From Greg's Head

Note: Running most Fridays in FromGregsHead.com, is a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on Supertalk 97.5. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

As much as we don't like to talk about it, sometimes the world experiences a disaster. In the wake of a major world event, people's needs change, and manufacturers are challenged with shifting production quickly to address customer demands.

By integrating closely with suppliers, manufacturers have a higher level of agility and can efficiently react to changes, instantaneously. The bottom line? Competitive edge is in the hands of manufacturers with a level of agility that enables them to shift with the global marketplace.

Globalization, declining margins, and shorter product life cycles are pressuring manufacturers to transform their traditional supply chains to demand-driven, adaptive supply chain networks. Creating a collaborative environment to work very closely with suppliers and partners is essential to maintain an edge.

Manufacturing companies must be agile in a shifting global marketplace

How can manufacturers achieve this agility? Consider the following:

• Reduce time to market.
• Integrate supply chain.
• Share costs.

Customer demands in manufacturing get resolved fast with supply chain integration tools

For example, consider the following uses of technology in the supply chain:

• Effective and accurate inventory accounting.
• Tracking products during manufacturing.
• Precise parts selection.

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Note: Running most Fridays in FromGregsHead.com, is a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on Supertalk 97.5. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

This tip is brought to you by Thomas A. Kayser, author of Mining Group Gold and PKF Texas.

Communication can be one of the most misunderstood and misused tools in business. How do you effectively communicate with your employees and not waste time in meetings? Effective communication does not just happen. 

Every meeting should have an agenda with time allotted for each topic. There should be a facilitator, timekeeper, and a scribe.

The facilitator plans the meeting, prepares the agenda, and keeps the group on task during the meeting.
Planning for meetings should include answers to the following questions:

· What is the purpose and desired outcome?

· Who should attend?

· What is the agenda content and topic flow?

The time keeper reminds the group what time it is and if they are exceeding the time allowed for each topic.

The scribe is responsible for keeping meeting notes and action item assignments.

In practicing these simple techniques you will be more effective with better results. 

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Note: Running most Fridays in FromGregsHead.com, is a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on Supertalk 97.5. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

This tip is brought to you by Rebecca Ryan, of Next Generation Consulting, Inc.and PKF Texas.

Can your company be considered a next generation company? 

Next generation companies work to put in place policies and procedures to ensure their employees come first. They look at what motivates their employees and adapt to meet the needs of both the talent and the marketplace.

These are a few questions you should ask yourself in order assess how your company can provide a better work/life balance for your employees.

·        What are you doing now that makes the most difference to your staff?

·        Which current practices should you maintain and enhance?

·        Which should you abandon?

·        What new practices should you implement?

Because of the shrinking talent pool, companies are facing greater pressures to change their policies and practices in order to compete for and to retain talent. Have you thought of forming an internal taskforce to provide a forum for your employees to voice their preferences?  Allowing your employees to have a voice will ensure they are more engaged and committed to delivering the results needed to run a profitable business.

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Note: Running most Fridays in FromGregsHead.com, this is a continuing series of budgeting tips brought to you by Ventana Research and PKF Texas. These run Saturday mornings during the BusinessMaker’s Radio Show on SuperTalk 97.5. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

The electronic spreadsheet was a breakthrough because it automated the most time consuming part of manual budgeting and eliminated errors caused by purely arithmetic processes. In theory, spreadsheets should allow organizations to collect detailed information from every individual with budget authority and roll it up into a consolidated view.

In reality, two decades of results has shown that numerous issues routinely occur making it difficult to achieve ideal results. Common problems include:

• Broken links or formulas
• Consolidation errors
• Using the wrong data
• Using the wrong/incorrect formula

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Note: Running most Fridays in FromGregsHead.com, this is a continuing series of inventory control tips by Jon Schreibfeder. These run Saturday mornings during the BusinessMaker’s Radio Show on Supertalk 97.5. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

Separate your “stock” from your “stuff”.

When you stock material you are making a commitment. A commitment that an item will be available in reasonable quantities for immediate shipment or delivery to customers. Most distributors’ warehouses are filled with two things: “stock” and “stuff.” Stock is the material you intend to have in the warehouse. These are the items that you anticipate your customers will want. Stuff is everything else.  You have got to separate the stock from the stuff in order to have effective inventory management . Our goal is to liquidate the stuff and arrange the stock items in the best way to facilitate filling customer orders.

To determine which products you should stock, we suggest you sort the items in a warehouse based on each product’s “annual hits.”

Annual hits represents the number of times each product was ordered by customers, transferred or used in an assembly during the past 12 months, regardless of quantity. Why do we rank products based on hits, instead of the total quantity or material value ordered?

Annual hits more fairly represent that actual expectations of your customers and not the hoped for, or budgeted sales of your sales and marketing personnel.  Track items based upon the number of annual hits and compare this to the quantities ordered.  Once you start eliminating products with few annual hits your own the way to improving your cash flow and achieving effective inventory management.

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Note: Running most Fridays in FromGregsHead.com, this is a continuing series of budgeting tips brought to you by Ventana Research and PKF Texas. These run Saturday mornings during the BusinessMaker’s Radio Show on FM Newschannel 97.5. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

Many executives at mid-size companies feel trapped in the middle, bigger but less agile as an organization that they were previously, but smaller and without the resources of large organizations.

By budgeting and planning more effectively, mid-size companies can recapture the agility that they had as a smaller organization and overcome the advantage of their larger competitors.

Agility is as much about seizing opportunities as reacting to disappointments. When markets are hot, companies that can decide to apply more resources sooner are more successful than those who wait. During downturns companies that trim spending sooner do well, but those that understand where best to cut resources do even better.

Agility is one of the most important reasons small companies are able to compete effectively against giant corporations that have far more resources. People associate survival of the fittest with Darwin. However, what Darwin actually wrote is “It is not the strongest of the species that survives, nor the most intelligent…it’s the one most adaptable to change.”

Agility is knowing the right answer sooner, not later.

Agility is being able to make the right decision sooner, not later.

Agility is being able to implement the action plan in a concerted effort sooner, not later.

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Note: Running most Fridays in FromGregsHead.com, is a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on Supertalk 97.5. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

Attracting and retaining talent for your company roster is one of the hottest topics in boardrooms across the country. In order to successfully compete for quality talent, companies need to take the steps to set themselves apart from the fierce competition in today’s crowded marketplace.

Participating in the Houston Business Journal’s Best Places To Work program is a proven method for setting yourself apart. It demonstrates to the marketplace a commitment is being made to emphasize and nurture a positive corporate culture, and serves as a morale booster for firm recruitment and retention.

 Potential talent along with prospective clients want to align themselves with companies on the Best Places To Work list. What attracts and retains talent will ultimately attract and retain clients as well.

The champions who make Best Places To Work a reality, are the company’s employees – not the media or public. There is no better advocate for your company than you own employees!

The Houston Business Journal’s 2006 Best Places to Work awards ceremony is scheduled for Oct 12 at the Hyatt Regency Downtown. If you want to know how your company can benefit from such an award, sign up several of your key employees to attend this event.  Visit houstonbusinessjournal.com for event details.

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Note: Running most Fridays in FromGregsHead.com, this is a continuing series of inventory control tips by Jon Schreibfeder. These run Saturday mornings during the BusinessMaker’s Radio Show on FM Newschannel 97.5. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

How accurate are your inventory stock balances?

Accurate Stock Balances Are Needed for Success
– No computer system will replenish inventory with the right quantity of the right item at the right time in the right location if the quantity in the computer system does not agree with the quantity physically in stock.

Maintaining Stock Level Accuracy is Difficult
– Not all material related transactions are properly recorded
– Material is put away incorrectly
– Damaged material is mixed with good stock
– There is a lack of warehouse security

A lot of distributors try to make up for stock level inaccuracy with more sophisticated computer software.  Every Employee Must Know the Cost of Bad Inventory Mgmt.
– Inventory is valuable 
– Paychecks result from the sale of inventory
– If inventory is lost, stolen or destroyed, it must be paid for with net profits
– Management must lead by example

Assuming a 4% net profit, it takes $2,500 in new sales to make up for a $100 material loss.  If $100 is lost per week, a branch needs $130,000 in additional sales each year just to break even.  If your employees have not bought into concepts of Inventory Control (Controlling what is in your warehouse) and Inventory Management (Managing your inventory investment to maximize net profits), you will have difficulty reaching your financial goals.

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Note: Running most Fridays in FromGregsHead.com, is a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on Supertalk 97.5. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

Do you know your corporate financial DNA?

Are people asking for a Benchmark Report on your business?  As your company grows, are you treading water?  Are you ahead or behind of your competitors?  Success leaves clues, so do you know where to look?

If you know your corporate financial DNA, you can adapt to changing business demands more readily.  There are several areas that make up corporate financial DNA.  These include but are not limited to: revenue growth, operating income margin, percentage cost of good sold, days sales outstanding, days in inventory, and days purchases outstanding.

Corporate DNA must be combined with performance metrics to drive success.

No matter what metric you use, make sure it is easily understood by many managers throughout your company.  Use the metrics to reward performance of your employees.  Also, make sure your corporate DNA relates to shareholder value.

Look back at your successes.  What did you do right and how can you apply that to the future?  Success is measurable, but it takes the right combination of people, process, and technology to become effective.  Make sure you map SCM initiatives to financial performance gaps and link gaps to SCM Business Processes and Strategies.

Studies have shown, that for certain industries, using your corporate financial DNA to improve performance in reducing your Days Sales Outstanding from the median to the 1st quartile has a bigger impact on your cash flow than increasing sales from median to the 1st quartile.

Make sure you know the comparison between your corporate financial DNA and your industry.  If you do, you can implement improvement plans to put money in your pocket.

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Note: Running most Fridays in FromGregsHead.com, is a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on Supertalk 97.5. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

If supply chain management, or SCM, has so much potential, why does it often fail to deliver a return on capital?  Recent studies have shown that return on capital is down thirty percent for 1,500 manufacturers, distributors and retailers.  Is the hype driving us all to move in a direction that we believe will help our businesses?  Or it is something else?  It is something, or a process that seems so simple, but elusive to most businesses.

There are several reasons SCM can fail but three key reasons are consistently found:
First, SCM project managers often lack access to C level executives.  C level personnel are crucial for success and must be involved in any SCM project.  The C level person must be engaged in the oversight and management of the SCM project.  If they don’t, they have shirked their responsibilities and the SCM will have to battle priorities and commitment from others.

Second, SCM project managers don’t necessarily speak the language of finance.  In order to be successful, they have to have the tools to communicate information effectively.  They don’t know the key elements of their Corporate DNA.  Corporate DNA being defined as the metrics by which you measure success beyond the software implementation.

And third, SCM cannot be done in a vacuum.  You must take into account entity wide issues.  Getting departments to work across company lines and getting input from the appropriate key people sounds easy.   But as many SCM project managers will attest to, getting this cooperation is much more difficult than one might expect.
In short, everyone has to be active and committed to an SCM project for it to be a success.

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Note: Running most Fridays in FromGregsHead.com, this is the first in a continuing series of budgeting tips brought to you by Ventana Research and PKF Texas. These run Saturday mornings during the BusinessMaker’s Radio Show on FM Newschannel 97.5. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

With all the advances in technology, software and collaboration tools, one might think the budgeting has risen to new and more effective higher levels.  However, recent research has shown that executives in mid-sized companies have not focused on the potential benefits of more effective budgeting and are unaware of possible solutions that can be quickly implemented.

Questions to Ask About Your Budgeting and Planning Process

Is the process strategic?  The CEO of you company has a strategy, but how well does the financial budget reflect it?  Is you budget realistic or just update of last year’s amounts by a factor of inflation?

Is it accurate?  Are the budgets as accurate as they should be?  Does the budget process itself create systematic errors?

Does it increase your company’s agility?  Does the company respond quickly to changes in the environment or changes in the competitive landscape?  When things don’t go as planned does the company have a coordinated response?

Does it provide deeper insight? What assumptions are being made in forecasting? Can you drill down to ascertain consistency, assumptions, etc?

Does your budgeting and planning process improve process quality?  How quickly can you prepare your budget?  Is it consistent from year to year and department to department?  What tools are you using to help in this effort?

We recommend that you start to improve your budgets by looking at three key areas:
1) Making strategy explicit;
2) Increasing collaboration
3) Optimizing resource allocation. 

With this focus, you can improve your budgeting process and your results.

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Note: Running most Fridays in FromGregsHead.com, this is a continuing series of inventory control tips by Jon Schreibfeder. These run Saturday mornings during the BusinessMaker’s Radio Show on FM Newschannel 97.5. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

What is Effective Inventory Management?

“Effective inventory management allows a distributor to meet or exceed customers’ expectations of product availability by maintaining the amount of each item that will also maximize their company’s net profit.”

Effective inventory management is the result of outstanding inventory control and inventory management. What is the difference between “inventory control” and “inventory management?” Inventory control involves managing the inventory that is already in your warehouse, stockroom or store. That is, knowing what products are “out there,” how much you have of each item, and where it is.

Inventory management involves determining when to order products and how much to order, as well as identifying the most effective source of supply for each item in each stocking location. Inventory management includes all of the activities of forecasting and replenishment.

The most common question we are asked is “where do we start?” The answer is: You must begin with inventory control. Unless you know exactly what inventory is in your warehouse and that material is in usable condition, you can’t accurately determine when to reorder products.

Stay tuned for future segments on effective inventory management. 

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Note: Running most Fridays in FromGregsHead.com, This is the first in a series of inventory control tips by Jon Schreibfeder. These run Saturday mornings during the BusinessMaker’s Radio Show on FM Newschannel 97.5. Audio files can be found at the PKF Texas Radio/Television page.

How do you achieve Inventory Control? Where do you begin?

First, you have to understand the problem. I’ve worked with distributors throughout the world. These firms have distributed nearly every type of product imaginable. Despite the variety of locations and industries, I’ve found they typically have very similar inventory-related problems:

• They have too much of some products.
  • Results in excess inventory and dead stock and leads to decreased turnover and profitability
• They experience stock outs of other products.
  • Results in backorders, lost sales and an overall decrease in customer service.
• They don’t know what is in stock.
• They can’t find material in their warehouse.

As a result, many distributors don’t have control of their inventory. So, to get control, you need a plan for effective inventory management.

Stay tuned for future segments on effective inventory management. 

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Note: Running most Fridays in FromGregsHead.com, this is a series of business tips offered by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on FM Newschannel 97.5. Audio files can be found at the PKF Texas Radio/Television page.

Is your company on the Best Places to Work list? If your employees were surveyed today would you be on the list?

In Houston’s fast paced economy, human capital is the number one issue executives should be talking about. What are you doing as a leader of your company to encourage a positive environment that attracts and retains valued employees?

Appreciation for your employees needs to be demonstrated from the top down. If the leadership of your company shows appreciation for employee accomplishments, it will be infectious throughout the company. It can be as simple as acknowledging interim successes of a project or giving a gift card to someone who went the extra mile. 

Taking the time to let your staff know they are valued will make a world of difference in both the morale of your company and your bottom line.

Share you own business insights by sending me a note.

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Note: Running most Fridays in FromGregsHead.com, this is the third in a series of business tips offered by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on FM Newschannel 97.5. Audio files can be found at the PKF Texas Radio/Television page.

This is a good time of the year to take a look at your budget and forecast for 2006, and compare your performance to your expectations. If you do not have a forecast, it’s not too late to prepare one for 2006.

How do you use a forecast to take your company to the next level of performance?

The secret may be a “flash report.” A flash report will keep you focused on the key performance indicators that will drive your forecast. For example, if your goal is to improve cash flow and increase sales, a report would track your daily or weekly sales, along with the daily cash balances of your business.

Track a few items in your business and see how it works for you. Over time, I think you will find you can keep your finger on the pulse of your business by using a flash report on a regular basis. Remember you can’t manage what you can’t measure!

Share you own business insights by sending me a note.

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Note: Running most Fridays in FromGregsHead.com, this is the second in a series of business tips offered by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on FM Newschannel 97.5. Audio files can be found at the PKF Texas Radio/Television page.

In this ever more fragile economy, managing your cash flow may prove to be one of the keys to your Company’s survival. Customers will delay payment in an effort to preserve what little free cash they have. Unfortunately, this can be prove to be extremely painful for your Company, and may lead to your demise.

As an owner/entrepreneur, you are faced with many financial terms. One of the key terms you should become familiar with in managing your business is “Days Sales Outstanding (DSO).” You can calculate DSO by dividing your total annual revenues by 365 to get your average daily sales. Then, take your monthly accounts receivable balance and divide by the average daily sales to get your DSO.

Did you know that a properly designed and implemented cash management process, allowing you to track and collect overdue accountings can have an immediate impact on your cash flow? For example, a three-day reduction in your DSO balances (a very reasonable and achievable target) will generate $5,000 in cash flow for every $1 million in revenue. Thus, a $10 million dollar company should be able to generate $50,000 in cash flow by having a well designed and operating cash management and collection program.

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Note: Running most Fridays in FromGregsHead.com, this is the first in a series of business tips offered by Greg Price. These run Saturday mornings during the  BusinessMaker's Radio Show on FM Newschannel 97.5. Audio files can be found online at the PKF Texas Radio/Television page.
 
According to Fortune Magazine, “Blogs have become a force businesses can’t ignore.”

With all the buzz about business blogging, perhaps you’ve already considered whether this tool would be a good fit for your business.

What is a blog? Well, a blog is simply an online journal. Web log = blog. More than that, blogs are conversations among human authors, not marketing departments. They are part of online communities where information is shared and commented on.

Ask yourself: Do I have something to say? Can I make it interesting and relevant? Can I keep talking about it?

Two great resources to look at if you’re thinking about blogging are problogger.net and lexblog.com. These sites were excellent guides during the development of my business blog, fromgregshead.com.

A blog can be a useful communication tool for the technology minded entrepreneur. The possibilities are endless and you limited only by the information you provide to your audience.

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As many of you know, I was featured on the BusinessMaker’s Radio Show several times, and now they have asked me to present a series of best practice business tips to air during their Saturday morning show on FM Newschannel 97.5.

I am going to be the voice of PKF Texas’ Entrepreneur’s Playbook.

The first tip from the Entrepreneur’s Playbook will air this Saturday – July 1. Each Friday, I will post both the written and broadcast versions of the current tip here in the blog.

Here is a list of some of the topics The Entrepreneur’s Playbook will cover:

• Blogs
• Inventory Control
• Profit Enhancement
• Human Capital
• Cash Management

As someone who writes a blog with a technology focus, it is always interesting to see how technology plays a role in different industries. The amount of time that went into recording and mixing these spots, as well as the BusinessMaker’s Radio Show, is commendable. Thanks to John Whiteside and Russ Capper who helped make me “One Take Jake.”

Let me know what you think about the Entrepreneur’s Playbook and especially using the blog for broadcast clips. Were the tips useful for your business? Are there any topics you would like me to touch on? What are your own best practice tips? I look forward to your interaction on my blog.

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