What the Duck?! Episode 4 Transcript
ARE YOU INFOR A CHANGE? Let’s Talk Operational Process Improvements with Michelle Rydman
Welcome to What the Duck?! A podcast with real experts talking about real issues in direct spend supply chain. And now here’s your host, SourceDay’s very own supply chain maven, Sarah Scudder.
Thanks for joining me for the What the Duck?! Another Supply Chain podcast brought to you by SourceDay. I’m your host, Sarah Scudder, and this is the podcast for people working in the direct materials part of supply chain.
Today, I’m going to be joined by Michelle Rydman, and we’re going to explore why operational process improvement is so gosh dang hard and what you can do to make it easier. If you work at a small or mid-size manufacturer and are struggling to implement new software, then this episode is for you.
I’m @Sarah Scudder on LinkedIn and @sscudder on Twitter. If you are new to the show, be sure to follow this podcast so you don’t miss any of our direct spend content.
Today, I’m excited to be joined by Michelle Rydman. Michelle was most recently with Infor. She held several product management roles, including Senior Product, Senior Director of Product Management. Michelle works with small and mid-sized industrial manufacturers to adapt technology to bring supply chain insights to teams that need this valuable data most.
Welcome to the show, Michelle.
Thank you so much, Sarah. My pleasure to be here.
Working in product management is not a career path that you had planned. How did you wind up doing project management for the ERP company Infor?
Well, that is a long journey, so I’ll just say that I started off in the manufacturing space with a small industrial manufacturer in the greater Portland metro area. I’m from Oregon, and that was the beginning of my journey. I really enjoyed all things to do with manufacturing and all aspects of the operations, and that led me to my journey with Infor and into the ERP space. In fact, I did my first ERP implementation with that manufacturing company, loved it so much that I made a career out of delivery and implementation in the professional services organization. So I was with a professional services team for about 14 years, and then I had an opportunity to actually come in and be part of the product team. There was an opening, and the director said, “Hey, I think you’d be great for this.” Having a holistic background, really understanding all of the areas of business process
as well as the manufacturing industry space, led me to my career in product management.
What does Infor do?
Well, again, great question. Infor, at the high level, is a global software company provider of solutions for the industrial manufacturing space for the enterprise, as well as the SMB, or the small to medium-sized businesses that we’re talking about here, as well as distribution, healthcare, many, many verticals there. So, of course, if you’d like to see exactly what Infor does, you can check out the website at www.infor.com.
So to say that in layman’s terms, Infor is an ERP system for manufacturers?
It is. Infor is a provider of cloud SaaS-based solutions for industrial manufacturers, as well as a number of other industries and micro-vehicles.
So you mentioned you spent your first 14 years in professional services, and then you had an opportunity to pivot and join the product management team. Why were you drawn to product management?
I think for me, it was the blending of all aspects of the enterprise operation, so I would be able to direct the solution because, for me, it’s just like the magic quadrant, you know? It’s people, processes, systems, and tools. Understanding the process and how do you bring to life the business and operational objectives that you want, leveraging those systems and tools, and looking at the capability that the SMB manufacturers have. I mean, I could not pass up an opportunity to be a leader and a driver and bring to light the capabilities that this space needs for success. So it was a wonderful opportunity to be able to continue to work with the customer community, work with the various domains, the implementers, partner space, and of course, the whole organization but really to drive a product forward in this zone.
You mentioned SMB. For those that aren’t familiar with that abbreviation, what does that stand for?
So SMB stands for small to mid-sized businesses. That’s kind of the band that we look at when we’re looking at the size of organizations and the best fit for the particular solutions. So you have an enterprise band up here and then SMB, so SMB is quite a big band. It can be those pretty small organizations, but also, depending on who you talk to, it could be anywhere under the 500 million revenue band if you look at that or maybe the 250 depending on whose definition if you’re doing a Google search on exactly what size of companies fit the SMB space.
So other than SMB companies, what other criteria do you have for the types of companies that you work with?
Well, manufacturers. That’s been my focus in my career, working with those organizations who need, obviously, there’s a need for every company, right? But especially manufacturers, to not only manage all the aspects of their business processes but manage the information. There’s so much to do. They have products to build, but they also have everything else that needs to be done. So from the intake funnel from opportunity all the way through to order management, from that lead to cash and all of those processes in between through planning and scheduling, and of course, here, our focus of supply chain, so supply chain being incredibly vital to the success of an organization.
So today we’re going to talk about operational process improvement. This is kind of a scary phrase, so I’d like to have you start out by defining what is operational process improvement.
I think at its heart, operational process improvement is looking at where you are today and how you are managing your key business processes and how you are going to be better. One of the things I learned early on is that process improvement, done incrementally or done every day, is a bit, I’ll use an analogy, like bumping a pencil. You know, just a little bit, it’s going to keep rolling and keep rolling and keep growing. But if you stop, it takes more force actually to move it where you want to be. As SMB manufacturers, it is very often the little things stacked up that provide the competitive advantage for these organizations as well as the cost and profitability advantage for them to see success. And it’s because they’re smaller, right? These subtle or small increments are very substantial when taken as a whole, when you stack them all together. So it’s incredibly vital that they be efficient because often they are very lean, they’re working with maybe not the number of resources, so they have a set number of resources, they have set number of a budget, for example, the material. So let’s talk a little bit about material and supply chain, for example. The importance of having a good process is can be illustrated by if you have visibility to when you would have delays, then you can look to alternate sourcing options. But if you miss the window, so let’s say you need this part next Friday or maybe it’s three weeks from next Friday, and you can see that your primary supplier is not going to be able to get you that information, then you can look to your secondary suppliers. Then maybe you need to pay a premium, maybe there’s some other things you need to consider, but then you have the advantage of time to get in front of it and to make better decisions. So that information is super important, right? Data is important, but it’s not just the data because we could surface up the data that says great.
This is a problem. Okay, but now what? Do we have a process to actually execute, to make the business decisions, to, you know, execute new purchase orders, to maybe push out, you know, there’s so much to that process, and that’s where operational improvement initiatives come in because that’s really what powers the leveraging of the systems and tools better. We’re talking potentially on automation, so getting the information to the user at the right time so that they can make the best decision possible. Using this is another great example of where machine learning and artificial intelligence can come in, helping the users make sense of the data so that then they can execute. But if you don’t have a good process, right, if we don’t have it identified what we want to do when and how, what do we do when there’s a quality problem, what do we do when we have a scrap, right? Are we as efficient as possible? Then we lose valuable time, valuable opportunity to leverage the resources and potentially valuable revenue, maybe directly but also because we have increased operational costs. Why is operational process improvement in particular so difficult for manufacturers? At its heart, because it takes time.
For, I would say, typically your SMB company, your mid-size, your small mid-sized company is very focused on what they’re doing right. They’re building, they’re building, they’re doing that, and they may not be providing the time for their team members, for their leaders and thinkers, to actually look at how could they be better. So it’s very easy to drop into the zone and to just be doing business as usual. It’s much harder to pull back out of the zone to dedicate time. Just like on the production floor when you look at it, a quality initiative, a Kaizen event, that takes time and resources. So operational process improvement takes thought, it takes commitment from leadership, and it does take time. It’s very valuable and definitely a return on investment, but sometimes you’re sacrificing the time to actually run and produce versus actually improving as an organization.
Michelle, tell me about a story when you worked with a manufacturer that couldn’t improve a process.
Well, there’s lots of stories, lots of stories there, Sarah. I would say that. But here’s an example that comes to mind. I’ll pick on a shipping process, okay? And this particular company, when they put in their orders, they had a due date, just like most organizations were shipping product out, and we have commitments that we make to our customers for those due dates. Well, they had a huge disconnect in production, their metrics and measures and effectively the reward for the production department was not aligned with their goals for the shipping on time, right in full on time for their customer satisfaction. In fact, it was just the opposite. So what was happening is in production, they were being rewarded by the number of units produced, regardless of the orders that they were on. So what they do is they say, what’s the most that we can do in this month the quickest? So they were producing to orders that were early. They had no process control over the ship early, right? And they would just make those decisions. So they were meeting their targets, which was very much not aligned. Now, why it’s my story, Sarah, is because operationally and organizationally, they were not able to impact the change to have those two things connected. So they were not successful because they had entrenchedment, and that really does come to leadership. You’ve got to have leadership alignment for the vision and to have that connection and those measures and drivers in production to align with your operational measures for success.
Favorite story of a manufacturer that was able to improve a process?
Okay, now on the flip side, I was working with a company. This was a global mix, I say global manufacturer. They had operations in many, many GOs, but particularly the North American. I’ll pick on the North American operations from Canada and the United States. So what they did is they put together a team.
How, why it’s my favorite, is because it’s just textbook for change management and operational improvement. They recognized that they had some inconsistencies and that those were not going to get them there, and they had the leadership, so the leadership vision and commitment to the change and they talked with all of their leaders as well as all of their team members all the way down, let’s say, to the lowest person who was maybe pulling product on shelves and says, “This is how we want you to do this and this is why it’s important and we know it’s different.” So, they treated everyone like a valuable member, right, of this process and really got their buy-in in just a phenomenal way. So, the people, we say, it’s people, then the process, and then the systems and the tools and you have to have a balance of that. If the people don’t believe that the process is good, right, they’re not going to use the system and leverage the tools, they’re going to find alternate needs. So, this is my favorite example because it’s the leadership setting the stage for the change management. They did that in all of their departments and they tested, tested, tested the new processes. They had the metrics and measures. They took the before and after, right? They said, “Here is our number before and here is the after,” so they actually were able to show the people the improvement and feel good about the project. So, they did everything right.
Where does technology fit into the operational process improvement mix?
Technology is really important. Taking the people and the process to the side for a moment, they are really important, right, because the people are the ones who are using the system and following the process. So, technology, of course, continuing to evolve Sarah over the years and we have seen so much happen. I mentioned AI, the artificial intelligence and machine learning, and that plays such a significant role in process automation and in the analytics. So, that crunching of the data to get those people the information as quickly as possible in a user interface, right, in something that makes sense and is usable and actionable. Gone are the days when the team members are just gonna go and have to dig into all of that. That’s the really exciting role that technology is playing today and is really poised, you know, to the future. So, if you think also about the future of technology and process automation, it’s going to continue to become more mature and more robust in what it can do to really do a lot of heavy lifting for some of the mechanics of activities that the users had to do in the past so that they can really be more value add to the engagement of the business and bringing their skills to life.
When a manufacturer purchases a software solution, walk me through the steps that should be taken to ensure adoption and I want this to be down in the weeds, an actual list that somebody listening right now could take and go immediately implement at their company.
Well, the first things first is you need to have measurable goals. Okay, what are you expecting to achieve with the implementation of this software? Regardless of what it is, if it’s an ERP if it is a particular specialized niche product to help in a particular zone, first thing Sarah, you must identify what is this going to achieve? They must be measurable. Okay that’s step one. Measurable and realistic. Okay, Right? Measurable, quantifiable, and realistic.
That’s one, but what are we going to achieve? The two is really be thoughtful about where you are.
Be honest, where are you today? If you don’t know where you are today, if you don’t have the comparative data so that you, when you after you’ve implemented to compare those measurable goals, well then you need, you should spend some time on that, right? If you need to go through a process of analysis and understanding where your challenges are, if you don’t know where they are, then that’s something that you should build time into, and I would say Sarah, definitely put that on the list, because there’s the self-discovery of the organization if they haven’t done it recently, right? It’s worth doing, where are we at, let’s snap some watermarks, okay?
Also, they need to understand what challenges they have, okay? If we are talking about an improvement in the supply chain, we’re looking at inventory turns, we’re looking at reducing our inventory, okay? What are your inventory levels? What is your inventory accuracy? Why is your inventory accuracy only 68%? Are you using a planning system to drive that? If not, why is your information? What’s the accuracy of your bills of manufacture and your lead times? This is where, as we talked about, data, data, data, data, the data is vital because there is a bit of the age-old the GEICO principle, garbage in, garbage out, hands down. Because you’re not managing potentially the information in the systems that you have available to the level that’s necessary, you have shadow systems that you’re using, probably Excel, where you’re managing your schedule, and you’re keeping track of everything in another system. So it’s vital you take a watermark and understand where your business challenges are in these key areas. Inventory accuracy is one, your next one I would say is bill of manufacture, so your BOMs and your routing, okay, and your lead times, those are incredibly vital, right? Those things having good accuracy there is going to prime the pump for successful analysis of the system. The other one that I would put on this list, Sarah, is the accuracy of your reporting and the timeliness of your reporting, and by reporting, I mean all of the types of things that you would do transactionally that impact inventory, for example, shipping. Do you ship when you say you ship, or do you backdate transactions? Do you report production when the shift like today, so before the production person leaves, do they actually report the transaction, or is it batched and it’s three days later? Are you… And then all these things, of course, tie into the inventory accuracy, but the timeliness and the accuracy of your reporting are critical as well.
So to recap for our listeners, that was a lot of information. Can you go through one, two, and three one more time? Inventory accuracy, your your bill of manufacture accuracy, your lead time accuracy and your timeliness of reporting and accuracy of reporting. So I want to make sure that our listeners get at least one takeaway that they can go back immediately and start either doing themselves and or implementing with their teams. What’s the number one most important takeaway you want our listeners to know about how to better handle process improvements?
I this is a simple one Sarah but it’s so, it’s so important: Just start. Pick a place, Pick a place and in many respects that may not be the place that’s the hardest, the area that’s the most difficult. Start asking the questions. Start looking at your information. You will be amazed What you find and then start making action plans on how you can address what you find. I think you’ll be surprised some things. You’re going to be spot on about but others when you look at process adherence. For example, how well are your people executing to the processes that you define? I think you’ll find you’ll find some really interesting and intriguing results.
If people want to check you out where do you want to send them? Sarah if anybody is curious I would like to reach out you can find me on LinkedIn Michelle Rydman Friesen and again LinkedIn probably the best the best bet.
Thanks for sharing your why operational process improvement is so gosh dang hard and what you can do to make it easier wisdom with us today, Michelle. If you missed anything you can check out the show notes. If you are new to the show make sure to follow this podcast so you don’t miss any of our direct spend supply chain content. I’m @SarahScudder on LinkedIn @ssscudder on Twitter. This brings us to the end of yet another episode of What the Duck?! Another Supply Chain Podcast. I’m your host Sarah Scudder and we’ll be back next week.