Secret Formulas of Implementation Success

Posted on September 4, 2024 by Mike Doherty

As someone who’s been doing project work for decades, I must admit, it’s always cool and rewarding when you implement something. Shipping your work and having it exposed to reality instead of theory is the essence of innovation – taking an idea, or a design, and making it real.

But implementation work is hard, especially for a business process like Flowcasting since it touches, interacts and changes a large part of a retail business and extended eco-system.

I’ve been very lucky over my career to have either led, or co-led, three successful implementations in retail of Flowcasting or major elements of the concept. As an implementer at heart, over the years, what’s emerged are some mechanisms I’ve used that I believe are instrumental in success.

What I’d call my secret formulas.

For a key one, we’ll turn the clocks back to the mid-to-late 1990s. At the time I was the leader of a team for a national, Canadian hardgoods retailer, who’s mandate was to design and implement new processes and supporting technology to improve the planning and flow of inventory from supplier to store shelf.

The team had essentially designed what we now call Flowcasting and had selected technology to support the process. While we all understood that planning from the store level back was technically infeasible, we decided to forecast DC-level demand, and calculate and share forward looking supply projections with our merchandise vendors – in the process instilling the concept of supplier scheduling in retail. I won’t bore you with the details, but the project was quite successful and helped cement some of the principles of Flowcasting in retail, including supplier scheduling and working to a single set of numbers.

For a project of this size, like most larger scale transformations, we had a cross-functional governance team established – essentially like a steering committee – that would help guide the project and provide advice and suggestions to the implementation team. And to be honest, they did a good job.

However, inevitably, when a group of that size and functional diversity is tasked with guiding and asking questions of the leader (in this case me), there are bound to be some dumb asks and even dumber suggestions.

That was the input for me to develop my “Rule of 3”, which I/we used successfully on this implementation, and I’ve used ever since.

It works like this. If the ask/suggestion from the steering committee or large governance group sounded mental to me, I’d note it down and tell everyone I’d think about it. Then, I’d go back to the team and see what they thought. If they agreed it was mental, I’d ignore the ask/suggestion. And I’d continue to ignore it until the group had asked a third time – at which time I/we’d develop a response.

The beautiful thing about this approach is that seldom does the request ever get asked again, let alone a third time. It’s forgotten and therefore requires no cycles of thought or response from me and the team. I’m not exactly sure why but my thinking is that in larger groups people tend to like to hear themselves talk – they want to make suggestions/contributions, so they can’t help themselves and sometimes make a dumb suggestion or ask. Then, by the time the next session comes around, they completely forget about their initial request.

As an example, when I was working with our Winnipeg-based retail client designing and ultimately implementing Flowcasting, me and the team leader had to regularly present to a large cross functional group about Flowcasting – how it would work, the benefits, the implementation approach, etc.

I remember at one large, cross-project session a participant asking something like “How will the new process factor in social media sentiment into the demand planning process, to potentially revise the forecast of that item and others?” My response was, “Not sure yet, but we’ll think about it”.

I remember the team leader asking me after, “what are we going to do?”. My answer was simple: “Nothing. We’re going to ignore that and see if it’s ever asked again”. It wasn’t and the rest is history.

Now, not to brag or anything, but this client was able to improve daily in-stock from about 92% to 98%, while reducing both DC and store inventories, all while completely ignoring social media sentiment (whatever that is). Thanks to the Rule of 3.

Now, don’t get me wrong. I’m not saying that most of the suggestions from steering committees and cross functional groups are/were dumb – they’re not. I’m saying that a certain percentage will be and you, as an implementer, need a mechanism to ignore them and/or say “No” nicely, so you can stay focused on what matters.

For me, it’s The Rule of 3. It has been a loyal friend to me, over many years and implementations, and I hope you can use it – or something like it – as well.

It’s one of my secret formulas of implementation success.

Repetito est mater studiorum

Posted on July 3, 2024 by Mike Doherty

“Repetition is the mother of learning, the father of action, which makes it the architect of accomplishment.” – Zig Ziglar

When I was growing up, I was a very competitive dude, particularly in sports. When it came to sports, for me, winning was everything. Basically, I was an asshole. Many of my friends and foes called me by a different name. What’s the name they used? Oh yeah, a cunt. It’s OK, it was the truth and they often called me that to my face.

Here’s a story, from high school, that helps confirm my then status.

In the basement of our school, down near the gym, there was a ping pong table. And, during lunch and breaks, students would play. The rule was simple: the winner stays on the table, until someone beats them, and then they take over. So, a very good player could play for quite a while.

One day, me and my pals sauntered down and watched as a girl named Dana beat all comers. Then, at the insistence of my mates, it was my turn to challenge her. She crushed me. My buddies, of course, knowing how competitive I was, absolutely shamed me that day and for many weeks after.

So, what did I do?

I did what any red-blooded, super competitive dude would do. I bought my own racket and a ping pong table. I was determined to win.

Ping pong tables fold in the middle where the net is so that, when folded, the other side of the table is upright. It allows a single player to hit the ball, over the net, against the other side of the table and it pretty much guarantees that the ball will be returned. So, I set up the folded table in my parents’ basement and, every chance I got, would go down and pound balls against the returning wall.

Over and over. Harder and faster. Learning how to put overspin on both a forehand and backhand. Learning how to smash and return a smash. Repetition after repetition – for hours and days on end.

I would soon get to challenge Dana again. And, with my buddies watching, I would demolish her and would become not only the ping pong champion of my school, but also the best high school player in the county.

The moral of this true story isn’t to confirm that I was an asshole. The moral of the story is highlighting the importance of repetition.

There’s an old Latin saying, “repetito est mater studiorum” which means repetition is the mother of learning.

When it comes to instilling new ways of working, turns out repetition really is the mother of learning.

Implementing a new planning approach like Flowcasting in retail benefits greatly from repetition. You’re essentially teaching the planners and the wider organization (including suppliers) how to think differently about integrated demand and supply planning, so the more often people are exposed to the idea, the better.

I recently read a great book about change called The Human Element. In it they outline one of the most important strategies for instilling change is to “Acclimate the Idea” through repetition and repeated exposure (i.e., give people time to think and internalize the idea/change)

In a recent implementation of Flowcasting, the idea of repetition was leveraged extensively to help people make the change journey, including:

An ongoing education program which started with a cascade from the CEO and delivered repeated educational sessions to help people internalize the change in thinking and underlying principles of the new process
Process prototypes where the Buying Teams (Merch and Supply Chain) would execute a day in the life scenario, with company-specific data for every major planning scenario – like product life cycle, promotions planning, seasonal planning, etc.
A supplier education & training program to teach suppliers and the Buying Teams the new approach to collaboration
Training sessions to demonstrate how people would execute the new ways of working
Coaching sessions and ongoing coaching with job aides to help people transition from the old to the new

What do all these activities do?

They constantly repeat and demonstrate to people the underlying change and principles of the new process. As an example, in each of the process prototypes, the Buying Teams could see what was meant by a valid simulation of reality, what the supplier would see in their supplier schedules, why postponing creating a purchase order for promotional volume was better for everyone, plus many other learnings. Repetition, with real scenarios, helped them instill new thinking and helped acclimate the ideas.

Getting good at anything (Flowcasting or ping pong) requires learning. And learning needs repetition.

After all, she really is the mother of learning.

Subtract

Posted on March 6, 2024 by Mike Doherty

“Life can be improved by adding, or by subtracting. The world pushes us to add because that benefits them. But the secret is to focus on subtracting.”

                    - Derek Sivers

People don’t subtract.

Our minds add before even considering taking away.

Don’t believe me?

Leidy Klotz is a Behavioral Science Professor at the University of Virginia and a student of “less”. He conducted a series of experiments that demonstrate people think “more” instead of “less”.

Consider the following diagram and the ask.

Thousands of participants were asked to make the patterns on the left and right side of the dark middle vertical line match each other, with the least number of changes.

There are two best answers. One is to add four shaded blocks on the left and the other is to subtract four shaded blocks on the right.

Only about 15 percent of participants chose to subtract.

Intrigued, Professor Klotz and his research assistants concocted numerous additional experiments to test whether people would add or subtract. They all produced the same result and conclusion – people are addicted to and inclined to add. It wasn’t close.

Big fucking deal, right?

Not so fast. Unfortunately, adding almost always makes things more complicated, polluted, and worse. You’d be better off subtracting.

A great example in supply chain is demand planning.

Demand planning, according to many, is becoming the poster child of adding. Let’s factor in more variables to produce an even more beautiful and voluptuous forecast. Are you sure you all these additional variables will improve the demand plan?

I doubt it.

First, many companies are forecasting what should be calculated. It’s been proven that the farther away from end consumption you’re trying to forecast, the more variables you’ll try to add. And the resulting forecast usually gets worse the more you add – since you’re often adding noise.

We have a retail client that is forecasting consumer demand at the item/store level only and calculating all inventory flows from store to supplier – what we call Flowcasting. Their demand planning process only considers two variables to calculate the baseline forecast:
• the sales history in units
• an indication if the sales was influenced by something abnormal (e.g., like promotions, clearance, out of stock, etc.)

All “other” variables that the “experts” say should be included have been subtracted.

Yet their planning process consistently delivers industry leading daily in-stocks and inventory flows to the store shelf.

The idea is simple, profound, and extremely difficult for us all. For process and solution designs, and pretty much everything, you need to remove what’s unnecessary.

You need to subtract.

Rising Tides

Posted on October 4, 2023 by Jeff Harrop

It is better to aim high and miss than to aim low and hit. – Les Brown

Why is the shelf empty?

I could go on and on about the myriad factors that could be at play, but it really boils down to one of two things:

Failure to anticipate (or quickly react to) demand or;
Not enough available supply, even if demand is properly planned

The first one is pretty obvious. No how matter how much effort you put into forecasting, sometimes shit just happens. The season breaks way earlier than expected. A mundane product that’s been selling steadily for years “goes viral” because of a TikTok trend. Or a customer just comes in and wipes you out unexpectedly for no discernible reason.

The second one is also obvious – at least on the surface. Clogged ports, pandemics and strikes immediately come to mind. But what often doesn’t come to mind is store inventory accuracy. Of all of the millions of item/locations in retail stores with a computerized on hand balance, how many times does the replenishment system think there’s stock available to sell when there is actually none? And how often does this condition go undetected until the store manager starts seeing shelf gaps? With store inventory accuracy hovering in the 50-60% range, I’m going to say “probably a lot”.

I would argue that it’s probably the single biggest “supply issue” in retail, but the subject is so universally ignored and not measured that there’s no way of actually proving me right or wrong on that. But it sure feels like I may be right.

Regardless, lack of incontrovertible evidence aside, an informal quorum of people seem to agree with me anyhow, even if they may not know it.

Why do I say that?

Whenever we talk to retailers about fully integrated planning from supplier to shelf and explain the process in detail, someone inevitably connects these dots:

Store on hands are a critical input to the planning process – TRUE!
Store on hands aren’t particularly accurate – TRUE!
Therefore, you can’t properly plan anything until inventory accuracy is under control – hmmm, well…

Here’s the thing about that last point: Inaccurate inventory has been a problem in retail for time immemorial. Computer assisted ordering, stock checking for customers, online order pickup in store – these are all common practices in retail today and have delivered significant benefits in terms of growth, efficiency and customer service. The most critical input for all of these processes is store inventory balances, which everybody knows are not accurate. Yet I haven’t seen any retailers shutting down automated ordering or buy online/pick up in store programs until their store inventory accuracy is up to snuff.

Could greater benefits be achieved if store inventory records were more accurate? Duh! But that doesn’t change the fact that significant benefits can be (and have been) achieved in spite of inaccurate inventories. Implementing an end-to-end planning approach that relies on store inventory balances is no different in that regard. There is no hard dependency on some arbitrary level of inventory accuracy to start building or improving upon planning capabilities.

Transforming a retailer from a reactionary firefighter to an integrated planning organization takes hard work and discipline and delivers enoromous benefit.

Sustainably improving inventory accuracy in stores also takes hard work and discipline and also delivers enormous benefit.

Either of these initiatives can appear daunting individually, so – except for the most courageous among us – creating a false dependency (i.e. “we can’t plan without accurate inventory”) is a surefire way to ensure that nothing gets done about either of them.

As John F. Kennedy famously popularized: “The rising tide lifts all the boats.”

A retailer with so-so inventory accuracy will be made better with improved planning capabilities. A retailer with poor (or virtually nonexistent) planning capabilities will be made better with improved inventory accuracy.

So work on planning and shelve inventory accuracy for awhile.
Or work on inventory accuracy and shelve planning for awhile. Or be extra brave and work on both at the same time.

But work on something.

Remember Warren Buffet’s addendum: “A rising tide may lift all boats, but only when the tide goes out do you realize who’s been swimming naked.”