Do any of these concerns sound familiar?
“We are running out of space!”
“My labor costs are out of control!”
“We shipped another order wrong!”
These challenges are common. And there are two common but distinct ways that companies approach resolving these issues: “buy and hope” and “plan and execute.”
The buy-and-hope approach
The basis of the buy-and-hope method is simple. A company brings in a range of vendors (software, hardware, or other technologies) to look at its current situation. Each vendor assesses the situation and informs the company that it has the answer. Hallelujah, problem solved, right?
Well, not exactly. Careful attention must be given to a vendor’s ability to provide both an objective and a complete solution. This is not to say that vendors of any specific equipment, technology, or service do not have your company’s best interests in mind; hopefully they do. The key, however, is to remember is that each vendor has a specific product or service (or suite of products and services) that it wants to sell to you. In many cases, a vendor may indeed have the right solution–but how will you know for sure? You won’t, at least not for some time and not until long after your company has spent money on the product or service.
At the end of the day, you have bought a product that may have cost your company hundreds of thousands of dollars, and you hope that it will produce the results the vendor promised. This is a very common approach mainly because vendors are usually willing to do the up-front engineering/analysis/research for free. But as the saying goes, “There’s no such thing as a free lunch.”
The plan-and-executive approach
The basis of this methodology is a more conservative and cognitive approach to reviewing your operational matrix. Here is the path you might take if you apply the plan-and-execute approach:
- Operational analysis
Perform a thorough, comprehensive business process review of your entire operation. While you may feel all your issues are directly related to, say, storage, the review might well reveal other bottlenecks and inefficiencies throughout the facility that are equally painful. By assessing all your operational processes and practices you will soon learn exactly where your strengths and weaknesses reside and can develop a long-term plan for growth. - Design engineering
The difficult (but most eye-opening) part of the process is already complete. Now that you have a long-term plan, you can begin to map out how to execute its first steps. You have flushed out your operational challenges and can now begin to develop an applicable solution that truly fits your needs and growth plans. - Vendor selection
Only now do you seek out the vendors (from the agreed-upon solutions) needed to make things better. This typically involves examining a number of potential providers and making an informed decision. By sending each vendor a detailed, written description of what they are to provide, you take control of the vendor selection process and are in the best position to make a good decision. - Purchase
At this point, you are comfortable with all of the issues and the solution that has been developed; it’s time to pull the trigger, but you con proceed with confidence. - Implementation
The plan-and-execute method certainly takes more time, and may tie up more internal resources early on in the process. And not all companies have the resources available to dedicate to operational analysis and design engineering; that’s why many small and midsize companies enlist a supply chain consulting firm to help them.
Both methods have their challenges. The buy-and-hope model is typically a faster process, and the up-front costs are usually minimal. The plan-and-execute model requires an investment of time and money up front to ensure the quality of the results.
Your company needs to do what is best for your operation, your business, and your budget. The ultimate goal is obvious: to make your business better. The key is to determine how to allocate your total funds toward improving operations in the long term, not just to fix things today.
Frank McCabe is the director of business development for Beacon Systems (www.beaconsystems1.com), a supply chain solutions firm headquartered in Tewksbury, MA.