Tag Archives: transparency

Don’t Ignore the Brutal Facts!

Never ignore the brutal facts surrounding your organisation

How do you usually react when one of your team tells you that they think there’s something wrong with your business? Are you the type of leader with a tendency to react badly to criticism? Or the type who wouldn’t think twice about brushing off your staff member? If you answered yes – then quite frankly, you’re a bloody idiot.


Your employee could be right, and you should want to know about any issues that reflect badly on your company. After all, you aren’t always going to know everything. You need to face the brutal facts, instead of ignoring or brushing off the people who try and help improve your business.

The Harvard Business Review presents a good case study in which the COO of 1-800-GOT-JUNK? ignored the advice of his VP of Finance who was cautioning their growth, because the VP was a quiet man and seen as “meek”. As a result, the CEO and COO ignored his warnings, the company expanded too quickly and eventually ran out of cash.

In Good to Great, Jim Collins suggests that successful organisations are built on an open communication culture. I’ve shared the four key ways to confront the facts of your current reality and determine corrective action without being confrontational.

  1. Lead by asking questions

It is impossible to make great decisions and change when you only push your thoughts and ideas on to others. If you want to be respected as a leader, you must encourage open and effective communication by asking probing questions at the right time. Show your team that you care about their opinion and throw questions at them that require careful thought and focus. The aim is to get honest answers that may highlight any obstacles and problems with your company.

That said, nothing positive can come from someone who is unwilling to listen to answers they do not want to hear. Remember, most of your workers will be nervous about speaking up and sharing the brutal facts with you. Regardless of your opinion, you must work collaboratively as a team and concentrate on where you need to be rather than what got you to where you are now.

  1. Create an environment where honesty is valued

Being heard is very different from being confident enough to say what you think. Every person that works for you should be comfortable to share their honest thoughts – which is why you need to encourage healthy debates. I’m not talking about arguments and differences of opinions that will put your team in a bad mood.

Just because you’re a manager, it doesn’t give you licence to boss people around. Your job is to demonstrate control when confronted with the brutal facts and guide your workers in a productive environment where conclusions can be reached – and you can all move on. Nothing shows authority more than motivating your people to engage in debate and dialogue without coercion.

  1. Investigate problems without pointing the finger

When things go wrong, most managers like to assign blame to protect themselves from being seen as a failure. Pointing the finger and embarrassing others is why these people will never become great leaders. No one can expect to honestly learn from blunders and avoid repeating the same mistakes when they are in denial about how they came about in the first place.

In the words of Dale Carnegie – “Discouragement and failure are two of the surest stepping stones to success.” Whatever the situation, take responsibility for mistakes, analyse failures, and learn from them to ensure success further on down the road. One of the most effective ways to deal with a problem is to openly discuss with your team and decide, together, what needs to happen next.

  1. Create invaluable mechanisms

The greatest thing about creating an environment that allows colleagues to communicate problems without repercussions is finding out metrics and facts that can’t be ignored. Did you know that 54% of employees feel like they don’t regularly get respect from their employers? When you invite all the members of your organisation to raise a red flag when something is about to go wrong, it makes everyone feel valued and respected – and helps you identify potential stumbling blocks.

It’s crucial for every member of your group to feel like they are part of a team and can contribute to solutions – and never want to give up. When you know what you’re fighting, you can stand up to it and take action. Whatever the truth, you can still retain faith in your ability to succeed and have the edge over your competitors when you embrace a climate that energises people to communicate.

I want it here and I want it now!

I want it here and I want it now!

If customers can’t buy what they want from you because it’s out of stock they will go to a competitor who has it. That’s not just one sale lost but potentially many sales over the life time of that customer. And with so much online, you’re competitor may be just a single mouse click away.

Holding stock or inventory is a very expensive business, particularly where the goods are of high value. On the other hand not having enough stock available for customers means lost sales and revenue. The ability to keep inventory at a minimum where stock arrives just as its needed is a careful balancing act.

To prevent the costs associated with over-stocking or under-stocking, distributors and retailers are making greater use of BI (Business Intelligence) and analytic tools for forecasting and inventory management. With these tools they can analyse data and information from across the supply chain and internal operations. This insight into their data allows them to:

•    Conduct detailed, in-depth analysis of historical data and sales transactions to better calculate demand.

•    Accurately track inventory throughout the entire supply chain. Compare current stocking position with short and long-term trends.

•    To better monitor sales by product, geography and customer to better understand the factors that influence sales.

The more insight a company can gain into its business, its supply-chain and its customers the more unlikely they are to over or under-stock.

The costs associated with over or under stocking

If a business holds too much buffer stock (stock held in reserve) or overestimates the level of demand for its products, then it will overstock. Stock that isn’t moving will accumulate on shelves and occupy more and more warehouse space. The longer it sits there the more it will cost.

Aside from general storage costs for maintaining the space other costs can include:

•    Increased insurance and security required to ensure the stock is protected from theft and fire.

•    Stock may become faded, tattered and ‘shopworn’.

•    The risk that the stock will become obsolete as it sits there.

The cost of carrying inventory will vary from company to company. If a company has a large cash balance, has excess space for storage, and its products have a low probability for deterioration or obsolescence, the company’s holding or carrying costs are very low. A company with a large amount of debt, little space, and products subject to deterioration will have very high holding costs.

The costs associated with over stocking can have a dramatic impact on cash flow which may mean you can’t afford to restock with items and products that do sell. Restricted cash flow means the business can’t expand or respond to current trends in the market.

On the other hand, understocking can also be very costly.

Not having sufficient stock on hand means lost sales. Your customers may go to a competitor who has stock of what they want. Or to meet the demand may mean shipping things in at the last minute at extra costs and having staff work over time to process the orders.

How business Intelligence and data analytics improves inventory management

Your sales and inventory systems may contain a wealth of data. Collated into a central repository and analysed in the right way, it can reveal tremendous insight about your supply chain and sales performance. This insight can prevent an over-stocking or under-stocking situation from occurring.

Business intelligence allows you to improve the accuracy of operational forecasts. Bringing together stock and inventory data with sales information you can identify potential out-of-stock situations.

It will identify where stock needs to be increased to prevent lost sales. If you have a good idea of expected demand then you know how much you will need to order and how much buffer stock you need to have on hand.

Stock-outs can be reduced or eliminated. The ability to forecast future demand depends on having sound data and analysis on current and previous sales. If target and buffer stocks are too high relative to current sales trends, they can be reduced and the inventory repositioned in the supply chain.

A BI solution is crucial for optimising inventory management and accurate demand forecasting. . By extracting information from disparate systems into a centralised repository retailers and distributors can report on metrics related to their supply chain, sales, production and internal operations. In the long run make better, fact-based business decisions

Using BI for supply-chain optimisation reduces the need for buffer stock to avoid service interruptions, increased asset liquidity and easier access to available working capital. Retailers and distributors can reduce the need for buffer stock if they can identify bottlenecks in their delivery system and reduce lead times for movement to the sales floor.

Business intelligence can quickly identify products that should be discontinued or marked down and assess the most profitable way to sell through poor performing merchandise. The ability to react quickly to issues at an item level can avoid an over-supply of non-productive and unprofitable stock.

Why Phocas?

Phocas is a reporting and analytics solution that allows structured and unstructured data from a variety of sources to be extracted and centralised so accurate, timely yet comprehensive sales and inventory data is available in an easy to understand format.

It’s capability to extract data from any source easily, and present that data in a very user friendly manner, means you can:

•    Track and analyse costs associated with over or under-stocking.

•    Identify potential stock-outs

•    Analyse sales data to forecast demand

•    Match inventory and stock position against sales trends

The ability to drill-down and reveal the underlying issues behind the trends is another strong feature of Phocas. With this capability you can:

•    Identify and remove bottlenecks in the supply chain to ensure faster, more accurate and reliable deliveries.

•    Improve management of stock levels and resupply.

•    Increase manufacturing, distribution and supply chain efficiency

In essence Phocas gives you an accurate and holistic view of what’s happening with your business.