Traffic Flow Simulator by Goldratt Research Labs

Thanks to Dr. Alan Bernard for letting me test the Traffic Flow Simulator ver 1.2.2.

This simulator is ready to run after downloading. It is based on AnyLogic infrastructure. There are two lanes main road and a fast road. A vehicle arrival point which is driven by a traffic light and a vehicle departure point are provided. There are 3 types of vehicles selected by arrival rate and allowed speed. It is possible to imitate rush hours such as early in the morning and fluctuating traffic density in the simulator. The fast road could be interpreted as an emergency lane or a side way or a "paid lane".

The simulator is running very similar to the navigation application. There is a calculated travel time for the destination covering certain parametric allowances. The performance will be reported based on travel time. There are 3 different options for calculated travel time: Static has full allowances and the same for all vehicles, the hybrid has flexibility by the rush hours and the same for the vehicles in that particular hour, and finally dynamic is based on each vehicle and arrival time - traffic density, ie. different for each vehicle.

There is a very versatile and rich set of KPIs for reporting performance. Conventional traffic light color codes are applied for road segments, vehicles, and various result figures. The storyboard flow of the simulator is quite interesting and encouraging to learn.

I have tried an interesting and not implemented suggestion for a real road segment in Istanbul by official arrival rate figures. In this suggestion, smart traffic lights powered by three selected road segments around traffic lights and sensitive to real-time traffic density. 

The initial state is reflected to the simulator and then the proposed smart traffic lights suggestion is applied. It amazingly increased throughput by 320% and decreased backlog before joining the main road by 75%.

I have thought of another point inspired by the simulator. It is a smart city version of the fast lane by letting prepaid selected vehicles by the central control tower to switch to the fast lane.

Dr. Alan Bernard has another nice reflection for the simulator. He is interpreting the simulator as a production environment. Now fast-moving small cars are ordinary job orders, slow-moving large trucks are time-consuming big projects and emergency vehicles are rush orders... The backlog means the orders have not been issued to the production floor yet, the capacity of the road is the capacity of the flow line, and the number of vehicles completing the track is the real throughput. The smart traffic lights concept is very similar to DBR (Drum Buffer Rope) mechanism.

Now you could try different scenarios to improve flow in your production unit!

The Sales Development Playbook / Trish Bertuzzi / 2016 / highlights ve zihin haritası

INTRODUCTION.. sales development:  A specialized role focused on the frontend of the sales process—qualifying inbound leads and/or conducting outbound prospecting—to generate sales pipeline

Sales development reps (or SDRs) are responsible for the front end of the sales process. They either set introductory meetings or generate qualified opportunities for sales partners.

Inbound sales development reps (often called BDRs, LDRs, or similar) are responsible for inbound lead qualification in response to marketing programs.

Outbound sales development reps (often called ADRs, MDRs, or similar) are responsible for outbound prospecting.

Account executives carry a revenue quota. Also called territory managers, sales executives, or similar, they convert opportunities into closed business. For our purposes, this can include inside (phone-based) or field (road-warrior) sales reps.

Part 1 / STRATEGY / The essence of strategy is choosing what not to do. MICHAEL E. PORTER

Successful sales development means choosing the right goals, plans, and actions for your unique market dynamics.            

Chapter 1 / Two major waves are colliding. The first wave is the exponential growth in the number of ideas, options, and solutions available for (and marketed to) your prospects. The second wave in play concerns the number and diversity of people involved in purchasing decisions. The value of a sales development effort is measured by increased won business per account executive and/or accelerated new customer acquisition.

Chapter 2 / The four steps in AIDA stand for attention, interest, desire, and action. notice just how distinct the first two whys (Listen and Care) are from the last three (Change, You, and Now).

The final three whys (Change, You, and Now) are about gaining commitment and closing a sale. They are the domain of account executives, and, as such, we won’t be discussing them further.

But take another look at the first two whys (Listen and Care). These two are about opening doors and sparking interest. At first glance, they might seem similar, but there’s quite a bit of distance between the two.

we’ve established that why listen and why care are the domain of sales development. your reps’ first hurdle is to arouse curiosity and get prospects to listen. your reps have to evolve curiosity into interest while at the same time qualifying for fit. 

Chapter 3 / Introductory Meetings: You should deploy an introductory meeting model when the market for your product is immature and/or when your account executives need more at-bats. If your SDRs are booking meetings with the right types of companies, the right people within them, and the prospects are at least curious about addressing a potential pain point, then the reps have done their jobs well.

1. HYPOTHESIZE: Build a hypothesis of which companies need your solution. Develop baseline messaging and identify target prospects. 2. TEST: Schedule as many introductory meetings as possible. SDRs and account executives test messaging before, during, and after meetings. 3. ITERATE: Based on learning, iterate on both the target profile and the message. 4. REPEAT: Rinse and repeat, learning more and more each time.

Qualified Opportunities: account has reached a qualification threshold. At some level, this means:   ● A problem has been identified ● A potential solution was introduced ● And the prospect has committed to a next step

PACT: pain, authority, consequence, and target profile.

Not every company has a need for your product or service. Pain matters. You are looking for people who can get an organization to move. That isn’t always reflected in a title. Their biggest issue is fear that the cure will hurt worse than the illness. You need to dig for the implications of not acting. An organization that isn’t in motion is much harder to move than one that has already realized the consequences of inaction. Target Profile is all about confirming fit and identifying red flags.

Chapter 4 / Before you rush to build out your team, there are three considerations to take into account. The strategy element of sales development goes beyond just why and how. The factors that support when to build must be in place before launching a team.

1. ALIGNMENT: Shared goals, objectives, and expectations across the management team are a critical component of your success. 2. MARKET-MESSAGE FIT: Make sure your onboarding and training leave reps fluent in your prospects’ language, thinking, professional goals, etc. 3. SKILL OF CLOSERS: Take a dispassionate look at your sales team. Are they truly closers, or are they relationship builders? If you’re going to invest in building an early-stage team that aggressively focuses on building new pipeline, you need to have account executives who can effectively launch the sales process.

Stop thinking about sales versus marketing. Success hinges on who leads the group, not where it sits in the org chart.

Part 2  / SPECIALIZATION

Chapter 5 / Specialization involves addressing two big questions:   1. How should my team tackle our market? (segmenting the prospect universe) 2. How should my group be structured? (role specialization)

INBOUND: Prospects who take action in response to marketing activity (filling out a web form, signing-up for a trial, attending a webinar, etc.) OUTBOUND: Prospects whom your reps target with proactive outreach. Your philosophy should be inbound + outbound = allbound.

Chapter 6 / A: A-LIST. These are your dream clients, the ones you absolutely want to do business with. They can make your quarter and change the direction of your company. They have a problem, you have the solution, you know it, and they’ll figure it out (sooner or later). Some companies call these named or strategic accounts. B: BREAD & BUTTER. This is your sweet spot. These types of accounts—hopefully there are thousands of them—should all be doing business with you. There are too many to list by name, but you can easily define a few key traits they share (e.g., five hundred to four thousand employees, five remote offices, running Google Apps for Business). C: COMPELLING EVENTS. These are accounts that generally don’t have a pressing need for your solution, but then . . . BAM! An internal or external shock shakes up their priorities. This could be an acquisition, a bad quarter, or a change in leadership. D: DEAD ENDS. These accounts may want to work with you. They may even need to buy from you, but for whatever reason they can’t or won’t. The biggest problems with Dead End accounts are that they look and sound just like Bread & Butters. The key is identifying red flags and preventing your reps from wasting time here.

Chapter 7 / “whys” of SDR specialization. As I see it, there are three main reasons: focus, attitude and aptitude, and human nature. round-robin, is much easier. In this model, leads are distributed to inbound SDRs in turn. Because SDRs won’t consistently work with the same account executives, the round robin approach doesn’t allow for the tight bond—and informal mentoring—between team members. One inbound SDR can typically handle about two hundred to three hundred leads a month when fully ramped. One outbound SDR can typically target one hundred to two hundred accounts per month.

Chapter 8 / The lead researcher role is all about streamlining the pre-calling process. It affects productivity in two ways. One, it enables sales access.Two, it enables context. pre-sales analyst role. These reps’ sole function was to comb through earnings calls and summarize relevant tidbits.

Chapter 9 / -

Part 3 / RECRUITING 

Chapter 10 / Benefit of hiring in groups: Onboarding is simplified, your time is protected, new hires bond together

Chapter 11 / There are three characteristics that are universal in the best sales development candidates: passion, competitiveness, and curiosity. When I say passion, I mean perseverance and grit over the long term. Passion plus great leadership equals success. “compassionate competitors—reps who like to win, but not at the expense of their teammates.” “Reps who are genuinely curious have an advantage when prospecting. Questioning is in their DNA; they don’t have to fake it.”

“Hire and promote first on the basis of integrity; second, motivation; third, capacity; fourth, understanding; fifth, knowledge; and last and least, experience. Without integrity, motivation is dangerous; without motivation, capacity is impotent; without capacity, understanding is limited; without understanding, knowledge is meaningless; without knowledge, experience is blind. Experience is easy to provide and quickly put to good use by people with all the other qualities.”

Chapter 12 / A job description should sell the job. If you can’t capture attention and interest, who the hell cares about the fine print. this is the place to advance my career.

Chapter 13 / To recruit and hire the best, you have to both pay a competitive wage and build an attractive compensation package. you also have to pay a market rate.

Chapter 14 / Great sales development compensation plans have three things in common:

1. CLARITY. The core plan has no more than two moving pieces, and the nuances can be bulleted out on a cocktail napkin. 2. PAYMENT CLOSELY FOLLOWS ACTION. To be effective, the reward has to closely follow the desired action. 3. REPS CONTROL THEIR OWN DESTINIES. This one gets a lot of push-back (I’m looking at you, CFOs!), but I don’t believe that reps should be rewarded or penalized for the skills/actions of others.

In terms of a general rule, base salary should be roughly 60–70 percent of total compensation for sales development reps. If you’re worried about SDRs setting meetings with the wrong prospects, realign your right profile, right person, right pain criteria. If you’re concerned over unqualified appointments, don’t use the introductory meeting model. Don’t confuse a strategy issue with an SDR issue. No ceiling on monthly commission.

Chapter 15 / Most important components of “activating” passive candidates are the messenger and the ask. Putting the right messenger in play is often a stand-out strategy. THE ASK: Messaging a passive candidate is about one thing: selling the next step. Stand-out subject, short and sweet, and sell the next step. Remember The Five Whys. Ask refereal -  ‘you or somebody you know’. Take action to get the most from your employees’ networks.

Chapter 16 / Glassdoor ratings   In terms of a goal, you’ll want to shoot for or above 3.7 out of 5 stars and 80 percent+ in “Recommend to a friend” and “Approval of CEO.” I recommend a three-step process for your company on Glassdoor: encourage, respond, and address. Step one, encourage your current team to post reviews. Let them know you want them to have the best-of-the-best colleagues and that reviews on Glassdoor are one way to show what a great company you’re building together. Step two respond to any negative reviews honestly and non-defensively. Most likely, your HR folks will own the Glassdoor profile, but don’t wait for them to respond. Get in front of any negative reviews and help to shape a reply. Step three, address the complaints. No, seriously. This is a way to build a better team, culture, and company. Reflect on the issues shared on Glassdoor, and try to fix them.

Chapter 17 / Six-step hiring process: I’m a huge advocate for attaching a brief web survey to your application. The purpose of the survey is to determine “fit” for your position and to quickly sort candidates into yes, no, and maybe buckets.

Our next step is a phone screen. If possible, have the initial screener be your talent specialist, recruiter, or HR person. This step is about screening for red flags, not evaluating skills. no red flags were uncovered, the recruiter should tell the candidate to expect a call from the hiring manager the next day. Make sure your talent specialist provides the hiring manager’s name and title and sends an email to confirm.

The third step is a more traditional interview, but briefer and still phone based. It should take no longer than twenty minutes and, hopefully, end by scheduling an in-person interview. These are the first two questions you should ask:   1. What do you know about our company? 2. What do you know about me personally?   If the candidate doesn’t do an outstanding job in responding, you should proceed no further. Great candidates will come prepared.

On-site interviews require real time commitments of yourself and your team. It is much better to disqualify aggressively in steps one through three and save cycles for all involved. During the phone interview, they were asked what they know about your company. Now, take it one level deeper. Probe them on what they know about your product and your market. Ask them what they’ve gleaned about your prospects and your target market. They don’t have to be flawlessly prepared, but you should feel that they have made an investment. The candidate should understand what you are looking for. You want candidates who answer concisely, stay on point, and deliver a beginning, middle, and end. Finally, make sure to focus on the candidate’s ability to ask you for something, more commonly referred to as “the close.” At the risk of stating the obvious, closing is a critical sales development skill. If a candidate doesn’t close at the end of the interview, you have a problem.

Because you have the candidate onsite, I highly recommend you give him or her an opportunity to sit with a current rep to see the job firsthand and ask candid questions. When selecting which rep to be shadowed, pick someone who operates by the book. The candidates who make the most of this opportunity are the ones you want to hire. After thirty or forty-five minutes of shadowing, your candidate will have seen the role firsthand and have a much better idea of what it means to be an SDR. After the shadow session, meet your candidate again. What other questions do you have for me?   That final question is the big one. If the candidates don’t have questions after this immersion process, you should be concerned.

Part 4 / RETENTION

Chapter 18 / “The key to sales management is sincerely caring about each rep. It is getting harder and harder to over-achieve goals by “managing” processes and tools alone. Sales development leaders need to spend less time managing things and more time leading people. three areas for engaging and retaining your people: coaching, professional development, and career path.

Chapter 19 / Coaching is not a component within the sales manager role; managing is now a component of the new coaching role. enthusiasm is good, but productivity is great.

Chapter 20 / DEFINE THE COMMITMENT: What is your coaching goal and what are you willing to re-prioritize to make it happen? CREATE A SCHEDULE: Add the dates and times you’ll be spending with each rep to your calendar. MEASURE REULTS: Track how well you’re doing against your commitment. KEEP IT FUN: Keep your session fresh by mixing up the coaching methods. Recorded Calls, Side-by-Side Coaching, Group Sessions, Self-Assessments, Hot Seat

Chapter 21 / The CFO asks the CEO, “What happens if we invest in developing our people and they leave us?” The CEO responds, “What happens if we don’t, and they stay?” To my mind, there are three avenues for professional development. I think of them as meet, learn, and teach. Meeting is about getting exposure to other parts of your company. Learning involves your reps studying to become more well-rounded professionals. Teaching requires reps to understand ideas so deeply that they are able to present them to others.

Chapter 22 / -

Part 5 / EXECUTION

Chapter 23 / Vision without execution is hallucination. new reps learn most effectively when the approach involves chunking, sequencing, and connecting. CHUNKING: It’s easier to learn a new subject in bite-sized chunks. SEQUENCING: Determining what comes first, in order of importance, is key to learning CONNECTING: This ties it all together. You’ve created a learning sequence built with bite-sized chunks of information. Now you need to connect the dots. Keep onboarding sessions short. Make the order purposeful. Let them sleep on it. Learn, then do. Revisit. And revisit again. This is how people learn.

Chapter 24 / 1. Why before What Simon Sinek argues that we must start with why. 2. Leverage Internal “Prospects” Do you sell into a functional area that actually exists within your company? 3. Exit the Bubble If your reps never exit the sales development bubble, they won’t have the full picture of what it is that your company does. 4. There Will Be a Test In theory, onboarding covers all the materials that reps will need to do their jobs. But when do you know if a new rep is ready to execute? Try a certification process. Make the certification as objective as possible. You might break certification into four models: a. Prospect-Raedy (verbal evaluation of a rep’s understanding of key prospects, pains, and with us/without us vision)   b. Process-Ready (dry run of tool usage: CRM, content, other technologies)   c. Message-Ready (provide a rep with several dummy leads; ask them to do pre-call planning and leave you customized emails/voicemails)   d. Phone-Ready (a phone-based role play simulating a live connect) 5. Be Prepared to Break Some Eggs

Chapter 25 / Suspend your ego to get people to like you. buyer-based messaging.

Chapter 26 / effective outreach means mastering two things: a multi-touch cadence and a multimedia approach. Cadence is the number and rhythm of attempts your reps use to reach out. Media are the methods they use (e.g., phone, email, voicemail, and LinkedIn). The absolute bare minimum number of attempts to contact at least 50 percent of your leads is 6. The average rep’s performance? Between 1.7 and 2.1 attempts before they give up. sometimes it is easy for reps to get hyper-focused on responses at the expense of results

Chapter 27 / Implementing a formal and consistent cadence is a must for your group. For your reps, the routine helps them master the game—taking away uncertainty around the process.

Chapter 28 / Rule 1: Be Different and Be Relevant- What one thing about this prospect can I include that will get them to tune in? Rule 2: Be Specific with the Ask - Your reps have to ask for something very specific if they have any hope of receiving a reply. Rule 3: Don’t Reference Previous Attempts - Referencing previous attempts wastes precious airtime and often comes off as hostile. Rule 4: Don’t Trick Prospects - For the teams I coach, the rule is don’t lie, don’t BS, not even a little bit.

Chapter 29 / 1. THE OPEN: The subject and initial sentence are the first and only shot at keeping the prospect’s finger off delete. 2. THEWIIFM: This is the meat, where we pitch what’s in it for them. What value are we offering? Why should they respond (let alone care)? 3. THE ASK: This is your call to action. If the ask is clear and simple, the likelihood of responses increases exponentially. If confusing or requiring too much work, they won’t.

Paragraph 1: The Open: The best emails have subject lines that capture attention and flow beautifully into the first sentence. They also look like a real person wrote them and were sent one to one. Paragraph 2: What’s In It for Me (WIIFM): It’s the value proposition, the thing that makes them realize you’re worth their time. To get across WIIFM, emails need to tell prospects what you can do for them (not what you do). email is an attempt to arouse curiosity and lead down the path to the ask. Email is about generating interest, not educating on what you do. Paragraph 3: The Ask: a great ask can dramatically increase the number and quality of conversations your reps can have. Don’t waste it on something silly.

Part 6  / LEADERSHIP

Chapter 30 / We’ll cover six key considerations:   1. Choosing the right captain 2. Equipping with a toolkit 3. Setting appropriate quotas 4. Architecting core processes 5. Using metrics to drive what matters 6. Implementing enablement technologies   These are the pillars of day-to-day leadership.

A director is someone who can interpret results and make course corrections—someone with experience who can take the overall goals delivered by the executive team and drive results. Directors have been here before. They’ve taken their lumps and are armed with the knowledge and experience that lets them hit the ground running.

Once you’ve locked in on the strategy, built solid processes, and have metrics down, you’re ready for a manager. 1. SKILL FOR SPOTTING TALENT: Hiring reps in this competitive environment will be one of this person’s greatest challenges. Hiring for potential is no easy task, but finding a person who has the skill to identify potential is a huge win. 2. HIGH MOTIVATIONAL ENERGY: I don’t know any other way to say this. Motivating a sales development team on a day-to-day basis is exhausting. Many reps are young and fairly inexperienced, and they suffer massive rejection daily. 3. ABILITY TO SIT AT THE TABLE: You should look for a candidate’s ability to take a seat at the executive table (either now or in the future).

team lead is a blended position—part day-to-day manager and part individual contributor with a personal quota. I’m not a fan of the team lead role (both in idea and in execution). GO SLOWLY: We all know that there are no guarantees in hiring. SET REALISTIC TIMEFRAMES: Be direct about the realities of the role. What has to happen before the team lead can be promoted to full manager? ASSIGN A FAIR QUOTA: Let’s say you expect your team leads to manage three reps at about 30 percent of their time. How much quota relief should that give them? As an individual contributor, he or she was measured on one thing—achievement of quota. Now as a leader, he or she will be measured on ability to fill open slots, attrition rate, ability to motivate, and ability to effectively communicate both up and down. This is a very different landscape.

Chapter 31 / In this highly competitive market, wouldn’t it be great to show a candidate your SDR toolkit and say, “Here is the roadmap for how the team executes. I look forward to you joining us and helping us to evolve this tool for future reps”? Section 1: Understand/Target include pieces such as a visual representation of your ideal customer profile, your “with us/without us” vision, and a cheat sheet for value propositions aligned to prospect personas. It is the foundation for how your SDR team will communicate with your buyers in their conversations as well as in voicemail and email. Section 2: Strategize/Plan define and document the entire process of scheduling, passing, and executing the meeting and/or the passing of a qualified opportunity to an account executive. Section 3: Contact detail your multi-touch cadence and multimedia approach. Section 4: Message give the team a framework for how to take all those things and create messaging that resonates. include customer stories. Teach the team to create and present them in a phone-ready format vs. a case study format (think actionable sound bites). Section 5: Overcome identify your most common objections and develop the responses you want your team to use. Section 6: Execute Here is where all the detail goes regarding how to leverage the technologies at the reps’ disposal, what a perfect day looks like, how to effectively use the toolkit, you name it.

Chapter 32 / Quota Considerations: Activity focus, Model, Size of accounts, market maturity

Chapter 33 / Speed-to-Contact. A great deal of research has been published on the need for an extremely short timeframe between a prospect hitting “submit” on a web form and your rep placing the first outbound call. In InsideSales.com’s Lead Response Management Study, the researchers found the following:   Reps are ten times more likely to “contact” a lead if they call within the first hour of its creation. Reps are six times more likely to “qualify” a lead if they call within the first hour of its creation. Rule 1: Not all leads are created equally. Rule 2: Speed-to-lead requires pre-set plays.

Chapter 34 / -

Chapter 35 / ● RESULTS: the outcomes that are incredibly important to the business but outside the control of sales management   ● OBJECTIVES: areas that can be influenced by sales managers but still are outside their direct control   ● ACTIVITIES: things that are under the direct control of the managers and as a result can be proactively managed by them

Chapter 36 / The Activity metrics you’ll want to measure include the following:   ● Total activities per day ● Inbound lead response time ● Attempts per lead ● # of prospects per account

Informing your reps that x activities will lead to y outcomes and drive z results is real leadership.

The Objective metrics you’ll want to measure include the following:   ● # of connects/connect rate ● # of quality conversations/rate ● Email response rate ● “Bad data” rate

The Result metrics you’ll want to measure include the following:   ● # of discovery calls ● # of discovery calls accepted as opportunities/acceptance rate ● Show/no-show rate (relevant for introductory meeting model) ● $ SDR-sourced pipeline ● $ SDR-sourced wins ● % of total pipeline sourced by SDRs ● $ won per account executive (relevant for new groups—e.g., pre-/post-SDR team)

When building sales development dashboards, I keep three things in mind:   ● Which metrics ● What timeframe ● For which audience

Chapter 37 / There’s a term for applications that accelerate effectiveness and are popular with reps: tools. There’s also a term for highly popular applications that don’t move the productivity needle one millimeter: toys. ELIMINATE THE MUTINY-MAKERS: If it isn’t helping reps be more productive and they hate using it, rip it out. ALLEVIATE THE BURDENs: A single system of record for commissions might give them the visibility they want without the wasted hours and effort. THIN THE TOYS: Whether or not these technologies increase effectiveness, reps love them. You have to keep some of them around for morale. DOUBLE DOWN ON TOOLS: This is true sales acceleration. These applications actually increase productivity, and you don’t have to bribe (or threaten) reps to adopt them.

amazon highlights: TOC Inventory Management / Namkee Chung / 2013

 TOC Inventory Management: A solution for shortage and excess dilemma / Namkee Chung / S.Korea / 2013

Generally speaking, inventory asset takes around 30% of total assets for a manufacturing firm and almost 90% for a distribution company. Note that there is no need of inventory management in case of bulk purchasing when a price raise is expected for certain materials or parts; there are fewer risks of maintaining excessive stocks as long as it is certain to gain the more profits with the more stocks. Also note that work in process or WIP is better to be dealt with operation management instead of inventory management since WIP inventory may vary depending on production planning method, production capacity of each process, and changeover system.

The core competency factor for distribution industry is a systematic control between sales and supply of goods. After all, it is impossible to avoid stock-out and overstock with the purchasing planning system based on the above demand forecast. Another method is needed that can function regardless of sales forecast. As such, there are great concerns about stock-out and overstock due to variation of demand when inventory management is solely at hands of a production planner to determine production volumes and timing. The key issues to be dealt with inventory management are rather decision-making issues as following than the data collection and application; - Selection of items for base stock - Location of inventory - Determining order quantity and timing - Decision for optimal inventory level

Firstly, to decide items for base stock, choose ones whose demand is large enough.

Secondly, location of inventory refers to a physical place for stored goods.

Thirdly, order quantity and timing strongly affect stock-out and overstock occurrences,

Lastly, an optimal level of inventory can be determined by ordering time and quantity as well.

Since an official record of 2-3% of stock-out rate would actually represent over 20% off-the-record rate, we need to keep the rate near zero. What would be the solution to keep the minimum stock while securing the maximum sales opportunities? It is only possible when the inventory control system is built up independently from demand forecast. improving sales forecast accuracy is not that easy. In fact, there is no ‘accurate demand forecast’ in real world, and that is the most prominent problem of inventory management. when the supply lead time is longer than the customer lead time, in order to prepare the required stocks in advance, there is no other choices but to place pre-orders by predicting quantity and timing. This is one of inventory control methods depending on demand forecast. The forecast-dependent pre-order system is frequently used also for goods in distribution. because each function of the supply chain seeks only a local optimization, it makes the supply lead time longer and the longer lead time brings the more dependency on sales forecast.

Inventory management should be implemented in a way to reduce the supply lead time rather than improving forecast accuracy. The inventory turns ratio is cost of goods sold (or net sales) divided by average inventory assets. despite the improved inventory turns, the number of unsold items would go up due to stock-out, and the sales would go down. Like previously mentioned, inventory should be controlled up to the point where it does not create any stock-out even during the process of improving inventory ratio. Even though we can fix the ratio by item, it could just be a target, and it does not imply any managerial advice. The inventory turns ratio itself does not provide any insight on how to decide an optimal inventory level nor how to manage it effectively. the suggested solutions are to get rid of the three main concerns – the reasons why operating a large inventory. - Make replenishment period shorter, - Improve demand forecast accuracy, - Enhance supply reliability

Two-bin system is to fix an order point and order quantity to facilitate the administration. This system is mainly useful for low value items, standardized goods with a shorter lead time, and office supplies.

Continuous Replenishment Planning (CRP) does not refer to a replenishment system itself but rather an operating program for it. It is a procedure or a scheme of business process of controlling inventory for goods for sale, indicating a method of replenishment for a certain location where goods are sold or consumed. Therefore, in order to implement CRP, it is a prerequisite to determine specific order quantity and time. In order to expect those benefits from CRP, a proper decision making process should be established so that it can make the best use of information on current supply, narrow variations in lead time, and cope with fluctuating demand and business environment.

Vendor Managed Inventory (VMI) is an arrangement where a supplier decides when and how much of customers’ stocks to be replenished. In that case, the vendor receives the payment only for those which have been consumed by the mother company. The VMI method can also be applied when a manufacturing company is managing inventory for a distributor. The seller supplies goods in accordance with the consumer demand except when there are sufficient stocks in the distributor’s warehouse.

Co-Managed Inventory (CMI) is similar to VMI in its structure of overall business process, but it is different in that suppliers and buyers are working together.

Supply Chain Management (SCM) is a business administration system to effectively operate the supply chain. SCM connects sales to manufacturing by regulating inventories in the supply chain. Related feedback from managers, supervisors, and staff is quite common, and can be summarized as follows; - Demand forecasting system is in a mess. - Inventory managers are negligent in monitoring stocks. - Purchasers buy too many for some items and too few for some others. - Information from sales/distribution is not sufficiently shared. - Customers change their minds too often. order cycle time and order quantity affect stock levels, as well as overall related cost for inventory controls; a frequent replenishment or a shorter order cycle time causes a heavier workload and more transportation cost, but on the contrary, expenses are likely to be reduced to maintain the inventory.

Replenishment can be done in four different models depending upon the decision factors for order time and quantity. That is, order time can be determined on either periodic or non-periodic basis, and order quantity can be decided on either fixed or non-fixed quantity basis.

Target Inventory System involves setting a target inventory and placing an order for what have been consumed during a given period of time. In other words, it is a replenishment method to make up the actual consumption for a cycle time. Placing orders at predetermined time intervals will facilitate and simplify daily duties. here are the summarized business processes; - Sales team to submit a replenishment request to plant (or distribution warehouse) to make up what have been actually sold. - Plant (or distribution warehouse) team to establish a production plan (or distribution plan) based on the request, while purchasing team to set a purchasing plan for materials/components in line with the actually produced volumes. - During this process, an individual target inventory (22 units of sales, 10 of plant, and 20 of purchasing team) enables each function to independently work on its planning. Such link in business flows between sales – distribution – manufacturing – purchasing is the core issue of Supply Chain Management (SCM) or Sales & Operation (S&OP), a major part of logistics management. can be summarized from the perspective of the Decoupled Pull System as below; - As sales team sells the goods, the stock level reduces in distribution warehouse as many as the sales quantity. Then, distribution warehouse team places a reorder to plant team (or a supplier) to make up the consumption. - The plant (or the supplier) makes a shipment out of its on-hand stock to the distribution warehouse, and adds up the same quantity to production planning. - The plant team places a reorder for the subsequent materials as much as it has consumed for production. To conclude, followings are the summarized features of Target Inventory System.

First, it is a decoupled pull-based system. Although order quantities match the actual sales, each functional operation can remain independent. This benefit reinforces the capacity to cope with demand variations by making full use of inventory functionality and by driving cross-functional cooperation.

Second, it streamlines the inventory controls as the order time can be fixed at a regular interval. There is no need to monitor stock levels all the time and no need to be concerned about missing an order time, so it reduces stock-out risks consequently.

Finally, what needs to be determined is the inventory target only. Order time can be easily fixed upon the corporate policy or upon the demand. To be specific, classify a set of products into A, B, and C group and fix the order cycle time as daily, weekly, and monthly each. Then, except under special circumstances, it is well enough to simply adjust the inventory target only although the demand or lead time may vary. It makes it easy to create an effective inventory management system.

It can be said that most of replenishment systems that are currently deployed in business are Reorder Point Systems. This method is still in use going through several modifications since Economic Order Quantity (EOQ) has been proposed in early 1900s. Indeed, a pull-based method is more appreciated than a push-based method in terms of effective demand controls in most of business management systems. The number of items in stock must increase in line with the more demand and the longer replenishment period. Replenishment Period needs be defined in detail; it consists of order cycle time, production lead time, and transportation lead time. First, order cycle time is the time between orders. If orders are placed on every Monday, then, its order cycle time is to be seven days. Second, production lead time can be defined as the total time required to produce an ordered item including order processing time, queue time, actual manufacturing time, and so forth. Finally, transportation lead time refers to the time from production finished to customer order delivered. Sometimes, the term ‘supply lead time’ can also be used, meaning the sum of production lead time and transportation lead time, that is, the time it takes from when you place an order until it arrives on your doorstep. Therefore, replenishment period can be said to be the sum of order cycle time and supply lead time. When the ordered items on Mondays arrive after five days, the replenishment period can be counted to be 12 days, 7 days of order cycle time plus 5 days of supply lead time. To sum up for a better understanding; - The amount of supply stock is determined by the demand during the supply lead time. The shop’s on-hand stock is determined by the demand during its order cycle time. Available stock, the sum of supply stock and on-hand stock, is determined by the demand during the replenishment period, i.e., supply lead time plus order cycle time. total available stock (= supply stock + on-hand stock) is proportional to the demand during replenishment period (= supply lead time + order cycle time).

However, generally speaking, people tend to be quite active in reflecting the demand rate but passive in reflecting replenishment period. This is why they put more efforts in forecasting demand. However, in fact, impacts of replenishment period are more critical having more indirect influences described as following; - In most cases, the longer replenishment period, the greater uncertainty, that is, the greater deviation of the period. - Hence, the longer replenishment period means the bigger demand variability. - Moreover, the longer replenishment period, the longer forecasting period of the demand. - Therefore, the longer forecasting period means the lower demand forecast accuracy. - Since target inventory consists of average demand for the replenishment period and safety stock to mitigate any variability, a doubled replenishment period should involve a doubled target inventory. Now, it is time to provide the target inventory formula. - Fix an expected demand for replenishment period. If demand rate is known, the demand forecast can be calculated by multiplying the demand rate by replenishment period. - Add safety stock to mitigate any uncertainty factor. This is determined by management policy considering a target customer service level.

Q = T – A Q: Order Quantity A: Available Stock (=On-Hand Stock + Open Orders – Actual Demand)

In order to lower stock levels and ensure sales by reducing stock-outs at the same time, it is necessary to shorten replenishment period. What are the main factors to make the order cycle time and supply lead time longer? One of the factors is the habitual practice of order processing in batch. Batch processing extends the order cycle time. Because many believe that a bulk purchasing lowers the purchasing price easing the order processing work, they take time to release an order until the orders are combined into a large batch. Besides, what makes a longer production lead time is production in large lots. People believe that decreasing set-up times while enlarging batch sizes is the best way to improve productivity and reduce production cost per unit, so ultimately it would create more profits. The reason why transportation lead time to be lengthened is also similar. Since making a big transportation batch can save transportation costs, people take time until the number of goods to be delivered becomes big enough before beginning transportation.

In order to make the replenishment period short, it is easier to reduce the order cycle time than supply lead time. Note that the shortened order cycle time can reduce on-hand stock but not supply stock. Supply stock can only be reduced with supply lead time decrease. Taking into account of only the demand factor, it is enough to run a system to set a shorter cycle time with a bigger demand or a longer cycle time with a smaller demand. In this way, it is determined by management policy based on experiences without meticulous calculations, and this is a better solution at a working level. For example, divide each set of products into A, B, and C group based on its sales quantity and unit price, then assign one week of order cycle time to A group, one month to B group, and three months to C group each. Simplicity works better.

Service level, in general, represents the percentage of satisfying customers’ needs. In inventory management, Service Level can be defined as the probability that goods are delivered as requested by customers. Safety Stock refers to an extra level of stock added to average demand to immediately enhance the service level. Safety stock is added only to on-hand stock and not to supply stock. Recall that the supply stock is determined by the demand during supply lead time, and on-hand stock is fixed by the demand for order cycle time. In this sense, safety stock is a buffer to mitigate demand variations during the order cycle time only, because there will be no more stock-out risk once the cycle time is finished thanks to newly arrived items. the decision factors of target inventory are demand rate (average demand per time unit), demand variability, replenishment period, and replenishment period variability. As a matter of fact, it is nearly impossible to attain a precise level of forecast. Even with heavy investment of time and money, forecasting accuracy is hardly improved. What we can expect to get is just some trend information on demand rate. if inevitably required, it is better to use short-term forecast rather than long-term one. Moreover, it is preferred to have forecasts by product group rather than by individual item. The deviation of the sum is normally smaller than the deviation of individual data, and this is what the Central Limit Theorem has generalized as a theorem. Although sales forecasting is a difficult task, an overall trend can be estimated to a relatively satisfactory level of accuracy.

Risk Pooling. It is a concept to effectively offset an overall uncertainty of the system by combining risk factors or uncertainties across locations into a single location. goals; - Make replenishment period shorter - Improve demand forecast accuracy - Enhance supply reliability –

Measures to shorten the replenishment period 1.     Make order cycle time shorter by placing orders for what have been actually sold on a previous day (or week, month, etc.). 2.     Make a small size batch to reduce supply lead time. 3.     Decrease or get rid of supply lead time by holding inventory.

Measures to improve demand forecasting accuracy 1.     Set a broad target area for demand forecasting. 2.     Integrate each regional inventory to a centralized distribution station for management. 3.     Make the best use of safety stock.

Measures to enhance supplier reliability 1.     Make the best use of safety stock. 2.     Reduce the number of emergency orders by placing orders for what have been actually sold on a previous day (or week, month, etc.).

Reorder Point System has its own value to be applied. The system has an advantage of being deployed when there is no substantial problems without sophisticated controls. The business processes can be much more simple. Supplies like raw materials/components are well suitable for Reorder Point system, those of which demand is not so big but that have a common usability. To be specific, the following is the process of inventory fine-tuning in preparation for seasonal variations. Estimate first the maximum sales during a high demand season. Check then available stocks on hand for this season. If you subtract the stocks on hand from the estimated maximum sales, you can get the target to be added before the high season comes. You need to raise the target level in advance up to this calculated point. Then, there will be no problem of supplying the demand as forecasted without having overstocks. On the other hand, you should not modify the target with a one-time sudden rise or drop that does not imply a trend. This can be settled by releasing special or extra orders. If the target inventory is changed with those one-time events, it will keep triggering stock-outs or overstocks afterwards. it is called Buffer Management that adjusts and controls the target inventory. Buffer Status (%) = On-Hand Stock level / Target Inventory These systems allow us to assess the priority not based on the smaller number of stock being more urgent but based on the ‘relatively’ smaller number of stock comparing with the target being more urgent.

“Instead of trying to be very precise in very uncertain situations (like using sophisticated forecasting techniques), TOC strives to build a robust design that is good enough. What complements good-enough planning is a very flexible and priority-driven execution control system that is capable of taking care of the exceptions.”

Buffer management allows to keep the optimal inventory by providing signals which orders need to get an urgent attention in response to demand variations including changes in demand rate, suppliers’ capacity, and supply lead time, etc. In case of penetration of the red-line, check first progress of open orders that have not yet been shipped to and call for an immediate supply as early as possible. On the contrary, in case of penetration of the green-line, postpone the shipment of open orders or do not place an additional purchase order. What needs to be done next is to verify how largely the buffer zone (the red or green) has been penetrated and modify the target level accordingly. This is what we call ‘Dynamic Buffer Management (DBM)’. The word ‘dynamic’ emphasizes here the meaning of active management and readjustment according to ‘situational changes upon time’. There are three types of circumstances in which the target level needs to be revised under Target Inventory System, described as follows;

1.     The target inventory has been set too low.

2.     The target inventory has been set too high.

3.     There are some special factors to be considered such as seasonality and promotions.

The size and duration of penetration are the two important parameters to adjust the target inventory. If the inventory penetrates ‘too much’ the red zone, the target level should be raised by one block size; the criteria ‘too much’ include either ‘too large’ size of penetration, ‘too long’ period of penetration, or ‘too big’ accumulated red zone penetration. After waiting until open orders arrive, that is, waiting for the replenishment time (this waiting time is so-called ‘Cooling Period’) passes by, you may start again to keep track of red zone penetration, if any. The reason why this cooling period is necessary is to check outcomes from the adjustment first before reviewing any further adjustment. If you add supplementary modification before the outcome is revealed, the adjustment process will never end that will make the target level go up endlessly.

If the inventory penetrates ‘too much’ the green zone, the target level should be lowered by one block size; the criteria ‘too much’ include either ‘too large’ size of penetration, ‘too long’ period of penetration, or ‘too big’ accumulated penetration Once these assessments on buffer penetration are done, the target inventory is to be adjusted downward, and you may begin monitoring the actual stock level again. Then, if the stock level falls nearly to the modified target, wait further until the replenishment time ends and now observe newly again the penetration situation of the green zone. Therefore, in this case, the cooling period is longer than the replenishment time. If there is no such cooling period in this process, the target level will almost endlessly go down.

In case where a sharp increase or sudden drop is expected due to the seasonality and promotion, there must be extra attention paid to this operation of buffer management. It can also be sought to temporarily suspend the buffer operation depending on situation. The graph shows the upward and downward temporary manipulations of the inventory level, ignoring the target inventory. When a drastic demand increase is foreseen, prepare in advance more stocks than the target, and stop the buffer management for a while to do so. When the demand is back to normal, you may resume operation of the system while keeping monitoring of the demand. In the same manner, when a rapid drop is expected in the demand, begin lowering the stock level regardless of the target. You need to stop the operation temporarily until the demand gets back to a stable level.

a replenishment period is the sum of order cycle time and supply lead time (= production lead time + transportation lead time). This supply lead time is sometimes very long comparing with order cycle time, and in such cases, target inventory becomes quite high relatively to on-hand stock. Moreover, the number of open orders increases, thus, the available stock (=on-hand stock + open orders – actual demand) increases accordingly because the quantity of open orders is proportional to the supply lead time

In these cases, the rules of determining buffer zones (green, yellow, red zones) must change. It may not be appropriate to keep the regular principle, i.e., setting each size of the zones to one third of the target inventory. If the same rule was applied to set the red zone to a third, stock-out risks from the on-hand stock could be very small regardless of its red sign. It means that the red zone signal does not work properly as a warning system because of enough open orders to be delivered soon. To make up for this kind of situation, it is desirable to fix the red zone size smaller than a third and the green bigger than a third. To sum up from the perspective of actual application, you have to make the order cycle time shorter and place orders more frequently, if it takes long time from the point of order to arrival, that is, if your product has a long supply lead time. While doing so, there are not much of stock-out risks because you have a plenty of open orders that will arrive soon despite the currently low level of on-hand stock. Moreover, if you set the red zone size smaller than a third of the target, the stock-out alarming system will become much more functional.

If you have sufficient available stocks despite a lower level of on-hand stock, potential risk of stock-outs will not be so significant. This is because there are ordered volumes to be soon delivered. In this case, rather than placing a new order, it is more effective to call for urgent supply of the open orders. In the case in which the available stock is not sufficient, you need to place a new order. If the on-hand stock is particularly not enough, you have to make it immediately. operating two separate buffer zones for two types of stocks can be very useful, especially when supply lead time is considerably longer than order cycle time. Hence, a good performance indicator on stock-out management should incorporate not only the quantity but also its duration period. Taking one step further, it should also involve financial loss caused by the stock-outs. In Theories of Constraints (TOC), this kind of measurement is called Throughput-Dollar-Days (TDD). It is a calculated value of a product’s throughput dollars multiplied by days of all the commitments not delivered.

Likewise, a good performance indicator for overstocks includes the length of stay. This value is calculated multiplying the overstock value (inventory dollars) by the number of extra days it is kept in the system. It is called Inventory-Dollar-Days (IDD) in TOC terminology. IDD will increase as the amount of overstock inventory goes up or as the days of stay gets longer. Remember that our objective is to manage the IDD to not to further increase or to make it reduced. TDD measures the financial value and delayed time of stock-outs, as well as loss coming from unfulfilled market demand. On the order hand, IDD measures the value of overstock that blocks flow of the system, and it is used as an indicator monitoring how fast each stock moves in developing SCM solutions, it is a valuable approach to set a target inventory and to distribute/produce according to actual sales quantity.

The forthcoming 4-step procedure is suggested to be followed,

1.     [Operate a centralized distribution station] Supplier (manufacturer or distributor) to establish a centralized distribution station and hold inventory for most of items in this location.

2.     [Regional warehouse to place orders on the basis of actual shipment] Each regional warehouse to fix a target inventory for each item and place an order for the same quantity as it shipped out on a previous day (or week) to the centralized distribution station.

3.    [Retail store to place orders on the basis of actual sales] Each retailer to fix a target level for each item and place an order for the same quantity as it sold on a previous day (or previous week).

4.     [Buffer management] Each of centralized distribution station, local warehouses, and retailers to keep track of demand variations and adjust the target level when necessary.

The objective of operating a centralized distribution station is to minimize forecasting errors. Taking into consideration of that, make a smaller target level towards the downstream to the retail level. To make it safe, keep the most of inventory at a center, a little less at a regional stock, and much less at retailers. Although the centralized warehouse will have an inventory rise, it is still less than the sum of  the decreased amount of inventory in each retail shop and regional warehouse. By rule of thumbs, it can cut the inventory nearly to 2/3 of the previous level. It doesn’t raise transportation cost although item composition and order cycle time has changed.

the starting point is to place most of inventory at supplier’s (or distributor’s) centralized distribution station so that retailers can place daily orders to the center (or regional warehouse) for the same quantity as the sales of previous day. Inventory is kept for common/flexible purpose Plant’s production planning becomes stabilized. Retailers’ inventory becomes reduced Retailers can have a larger space for displaying stands. Retail sales increase. Quality of fresh products is improved. New product launching is accelerated. New distribution channels are created. Overall Inventory level is reduced in distribution network It becomes less dependent on demand forecasting

in case of the materials of which supply lead time is longer that customer lead time, it is a must to secure the inventory in advance. you have to arrange the materials in advance to be available within the customer lead time. MTO (Make-to-Order) is a production system to start manufacturing of customized products only after a confirmed order for the products is received. MTO production method can be effectively operated by combining a replenishment system to MRP. Reserve inventory for the items that require to be held in stock and maintain the optimal inventory level through a replenishment system.

amazon highligts: Unlocking Innovation Productivity / Michael Dalton / 2021

Innovation - A Market Driven Definition:  The Organization-Wide Capability & Passion for Finding and Profitably Serving Unmet Customer and Market Needs

innovation challenges: Low Project Throughput: Simply not getting as many new products to market as you need or want, Poor On-Time Performance: Struggling to predict and commit to timelines that your business can achieve, Minimal Market Impact: Too many resources going to low-impact programs that don’t deliver as promised, Long Time to Market / Slow Speed to Market: Projects taking too long causing you to miss critical windows of opportunity, Not Enough Resources: Constantly hearing that your people are stretched too thin

Without a sustained improvement in productivity—a change in the status quo—your existing resources won’t ever be able to get it all done. Unless a solution systematically deals with the root causes, its impact will be minimal and unsustainable.

Myth #1 Busy Equals Productive: It’s a culture that rewards activity instead of results. Being busy looks productive, but effort isn’t the same as achievement. multitasking is the holy grail for this culture. multitasking, it was at least twice as long before anything finished. Multitasking hurts quality.

Myth #2 You Finish a Project On-Time by Finishing Every Task On-Time: project due date and those deliverable dates are the only dates that matter. Milestone and deadline thinking for the other tasks in a project just ends up extending timelines while still exposing the due date to slippage. when people inside your organization build project plans. They add safety over and above the touch time estimate and then use those “safe” estimates to assign a required completion date for each task. The result is that most projects end up planned at two to three times the duration it would take solely based on the work effort. The problem is that traditional project management puts safety in each task and gives each task its own due date. But work expands to fill the time available. That means the safety in each task encourages procrastination. Student Syndrome isn’t limited to students. It also isn’t the only type of procrastination; Perfectionism and Sandbagging are two others you may face. That why experienced project managers know that delays accumulate while early finishes evaporate.

Myth #3 You Have to Run More Projects to Get More Done: The key is to realize that most companies don’t get paid for the new products they work on. They only get paid for the new products that they successfully launch and start selling. you should only run the number of projects you can carry out at full speed. Full speed is when adding resources would not help you go any faster but removing resources would slow execution.

A high-performance New Product Operating System.

common sense and common practice aren’t always the same thing. The Three Levers:

• Lever 1 Doing Better Projects is about improving the quality of the opportunities that you put into your new product pipeline.
• Lever 2 Doing Projects Better is about improving your new product execution.
• Lever 3 Increasing Resilience is about the ability to weather any uncertainty that befalls your projects—to bend without breaking.

Creating a high performing OS requires moving: Strategy from ad hoc to Market Driven, Process and systems from siloed to collaborative and synchronized, People from busy and stressed to engaged and productive

The Guided Innovation OS Accelerators

• Create a Firewall to Filter Out Low Impact Projects (Strategy)
• Build Resilient Project Plans with Realistic Timelines (Process)
• Harmonize Task and Role Definitions (People)
• Control Pipeline Entry to Avoid Derailing Projects Already Underway (Process)
• Synchronize Priorities for Crystal Clear Workflow (People)
• Get an Early Warning—While You Can Still Recover (Process)
• Huddle Daily—Even if You Think You Don’t Have Time (People)
• Boost your Pipeline with Better Opportunities (Strategy)
• Structure for Continuous Improvement from the Start (Strategy)

Get your execution and timeline under control, and budget performance will fall into line.

Accelerator #1: Create a Firewall to Filter Out Low Impact Projects  

“We don’t know how to say no.” The result is that the top 20% of what you work on delivers 80% of the impact. “Big 5” feasibilities: Commercial, Technical, Manufacturing, Regulatory, Intellectual Property. The best way to rank projects is using return per hour for your most constrained resource. the idea behind full-kitting is that you shouldn’t start a project without having everything you need to finish—the so-called full-kit. a Full-Kit Review before the project starts. This review ensures that the cross-functional project team has all the information they need regarding requirements and specifications and an appropriate plan to deliver the new product. It also resolves questions or inconsistencies before the project starts. the team should also identify and calculate the cost of a day’s delay—a handy bit of information for both force ranking and execution.

• Pitfall #1 Bureaucratic Governance
• Pitfall #2 Pretend Governance
• Pitfall #3 Static Governance
• Pitfall #4 Thinking You Are Different
• Pitfall #5 Confusing Technology Development with Product Development

Accelerator #2: Build Resilient Project Plans with Realistic Timelines  

Once you’ve decided that a new product opportunity is consistent with your strategy, is feasible, and meets your financial hurdles, the next step is to create a robust plan and realistic timeline that your team and customers can understand and accept. Before any program enters the execution pipeline, just assemble a cross-functional team to follow these simple steps—what I call Guided Innovation Planning: Plan for Obstacles, Build the Project Network, Add Resources & Durations, Identify the Critical Chain, Crunch the Plan

1. Plan for Obstacles: "What are all the possible reasons you could dream of that would cause this project to fail?"

2. Build the Project Network: Instead of a task list, your cross-functional project team needs to build a project network that shows the relationships between tasks. the team starts by planning in reverse. Beginning with the final deliverable and then using Post-its on a large whiteboard or wall, they work back task-by-task through all of the identified obstacles—one Post-it per task. With each, they ask, “And what needs to happen before this task can start?” or, “What do we need to do to get around this obstacle so this task can be successful?”

3. Determine Task Durations: Critical Chain Project Management. touch times should be half the length of 90% probability estimates. then put half of the time removed from the critical chain tasks back as a shared buffer at the end of the project.

4. Identify the Critical Chain: The critical chain is your project’s constraint—the longest sequence of tasks without any planned multi-tasking.

5. Crunch the Plan: That means that the only way to crunch or shorten the project duration is to scrub the critical chain looking for tasks that could run in parallel without multi-tasking.

• Pitfall #1 Planning in a Vacuum
• Pitfall #2 Buffer Deniers
• Pitfall #3 Sizing Tasks to Meet the Due Date
• Pitfall #4 No Peer Review
• Pitfall #5 Micro or Macro-Managing Tasks
• Pitfall #6 Waiting Tasks ---- Check for GuidedInnovation.com/Software-Choices

Accelerator #3: Harmonize Task and Role Definitions

Engines of Disharmony: Not understanding how you or others should be contributing to the company’s success, Conflicts about the work to be done, Work or work rules that are no longer necessary but still exist due to inertia, Gaps between responsibility and authority

• Pitfall #1 Inflexibility in Execution
• Pitfall #2 Gaps in Preparation and Approval

Accelerator #4: Control Pipeline Entry to Maximize Speed and Resilience

Once you reach your bandwidth, every extra project you add makes the others take longer and delays cash flow and its compound effects. he impact is relatively mild until you near 70-80%. Beyond that, waiting time becomes unstable and highly vulnerable to variation. So operating any resource near full capacity creates instability that reduces both throughput and predictability. The solution is to monitor the capacity utilization and then limit new project entry to keep your loading in a target range below 80%. Why four and not five? Because you don’t want to exceed 80% of capacity and stray into that unstable zone. Unfortunately, the virtual drum has two drawbacks. First, bandwidth can be very fluid and difficult to measure—especially if your projects differ significantly in size or have wide swings in resource utilization within a project. Additionally, the virtual drum can be hard to sustain with people continually pushing for a higher WIP limit to accommodate their projects. A better approach is a dynamic one where your project planning and execution software does the work of monitoring your bandwidth and its projected utilization.

• Pitfall #1 Not Taking Bandwidth Seriously
• Pitfall #2 Fear of Saying No or Not Now

Accelerator #5: Synchronize Priorities for Crystal Clear Workflow

That means you must synchronize priorities across the organization so that everyone knows what they should be doing today: What should I be working on now? What should I work on next? These sound like simple questions—don’t they? But in most companies, the answer is anything but crystal clear and stable. Instead, it depends on who you ask. consider splitting priorities into two parts. Strategic priorities determine the next project to come off the backlog. But operational priorities need the clarity of a relay race handoff, so the project that is most at risk of finishing late gets priority access to resources–especially if the goal is an on-time finish. prioritize the resources based on the risk of finishing late. Priority is not a reward for burning more buffer. It’s merely a strategy to increase new product throughput by bringing more projects in on-time. our projects, the people working on them need only make one daily update in your project management system. they simply provide their best estimate of the amount of work remaining for their task. The key is daily reporting based on the latest information available. One exception is longer waiting tasks, such as ordering tooling or waiting for an outside resource to complete market research. When someone marks a task as zero days remaining, it is complete according to the task definition. Then it’s time for them to look in their workflow report for the next available task. If there is more than one, they follow execution priority rules to make sure they work on the one most at risk of finishing late.

• Pitfall #1 Ignoring Priorities
• Pitfall #2 Inflexible Priorities

Accelerator #6: Get an Early Warning — While You Can Still Recover

• Pitfall #1 Customer Delays
• Pitfall #2 Scope Creep

Accelerator #7: Huddle Daily Even if You Think You Don’t Have Time

your people need to meet and communicate frequently. Communication and a sense of urgency are essential to avoiding crises in execution. striking at the root of this problem only requires a simple fifteen-minute cross-functional meeting. It’s not just any meeting, but a unique daily team huddle focused on visualizing the progress each project has made and what is required to maintain the flow.

The FlowView™ Board: During the daily standup, your teams gather in their work areas in front of a wall-sized board representing the flow and current state of every project moving through your system. The FlowView board is a wall-size magnetic whiteboard. It has vertical lanes representing the flow of work and horizontal swim lanes for different workstreams that can go on in parallel. For each project underway, you create a card and place it on the FlowView board. You may need more than one card per project, depending on the number of activities you can run in parallel. It’s good practice to label each card with the project identifier and other useful reference information such as the project due date or the customer name. You should also include additional items such as status flags and the current task manager’s name. As resources become available, you pull the cards from a Ready column into a Doing column. Then you move completed cards into a Done column. That becomes a Ready column for the next activity. With the board prominently displayed in the work area, the team and anyone inside the company can easily see where each project is and whether it’s blocked. There are many software tools available to create and manage boards like this. My recommendations are available at: GuidedInnovation.com/Software-Choices

The standup huddle occurs in front of the FlowView board and is limited to only 15 minutes. So before the meeting, the leader reviews the buffer status charts to prioritize the projects most in need of attention. That way, during the session, they can focus on the exceptions. your priority is the projects at risk. One of the benefits of sizing tasks between 1-3 days, as covered earlier, is that it helps create both ownership and energy. As the team sees work regularly moving across the board, there’s a natural desire to want to be part of the progress. You might even see a little friendly competition and peer pressure to get more done.

• Pitfall #1 Problem Solving: you can’t let them become problem-solving or strategy meetings. Problem-solving happens after the standup when the project leader and a sub-team meet to plan ways around the obstacle and ways to recover buffer so they can still deliver on time.
• Pitfall #2 Non-Escalation: There are many reasons a project task can become blocked—technical problems, supplier problems, customer changes, and approvals of all sorts. you must have a process that freezes blocked projects and a manager responsible for seeing that they are rapidly escalated and resolved. People also need to know that non-escalation of an issue to save face is not acceptable. Not only is escalation expected, but there are also no reprisals for raising issues of any sort.

Accelerator #8: Boost Your Pipeline with Better Opportunities

getting execution under control first frees up some of the resource capacity you need to do this kind of work. That means you can start to leverage your execution capabilities on Doing Better Projects

A Field Guide for Finding Unmet Needs

1. Never Enter the Jungle Unprepared: Cross-functional teams, need to develop an interview guide and determine what role each will play in the interview (lead, scribe, clarifier, observer, etc.)

2. Focus on Unmet Needs: finding problems that you might later be able to solve and identifying the value created by doing so.

3. Discover Their Limitations: What limitations, restrictions, or problems are apparent in the customer’s life–be that in their workplace or home? It’s best if you can observe people at work—continually asking them questions to make the assumptions around their practices explicit.

4. Dig to Get Below the Surface: Continue asking why until you get to the root cause. Then continue to go deeper to find elements of the problem where you might eventually develop a profitable solution.

5. Look Through a Customer Value Lens™ : New product success in industrial and technology markets depends on helping customers sell more, spend less, or free up working capital. customers are only listening to station WIFM—What’s In it For Me. So you need a framework that works from the outside-in—what I call the Customer Value Lens:

6. Keep Them Talking: The detailed type of information mentioned above is hard to get unless the customer feels you need it to determine if you can develop a win-win solution—develop being the operative word. Any premature solution discussion shuts down the information flow because they suspect you’re trying to gather information to put a price tag on the solution. For that reason, conduct these visits without a salesperson if you can. These are marketing visits, not sales visits,

• Pitfall #1 Missing What They Are Saying: You must listen to what the customer is saying, but sometimes it’s just as important to pay attention to how they say it or even the body language they exhibit. It requires impeccable listening skills and excellent note-taking. It’s critical to use what you’ve learned to improve future sessions.
• Pitfall #2 Ignoring Resistance: While you can help remove a limitation, the market has lived with that limitation for some time now. That means there are norms, policies, regulations, sales channels, and even institutions that have enabled companies to work around those constraints with alternative approaches. The status quo can create formidable resistance. it’s an important step to consider what kind of resistance you might face and how you can reduce that friction to make your solution easier to adopt.
• Pitfall #3 Getting Ahead of Yourself: It’s important to note that this strategy is only for advanced users. In fact, it’s challenging to get here without first putting the other strategy elements solidly in place.

Accelerator #9: Structure for Continuous Improvement from the Start

Change is hard enough without unrealistic expectations. the longer it takes to see positive results and benefits, the lower the chances are that the change will be sustainable.

A More Agile Approach to Change Management

Good enough for a passing grade. The first step is to establish a directional goal for the performance you want to achieve longer-term. Then you can determine what metrics you need and set an intermediate target for improvement—where you would like to be in six to twelve months. Often, managers start out wanting to set ambitious targets along too many dimensions, including on-time performance, new product throughput, and time to market. But it’s essential to pick one of these as your guiding light. Choose that guiding goal based on a diagnosis of what is constraining your growth. Then once you’ve rolled out Version 1 and have it up and running with a passing grade, you can begin managing for regular and continuous improvement. Each improved version should focus on bringing your performance up another grade level. As part of continuous improvement, it’s critical to evaluate the lessons learned during each major project—including each phase in implementing these changes. A key benefit of using CCPM software is that the automation makes many of the strategies already covered much easier to implement and sustain. The real value of AAR’s and the Dashboard is in putting what you learn to use. Another element of continuous improvement is aligning your organizational structure and the goals, objectives, and other parts of your performance management systems with the transformation you are leading. You also need to evaluate whether your organizational structure might be creating conflicting goals and incentives. This often happens in matrix organizations if metrics don’t link functional contribution to top-level business goals.

• Pitfall #1 Winging It: Structuring for continuous improvement isn’t the same as trial and error. So before beginning the change process, you need to identify proven building blocks that will take you to a better place than where you are today.
• Pitfall #2 Not Casting a Wider Net: True continuous improvement involves everyone in the enterprise, and people want to know how they can contribute.
• Pitfall #3 Not Celebrating Enough: people love to be part of a winning team. So communicate and celebrate early and on-time finishes.
• Pitfall #4 The Rearview Mirror Problem: the competitors in your rearview mirror are closer than they appear.
• Pitfall #5 Failing to Leverage: Imagine for a moment that you have overcome the status quo and transformed your new product innovation operating system. You can now develop more new products in less time and with a higher level of predictability than any of your competitors.

No Silver Bullets

These results beg the question, why hasn’t every company moved in this direction?

Unfortunately, too many managers are looking for a silver bullet. And while the accelerators shared here can create dramatic improvements, they still require significant organizational change and transformation. your company’s DNA. As harmful as they can be, conventional project and resource management practices have rooted themselves in that DNA; it takes a concerted effort to eradicate those roots. That’s the status quo at work, especially if your changes are only hacking at the branches. Significant and sustained improvement requires a solution that strikes directly at the roots of the problem. But it also requires a proven roadmap for change. And that’s exactly what I designed the Guided Innovation Operating System to be.

Obstacles You Should Expect

• Pitfall #1 Being Afraid to Lead Change: The key here is leadership. Change is, after all, a leadership activity. And you can still choose to lead even if you don’t have the final decision. It’s about turning that reflection around and owning the problem. Taking a stand for what you know is best for the company and ultimately for everyone within. It’s time to get out ahead of the issues and lead your organization to buy into a better way.
• Pitfall #2 Getting Buy-In Backward: High influence leaders learn to overcome this by leading people to the change instead of leading with the change. They know that people aren’t naturally resistant to change—only to change that makes them feel insecure or that they think is being pushed with a hidden agenda. You can’t win the hearts and minds necessary to move beyond the status quo when you lead with the solution.
• Pitfall #3 Failing to Quantify the Problem:
• Pitfall #4 Going It Alone: Innovation leaders are fast learners. They often feel, “Once I’ve read the book, I know what to do.” But as the saying goes, “The Map is Not the Territory.” And making sustainable changes within organizations of any size is unquestionably complex. When results matter, there’s no substitute for working directly together with an experienced advisor.