You’ve just been to a conference and you learned how you can reduce inventory 40% in 6 months without impacting customer service. You can’t wait to tell your boss what you learned. On Monday morning you rush in to see the boss and share your new insights. What response do you get? “We can’t do that. We’re too (big, small, rich, poor, busy, slow).” “ That will never work.” “Great theory but who in our industry has really done it?” “They (corporate, owners, auditors, the union, or customers) will never allow that.” Sound familiar? Seems like “no” is the default answer to any suggestion to change.
What do you do now? Go back to your desk with your tail between your legs and forget about it? Dream about what it could be like if you were the boss? Start updating your resume? All those responses work but I have a better idea for you to try.
While it’s true that sometimes the boss resists change just because they are afraid of change, sometimes the person suggesting the change just does not know how to sell their ideas.
Jim Strong of the ACA Group (www.theacagroup.com) said in a recent article, “After 30 years in operations as a practitioner, manager and consultant, I have learned three things about managers that are important to understand when trying to sell them new ideas. First, most managers don’t have a lot of time or patience for listening to new ideas; therefore employees must be clear and concise in presenting their ideas. Second, most employees don’t know how to present their ideas to management. They need to learn to present ideas in a language and style that is familiar to managers; i.e. charts, graphs, financial measurements, etc. Third, and most important, they need to back their ideas with factual data. Data speaks loud and clear to managers.”
I couldn’t agree more, but I’d stress the financial measurement recommendation. To communicate in the language that senior managers understand most clearly, you must present your facts and data in terms of the impact to the bottom line. Show them the money.
Using the example I started with, if you want to show the boss how you can reduce inventory, run the numbers. Do an analysis of the current inventory levels. Clearly identify how much excess you have. Identify specifically where you can reduce excess. Point out specific part numbers that can be reduced. Point directly to how that reduction will impact the bottom line.
At www.inventoryperformance.com we offer just such an analysis of your inventory for free. When you provide key pieces of inventory data, we will run that data through their Inventory Quality Ratio tool and show you:
Current Inventory Quality Ratio (ratio of good inventory to bad inventory)
Number of parts and the dollar value of material that is active
Number of parts and the dollar value of material that is excess and slow moving
Potential inventory reduction dollar value including the impact on company profit
This is exactly the kind of bottom line data that gets managers attention. The information is clear, concise and relevant to managers because it translates parts numbers and quantities into dollars.
IQR was designed by materials and purchasing managers. It presents all its information in terms of dollars. Specifically, IQR Targets functions help you develop meaningful bottom line objectives, for both inventory levels and increased profits. Each Target function requests user input to create specific “What if….” scenarios. The output is valuable information that can be used to focus the entire organization on a single goal. IQR’s Target functions include:
- Profit Contribution from Improved IQR – This Targets tool displays the Inventory Reduction and the Contribution to Gross Profit resulting from a change in the Inventory Quality Ratio. You can see the inventory reduction and increased profits that you can expect from increasing the IQR percentage.
- Inventory Reduction Estimate – This Targets tool displays the dollar value of inventory that you can reduce. You enter the percent of reduction you think you can achieve for each IQR Class and the tool will calculate the total dollar value of that reduction.
- Profit Contribution from Improved Turns – This function calculates the Inventory Reduction and the Contribution to Gross Profit resulting from an increase in Inventory Turns. This item is particularly useful in setting realistic improvement objectives and programs if your company is accustomed to working with inventory turns.
Combined these and the other Target functions of IQR allow inventory managers to set realistic inventory reduction and increased profit plans based on facts and data.
Whether it is inventory reduction, cycle time reduction, improved quality or any other improvement you want to suggest, you have to get your boss to want to change the way things are currently done. Getting your boss to change requires that you first get their attention. Facts and data presented clearly gets a manager’s attention. Once you have your boss’ attention you have to speak in language that has meaning and relevance to their concerns. Translating all improvements into dollar value, and showing impact to the bottom line is relevant to every senior manager. So next time you go see your boss with a new idea, be brief and clear, talk about the data and make it meaningful by knowing the monetary impact. If you want your boss to change, then show them the data.
