Are you bored?

Chances are, you’re not and that’s a problem.

As a society we’ve won the battle against boredom. You probably have a smartphone in your pocket, maybe a game console in your den, perhaps a kindle or iPad in your briefcase.  Congratulations, you’ll never suffer a minute without stimulation. Yippee!

Here’s the problem. Experts say our brains need boredom so we can let our minds wander and be creative. I think they’re right. If you’re like me, then your best ideas always seem to bubble up when you’re bored and lacking outside stimulation.

Being bored is, actually, the critical factor in creativity – whether that’s for folks like us who need to develop new supply chain models or solutions, or anyone working in a creative endeavor.

Boredom allows the mind time to wander.  And a wandering mind is not only a beautiful thing, but also a brilliant and productive thing.  It allows you, subconsciously, to make connections and to reuse ideas and concepts in new and novel ways.

William Shakespeare is widely considered the greatest writer of all time and Romeo and Juliet is one of his finest works. But Bill didn’t create those characters of out the blue. He got the idea for the play from a 3000-line poem by Arthur Brooke, published 30 years earlier.  He got the idea because he was bored and his mind wandered and made a connection.

Henry Ford became the world’s first billionaire by making the connection and applying the idea of the overhead disassembly line of a meat packing plant to create the Detroit assembly line of the Model T.

Steve Jobs used his boredom and wandering mind and followed the lead of Nike. Instead of focusing his advertisements on their products, he turned the lens toward the people who would buy Apple products. As a result of making this connection, he was able to deposit 11 billion dollars into his pocket.

The ideas and concepts of Flowcasting are, in reality, the repurposing of ideas and concepts from manufacturing.  They stemmed from boredom and someone letting things “soak” in their minds and then asking some questions and making connections.

After all, if time phased planning works at a manufacturing or distribution facility, why would it not work at the store?

It appears that Solomon was right. “There is nothing new under the sun.”

If you want to be creative, develop new models and solutions then you need to repurpose the proven. That is, find a successful pattern from somewhere else and use it as a blueprint.

For that to happen, you need to be bored.  You need to let your mind wander – give it “soak time”, free from the endless drivel and distractions it is currently served.  Give it time to make connections.

It worked for Shakespeare, Ford and Jobs and it will work for you too.

So, shut off your cell phone, put down that iPad, close your Kindle reader and do the following: absolutely nothing.

Be bored.

And then, be brilliant.

I think it was Yogi Berra who said, “In theory there is no difference between theory and practice. But, in practice, there is”.  Just another example of the brilliant and sage advice from the legendary Berra.

Theories are wonderful things.  They help us to explain things and sometimes help understand an entire discipline.  In math and science, theories need proof.  Rigorous, thorough and defensible arguments and facts that confirm the hypothesis.

Theories in business processes are a lot like math and science.  Instead of needing proofs, they require practice – to be more specific, putting the theory into practice.   Flowcasting is essentially a theory.  And a number of years ago it was just that.  A pipe dream.  An idea that a hockey-loving French Canadian, an American MRP guru and a couple of process designers from a large Canadian retailer had.  At the time a theory that the retail supply chain could be seamlessly connected by a single forecast only at product store level.

Through perseverance, hard work, luck, many pilots and attempts, Flowcasting has moved beyond the realm of theory and is now being put into practice.  As we speak, a number of early pioneers are implementing the Flowcasting process and reaping the benefits of a completely integrated supply chain.

All because a few people concocted a theory and turned the theory into practice.

You see in business, until something is implemented and working, it’s just theory.  How many conferences, speeches and youtube videos have you watched, then scratched your head and muttered…”nice theory, how would that work?”

In supply chain planning there are many theories.    Consider Forecasting, or Demand Planning as an example.   I don’t know about you but I’ve been awfully impressed with the theories I hear a variety of experts talking about when it comes to demand planning. Here’s a few of the “theories” I’ve heard or read about, that maybe you’ve seen to:

• You should factor in the latest weather forecast and that will improve your demand plans
• You should design planning processes that take into account the latest available information from social media to automatically sense and adjust your demand plans
• You need to build cognitive learning capabilities into your demand planning process
• You need to incorporate Big Data into your demand planning process to recognize early patterns to improve your forecasts

Now, I have to admit, these all sound wonderful but they are all just theories.  I’ve yet to see any proof.  And if you find any proof for the above can you do me a favour?  Send me the details.

One of the problems with most of these theories is that people either don’t seem to realize or are missing a simple fact – that people are accountable for producing decent forecasts.  And the problem with most of these theories is that they tend to overlook the human element in demand planning.

People need to completely understand the demand planning process, including how any sytems and theories arrived at the predictions.   I’ve got a little theory of my own about demand planning.  “The more complicated a theory in forecasting, the less practical it is”.

The good news is I’m not alone in my thinking.   Scott Armstrong is pretty knowledgeable about forecasting processes.  In fact, he might be one of the world’s leading authorities.  Armstrong is a professor at the Wharton School of Business at the University of Pennsylvania.  He’s dedicated his whole life (and he’s 78) to studying forecasting and his book, “Principles of Forecasting”, should be considered a bible to anyone interested in the field.

Us supply chain planners could learn a lot from old Scotty.   One of his gems of wisdom is about complexity of the forecasting process/model.  He states, “there’s been no case in history where we’ve had a complex thing with lots of variables and lots of uncertainty, where people have been able to make forecasting models or any complex model work.  The more complex you make the forecasting process the worse the forecast gets”.

Hmmm…makes you wonder, eh?

We have lots of theories about how to factor in Big Data, the weather, and a whole host of other variables, all with complex models aimed at sensing and translating and responding the short and long term forecast, yet according to Armstrong, that’s never worked in practice.   But practice, unfortunately, is where we work and where the rubber hits the road.

Of course the Flowcasting disciples understand something fundamentally critical to demand planning processes.  Any supply chain really should only have a forecast at the point of consumption and all other demand plans can and should be calculated.   The farther away from the consumer/point of consumption you’re forecasting, the more variables and constraints you’ll need to try to factor in.  Exactly Armstrong’s point!

In theory, you can make your demand planning process as complicated as you want.

In practice, you can’t.

I can still remember how excited and proud I was when I presented my Mom an autographed copy of our book, “Flowcasting the Retail Supply Chain  For those of you who don’t know Betty Doherty, she’s a word wizard – loves to read and even dabbles with writing her own poetry.

I knew then, that Mom would read the book.

A couple of weeks after she received her gift I got her feedback.  To paraphrase, she said,…“It was good, but to be honest, I’m surprised how simple the math is.  I thought it would be more sophisticated and complicated”.

I could tell that she had expected more and was a little disappointed.

But, you know, usually there’s a nugget or two of wisdom in any feedback and this was no different.  While I’ve always considered my Mom to be brilliant, the more I reflected on her assessment the more I’ve come to realize that, when it comes to Flowcasting, she’s guilty, like most people of…

Doing the math.

Most professionals that we talk to – be they retailers, consultants, solution providers – really don’t understand Flowcasting.  They think they get it, but are really only focused on doing the grade 3 math that Flowcasting employs.

As Aldo – my Mexican colleague and early Flowcasting pioneer, says, “Flowcasting is not a supply chain solution, it’s a business solution”.  Aldo is right.

Flowcasting, at its core, is the fundamental transformation of the retail supply chain, from consumption to origin – orchestrating the entire network and all inter-related processes to the consumer, regardless of the supply method.

This includes changing the entire mental model of the retail supply chain so that:

• A single, time-phased forecast of consumer demand is developed for all selling locations (physical and virtual)
• All planned shipments are calculated for the resulting flows from source to consumption to meet this sales forecast for an extended planning horizon, say 52 weeks into the future
• Everyone in the entire network can see a clear projection of the product requirements, including suppliers who are receiving a rolling supplier schedule of expected purchases by product/locaton
• Suppliers use the schedule to plan raw materials and produce to the schedule, even for projected promotional volumes
• A single order lead time exists between retailer and supplier and all orders are created at this lead time – yes, even for promotional volumes. Furthermore, these order lead times are short (7 days or less), regardless of where the supplier is located
• Regular, seasonal and promotional volumes are all planned using a simple process – that is, to forecast expected sales and flow product to meet sales and time-phased planogram changes at store level
• Silence is approval, as a concept and a discipline, replaces the current infatuation with collaboration, thereby ingraining in people that collaboration is truly exception based and rarely needed
• The projections are seamlessly converted to the language of the business (sales $$, cube, capacity, etc) and used to gain control of how the business is doing
• The retail supply chain is managed like an inter-connected network of businesses, working as one

It’s quite a transformation and a journey to say the least.  But it’s a journey worth embarking on.  Your supply chain will be laser-focused on meeting and delighting the needs of your customers, all while working in harmony with your supply chain partners – both internal and external.

But, make no mistake, a journey like this requires a little more than grade 3 math.

It demands hard work.  And it requires an approach that teaches the easy stuff – the basic math – while primarily focused on changing the mental model.  Any approach to changing mental models needs to reek of process design, education, labs and pilots, training, and coaching.

Take supplier lead times, as an example.  Most retailer/supplier relationships have excessive lead times.  But the visibility provided by Flowcasting allows the retailer to educate and help a supplier understand that long order lead times are not necessary.  After all, what lead time does the retailer get from their customer?  Zero.

Educating and demonstrating how the Flowcasting process seamlessly integrates a retailer and manufacturer, resulting in drastically shortened lead times is work.  It requires emphasis on changing the supplier’s mental model.

But it’s worth it and makes both companies more competitive and responsive to the consumer.  And this is not pie in the sky – we’ve had clients reduce lead times by 50-70% and have North American retail clients with Offshore lead times of 40-60 days, compared with the 160-180 day lead times that are typical.

Unfortunately, most teams spend their time on the grade 3 math and hooking up the systems to support it – rather than on the business processes and underlying models that support those processes.  And the implementations and transformations (or lack thereof) suffer as a result.

You have a choice.

You can either do the math.

Or you can change the mental model and Flowcast.

In the mid 1950’s a series of simple experiments were held with various groups of people to get a handle on the cognitive capabilities of people.

In a famous experiment, Baba Shiv randomly split groups of people into two groups:

• One group memorized two digits, say “17”; and
• The other group memorized seven digits, say “3784926”

Before each group reported their number, they walked down a hall where they were offered a reward for their efforts – either a healthy fruit cup, or a piece of chocolate cake.  People who were to recall the seven digits were 50% more likely to choose the cake.

Why was that?  It’s because the mental effort required to remember those extra numbers induced them to rewarding themselves with the less healthy cake.  Researchers call this effect “cognitive overload” and its unfortunate effects are well documented.

As companies expand and mature, rather than rationing or reducing load, they often pile on so many metrics, procedures, processes and activities that people lose the capacity and capability to do the right things.

In the mid-1950s, psychologist George Miller showed that people could hold roughly 7 numbers in short-term memory. This became known as Miller’s Law during thousands of observations on the hazards of overtaxing our brains.

Miller’s Law has wide-sweeping implications for potential Flowcasting solutions and their ability to scale.

If you understand the paradigm of Flowcasting you’ll quickly appreciate its power and benefits.  The supply chain, completely driven by a store/sku forecast, entirely recalibrating based on what is and isn’t selling, daily.

Many retailers have 10’s or even 100’s of millions of store/sku combinations.  The ability of a solution to scale to these kinds of volumes is not an easy proposition.

To date, I’ve been invited to review a few of the major technology providers who beat their chests and proclaim, before my visit, “we’ve got a Flowcasting solution”.  After my visit they realize what they’ve really got.

I’m not shitting on these companies, as they are fine organizations with a long and illustrious history of providing supply chain solutions.  All the companies I’ve visited view Flowcasting as adding more to their existing solutions – essentially thinking that they can just extend the solution to the store and add lots more computing juice to crunch the numbers.

I think these companies, along with others attempting to build a Flowcasting solution, would be well advised to think about Miller’s Law and try a fundamentally different approach.

You see scale is not a technical issue, but rather a people issue.

I’ll let you in on a little secret that very few people really understand.  Please keep this to yourself, if you can.

All retailers have essentially the same business processes.

What that means is that the mid-size retailer I’m currently working with has the same processes as a behemoth like Wal-Mart.  They introduce and discontinue products, promote, add new stores, add DC’s, change product flows and buy product from all over the world.

The issue with trying to take existing solutions and add to them is one of cognitive overload.  For people.  The system becomes so heavy and difficult to implement and manage that it collapses under its own weight.

It becomes too burdensome for people to use, implement and sustain.  So what do they do?  They go around it.  They use spreadsheets and manual processes.

I’ve seen recent studies that highlight that 60%+ of companies don’t use their planning solutions and rely on spreadsheets for planning and ordering.  Even some of the largest and, theoretically, more advanced organizations.

Suppose a technology company said, “fuck it, we’re going to do this differently”.  “We’re going to design our Flowcasting solution, virtually from scratch, to be easily implemented by small or mid-sized companies”.

The beautiful thing about an approach like this is that they’d quickly realize that smaller retailers would have no appetite, desire or capacity for unnecessary complication.

All they could handle and support would be what is required to get the job done.

Yet getting the job done in a small to mid-size retailer is the same, from a process perspective, as a large retailer.  And the resulting solution to handle this would be clean, crisp, elegant, simple and, ironically….

…able to scale.

“The chains of habit are too weak to be felt until they are too strong to be broken.”  – Samuel Johnson

It’s 1934 and in a dark, dingy basement on the lower east side of New York, a fundamental principle of change management would emerge, from the unlikeliest of sources.

Sitting in the basement was 39 year old Bob Wilson.  Wilson was an army machine gun operator and had recently returned home from missions in Europe.  During the war Bob experienced many things including something that would change his life, and alter the thinking of change management.

That thing was alcohol.

Back from Europe, penniless and with a failing marriage, Bob was consuming 3 bottles of booze a day.  Bob Wilson was an alcoholic.

After struggling with his addiction, Bob eventually checked himself into the Charles B. Towns Hospital for Drug and Alcohol Addictions. One of the prescribed drugs at the time was a hallucinogenic, call belladonna and Bob was receiving daily doses.

During doses Wilson floated in and out of consciousness and it was during these states of suspended animation that Bob would begin to formulate the most successful, and insightful change management program ever developed.

During the next 36 years, until he passed away in 1971, Bob would found, build and instill the most successful change management program ever developed – the famous 12-step program of Alcoholics Anonymous (AA).  AA helps an estimated 2 million people each year and has changed the habits and lives of literally 10’s of millions of people.

So, what does Alcoholics Anonymous have to do with Flowcasting or any new process/technology change?

As it turns out, just about everything.

Today, Retail Supply Chain Planners are alcoholics of a different ilk.  It’s not booze they are addicted too, it’s the order – the purchase and transfer order.

It seems like since the beginning of civilization, retail supply chain planners have been focused on ordering product.  In fact, in retail, today the vast percentage of products are ordered using manual processes, usually originating from a spreadsheet or a collection of spreadsheets merged together.

But with the introduction of a planning process and technology like Flowcasting, the ordering process is essentially automatic, with little or no human intervention.  Products are planned, in a time-phased manner, over a long planning horizon and when they reach the lead time, are systematically converted to an order.

Simple, right?  On paper, yes. In practice, not at all.

Retail planners, like Bob, have become intoxicated with ordering.  Sure, they nod their heads and realize that if they do a reasonable job of planning demand, then the order takes care of itself.

Bob also knew that drinking 3 bottles a day was stupid – yet did it – day after day after day.  It became a habit, just like manual ordering today.

Of course some technology vendors have added to the misery.  “Optimize the order, they say”, as if that’s gonna help an addict at all. I’ve got a better idea…how about we don’t and say we did.

In a Flowcasting world, the planned orders are always recalibrating and molding themselves to the will of the customer, and sometimes get automatically consolidated to meet a vendor constraint. But they are ordered without anyone touching the bottle.  There is no need to optimize – just go with the flow!

Bob was able to change his life and the lives of millions of other folks by developing a methodology to attack, address and change these habits.  His 12-step program is not only famous, but delivers.

A slightly less famous, but equally effective, approach is the methodology we’ve honed over the years to help companies change their planning habits.  Specifically, the order drunkenness that prevails in retail.

Much like AA, our approach puts a huge emphasis and commitment on teaching, designing, and coaching.  The focus is squarely where it needs to be – on people.

70-75% of our time is spent helping people change habits and focus on ingraining new thinking and instilling timeless planning principles.

It’s not just about presenting a powerpoint deck listing the Flowcasting principles.  It’s about using those principles to help the team design a new world – not just for demand & replenishment planning, but for all the processes and scenarios that integrate with them.

Over time, like the slow drip of a leaky faucet, the ideas and concepts are instilled in the design and, more importantly, in the minds of the project team members.  Slowly, but surely people change how they think and, ultimately, how they behave. In short, their habits.

And isn’t that what change is all about?

Over the years, I’ve learned a lot from alcoholics like Bob Wilson.

Maybe you can too!

Here’s a great post from Shri Hariharan, JDA VP of Flowcasting regarding the new paradigm in retail supply chain planning.  Click here to read.

JDA has created an entire new website dedicated to Flowcasting.  You can learn more about the concept, get a free eBook and watch some interesting videos that better explain how Flowcasting works.

Check it out at www.flowcasting.com

Recently read an awesome book, A More Beautiful Question, about inquiring and asking more than telling.  Should be required reading for everyone. Got me thinking though…

Most of the advice and thinking about supply chain planning (i.e., demand & supply planning) is about developing and applying new forms of advanced analytics to the wrong question.

My advice: find a better question!  Then you’ll realize you should never forecast what you can calculate!