach that looks holistically at organizational process improvement is essentially discouraged.
Cross-Functional Vendor Management
Take, for example, vendor management. Vendor management definitely crosses multiple business unit functions; merchants, buyers, allocators, transportation, distribution and store operations are all impacted by the vendor’s ability to execute. But, with operational silos, how does the retailer manage and control the “supply chain-relevant” data required to manage an item from vendor to store shelf? It is the “specialization” within a retail organization that effectively hampers the development of an optimal retail supply chain. The sub-optimizations are not necessarily a sign of bad management, but each functional area creates metrics, a language and set of routines that do not evaluate up-stream and down-stream processes. Without communication between all impacted parties, the right commitments are not made, the right action is not taken and the process remains broken. A paradigm shift in this silo approach is required for business transformation.
Let’s look at the vendor management example (one of many from which we could have picked) from a different angle. Major breakdowns in today’s retail supply chains are EDI, compliant labeling and the visibility to pre-allocate inventory in transit (less than 24 hours before hitting the receiving dock). I am amazed that something that is so simple is not accomplished in over 65 percent of the retailers with which we consult. Yet, when you consider communication, the language that merchants and buyers use with vendors is completely different than the language of someone who manages inbound transportation. A merchant is measured on sales and their ability to manage their open-to-buy (OTB), whereas, the transportation manager is measured on the number of purchase order (PO) consolidations and cost per hundred weight for a shipment. A merchant or buyer can “talk or take action” in a way that impacts transportation costs by simply changing PO order frequency from monthly to weekly.
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Overcoming Sub-Optimization
So how do organizations overcome sub-optimization where cross-unit organization is required? I believe the answer is by making promises (commitments) and building relationships outside your functional business unit. First, you need to identify critical commitments (internal and external), determine if there is a breakdown in the process, and then diagnose and fix it.
Flores’ Speech Act Theory is based upon the premise that “talking is doing.” Whenever someone in an organization commits to a future course of action, they are making a public promise. So, when a VP of Supply Chain states to other associates that they are going to have 90 percent of their vendors EDI compliant and with UCC128 labels applied to inbound cartons, the VP has effectively made a personal and public commitment. The VP’s speech induces others to depend on it and change their behavior accordingly. Such commitments provide the connective tissue that link different activities within organizations.1 By making such a promise, the VP of Merchandising might hold his or her team responsible for ensuring they only buy merchandise from EDI compliant vendors. The team may also inform vendors that non-EDI performance will result in chargebacks. The notion of reliance is central to the definition of effective commitments.
How do you open up lines of communication and create effective commitments in your organization? Leadership (C-Level, Managers and Supervisors) may reconsider moving from process-based management to commitment-based management. A process consists of standardized tasks and information that cuts an organization horizontally, whereas, a commitment is made by a “performer” to an internal or external “customer” to fulfill a condition of satisfaction.
So go “make it happen” and use your “voice” to create possibilities for yourself and your company. Keep me posted along the way – drop me a line in the space provided below.
1Fernando Flores, Werner Erhard Seminar Series for The Forum
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