Our Approach - Applied Acumen

Go Forward

There is a common thread amongst business conversations at the moment, and we won’t be alone in seeing it. Whether it’s a catch up with a business friend or a formal board meeting, the influence of external forces becomes the central theme. It could be the exchange rate, the increases in labour costs, the uncertainty surrounding all things European Union, the effects of the extraordinary weather conditions (which we seem to see every year), lack of government investment in just about anything you care to think of and lets not even start on the American Presidency. You can understand why businesses are adopting an approach to weathering the storm.

There are some examples of investment and job creation amongst this cacophony of uncertainty, and they are to be welcomed, but many of these are based on decisions taken some time ago and the effect of these external factors has yet to be fully realised. However, there are some examples of real business success that we would like to share with you.

modellingIt was Peter Drucker who said “The best way to predict your future is to create it” and these two short stories are where British businesses have truly embraced that idea wholeheartedly. These successes used resources available to every single organisation in the United Kingdom, without external investment or any of the aforementioned external forces being resolved. Their success came from really challenging themselves and becoming so much better at what they do.

The first of these is the example of a British based manufacturer who had seen decline in sales revenue and contribution as they experienced a situation all too familiar to anyone dealing in fast moving consumer goods. A squeeze on prices, shorter contracts and a never ending increase in complexity as retailers fought to maintain their corner is not a new subject. However, the ingenious use of sales data to drive change in the supply to the retailers has given an overall rise in sales of over 5%, with profits higher, despite all the external factors described.

How have they done this? By changing their approach to the customer, they started using the information available to them in a far more detailed way. Sales by stock keeping unit, by outlet, by regional area, by store size, by time of day revealed patterns and questions hitherto unseen. There is nothing new in the availability of this data, but the change came from the internal desire and capability to use it in finite detail.

Consequently, this supplier was able to help their customer in a precise way, rather than merely in broad terms. Hidden issues were quickly identified, and not surprisingly many of them were simple to resolve. They were able to help the retailer increase shelf life, promote goods more effectively by demonstrating the difference between store’s performance, and prevent shortages by understanding the sales profiles store by store.

Clearly this takes a different relationship with the customer, bringing together their data and the supplier’s knowledge and capability in a new way. The cynical might ask what is new about this, but

the combination of detailed data which the retailer is unlikely to interpret the same way as the supplier with the joint desire to work together at all points of contact is a large change in behaviour.

The next stage will be to redesign the operations away from the current constraints to be more agile, which will unlock further financial benefits. A second UK organisation made that their starting point. They applied a more detailed look at their own operational data far beyond the simple process efficiencies being reported, and started to challenge the differences in performance between shifts, teams, products and processes in a very open way. This meant an uncomfortable time for some, as the practices they supported were challenged, but with a well-managed behavioural change programme, everyone came through it. The result was a greater increase in profits in one year than they had seen in the last four altogether.

Both of these examples meant challenging existing understanding, and experienced commercial or operational staff found more than a few surprises along the way, but we should see that as a good thing. Both employed help on the data gathering and interpretation, and on the behaviour change, but these outlays are relatively small and provide good returns.

Most importantly we should understand that the resources and opportunity for organisations to achieve fantastic results is readily available, no matter what the external world throws at us. In times where there is a disorderly queue forming to throw more challenges our way, it is comforting to know that we can still determine our futures, should we chose to.

 

Keith Armstrong is a Founder and Director of Applied Acumen.

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