One of the most challenging areas for managers is presenting their case to executives to get their projects approved. Over my many years in supply chain I have seen many good and valuable projects not approved because the right message, data or the appropriate collaboration has not been made to sell the upper management on the project.
Getting your projects approved can be somewhat of a slippery slope. The first step is preparing the current state versus future state argument. Commonly referred to the AS IS and TO BE state. This argument is very important, and many times, an intangible may drive this whole decision.
Everyone looks at the basics: increased productivity or accuracy. Often times the areas that get overlooked are areas of intangible benefit. Loss of customer for order delay is a number that is hard to calculate. The sales and marketing team probably have a number or percentage their using for the impact of sales numbers if customer is lost.
When trying to justify a project make sure you use the growth rate that the CFO is using in presentations to the executive board, this way there won’t be any question where that number was originated. Collaboration is important in getting the data needed from other functional areas within the company.
Some other areas to find hidden savings:
*Reduction of packaging material
*Reduction of paper, tape, labels (The cost of paper, tape and labels is overlooked because the weekly cost doesn’t seem to be a large number. But once you expand that to a yearly cost it can send your ROI from a negative to a positive.)
*Reduction of clerical input (Sometimes this reduction involves another department, therefore, it is important to collaborate with that department. Unfortunately, other departments on the manager level may be sensitive to a reduced headcount by another department’s project, therefore, you may have to go up a level to get buy in.
*Avoidance of capital expenditure (If your growth is imminent and your company is thinking that they will need to expand the warehouse, the capital expense of adding 50-100,000 square feet is not a small number. If your project can give you better space utilization and create enough space to handle the increased business for the next three years, this number could be huge and justify the project. )
*Avoidance of increased personnel (If your project helps you double your productivity, that savings is often used. Another number not to forget is the increased personnel cost you would need if the project is not approved.)
*Order turnaround times (If you can increase the amount of time it takes to turnaround an order you may make a better cut off time therefore increase your shipping time by a day in some cases. Improved shipping time lapse may make reduce the amount of next day or two day shipments needed.)
*Don’t forget accountability (Sometimes a project may not reduce productivity but give the managers more accountability of the team. With this new accountability the team is more efficient and more accurate because they are now aware of the traceability of any errors and the fact they will be held accountable for productivity levels.)
*Reduction of Returns (If you have increased your shipping speed and transit times, the better customer service may reduce customer returns along with the increased accuracy of your personnel. This number may be a harder one to arrive at but the vendor you have chosen for your project probably has some end users that have achieved such success and can give you a benchmark to use.)
*Vendor Compliance Accountability (The cost in receiving of fixing an order, quality assurance, rework and shipment returns is also overlooked. The key to getting an accurate number to use in this area is tracking what it cast currently. Number of receipts requiring attention, cost of relabeling, cost of quality assurance, etc.
Because the buying and merchandising is usually done in either procurement or by a merchandiser, many times the distribution manager just shrugs his/her shoulders and accepts this as fate. If collaboration can be done and a report generated describing the effect of additional cost caused by specific vendors, it gives distribution the ammunition to affect change.)
*Reduction of equipment such as fork lifts, etc.
Don’t forget politics! This is usually a definite delay or killer of a project. If you need a software interface and you haven’t pre-approved the project with IT, you can almost be guaranteed that the IT executive will put a hold on your project or send it sideways in the decision process. Review your presentation with others before presenting to the holistic team to get buy in and suggestions.
Getting your projects approved can be somewhat of a slippery slope. The first step is preparing the current state versus future state argument. Commonly referred to the AS IS and TO BE state. This argument is very important, and many times, an intangible may drive this whole decision.
Everyone looks at the basics: increased productivity or accuracy. Often times the areas that get overlooked are areas of intangible benefit. Loss of customer for order delay is a number that is hard to calculate. The sales and marketing team probably have a number or percentage their using for the impact of sales numbers if customer is lost.
When trying to justify a project make sure you use the growth rate that the CFO is using in presentations to the executive board, this way there won’t be any question where that number was originated. Collaboration is important in getting the data needed from other functional areas within the company.
Some other areas to find hidden savings:
*Reduction of packaging material
*Reduction of paper, tape, labels (The cost of paper, tape and labels is overlooked because the weekly cost doesn’t seem to be a large number. But once you expand that to a yearly cost it can send your ROI from a negative to a positive.)
*Reduction of clerical input (Sometimes this reduction involves another department, therefore, it is important to collaborate with that department. Unfortunately, other departments on the manager level may be sensitive to a reduced headcount by another department’s project, therefore, you may have to go up a level to get buy in.
*Avoidance of capital expenditure (If your growth is imminent and your company is thinking that they will need to expand the warehouse, the capital expense of adding 50-100,000 square feet is not a small number. If your project can give you better space utilization and create enough space to handle the increased business for the next three years, this number could be huge and justify the project. )
*Avoidance of increased personnel (If your project helps you double your productivity, that savings is often used. Another number not to forget is the increased personnel cost you would need if the project is not approved.)
*Order turnaround times (If you can increase the amount of time it takes to turnaround an order you may make a better cut off time therefore increase your shipping time by a day in some cases. Improved shipping time lapse may make reduce the amount of next day or two day shipments needed.)
*Don’t forget accountability (Sometimes a project may not reduce productivity but give the managers more accountability of the team. With this new accountability the team is more efficient and more accurate because they are now aware of the traceability of any errors and the fact they will be held accountable for productivity levels.)
*Reduction of Returns (If you have increased your shipping speed and transit times, the better customer service may reduce customer returns along with the increased accuracy of your personnel. This number may be a harder one to arrive at but the vendor you have chosen for your project probably has some end users that have achieved such success and can give you a benchmark to use.)
*Vendor Compliance Accountability (The cost in receiving of fixing an order, quality assurance, rework and shipment returns is also overlooked. The key to getting an accurate number to use in this area is tracking what it cast currently. Number of receipts requiring attention, cost of relabeling, cost of quality assurance, etc.
Because the buying and merchandising is usually done in either procurement or by a merchandiser, many times the distribution manager just shrugs his/her shoulders and accepts this as fate. If collaboration can be done and a report generated describing the effect of additional cost caused by specific vendors, it gives distribution the ammunition to affect change.)
*Reduction of equipment such as fork lifts, etc.
Don’t forget politics! This is usually a definite delay or killer of a project. If you need a software interface and you haven’t pre-approved the project with IT, you can almost be guaranteed that the IT executive will put a hold on your project or send it sideways in the decision process. Review your presentation with others before presenting to the holistic team to get buy in and suggestions.
