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.

Collaborate, then calculate

Posted on November 1, 2023 by Mike Doherty

“Never forecast what you can calculate.” – Dr. Joseph Orlicky

Collaboration promises much to the retail supply chain, and rightly so. Retailers and their trading partners are beginning to understand they are not alone. The retail supply chain does not act as a series of islands – each independent entity working for its own purpose. Rather, smart companies understand that they are really working as part of one, completely integrated network that is designed (or should be) to deliver products to their end customers.

Almost 50 years ago, at the 1975 APICS conference in San Diego, Dr. Joseph Orlicky (the pioneer of MRP – Material Requirements Planning) made a profound statement regarding supply chain planning. Having just learned of Andre Martin’s idea to calculate factory demand from the distribution centre requirements, he told Andre that his idea was good since you should “never forecast what you can calculate”.

Leveraging this profound truth is the key to improved collaboration, addressing the shortcomings of CPFR and, importantly, making a significant dent in stock outs, overstocks, and the bullwhip effect.

The retail/CPG supply chain should be driven only by a forecast of consumer demand – time-phased by item/selling-location (e.g., store, webstore, etc.). The consumer demand forecast should then be used to calculate a series of integrated, time-phased product flow plans and planned shipments (for a 52+ week planning horizon) from the store to the supplier factory – what we call Flowcasting.

Sharing planned shipments allows the retailer to inform the supplier about future product flow requirements, by item and shipping location, with all known variables factored in – what we often refer to as the supplier schedule. This allows the supplier to eliminate all efforts previously expended to attempt to forecast that retailer orders. The planned shipments replace all this effort – improving the supplier order plan and allowing the collaborative process to work using the profound power of silence.

In the new collaborative model, since the planned shipments provide a long-term view of future required inventory flows, the expectation is that the retailer and supplier work to the principle of “silence is approval”. What that means is that the retailer expects the supplier to be prepared to deliver to the up-to-date, forward-looking schedule and only when they cannot supply to the schedule and/or they don’t understand the projected schedule, is collaboration required.

Collaboration based on a shared view of planned shipments (i.e., the supplier schedule) allows for the collaborative model to become more strategic and value added. In this new approach retailers and suppliers will collaborate on strategies to drive sales and potentially inventory plans – in essence, the inputs to drive joint business plans.

That’s a complete reversal of the traditional CPFR model where each company developed their own independent order forecasts and then spent considerable time and effort to reconcile these forecasts. In the new approach, the collaboration mostly focuses on a common language: sales to the end consumer. And, again, largely by exception. There is no need to collaborate on the plethora of retail forecasts and planned shipments since these have been automatically translated into the requirements, product flows and various languages of the business (e.g., dollars, cube, capacity, resource needs) for all trading partners.

The following diagram depicts the paradigm shift in collaborative planning between retailers and their merchandise suppliers – collaborating primarily on the inputs to the joint business plans, and only by exception if any issues or opportunities arise based on the resultant operational product flow plans:

Leading retailers and their suppliers will collaborate where they believe it is worthy of each partner’s time and largely on strategies (i.e., inputs to the joint plans) that drive growth and/or improved performance. That could be on promotional forecasts, new items, and ideas and concepts about product flows – to name a few. Both partners understand that the planned shipments resulting from these strategies are calculated – so collaboration on these shared projections is only needed if supply is at risk.

Dr. Orlicky’s famous and profound quote, “never forecast what you can calculate” is embedded in my mind and cemented in all the retail clients I’ve worked with. We can, and should, build on this profound truth and work to ingrain this thinking and practice between retailers and their trading partners…

Collaborate, then calculate.

Fossilized thinking

Posted on March 3, 2021 by Mike Doherty

In August 1949 a group of fifteen smokejumpers – elite wild land firefighters – descended from the Montana sky to contain an aggressive fire near the Missouri River. After hiking for a few minutes the foreman, Wagner Dodge, saw that the fire was raging – flames stretching over 30 feet in the air and blazing forward fast enough to cover two football fields every minute.

The plan was to dig a trench around the fire to contain it and divert it towards an area with little to burn.

Soon it became clear that the fire was out of control and the plan was out the window. The fire was unstoppable so, instead, they’d try to outrun it, to safer ground.

For the next ten minutes, burdened by their heavy gear and tiring legs, the team raced up an incline, reaching an area that was only a few hundred yards from safety. But the fire was unflinching, gaining ground like a wolf chasing down a wounded animal.

Suddenly, Dodge stopped. He threw off his gear and, incredibly, took out some matches, lit them, and tossed them onto the grass. His crew screamed at him but to no avail – when Dodge didn’t listen, they had no choice and turned and ran as fast as they could, leaving their foreman to what they believed to be certain peril.

But Dodge had quickly devised a different survival strategy: an escape fire. By torching an area in front of him, he choked off the fuel for the fire to feed on. Then, he poured water on a rag, put it over his mouth and lay down, face first, on the freshly burnt grass while the fire raged and sped past and over him. In total, he’d spend close to 15 minutes living off the oxygen close the ground he’d just torched.

Sadly, of the rest of his crew that tried to outrun the blaze, only two would survive.

Wagner Dodge was able to survive not because of his physical fitness, but his mental fitness – the ability to rethink and unlearn. The prevailing paradigm was that, at some stage for an out-of-control blaze, your only option is to try to out run it. But Dodge was able to quickly rethink things – believing that, perhaps, by choking off it’s fuel line and providing his own small wasteland area, the fire might avoid him. The ability to rethink had saved his life.

As it turns out, the ability to rethink and unlearn is also crucial for retails survival and revival.

It’s no secret, many retailers are struggling. The same is true of many retail supply chains.

Do you ever really wonder why?

Lots of people blame retail’s generally slow adoption of new technologies and business models as the main factor, but I think it’s a deeper, more fundamental and chronic problem.

Technology is not eating retail. Fossilized thinking is.

What’s fossilized thinking? It’s people – at all levels in an organization – who are unwilling or unable to challenge their long-held beliefs. Not only challenge them, but be able to rethink, unlearn and change them often.

As a case in point, many people who work in the retail supply chain don’t include the consumer as part of the supply chain. Yet, if you think about it, the retail supply chain begins and ends with the consumer. There are even a number of folks who don’t consider the store part of the supply chain. Once the product has shipped from the DC to the store, then, incredibly, job done according to them.

Don’t believe me?

I won’t embarrass them, but just recently I read a “thought leadership” article from one of the world’s pre-eminent consulting firms regarding the top trends in retail supply chain management. At #3, and I kid you not, was the growing view that the store was a key part of the supply chain.

Flowcasting tribe members know better and think differently. The consumer and store have, and always will be, part of the supply chain. That’s why we understand that, in retail, there is no such thing as a push supply chain – since you can’t push the product to the consumer.

In my opinion (and I’m not alone), fossilized thinking, not technology adoption, is the real disruptor in retail.

If you want to improve, innovate or disrupt then you must…

Constantly rethink, unlearn and challenge your own thinking!