800 Pound Gorilla

What is an 800 Pound Gorilla?  Well as this blog is not about biology or animal species it is safe to assume we are not talking about the Western Lowland Gorilla, the Eastern Lowland Gorilla, the Mountain Gorilla, or any other Ape Family in the Animal Kingdom. We are talking about a small sub-class of Homo sapiens whose natural habitats are corporations and other organizations. 

Yes, we are talking about people. They do not resemble Gorillas in any physical manner.  Nor are these “800 Pound Gorillas” necessarily obese as the weight reference alludes.  No, we are talking about a class of people, men or women, who are adept and skilled at getting their own way in organizations. The name comes because we generally assume that an 800 Pound Gorilla usually gets his weight in the Gorilla world.  It may be a little offensive to gorillas but this is a common name given to corporate bullies.

The 800 Pound Gorilla is often the leader of an organization. It could be the CEO, President, General Manager, VP, Director, Manager, and even Supervisor.  In his realm or span of control, the 800 Pound Gorilla is dynamic and forceful. The 800 Pound Gorilla gets his way through force of personality and often by intimidating those who oppose his point of view.

However, not all 800 Pound Gorillas are leaders. They might be natural leaders in a group or milieu where the actual leader may be the exact opposite of an 800 Pound Gorilla. More often than not, this sub-class of 800 Pound Gorilla is very knowledgeable and uses that knowledge as a club. There are also cases where these 800 Pound Gorillas are right and wrong. 

The term 800 Pound Gorilla is not a positive term. They are, as in the above matrix, senior executives who throw their weight around and are often wrong, the term Gorilla is not often used for leaders that impose their will and are always right.  We tend to call these leaders great and visionary.

At Cadent Resources, we are concerned with Demand Planning and Inventory Optimization. We see 800 Pound Gorillas mostly in the area of Demand Planning. These 800 Pound Gorillas insist on revising forecasts upward into what they “believe” the sales will be. In most cases the Gorilla is wrong. If the 800 Pound Gorilla is the CEO, President, VP of Marketing, or VP of Sales there is not much the demand planning team can do. There is also not much a well crafted S&OP process can do. The 800 Pound Gorilla gets his way and the Demand Plan is compromised.

If the Demand Plan is compromised too often, no one will want to play and the S&OP process will unravel. The entire effort will become ineffective. In fact, the best S&OP programs work when senior executives become Gorillas with the intent on making S&OP work.

We invite you to share with us your experience with 800 pound Gorillas both good and bad. Are you a Gorilla? Be honest.

Best of the Best!

Last week we attended the APICS & IBF Best of the Best Sales & Operations Planning (S&OP) Conference in Chicago Illinois. This was a 2-day event of educational sessions filled with practical lessons from the supply and demand sides of sales and operations planning (S&OP). 

We attended this event as an exhibitor introducing DemandCaster® our comprehensive demand and supply planning software as a service. This was our first such event. Prior to this our sales and marketing activities were largely limited to word of mouth. Additionally, we thought that events such as these did not attract our target market of smaller manufacturers and distributors. We decided to give it a try because our offering is so different that we hoped to introduce DemandCaster® to a wider audience.

We were quite pleased with the response and noticed that though we were in the company of some very sophisticated and excellent offerings, our combination of price, capability, and expertise really stood out from the rest. Additionally, we met a number people from some great companies that fit our niche. Because they were attending the conference to learn how to implement S&OP within their organization, it was a pleasure having the opportunity to learn more about their business and explain how DemandCaster® can translate their business data into optimal demand and supply plans that drive smarter, more effective sales and operations planning (S&OP) processes.

This event was a great experience and we are already planning for the next one!

Mark Gavoor, VP of Consulting, Ara Surenian, President and Developer of DemandCaster, and Jolene Pratt, Marketing Director

Operational Definitions Part II

In part I of this two part blog we discussed Operational Definitions and how specific words, terms or concepts can have a distinct meaning in a specific organization or business and how people must be aware of this when communicating in effort to solve problems and improve operations.  Now, let’s discuss how Operational Definitions plays an important role in Operational Measure and Inventory.
A recurring theme advocated, or mantra chanted, by process improvement experts is that:

• If you do not measure it, you cannot improve it.  


• If you do not measure it, you will never know if your efforts and actions have had any impact, positive or negative, on the process.

Operational Definitions are even more basic.  Without the right Operational Definitions, there can really be no Operational Measures.
In any particular situation, everyone has to know and agree on:

• What is the attribute that is to be measured and monitored?  


• What is considered good quality as well as bad quality?  

While Deming provides plenty of examples in his book, the problem is even more complicated in our modern world of ERP.  We are awash in a sea of data.  We need operational definitions more than ever to turn that data into information that we can then monitor and act upon.
Let us consider something as obvious as inventory.   We all know what we mean by inventory… don’t we?   Let’s start with a formal definition from dictionary.com:

Inventory: A complete listing of merchandise or stock on hand, work in progress, raw materials, finished goods on hand, etc., made each year by a business concern.

There we have it.  What could be easier?  Now that we all have the same understanding, we can easily measure it.  It is just Inventory.  Our experience at Cadent Resources while working with our clients is that we can break it down, per the above definition, in terms of stock on hand, work in progress (WIP), raw materials, finished goods on hand, etc. Etcetera?  What is included in etcetera?  What exactly does on hand mean?  Here are some questions we make sure we review with our clients and feel everyone in a company interested in inventory needs to have good definitions for including general management, finance, supply chain (planning, inventory management, purchasing, and more), and IT.

• What does “on hand” mean?  When is ownership taken of merchandise?  When does this include in-bound in-transits and under which criteria are out-bound in-transits considered as on-hand?


• WIP might be understood, but what is Construction in Progress (CIP)?  Do you use it?  Should you be using it?


• What exactly are raw materials?  Should packaging materials be counted separately from raw?  Are components, sub-assemblies different than raw?  How are they defined?


• Are returned goods counted as part of inventory?  Under what conditions and exceptions?


• What about inventory of every category on Quality Hold status?  


• What other exceptions, special rules, and “off the book” status categories are used?

This simple, or seemingly simple, area of inventory can be very complicated.  When working with an ERP such as SAP or Oracle, the complexities can be daunting.  There are so many levels and layers of transactions that must be considered.  The system may have a definition different from the common lore held to be true inside the company.

Improved Suggested Order Review and Edit Interface

On Monday, June 6, we released a number of changes that we hope you will find helpful. One of the more significant was the changes we made to the suggested order interface as described below:

1. When entering the suggested order interface you will see three new elements:
1.

DemandCaster Updates: Forecast Graphs, Suggested Orders, Safety Stocks, and Misc.

We are pleased to release a number of changes and improvements to DemandCaster today! We have provided a summary of the changes below:

1. When viewing a forecast detail that is currently being worked on by another user, you will now be able to see the name of the other user.


2. We have introduced a new safety stock method that includes the standard deviation of lead time / delivery performance. The new safety stock formula is: {Z*SQRT(Avg. Lead Time * Standard Deviation of Demand^2 + Avg. Demand^2 * Standard Deviation of Lead Time^2)}. It is included in the Forecast Detail Options Tab and is called Lead Time. We recommend using this safety stock only if the lead time performance data is accurate. Companies using blanket orders should verify that the order date being used to calculate lead time performance is not the original blanket order creation date.


3. We have enabled 5% / 95% confidence interval bands in the forecast detail graph. You may enable this by clicking on the confidence interval button in the graph tool bar below the graph.


4. We have made a number of minor capacity interface changes to improve usability and visualization of the data.


5. We have changed the Confidence Index to STABILITY Index to more correctly reflect the meaning of this measure. In short, we are measuring how much the forward looking forecast deviates from the recent past. The basis is that on aggregate the forward looking 13 week average should not deviate excessively from the previous 13 weeks. Even in seasonal products there should be a semblance of balance. As such, when we see a high importance item with a low or negative confidence we want to take another look because there may be something amiss with the analysis.


6. We have added an option to control the default forecast window length. This is managed in the system settings.


7. We have added the capability to view aggregate forecasts in month buckets similar to item forecast view. This is controlled in the tool bar below the graph.


8. We have added the capability to cancel a demand analysis that was launched incorrectly


9. We have added the capability to identify new items that are loaded into DemandCaster from your system (previously not in the DemandCaster database). These new items will receive a unique tag that you define in the Tags UI. This way after each upload you can run a quick filter of the data using the new item tag to identify the new items, then change their settings to make sure they are using the correct planning policy. Once the policy is changed, you can either remove the tag or assign a new tag to the items.


10. Finally, we have significantly improved DemandCaster’s suggested order interface as well as the manner to which suggested orders are edited and approved. More on this new feature in a forthcoming blog posting.

We hope you find these improvements to be helpful. If you have any questions or identify an issue with the changes that have been made please email us at support@demandcaster.com.

Thanks!