One Way To Overcome a Price Obstacle

Jacques slid into one of my guest chairs and adjusted his trousers by pulling up at the pleat near his knees. He was in one of his dark, grey pinstripe suits. A white, three point handkerchief stood at attention in the suit’s breast pocket. A solid, maroon tie matched the redness of his eyes.
 
He said, “We are losing deals from those customers we delivered the reliability offer to. Want to know why?”
 
“Why?”, I said.
 
He said, “Because our pricing was not in line with the other bids. It seems some customers continue to keep this information close to their vest. For as long as I can remember, trying to close deals based on price has been the way customer check our solutions against our competitors.”
 
I said, “Using price to compare our offerings versus others is a long standing habit.”
 
He said, “Yes, and they were big deals that I’m having a hard time letting go of.”
 
I waited a beat and said, “I see that. I’m sorry. What do you suggest we do about it?”
 
He said, “I want you to fix it. I can get you another meeting with the procurement folks, but I want you to fix it.”
 
I don’t remember any of the procurement folks objecting too much. Ensuring all the other parameters, like price, quality, lead time and support were in line with the other bids was a key part of our offer. I’ve seen Jacques get excited from time to time and blow things out of proportion.
 
I said, “You get me those meetings and I’ll see what I can do.”
 
One Week Later
 
The procurement manager asks, “Why do you want to know if your pricing is in line or not? Why don’t I get the best price right out of the box?”
 
I said, “As you know, a supplier costs can vary for amny different reasons.”
 
She said, “Yes, so give us your best price.”
 
Persistent, isn’t she? The best price usually ends up being a lower price. Sometimes a price much lower than we would like it to be. Yes, sometimes we offer a low price for many reasons, like trying to get an in with a new customer. But, Jacques says we should have closed the last deal with this customer. The products and services we offered are our bread and butter. I needed to take a different tact.
 
I said, “I also well understood a company wants to make as much money as they can. Like us, it’s done in two ways. One, getting the best price for the required purchased items. And two, keeping costs under control in all other areas of the business. Especially in operations during the manufacture of your customer’s order the supplier items were purchased for.”
 
She said, “Yes, so?”
 
I said, “Someone like Mr. Townsend, your General Manager, is interested in the bottom line impact of all those actions, right?”
 
She said, “Yup, he sure is. That’s why I’m trying to get the best price from you.”
 
I imagined he was sitting in the room right now.
 
I said, “If Mr. Townsend was here now, I would say something like this––compare getting the best price from us versus keeping your costs under control. For example, through price negotiations with suppliers like us, you could save your company about 10-20% per order. That’s usually a few thousand dollars, right?”
 
She says with a wink, “At least.”
 
I said, “But keeping costs under control means less rescheduling of your equipment, better equipment use, less breaking set-ups to run small batches, better worker efficiencies by keeping them busy, and minimizing the need for overtime. These actions can save your company thousands of dollars, right?”
 
She said, “Right.”
 
I said, “Not only that, but maintaining good relationships with your customers, by delivering your own products on time, a customer is willing to give you repeat business. Repeat business means an impact of millions of dollars.”
 
I could see her thinking. She said nothing.
 
I said, “Imagine irritating customers by delivering your order to them late because you chose a supplier who delivers late. Some customers may not order from you again. This is a big loss and doesn’t help Mr. Townsend’s bottom line at all. Has this happened to your business?”
 
She said, “Yes, and we can’t afford to have it happen. Again!”
 
Now it’s time for me to summarize, I said, “So, for us not to ask about our pricing being in line limits the amount of bottom line benefits your company can receive from a reliable supplier like us. Not only will we be competitive on price, but we’ll bring even more benefits to your company by delivering on time. That’s why we want to know if our prices are in line or not.”
 
She said nothing.
 
I said nothing.
 
Then she said, “Alright, I’ll let you know when your prices are not in the ball park; I’ll let you know when they are in the next county.”
 
On my way back to the office, I called Jacques and summarize my meeting. Double check pricing being in line and the benefits it brings with the procurement agent. If necessary, confirm the benefits to the whole company by finding a senior level executive who sees the whole picture. If you can get a person like this in the meeting, even better.
 
He was grateful, but asked when I would be visiting other customers. I said I was busy running my own part of the business. So, I suggested he put a workshop together for our sales force and I would be there to help.
 
I had already thought about the kind of sales person we needed to deliver the reliability offer. Using the conventional mode of offering features and benefits of the product itself was not going to be enough. It’s not rocket science, but the right sales people needed to be selected and the training had to be effective.

How to Establish a Quick Delivery Lane with CCPM

Instead of going to the office this morning, I stopped at my favorite park. Making my way to the edge of the pond, I wiped the dew off the bench and sat down. A few birds flying around and they dipped their beaks into the water only to take off again into the clear, blue sky. A loon swam and its head surveying the surroundings. The trees were springtime green and a cool breeze moved their leaves in a shimmering kaleidoscope.
 
Taking a deep, relaxing breath, and another, I looked out at the calm lake. I had made a good decision to be here. I smiled. The air was morning fresh. I was lucky to be alive. I was grateful to be able to spend time in this beautiful place. I was calm as I left the past and the worries about the future behind.
 
But, I couldn’t help starting to think about what the CEO wanted. He wants the ability to deliver orders in half the current industry standard lead time. For our customized products, the industry standard lead is about 12 weeks. We know this from the meetings Alice and her quote department have been having with our customer’s procurement agents.
 
We say we will be on par with all other parameters of an order. Not only do we promise to deliver on time, but the industry standard lead time needs to be in the ball park with other bids. If a parameter is out of line, Alice finds out, and the necessary adjustments are made.
 
As you can imagine, it’s not normal for procurement agents to be open and honest. Alice has a personality which gets folks to open up, but procurement agents in our industry don’t always reciprocate. As far an I know, the procurement agents are convinced of the value our on-time delivery brings. This encourages them to make sure we didn’t submit quotes which were out of line somehow. If we were out of line, we won’t get the order and they won’t get the benefits.
 
The things they tell us now are not only if we are in-line with other competitors lead times, but they tell us if our prices are too high. I’m surprised. Some customers even tell us if our prices are too low. And, in some cases, we add or subtract certain features or adjust our warranty period to be in-line with the competitors bids.
 
Because of our CCPM implementation and the software we use to support it, we almost never have an issue adjusting our standard lead times to be in line with our competitor’s bids. During the planning stage of a project, we can make adjustments to resources and task durations to make the project fit within the promised lead time. If something is way out of order, we share our planning with the customer and explain the reasons for the longer lead time. Adjustments can still be made.
 
But, the question remains––can we deliver some orders in less than the industry standard lead time? It was time to head to the office and see what I could work out. I took one more deep breath and stood up. I looked around the pond one more time and headed for my car.
 
Back on the highway the calm of the pond disappeared like a mirage in the desert. Rush hour around here was getting worse and worse it seemed. I moved into the left hand lane behind a white box truck with the logo of the company and its phone number in big, red letters. ‘If you can’t see my mirrors, I can’t see you’ a small sign read. I couldn’t see its mirrors nor could I see past the truck.
 
Creeping along, the opening to the HOV lane came into view on my left. I had placed my electronic tracker on my windshield a few weeks ago, but I never planned to use the HOV lane because I didn’t see the need. The times I went to the office were rarely as busy as things were now. But, since I had stopped at the park, my timing was off.
 
The HOV exit appeared and I instinctively jerked the wheel to the left and left the white box truck behind. Picking up speed, I was passing cars on my right and had a clear road in front of me. “Suckers,” I thought to myself. After a few minutes, my exit came into view. I wasn’t going to be that late after all.
 
On my way to get some coffee, I stepped into Jim’s office. Jim and Alice were sitting at the side table. Jim had his laptop open and was concentrating on something on the screen.
 
Alice looked up and said, “We’re putting the finishing touches on a “project” for the quotation process.” She raised her hands and used two fingers on each hand to quote the word project.
 
Jim looked up and said, “That’s right. There are five, main tasks, we added three more resources, and entered the first quote project into our main portfolio of projects.”
 
I said, “Good job! Will you be using this project to base the actual quote “projects” on?” I raised my hands and used two fingers on each hand to quote the word project.
 
Jim said, “Yes, that’s what were are going to work on next. Alice has about 25 quotes in process we need to create “projects” for.” He raised his hands and used two fingers on each hand to quote the word project.
 
Jim and Alice chuckled. I smiled at our silly use of hand gestures.
 
I said, “That sounds like a lot of quotes. How many do you usually have in process?”
 
Alice said, “Usually, about 10-15 at any one time. Whatever sales has been doing lately must be working. I’ve never seen this many quotes around this time of year.”
 
Sales has not been doing anything different other than letting me take the lead during their sales meetings.
 
But, I had to work on the quick delivery lane issue and would have to find a way to have the sales folks deliver the reliability offer. And, soon. I haven’t visited that many customers and there were many more to visit and present our offer to.
 
I said to Alice, “Would you mind if I worked with Jim this morning? I promise to send him over to you as soon as I’m done.”
 
Alice stood and said, “No problem, I need to go see what’s going on in my department anyway. I’ve got a person out sick and with all the quotes we need to get out I’m afraid to let things get too out of hand. If they aren’t already.”
 
As Alice left Jim’s office, I closed the door and sat down. Jim was sitting waiting on me. He pushed his laptop aside and said, “What’s up, boss?”
 
I said, “Our CEO needs to deliver an order in half our current industry standard lead time. He worked out some deal with the Kleinster Corp. and promised them we would deliver the order on time, too.”
 
Jim’s eye went wide.
 
I said, “I need your help figuring out how we deliver this reduced lead time order on time. And, I’m going to assume this won’t be the last time he’ll pull this stunt. We need to be ready for the next time, too.”
 
Jim said, “It was only a matter of time. No pun intended. Everyone wants things faster and faster. That’s nothing new.”
 
I said, “The first thing I would try is setting the due date of the project to half the current lead time. The software will warn us if it’s not possible. But, if there’s no alert, it means we can hit the due date, but we won’t have a full project buffer to work with.”
 
He said, “That’s one way to do it. When a project is launched without a full project buffer, the priorities for this project jump to the top of each resource’s task list. In this way, the work kind of skims along the top of the queue of work and moves through the process faster than everything else. But, you’re right, without a full project buffer the risks will be higher.”
 
I said, “Right. Either way, we can check the critical chain and see what we can do to reduce the total time and get as much buffer back as we can. I’m paranoid remember.”
 
He said, “But, you’re not hysterical. I know, I know.”
 
I said, “To open up even more capacity, I have another idea. This morning when I was stuck in rush hour traffic, I took the HOV lane. Clean sailing all the way to the exit. I had plenty of capacity. Like it was reserved for me.”
 
I laughed.
 
Jim said, “If we want an HOV lane here, we’ll need to reserve resource capacity. But, which resources? How much capacity do we reserve?”
 
I said, “Good questions. We can use the Dynamic Drum function to identify which resources have the least protective capacity. How much capacity we need should be in line with what percentage of these less than standard lead time orders we’re going to get.”
 
Jim said, “That sounds right, but as our product mix changes, the resources we need to keep an eye on may change. And, once Sales gets a whiff of the capability to deliver orders faster than standard lead times, who knows how many of these kinds of orders we’ll get.”
 
I said, “It feels like we are going around in circles. Someone will have to always be monitoring the load on our resources and monitoring the amount of orders which are promised in less than standard lead times.”
 
He said, “Monitoring the load on our resources is something I do anyway. Whenever I schedule a project and place it in the Pipeline, I run the report which shows the planned and actual load on all our resources. If there are any overloads, I double check how overloaded the resources are and how long the overload lasts. Most of the time it hasn’t been a big deal. Any delays due to overloads is usually small compared to the buffer available.”
 
I said, “Ok, good. It’s time to make monitoring resource capacity a formal part of our portfolio review. But, it’s the how much capacity to reserve problem which is not going to be as easy to solve.”
 
He said, “You can finally give me the resources I’ve been asking for.”
 
He laughed.
 
I said nothing.
 
In the past, adding more resources was the first reaction to try to finish project on time. Trying never worked, it only made things worse. Adding resources to the environmental chaos we lived in before using CCPM created even more multi-tasking. More resources, more multi-tasking. More multi-tasking, longer lead times. Longer lead times, fewer orders delivered when promised. No way were we going to go back to those days again.
 
But, if the company is getting a premium for the order, adding resource capacity will be a little easier. We’ll have the cash flow to pay for the added support. If a sub-contractor is involved, we’ll have funds to pay their expediting fees.
 
I said, “How about this, I’ll give you the resources the software says we need to maintain enough protective capacity. I’ll have to get Sales’ agreement to let us know of any potential less than standard lead time orders that may be out there. We’ll have to do our best to ensure we always have enough capacity. Like the HOV lane, it will always be there. Sometimes it won’t be used, but if we need it the capacity will be there.”
 
Jim said, “And, when it’s not needed, we can still use it to speed up regular orders, right?”
 
I nodded.
 
I said, “Opening up our own HOV lane doesn’t sound too difficult after all. We keep an eye on all actual and planned resource loading. And, we continuous watch the level of less than standard lead time orders. This should ensure there is enough protective capacity to deliver on time the less than standard lead time orders.”
 
Jim said, “With these two things in place, there should only be a few orders which we can’t deliver when a customer wants them. In these cases where we can’t deliver within the request lead time, the customer will have to suck it up.”
 
I said, “Right,” I laugh, “Those situations should be few and far between. In the meantime, I’ll email you the Kleinster Corp. order and we’ll use it to test out our assumptions.”
 
I sent Jim back over to Alice’s office. We had plan to get the CEO’s order to the door in half the time and had a way to deliver other future orders. Our CCPM software makes it easy to see the load on our resource pool. In real time. And, the software helps up predict what resource capacity we need for future orders.
 
We are making better decisions, in time, about which resource investments will make an immediate impact on our bottom line. And, all in all, I had a productive morning. But, when Jacques walked into my office, the look on his face told me that was about to change.

Our Reliability Offer Release Party

As Jacques and I walked to the front door of the Klinester Corporation, I turned and looked over my shoulder. You know the feeling you get when you feel like you are being watched? I had felt eyes on me all morning. I never have these feels, but this morning it was almost tapping me on the shoulder and saying, “Hey buddy, who’s watching you? I am. Don’t look now.”

Seeing nothing unusual, I turned back around and opened the door for Jacques. He was in one of his best suits. From the polished wingtips, along the tight creases in his slacks, the dark grey, pin stripe suit fit him like a shape in a drape. He said thank you and gave me nod as I made my way to the front desk. I wasn’t worried about what I had on. I have other things on my mind. I was nervous. I was anxious. But, I was able to greet the receptionist and announce our arrival.

I said, “We’re here to see Marty Moran. We have any appointment at nine o’clock.”

The receptionist pecked a few buttons on her massive phone console and spoke into her head set. She wore a pale chiffon dress, it was nipped and tucked in all the right places. He lipstick was a subtle shade of red. Her smile nonexistent. She said, “Marty, the two gentlemen are here for your nine o’clock.” Efficient. Cold. She directed us with a wave to a coffee stand by the guest seating area. I didn’t need coffee, but Jacque picked up a cup and added cream and way too much sugar.

After a few minutes, Jacques said, “We need the next order from these guys. From my sources inside the company, they are about to get a large order from a large Las Vegas hotel chains. If they do, they will need our services and a lot of them.”

I said, “As I said, my primary mission is to confirm our reliability offer. I need their feedback on what works and doesn’t work to move more deals into your sales funnel. And, I expect the hit rate to go up and you’ll need to be able to respond to more quotes and RFPs.” He was focused on making sales. That’s his job. If this meeting leads to more sales, that would be icing on the cake.

Jacques said, “And, like I said, you’re here because you won a bet on the golf course. I’m willing to take the risk because you may be on to something. You have cleaned up your act, but I’m not convinced it will make any difference to this customer. They are all about getting the best price. Always has been. Always will be.”

I said, “That’s what we’re here to find out. I want to find out if there other ways to secure more business by capitalizing on the operational capabilities we’ve built.”

I was going to continue with my explanation, but the receptionist interrupted us and said Marty was waiting for us in the main conference room. Jacques took his coffee and we made our way down the short hallway. With another wave, the receptionist directed us into the room.

Marty sat on the opposite side of the large, oak conference table. He was a big man, broad shoulders, and his muscled arms stretched the fabric on his short sleeve shirt. He looked up as we entered, stood and walked around the table. He was a hulk of a man. Taller than I expected.

He said, “Gentlemen, I’m glad you are here. I’ve set aside 30 minutes for this meeting, so let’s get to it. I’m very busy this morning.” His voice was higher than I expected.

We shook hands and I introduced myself. His grip left my hand feeling like a crumpled piece of paper. Jacques seemed to know him well and gave a nod. We took our seats on the opposite side of the table. Marty returned to his side. The field of battle was set. Marty’s dominate position, on home turf, and his imposing figure was distracting me.

Jacques said, “Stewart has something to ask you and he needs a few minutes before we talk about your upcoming order.” He looked over at me and grinned. I was the same kind of grin a lion would have after cornering its prey. I was a sitting duck and he had opened the gate to let the lion out.

I was in a curious mood. No, it wasn’t a mood where I felt uncertain or unclear about how I felt. I knew I was terrified. Pushing it aside, I wanted to hear the responses from Marty about our new offer.

I said, “Thanks for your time this morning, Marty. We are developing a new offering and I would like to check it with you. It may seem a bit unusual coming from me, but you are the best person I know to check it. Any opinions you have about it will be appreciate.”

He nodded. Out of the corner of my eye, I saw Jacques leaned back in his chair. Ready for the show. I took a slow, calming breath.

I said, “I know you and Jacques have worked together for a long time and you have been a customer of ours for over 30 years. But, over the past few years, we’ve let you down. Especially, by promising lead times and due date and then not meeting them. Sometimes by a few days, sometimes by a mile.”

Now Marty was nodding his head. He said, “That’s right. As much as I like Jacques and the services you provide, I was getting too many phone calls from my own people to find a more reliable supplier. You’ve broken your promise too many times.”

I said, “I understand and I’m here to see what we can do about that. We took some time to figure out why our processes we so unreliable. We looked in a lot of places and tried a few things to test our assumptions. Let me try to explain.”

I said, “What if you could completely trust your system integrators?”

Marty said nothing and looked at me like the RCA dog. Marty glanced at his watch and looked back into my eyes. He said nothing.

I said, “Our industry has always been focused on helping customers get what they want by creating custom tailored products. We meet your tight quality standards. And, we offer our solutions at a competitive price.”

He nodded and then was about to say something, but I continued, “But this environment is filled with uncertainty. We never design or produce the same systems twice. Your quality standards are hard to meet sometimes. And, sometimes we don’t get the margins we want. All this uncertainty effects our due date performance because its hard to predict how long all this work will take.”

I want to make sure I don’t blame Marty or his company for any of the issues I’m presenting. The way to build rapport was not talking about golf or the weather. Building rapport with Marty was going to based on understanding where the issues were and where they were coming from.

Marty said, “I see, but what does this have to do with me?”

I said, “You get what you asked for according to the specifications in the RFP, right? But, with all the uncertainty from accepting the order, the engineering, and shipping it out, you are forced to guess what you are going to receive your order. We are forced to guess, too.”

He nodded. He said nothing. Marty must have been practicing his Stoicism. He sat there with his arms crossed. The fabric of his shirt stretching even tighter. His granite face seemed to grow bigger as he waited for me to continue. So, I did.

I said, “Here’s where our analysis starts to get a little mirky. And, I’ll need your help to confirm a few things.”

He nodded.

I said, “When suppliers deliver late, what happens to your planned production schedules?

He said, “We have to reschedule the whole shop. It’s a real hassle.”

I said, “What about your workers’ efficiencies and equipment usage?”

He said, “They go down. We don’t like them to go down.”

I said, “What happens to the priorities you’ve make for your other supplier and subcontractors?

He said, “They have to change, too, since we don’t have the space to hold the inventory which is piling up waiting for all the parts to arrive. The phone calls telling a supplier to hold their shipment aren’t one’s I want to make. In some cases, I told them the week before to expedite their shipment. How’s I’m telling them the opposite.”

Now, he’s showing some emotion. But, I went for it. I continued to pour gas on the fire.

I said, “And, what about the planned commitments you’ve made to your customers when a supplier delivers late? Your lead times and work in process must go up, too.”

He said, “The customer’s procurement guys are the worst. The one thing we can’t do is blame a measly supplier for why we can’t deliver a customer’s order. They don’t care, they have their own due dates to meet.”

I tried to interrupt. He was on a role. I let him speak.

Marty continued, “Let me tell you that I’ve had to order replacement parts for some of the orders we’ve been working on. And, at expedited prices, because Engineering was forced to redesign something. If we used the original design, it would have taken too long and would have missed our due date.”

I said, “Do you see how one late shipment can disrupt many different things in your organization? But, as bad as it sounds, I’m sorry to say there are plenty of other bad things that happen to your company. Do you want to hear them?”

Jacques said, “Companies like your also want to be lean, efficient and on time, right? What happens when have to reschedule, waste resources and protect your operations from unreliable suppliers? I’ll tell you. There is a hit on labor costs, carrying costs, engineering costs, and overhead costs. Your cost of sales go up, margins are squeezed, sometimes penalties are paid, and cash get sucked up in the wrong places.”

I looked over at Jacques in surprise and gave a small nod of appreciation. This guys was paying attention after all.

Now Marty nodded.

I said, “There is a price for obtaining our products and services, but there is also a price for not receiving our products and services. The price for not receiving an order, on-time, from your suppliers is much larger than the few cents you squeeze out of Jacques.”

Marty sat back. Stunned. All the color left his face. His shoulders went limp as if being resigned to the vaccination shot he didn’t want.

On the way over, Jacques told me about a large customer of the Klinester Corporation switched to another supplier. Why? Because Klinester couldn’t meet their lead times. The large customer was a significant part of Klinester’s annual sales. It hurt. The news was all over the industry gossip line.

I said, “Integrators who deliver late and break their promises don’t make it easy to improve your company’s profits, do they?”

Marty shook his head side to side. Did I see a bit of appreciation in his face, too? I wasn’t sure. But, I had hit a nerve or two. Perfect, I had him where I wanted them. But, I’m not out of the woods yet. I may have convinced him the damage we’ve done to their company was way worse that anyone thought. Anger and resentment grew like weeds in that kind of environment. I still had some work to do.

Marty said, “Your 30 minutes are up, but I want you to continue. If you’ve got a solution, I want to hear it.”

I nodded. I said, “Before we go through our solution, let’s be clear about what a good solution for you looks like.”

My challenge now is to look at those problems with through the lens of the criteria for a good solution. I want to help Marty see that our solution is the only solution which will meet the criteria for a good solution to his problems. He’s agreed with the problems. Let’s see if he agrees to the criteria for a good solution.

He’s made commitment to other suppliers. His company has put in place things to protect themselves from unreliable suppliers. At some point, he will have to defend his decision to move more orders to our company. The main thing the other folks in his company know is that our company is not to be trusted. No more orders for you, sunshine.

I said, “Since an unreliable supplier causes so much damage by being late with their deliver, the first criteria must be to deliver order on-time, every time. Agreed?”

Marty said, “Agreed.”

I said, “The second criteria is to make sure we don’t cut the corners of any of the other things you need from a reliable supplier. Things like having competitive lead times, maintaining high quality levels, and offering fair pricing. Agreed?”

Marty said, “Agreed, but you also have to be able to respond on time to the RFP’s we send out. You take too much time getting them back to me.”

I made a note in my notebook and said, “I’ve made a note about it and I agree. That has to be improved and we’ll make it a part of the second criteria.”

How was I going to improve our quote response time? I didn’t have time to worry about it right now, but there had to be a way.

I said, “The last criteria to consider is that a supplier is reliable from the day they say they will be. Once you get used to working with a reliable supplier, all the things you are doing to protect yourself and your company will not be needed anymore. Your folks will realize they don’t have to place orders as early any more. You don’t have to hold buffer inventory anymore. You don’t have to reserve capacity in your shop to cover up the mis-synchronizations.

When all these things are gone and a once reliable suppliers delivers late again, real damage will occur. So, the final criteria is to be reliable for the long term. Agreed?”

Marty said, “I agree.”

I said, “If a supplier can meet these three criteria, the issues unreliable suppler cause go away now and into the future. What more could you ask for?”

He said, “I’m not going to give up on trying to squeeze every penny out of Jacques and try to get better deliver times.”

I nodded and took a deep breath. I wasn’t ready to go there and I wasn’t going to take the bait.

I said, “We don’t have a name for what we are offering yet, but there are some key features I want to tell you about. There are three of them.”

He nodded.

I said, “One, to provide a stable workflow, we limited the amount of work in process. This means there are no overloaded resource overloads. Overloaded resources cause slow downs. And, no resources which are starved for work. Starved resources lose momentum. Both situations cause bad multitasking. And, bad multitasking extent lead times.”

Marty said, “That sounds counter intuitive, but it’s your business. What can I say.”

I said, “Two, everyone is working on the right jobs at the right time. We agreed on a single priority system which improves our ability to focus everyone’s attention on getting orders completed on time,” I said.

Marty said, “That makes sense. Again, I’m not sure how you did it.”

I said, “And three, to sustain the ability to deliver on time, we watch the load on our resources. In this way, we will know ahead of any overloads what capacity we need to add and be able to promise delivery dates.”

I said, “Can you see how these three elements help our ability to deliver on time?”

Marty said, “I’ve been in procurement most of my working life, so I’m can’t say for sure. For the most part, they make sense. I am glad to hear you are doing different things. If you came in here blowing smoke, I wouldn’t be sitting here for very long. Please continue.”

I pulled a graph out of the notebook I brought with me and said, “Take a look at this chart. It shows our actual due date performance over the past eight months. As you can see, our due date performance was bad at the beginning. It turns out it was considered the standard in our industry.”

Marty looked at the chart and followed my finger to the 55% on time performance data point.

Marty said, “It takes guts to show this data to me. If I wasn’t desperate to find some reliable suppliers.” He trailed off and looking up at me.

I said, “We didn’t like it either. It was painful living this day to day. But, we stopped doing to stupid things, got some help, and made some key in the way we operate changes. Our performance improved and we are not in the mid-90% range.”

Jacques said, “I’ve been checking around with our competitors.” He looked at me with a grin that told me we was more interested in this than I thought. He continued, “As far as I can tell, our due date performance is well above the norm in our industry.”

Monty pursed his lips and raised his eyebrows.

There are some things we’re doing which will make this performance even better.

I said, “But, there is something I want check with you. What would it take to convince you we are serious about delivering your orders on time?”

Marty said nothing. I could see he was thinking. I didn’t want to leave him hanging too long, but it was satisfying to see him stumped for a moment.

I said, “Talk is cheap. We need to hold ourselves accountable for the promises we make. We we deliver on time, we should share in the benefits that brings. If we don’t deliver on time, we should be penalized.”

“Really?” Marty said. He looked at me unconvinced. I was ready to deliver the one-two punch.

I said, “Really. Here’s what we are proposing. For every week after we deliver late, we’ll take 10% of our selling price.”

I waited. In my mind, I came at him with my left jab getting his attention. Marty actually leaned back a little.

I said, “We want you to know that we take our promises seriously. A self imposed penalty like this should help you see that. What do you think?”

He said, “Ive tried to penalize you in the past by charging you late fees and liquidated damages. But, I would have never believed you would be come to me and offering a penalty ahead of time.”

In my mind, with my right hand, I punched him right in the nose with the second part of our penalty element.

I said, “And, for every week we are late, we’ll continue to take 10% off our selling price. That means if we are late by five or six weeks, we’ll loose our pants. Our margins will be wiped out. But, we’ll continue to take 10% off the selling price until your order is delivered. You order could be free.”

The right hook landed right where I wanted to. Right on the nose. Marty looked at me in disbelief. He was a big man and recovered well.

He said, “There has to be a catch.”

I said, “There is no catch. It’s a promise like our promise to deliver on time. We’ll even write in our response letters. But, there is some not so fine print. For example, before we make a promise, we need all the information about the order to do so.

If you make a change to the order, we’ll check and see if it effects the due date and give you a new date, if necessary. If we have to wait for you to approve a major phase of work, we could adjust the due date and give you a new date, if necessary. And, our payment terms need to be adhered to. Any issues with these things?”

He said, “I guess not. Sounds fair enough.”

He sounded encouraged. He was engaged in our conversation and I could tell he was paying attention. I took a quick glance at my watch and we’ve been with Marty for over an hour. A good sign.

I said, “Good, thank you. I have one more thing to check before I turn you over to Jacques.”

I turned to Jacques and gave him a look which I hope he interpreted as “don’t mess things up now.”

I turned back to Marty and said, “How well will what you’ve heard today meet the criteria for a good solution to your issues? Remember, the criteria? Deliveries are on time, every time. No compromise on product development, quality, customer service, lead-time or pricing. And, the supplier must sustain reliability over the long term?”

He said, “Let’s see, if you deliver on time I’ll have fewer hassles to deal with. I get less nasty phone calls from my folks because the shop will be running smoother. We’ll have more time to do good work on our orders. And, we’ll have a better chance of delivering our orders on time to our customer.”

A supplier who is on time and can deliver when they promise does bring benefits to their customer. At least in this case, but Marty is not that different than other customers of ours.

Our meeting started contentious and Marty was suspicious about why I was here. But, exposing the pain we’ve caused him and his company of the years was something he liked to bitch and moan about. We also talked about the pain inflicted on his company’s financials.

But, some relief came when the criteria for a good solution were agreed to. These criteria would clarify in Marty’s mind what to listen for from us, but also what to expect from other poor performing suppliers.

Once I showed Marty the things we did to change our environment and the results we’ve achieved so far, he was seeing things from our side. He encouraging me to continue. But, it was the penalty element which hooked him. No supplier, I am sure of it, has ever offered him to pay a penalty for poor delivery. Let’s see some other supplier do that.

And, the not so fine print was no big deal for him.

So, I said, “Here’s the next steps I would like us to take. I’ll turn you over to Jacques to review your quote response time needs and determine the best way to resolve any price and lead time issues.”

I’ll let Jacques ask about at any quotes Marty has open at the moment. I’ll have to help Jacques with the way to deliver our responses to those quotes. We will include these commitments in writing.

I said, “After you have experienced our good on-time performance, I want you to let me come back to gather some evidence that you have indeed experienced the benefits we’ve promised. Deal?”

Marty said, “You have guts, I’ll give you that. It takes a good man to come with this crazy offer and get me to agree it could help us around here.”

I smiled.

I said, “Do you have any reasons not to proceed with these steps?”

Marty said, “No I don’t. Let’s take a break, go grab a coffee while I spend some time with Jacques going through some open quotes.”

I turned left out of the conference room and taking one, then two, deep breaths. What a good meeting. We can bring benefits with the capabilities we’ve built. We can exchange those benefits for more business. Let’s see if it works out that way.

Marty may seem like a tough cookie, but that’s because he has so many problems to deal with. They would make anyone grumpy. If someone comes along and offers a solution to those problems, like us, we have a good chance of making a sale or two. If we get the chance to deliver a few orders on time, I hope we’ll get more.

I drink my coffee in the waiting area and waited for Jacques to appear. I looked through the polish glass of the Klinester Corporation’s front window and thought I saw same car I thought I saw following us this morning. The light off the glass made me squint, but I saw enough to feel uncomfortable. Never mind, I was feeling good about what we did this morning. But, that was about to change.

Preparing to Capitalize On Our Good Performance

What Happens to Peace & Happiness

Being at peace and being happy are goals I would like to achieve someday. But, the promise I made to lead a sales meeting with an unhappy customer is getting in my way. Being in front of this customer, who we’ve upset often over the years, is not the best place to find happiness. Or, peace.

My default position is to remain safe and secure. To avoid pain. To go on living without the added stress of putting myself in challenging situations. But, I do like to challenge myself. And, putting myself in uncomfortable positions will be challenging.

When challenged the outcomes have been amazing and beyond anyone’s understanding. I did find the courage. I did take a risk. I did stand up for what I believe in so that others could live in a better world. Well, at least have a better work life. And, most folks I worked with spent a lot of time at work. When I see a better way of doing something and it can help others, I will do my best to get the greatest effect from my knowledge and understanding.

Fear

The one thing which keeps me from being courageous is simple. It’s fear. Plain, unadulterated, paralyzing fear. And, when I realize this is what’s holding me back, I get depressed because I sometimes believe I’m helpless to overcome the fear. And, being helpless at my age, is a depressing thing. I hide from my responsibilities. I procrastinate. I need things to be perfect. I’m sure something terrible is about to happen. Somewhere in there the anxiety starts, the faithful companions of worthlessness and of being un-loved come along for the ride.

Fear Does Not Last, Sometimes

I don’t know where it comes from but there are times where I can get past the anxious feelings, become worthy and feel the love of others again. Maybe I got enough sleep. Maybe I got enough sunshine. Maybe I got good exercise. Maybe I had a stimulating conversation with someone. Maybe all these things happened and I find myself in a productive mood. Not only that, I realize there is nothing threatening me. No impending harm is standing outside the front door. Or no foreign entity is about the destroy me in some deadly, but silent way. I hold out hope these things are not happening and will not happen in the few minutes. I hang on to these feelings as long as I can. I have faith.

I can relate to the pressing issues our customer has. I have faith I can show them from where these issues come from. I can take it on the chin and admit our company is at the root of the problem. And, I have faith I can show them we have a solid solution to these issues. They need to give us a chance to prove it. But, before they give us a chance, I need to be prepared for the next sales meeting.

Brainstorming the Sales Meeting Flow

Enough about me. It’s time to dismiss the fleeting thoughts, the feelings that come with them, and the distractions. As my staff takes their seats the coffee cups land on the table top. I hear a peasant good morning here. A pleasant good morning there. I’m satisfied to see the casual way everyone gets along these days. If you would have seen this group six months ago you would have thought they hated each other. So competitive. So sensitive. But, today it is different.

I clear my throat and say, “Good morning everyone! This morning’s staff meeting is going to be a little different. I need your help preparing for a sales meeting next week.”

“What do we know about sales boss,” Jim said.

You Know More Than You Think

“Much more than you think,” I said. “We are about to test the impact of our reliability engine on our customer’s environment. We don’t need to focus on features and benefits of our catalog of offerings. We do need to focus on showing how a reliable suppler can improve the financials of our customer. We know a lot more about this than we think we do.”

Looking at Jim, Karen said, “We do know enough about our customers business because I have taken more than one tour of their facility. Customers like bringing us in on these tours with their customers because of our unique product offerings. Although their facility is state of the art, it’s follows a predictable and conventional production process.”

Look at Your Own Problems for Guidance

I said, “It’s the same way we look at our own problems like rescheduling hassles, procurement headaches, and holding higher than necessary inventories (to protect ourselves from our own poor suppliers performance). But, this is the tip of the iceberg. In the old days, our late deliveries created these other problems.”

As Jim was speaking, our CFO took a seat in the back of the room. I glanced over at him, gave him a one minute sign, and looked back at my notes.

I said, “Exactly. I talked with Gary and he gave me some guidelines to follow. Jacques is allowing me to start the sales pitch and hand it off to him at some point to close the deal.”

Karen said, “Are you going to start off with what our company has been focused on, e.g., product development, quality improvements, and competitive pricing? These are well known facts about our company.”

Objections & Gaining Commitment to the Reliability Offer

I said, “During the sales pitch, we want to keep the number of objections to a minimum. This of an objection as a thought or a comment from the customer which implies or stated another way means they don’t agree with what I said. Gary told me that the number of objectives raised is proportional to the likelihood an advance or a sale will be made. If was off the cuff advice, but it sounds like a good guideline to follow.”

“OK,” Karen said. “At some point, to include these things can show that we are not sacrificing what customer like about us to be reliable. The changes we’ve made over the past few months are still surprising to me and I was here to make them. Someone not involved with the changes we’ve made may wonder if we cut corners somewhere along the line.”

I said, “Good point. We can focus on product development, quality improvements, and competitive pricing. But, not at the expense of our on-time delivery and consistent delivery lead times. Customers know what they are going to get, but have to guess at when they will get what they ordered from us.”

What Does Everyone Agree On (For Sure)

“That sounds good,” Karen said. “But, to prevent any objections, focusing on what they are already telling us, we are an unreliable supplier, would be the best place to start. Everyone agrees on that point, no argument.”

I said, “I agree, but there is something even more damaging that everyone will agree with, too. It’s that customers don’t trust us. We’ve promised due dates and broken our promise so many times they don’t trust us, no matter how well designed and manufactured our solutions are.”

Protecting Operations

Jim said, “Right, look at what we do when we don’t trust our suppliers. When we are on the receiving end of poor on-time delivery and inconsistent delivery lead times, it forces us to protect their own operations. We do this by planning for longer lead times than quoted by suppliers, hold inventory, if we can, and place orders with only preliminary information.”

I said, “This also forces us to pass on longer lead times to our own customers. It increases our work in process inventories (both raw and work in process). And, it reduces our flexibility to make changes because of the time consumed by the expected change orders. I’m sure they will be able to relate this these things.”

Wasting Resources

Karen said, “Don’t forget when supplier deliver late and delivery lead times are inconsistent, this forces us to waste our own resources. For example, we are forced to take extra efforts to manage suppliers, work overtime or subcontract expensive outside resources, and under-utilize equipment.”

I said, “This leads to more hassle and frustration of managing more suppliers and reducing our efficiency. I’m sure they will be able to relate this these things, too.”

Rescheduling Hassles

Jim said, “Poor supplier delivery performance also forces us to reschedule our orders. What a hassle. We are forced to shuffle In-house operations, re-prioritize sub-contractors & other suppliers and then you have to manage our customer’s expectations. Sorry about that, boss.”

I said, “I dread having to make those phone calls. But, this also leads to a negative impact on other orders, more unhappy customers, and missing other commitments. We are going around in circles sometimes.”

Estimating the Financial Impact

Our CFO, Rodney Rabinowitz, said, “You have a good handle on how our own unreliable supplier make things difficult for us. Let me give you some more perspective on these issues from a financial perspective. Our customers focus on reducing costs like everyone else. They have programs to put in place lean production methods, and focus on efficiency, and they have their own goals to be on time. But, they are forced to work with unreliable suppliers. They have to guess about the best way to reduce the impact of the supplier’s delivery variability. In other words, suppliers don’t make it easy of our customers to make the margins or profits they would like.”

I said, “I don’t know how much worse we can make things appear. Do we all agree that our customers experience the same things when their suppliers deliver late?”

There were nods all around.

We’ve covered the direct effects of late deliveries on our customers operations. We’ve covered the continued negative effects on a customers resource use, rescheduling and the necessary ways needed to protect their own operations. And, to convert these issues into an impact on their financials is the sour cherry on top of the cake. Once I go through these impacts, I’m sure a customer will agree I understand what their problems are.

I look back at the notes I took when I was on the phone with Gary.

How To Solve the Customer’s Problems

I said, “Next, we need to get agreement that there is a way to solve these issues. Gary said to first review the criteria for a good solution, to any solution, the customer is considering. Our customers are not sitting on their hands waiting for a reliable supplier to appear. In fact, they have given up looking for one. They don’t think it’s possible. So, they’ve put things in place to protect themselves like Karen mentioned earlier.”

Rodney said, “If you don’t mind, I’ll stay for the rest of this meeting.”

Looking at me, he said, “I may be able to contribute something. In the meantime, please continue. I’m curious to see how you are going to dig yourself out of the deep hole you’ve dug for yourself.”

I smiled. I was curious, too. I worry a little that we have have laid on the problems too thick. Made things sound worse than they seem. A little over the top. But, the I want the impact to overcome the denial that anything is wrong. Or, rely on what they’ve learned to do to live with unreliable suppliers. They still make money. They are still in business.”

Criteria for a Good Solution

I said, “Plus, setting criteria for a good solution will also blocks a customer from considering any other supplier who don’t meet these criteria. I know our competitors have not made the same kind of improvements we have. So, I’ve written down these criteria for now. They are, on time, every time, consistent and competitive lead times without compromising product development, quality improvement and competitive pricing. These are all the things I’m confident we can do.”

Rodney said, “And, the solution must be sustainable over the long term. This should stop most, if not all, competitors in their tracks. Depending on their situation our competitors may be able to match up from time to time, but not for the ling haul.”

The Proof

Jim said, “The first thing I would show them is our on-time performance for the past six months. It shows a starting point of about 50% and making a steep climb to the high 90% range after a few months and staying there.”

I nod.

I said, “We can also show this kind of performance is not a fluke. It’s not because we have excess capacity coming out of our ears. There are some unique operational changes we can share. We don’t have time nor do we want to go into too much detail. But, we need to say enough to show the customer something different has happened with our operations.”

Easy to Understand Changes in the Way We Operate

Rodney said, “For example, we’ve limited our work in process. This provides stable a workflow. We use a single priority system so that we work on the right jobs at the right time. And, most important, we recognize the load on key resources which ensures we sustain the ability to deliver orders as promised.”

I looked at Rodney in surprise. I had no idea he was so interested in the main elements of our CCPM solution. Not only that, he summed them up so well. Very unlike any CFO I know.

I said, “The CCPM solution elements we’ve used are obvious to us now. But, I bet they won’t be obvious to our customers. Remember, we will be talking to the procurement department. Unless they have operational experience they may not be able to relate to anything of these things, but we’ll leave them in for now.”

No-one spoke. Jim and Karen were looking down at the table. Rodney was glancing away.

Getting Serious About Our Offer

I said, “But, here’s the thing I know will get their attention. We need show we are serious about being on time. Remember the story about the plumber who promised on time delivery? He offered to let me reduce the invoice amount any the amount of damage we would have caused if he didn’t arrive on time. This self-imposed penalty told me he was serious about being on time. There has to be a way we can show this same level of commitment to our offer.”

Karen said, “In other words, if we fail to deliver on our promise, we’ll pay.”

I said, “That’s right. We are announcing, for the first time in our industry, a self-imposed penalty for non-performance. I’ll work out the details with you, Rodney, and test some penalties before the sales meeting. We need to get a feel for how much of penalty it will take for a customer to take us seriously.”

Rodney looked surprised. His eyes looked at me and then scanned the others in the room.

I said, “Keep in mind if we maintain our excellent performance, we will never have to pay the self-imposed penalty. Don’t worry Rodney.”

Other Elements to Support Our Offer

Rodney said, “The only other thing we can say are the things which support our long term criteria. We are a fourth generation, family-owned and have been in business since 1910. We’ve had no work stoppage in our history. Our safety rating is the best in the industry. We are ISO Certified. And, we have financial flexibility due to our complete lack of debt.”

Jim said, “I’m feeling better and better about our company. Thanks, Rodney. I didn’t even know about some of these things. But, shouldn’t we expect something from our customers in exchange for what we are offering?”

I said, “What are you thinking, Jim? We expect them to order more from us. Isn’t that enough?”

The Not So Fine Print

Jim said, “I’m no expert at sales, but I’m thinking about any loop holes we need to close. With a unique offer like this there will be some misunderstandings. For example, it’s important to us that when we make a due date promise, we have the information necessary to be able to keep that promise. The due date should be provided when we have full working documentation, drawings and specifications. I can’t promise something I don’t have all the information for.”

Karen said, “I agree, but sometimes customers need to make changes to their order. In such cases, how about we review the impact of the change and provide a new due date. if necessary.”

I said, “You guys are on a roll. Here’s another element to consider. In some case a customer is an integral part of the order fulfillment process. They need to provide approvals, inspections, etc., A delay in such a step impacts the ability to ship on time. So, a new due date will be provided when the step is completed.”

Rodney said, “Let me pile on two more things. One, the penalty, whatever we decide it is, will not apply in the event of fire, war, terrorist activity, strike, lockout, flood or natural catastrophe. It’s the lawyer in me, sorry about that. And, two, we are counting on their adherence to our agreed upon payment terms.”

I said, “Wow, I didn’t think these things would come out so well. Good job everyone!”

“Give us some credit boss. We’re good,” said Jim. Everyone nodded. I smiled.

A Sigh of Relief

It was good to be working with others. It wasn’t always this way. I thought the only way to get things done was to be on my own. I didn’t need anyone. No one could do it as well as I could have. I’ve come to realize how egotistical that position is. The work we did in our staff meeting proves I do enjoy working with others. We did do some good work and in far less time and effort than I could have done by myself.

I said, “Where are we at this point in the presentation? I can ask the customer how well they think we’ll do to meet the solution criteria. I’ll get agreement. If so, it’s over to Jacques to close the deal or advance us to the next stage of the sales process.”

Rodney said, “Good job everyone!” Turning to me he said, “I’ll do some calculations and see if I can give you a number for the costs savings your CCPM program has produced. I know that wasn’t the point, but it will help customers with their decision about the benefits of our reliability offer.”

I said, “Thanks Rodney. Is there anything else for this morning?”

No one said anything. Everyone looked at everyone else and then left the room as they came.

Finally, Some Peace & Happiness

I felt encouraged. I needed to do more preparations, but I now have the content I need to make the sales pitch. It will be unconventional, but it’s the start I need to help me find peace and to be happy. I hope it will help others, as well.

Preparing to Capitalize On Our Good Performance

The YouTube personality wanted, no they demanded, that I Like, Subscribe and “hit the bell” icon. You are asking me to do this at the start of your video. A few minutes in is not enough time to decide to commit to do any of these things.

I don’t mind the over the top self-promotion, but I clicked on this channel to learn more about selling value. The personality stated his name and said, “This video is about five things you need to know about value selling.” Without offering anything of value, he wanted me to like, subscribe and hit the bell? My finger was already moving closer to the browser’s exit button. It was time to get to the office anyway.

I thought about the YouTube experience on my way to the office. What if I approached a customer this way? What if I asked them for something without providing something of value to them first? What kind of response would I get? More than likely, not the response I expect nor want.

I expect more sales from customers who value our new operational capability. Being able to meet our delivery date promises has to bring benefits. But, getting more sales is a big ask. The value we can provide will need to be well understood by the customers. And my hope is our sales folks will want to sell our new reliability capability, too. Getting them to do that is a much bigger ask than what I’m asking from our customers.

Initial Preparations

First, I need to work through the way to present our reliability pitch so that it doesn’t trigger the YouTube effect which I experienced this morning. I don’t want to raise any more barriers than I have to. I get the feeling it will be hard enough for many of our customers to believe. But, I worry more about our sales folks not understanding it. Or worse, dismissing it. Many of the them have years of experience selling things in a conventional way. Selling our products features and benefits. And, they have plenty of history of broken promised I’ve inflicted on them by my own organization.

Getting Help

The help I needed was not easy to find. I thought of Gary, our non-sales software salesman, but he was difficult to connect with. He sold me and he did it in a way that was respectful, exposed the cracks in my thinking. My Admin kept getting his voice mail, but the next day he called back.

I explained to him what I was attempting to do. I was going to pitch the benefits of our new on-time delivery performance during an upcoming sales meeting. I’m assuming if the customer sees value in offer (buying from a supplier who can meet their due date promises), then we are in a much better position to close a deal. Of course, the value they perceive has to be high enough to make the switch from their current suppler, too.

Building Rapport

I asked him, “How do I build rapport with our customer before I get into the guts of the meeting?”

Gary said, “Wrong question. In my many years of experience, the customer is already dreading the meeting before you walk in the door. They also have many years of experience dealing with salespeople who want to sell them something. And, don’t forget they have heard companies like yours break promises about when their order will be delivered. Not a good track record to build a relationship on. It’s nothing personal, that’s the way it is.”

I said, “Then what do I do? The meeting is a week from today.”

Gary said, “The main thing is to prevent the customer from raising any more objections to your pitch. You’re already starting off on the wrong foot, so be very careful about what comes out of your mouth. One way to start is to be curious and empathetic about their situation. We’ll assume you’ll be meeting with your customer procurement representative. What do you know about them that establishes some common ground?”

Fess Up

I said, “This is going to sound unconventional. I would start by saying something about how we’ve broken their trust by not living up to our due date promises.”

I’ve learned to admit when I’ve been wrong and let the other person know about it. But before I do, I’ve also learned to be ready to make amends for the wrong I’ve done. Some people shrug it off and say it’s no big deal. But, the relationship is never the same. To make amends is not saying you’ll do something different. You need to be prepared to do something different and do it. Actions do speak louder than words. As soon as possible.

Gary said, “That’s a good start. It definitely something they can relate to and you will be able to let them you may have a solution to this issue. But, don’t forget there are also many reasons for why they bought from you in the past. You don’t have to be too hard on yourself or your company.”

I said, “Good point, we make quality products, price them fairly, and have good customer service.”

Evaluate Your Own Environment First

He said, “But, also realize what kind of environment you are working in. It’s a multi-project environment. This environment exists within your own company, as you well know, but your company is only one of many within your customer’s environment. That’s a multi-project environment, too. What is a key feature of this kind of environment?”

I exclaimed, “There is a high level of uncertainty.”

“Right, and there is plenty to be uncertain about. For example, your customer requirements are unique, meeting their quality specifications can be difficult, and doing so at a price they are willing to pay all come with challenges. And, may times there is a high level of uncertainty about one or more of them,” he said.

I said, “So customers know what they are going to get, but are forced to guess when they will get it?”

He said, “You are getting the hang of it. Why do you need me again?” I heard splashing in the background.

I said, “To me this is the easy part. I can relate very well to their poor due date performance complaints since they’ve told us over and over again they are a problem. Sometimes I’m surprised when they don’t say anything about them.”

Gary said with a giggle, “They have given up mentioning them since they don’t see any hope in them every being resolved. This will also be why it will be necessary for you to take them through how your performance has changed and why it will continue to perform well for them. But, we’ll talk about that later.”

I said, “OK, but what’s next. I’m sure they haven’t been sold because I can describe their environment.”

The Negatives in the Environment Are Easy to Find

Gary said, “How about describing the negative effects of how you impact their environment? At this stage you have to be willing to be self depreciating and fess up to the size of the pain your company has inflicted on them.”

I said, “That’s going to be a tough pill for some of our folks to swallow. But, where do I get this information? I don’t work inside my customer’s company.”

He said, “You know more than you realize. What happens when one of your own suppliers delivers late and what are the significant issues they cause you?”

I said, “I see, that is easy. Our planned production schedules change. The priorities given to our subcontractors change. And, even the planned commitments we make to customers are effected.”

Gary said, “What about your workers’ efficiencies, equipment use, and work in process?”

I said, “Those take a hit, too. More work in process can mean our lead times go up. The relationships with our subcontractors suffers and we may not have the leverage to work with the one’s we want to.”

Linking Negative Effects to Financial Performance

He said, “See, you do know enough already. But, you’re not done yet. What effect do these issues have on your customer’s financial performance? Try to get as close as you can to generally agreed upon financial measurements they may be using. At this stage you want to expose the financial damage of late deliveries. Or, what is the financial damage of working with unreliable suppliers.”

I said, “This is also easy to understand since we have measures in place to support our cost control efforts. Our CEO is always looking for ways to improve our efficiencies. And, our new found focus on on-time performance. Is that what you mean?”

He said, “Yes, but what specific financial measurements might they be using to track these things.”

I said, “There are a many things, like labor costs, carrying costs, overhead costs, penalties and other cost of sales. And, there are always ways to link these costs to your customer’s sales, margins and cash flow.”

I said, “That’s a lot to keep track of.”

The Hazards of Being a Salesperson

Gary said, “The customer knows that you are a salesperson. You are there to offer them a potential solution and they will be willing to listen to you for a short while. That’s why you need to prepare well and practice getting to this point in your pitch as soon as possible. And, don’t forget, without raising any objections along the way.”

He continued, “Some general questions about people, equipment, materials used, etc. are a crucial part of the inquiry process. But, they have to be asked at the right time. Customers tend to lose their patience when they are asked too many questions. Each question asked by experienced salespeople has a purpose. I urge you to prepare well.”

Basic Preparations

The preparation I need to do is an important part of capitalizing on our good performance. If this first meeting, or any later meetings, with customers don’t advance the deal towards closing on a deal, I’ll be stuck. But, being stuck doesn’t mean I’m dead in the water, it just means I have to find what went wrong and make corrections for the next time. If there is a next time.

I needed to change the subject for a few minutes. I was thinking to far into the future and making predictions which may or may not come true. There are too many variables to consider and I can’t be the one at fault if things go wrong. Remember, I need to be curious and keep an open mind. I do want to hear everything the customers are saying. I can’t take it personally.

I said, “When do I talk about the things we’ve done to improve our performance?”

Gary said, “Before you do that, you must build a solid base to present your offer as the best solution to the customer’s problems. The prospect has already been thinking about ways to deal with their problems. If we would like the customer to listen to us, we must block any unsatisfactory direction for solution that they might have in mind, as soon as possible.”

I said, “After the customer has agreed that they have a big enough problem, what’s next?”

The Criteria for a Good Solution

He said, “Yes, you must show what you are offering meets the most important criterion. Then you can use these criterion to transition from talking about their problems and talking about your solution.”

In the background of Gary’s phone, I heard a child’s excited screech. And, then a splash.

Overcoming Obstacles

Gary said, “I’ve got to go soon, so pay attention to this next part. The customer might raise some obstacles during your presentation. The procurement folks are masters at finding ways which will prevent them from making you and offer. Any obstacle raised by the customer should be written down and the discussed with them. But, delay them until until all the characteristics of your offer have been presented. In most cases, you will have overcome their obstacles anyway.”

I said, “Do I need to get the customer’s agreement on the actions to take to overcome these obstacles?”

Gary continued, “Any way you can make them a part of the solution is usually a good thing. The more obstacles you can overcome, the more likely the sale will move ahead. In general, first do no harm. Don’t say something which will raise an obstacle in the first place. This is your primary mission. Second, if they do raise an obstacle, help them to be part of the solution. Also, be prepared to change your offer or the detailed terms and conditions.”

I said, “If nothing else, I’ll have a clear idea about what’s blocking the sale. But, most important, I will have raised the customer’s level of trust in our ability to perform.”

He said, “If all goes well, they may even agree to give you an opportunity to bid on the next project they have. If they don’t offer, be prepared to ask them to send you their next Request for Proposal. Don’t expect them to pull business from one supplier to another in mid-stream.”

Don’t Forget to Follow-up On Their New Understanding

I said, “Follow-up is important. That’s seems so obvious now. We can’t take it for granted that it will happen naturally.”

Gary sad, “That’s right. Remember, what you will go through with the customer will be something new, something they have never heard before. It will be hard for them to believe until they see it happen. And, even then they may not believe you. They may think it’s a fluke. Once you start being reliable, you have to continue being reliable. They will be waiting for you to slip up and be able to say ‘I told you so’.

The phone went dead and I took from my head and looked at it. Gary did spend a lot of time with me and he was with his grand children. I’m glad he was enjoying himself.

Now, it was time for me to enjoy myself, too. But, in a different way. I’ll feel much better once I’ve prepared for the upcoming sales call. I want to make some progress convincing others of the benefits of our reliability offer.

 

 

 

Re-building the Trust Ruined By Poor Project Performance––Part II

The lush, green grass of the golf course was bright enough to sting my eyes. At this hour of the morning sweat was starting to form on my forehead. Our top salesperson, Jacques, was decked out in his infamous lime green pants and yellow polo shirt. He looked like a character from the Moppets with his wild, blond hair. He was tall, lanky, and had a build perfect for playing golf. His low handicap reflected his commitment to the sport and so did his generous expense account.

He walked up to me and said, “How are things going back at the plant? I’m working on a major deal with one of our pissed off customers. If we get it, it could mean more business, but I want to make sure we can deliver. We can’t afford to break another delivery promise.”

I said, “We’ve made a few changes in the way we operate and I can show you the graphs of our monthly delivery performance. We can deliver 95% of our orders on time now.”

He looked at me sideways and said, “What are you doing to bring your costs down? I walked through your section of the office the other day and I don’t feel any sense of urgency. Your overhead has to be higher than it was before.”

I ignored him. Salespeople are always trying to compete on price and are always complaining our prices are too high. Sometimes it’s the only bargain chip they have. Jacques may be our best salesperson, but not if we ranked them by the size of the sales margin.

He was getting under my skin, but I was not about to show it. So, instead of letting my emotions get the best of me, I deflected his comments and asked, “What happens at a customer’s plant when we deliver late?”

As he approached the tee, Jacques said, “Someone picks up the phone and calls me to bitch and moan about their late delivery. I never like getting those phone calls.”

I said again but in a different way, “I wouldn’t either, but what do the folks at the plant have to do to respond to our late delivery?”

Jacques said, “It’s what they don’t do that bothers me. They stop giving us orders. Or, they threaten us with late delivery penalties. Isn’t that enough.” His ball sailed straight down the fairway.

As I approached the tee, I said, “Yes, that’s bad enough. And, as we know, they can find another supplier. I know. I know.”

“What’s your point,” he said it as we walked back to the golf cart. Not interested in my response or my shot down the fairway.

I paused for a second and said, “What do you think our CEO always seems to be upset with everyone?”

He said shaking his head, “What does that have to do with anything?”

In a voice urging him to humor me for a moment I said, “His position requires him to focus on the flow of cash coming into the business. If there is enough cash to cover our costs, pay our debts and have some left over, he’s satisfied.”

“Or course,” he said, “and he seems to back off and not interrupt me every five minutes to close the next deal. But, since our prices are never low enough, I can only do so much to secure new business by lowering our prices.”

See what I mean. Always complaining about price. I said, “I understand, but look where are our main costs drivers are coming from. Our labor costs go up when our internal lead times go up. Our inventory carrying costs go up when our internal lead items go up.”

I continued, “Our overhead costs and working capital costs go up when we are holding inventory longer than Finance planned on. And, our engineering hours go up when we have to do rework and take the last minute customer change requests into account.”

“Don’t blame our customers for your problems. You know customer change their minds all the time. It’s a fact of life in our business. You know that,” he said.

“I’m pointing out that when our lead goes up, one of the moan reasons is that one or more of our own suppliers delivered late. Our costs also go up since we have to work overtime and some weekends to try and deliver on time. And, before you say it, the chance to cut corners and trim some of the customer’s order content is tempting,” I said.

“I would say it’s more than tempting since there have been a few memorable field service issues I had to sing and dance around,” he said.

I said nothing. He was right. I was there when some of the tough decisions to deliver on time or take the time to deliver a quality product were made. I regretted them then and I regret them now.

Someone far off in the distance yelled, “Fore,” and we both ducked our heads.

But, isn’t the there a cost of making a decision about shipping a product on-time, but before it’s ready to go also come at a price? Somewhere down the line the cost will be a field repair, or a full replacement of the item, or reputation suffers.

He said, “I thought we came here to play golf. I wanted to get away from the stress at the office and take in the fresh breeze off the bay.”

The air had the smell of fresh fertilizer and cut grass, but I got his point. I said, “Me, too, but here’s the thing. When our suppliers deliver late, we experience the same issues our customers do when we deliver late.”

He said, “I assume they go through all the same gyrations you are complaining to me about.”

I said, “Our customers costs also go up. Their customers don’t let them change their original due date either. And, hassle of dealing with more than one late supplier is a significant issue for them. Like it is for us.”

He said, “Sum this up for me, we’ve got to move to the next tee.”

I said, “At the end of day, there is a price our customers pay for our product. But, there is also a price they pay for not receiving our product on time. Which price do you think irritates them them most?”

Jaques said nothing. He was thinking. But, I let him off the hook.

I said, “They may save a few dollars by squeezing you on price, but what is the price late supplier deliveries have on their margins? They go down. And, if they also deliver late to their customers, what is the price of losing business, or worse, losing a customer?”

Resigned, he said, “A lot, much more than what I can save them by lowering our prices.”

I said, “What if they could find a supplier who’s deliveries are on time, every time. If this supplier doesn’t compromise on their product development or quality. And, it they don’t compromise on their customer service, lead-time or price. And, what if they could sustain their on-time delivery reliability over the long term.”

He said, “I would begin to trust them again. Not at first, but I would trust them to do what they say they are going to do. It might even take some of the pressure off of focusing on price all the time.”

I said, “What if I told you the changes we’ve made in our operations have built this kind of supplier? Like I said, I can show you our on-time delivery graphs and our actual deliver lead times for the past three months.”

He said, “OK, OK, let’s finish this round and look at our calendars to see when I’ll be back in the office. I’m very busy these days.” He pressed the pedal on the golf cart and we shot off to the next hole.

I said, “It’s your shot. But, let’s make a bet on this hole. If I tie or under your strokes, not only will you sit and look at our performance charts. I want to take the lead during the next sales call with this past customer you want to close new business with.”

He froze in mid-swing and looked right into my eyes. He eyes squinted and it wasn’t because of the morning sun. His mouth turned into a small, straight slit of something akin to anger.

Before he could speak, I said, “What I’m offering is a new capability you have never sold before. Never in the years you have been with our company have you sold a customer on how reliable we are. Never have you had to convince a customer the changes we’ve made are not a fluke. Never have you admitted the reason so many of their internal problems have been our fault.”

He said nothing. His face was now blank. Only the perspiration above his upper lip shimmered in the sunlight.

I said, “I’ve had to sell our internal folks and address all these issues myself. Only then did they start to understand and agree to make the changes which made us reliable. I know how to sell this idea. Give me a chance to sell it to our customers.”

After taking a deep breath and standing erect, he said, “Fine, what do we have to lose. We are not getting business from this customer anyway. The only reason they are talking to us at all is that their internal policies requires them to get three quotations.”

I said, “Find some time and come in and listen to my pitch. If nothing else, it might be fun to see me struggle at my attempts to sell to you.”

Jacques smiled and teed off. Not a bad shot. I teed off, but mine was better.

My Experiences Interviewing for a CCPM Project Manager Position

In the haze of my anger and regret, I lost my temper. I’m usually the calm and collected one, but something snapped and I let my emotions take over. Some people will say I put a dent in my reputation. Others will see me as someone who stood up for what they believe in. There are others who won’t care. I am one of those. But, to understand the whole story, we need to go back to today’s interviews for entry level project managers.
 
Our CFO shared the preliminary sales figures at the CEOs staff meeting a few weeks ago. Sales showed a slight, but noticeable increase. This increase was from new customers he said. No made any comments about why these new customers bought from us. But I knew a few of them had bought from us because of our new CCPM ways. They didn’t call it that, of course. It was because of our clear improvements in delivery performance and because of our on-time delivery guarantee.

The Interview Bologna

 
I won’t make you sit through all the interviews, but by the end of the day I was at the end of my rope. Every candidate was on time and well dressed. Every candidate had clean, crisp copies of their resume. And, almost every candidate spouted the same bologna.
 
Many candidates had their Project Management Professional (PMP) certification. While I value continued education, I asked them to describe their experiences to get their PMP certification. They all said about the same thing.
 
The one with the dark, charcoal suit said, “I wanted to learn how to get projects done on-time and on budget. The two year program of taking course and quizzes fit in with my schedule.” And, “Being right out of college, I had to plan my finances since the certification is not exactly cheap.”

A Quicker Way to Get Results

 
I thought back on how long and what effort it required to bring our due date performance into the 90% range (from about 50%). Once we learned more about and decided to use the CCPM approach, I held a 30 minute overview meeting with my staff. This meeting conveyed my sense of urgency and the agenda for the next few weeks. Our non-software sales man, Gary, conducted a four hour training session for my staff and our project managers.
 
We went right into building CCPM project networks. Upgrading our project plans took about two months. In parallel the in-flight projects were being managed according to buffer management and the CCPM rules. All together and being conservative, this training process took about three to four months. We were seeing solid on-time performance results at about five months. So, why does it take someone two years just to learn how to manage projects?
 
Of course, we had seasoned project managers, but we also some that were new to the project management profession. Could some of their knowledge and experience carry over and make them more receptive to new ideas and the CCPM way of working? I don’t think so.
 
I looked into the certifications our folks had and found that about half had PMI certifications, too. I don’t think their prior knowledge helped them at all. And, we encountered the usual resistance to change I’ve seen before.
 
Also, CCPM has a handful of new ways of doing things that PMI does not teach; both in the planning and in the execution stages. (These new ways have been covered before). But, at the end of the day, what do you want to do, take two years and learn how to get mediocre results or take three to four months and get world class results? See why I’m starting to get irritated with what I was hearing?

More Questions About What Was Taught

 
Being a glutton for punishment, I had more questions. Such as, “What was one of the most important things you learned during the past two years?”
 
The responses boiled down to “knowing where to focus. The job of a project manager is a complicated one and there are a complex series of issues to attend to. The PMP tools helped me know where to focus.”
 
Three things came to mind when I heard these comments. First, if the basic method of managing project they were taught is the critical path method (the longest path of only task dependencies). This methods makes focusing difficult, if not impossible. Let me explain.
 
I used to use the critical path myself. I would chase down the resources doing the work on the day they promised to have the work done. These so-called task update meetings revolved around asking the resource doing the work, “did you get the work done you promised or not (usually not because of all the multi-tasking they’re doing).” Whatever the answer was, I updated the tasks with the new task due date.
 
Then, I entered the updates into my project management software, in this case Microsoft Project, the software recalculated the critical path. Voila! A completely new set of tasks to focus on. Almost always they were not the ones I was focusing on before the updates. How can someone say they learned to focus when the tools they were using distorted their priorities each time there was an update to the project task due dates?
 
Second, I reminded myself about when we use the CCPM software tools, the algorithm identifies the critical chain (the longest path of task and resource dependencies). And, as long as the cumulative task variabilities stay within the normal parameters, the critical chain stays the critical chain throughout the life of the project.

Stability Improves the Ability to Focus

The ability to focus on a never changing set of tasks. This is much easier to manage. Why doesn’t the PMI teach this approach if their priority is to teach their community where to focus? I moan to myself.
 
Third, a complex system is one in which the dependencies are not known. A change in any element of the system has unexpected effects on the other elements. And, the greater the number of unexpected effects the more complex the system. OK, enough theory.
 
Practically, to build a CCPM project networks we use the dependency logic of cause and effect and limit the amount of complexity. The cause and effect relationships between tasks are known. When there are a few independent variables, the system is more predictable. The project is less complex.
 
Since most critical path based project use a work breakdown structure little cause and effect logic exists. Is it any wonder these PMI certified folks still think projects are complex beings?

Good Marketing Has Its Advantages

 
Finally, the sentiment most candidates related to me in one way or another was that “there is nothing that can make managing projects simple.” This one cooked my goose.
 
These comments are from folks who spent hundreds of dollars on training, from an apparent reputable organization known world-wide, and who toiled long into the night studying their materials. To continue to have this outlook on their work life borders on negligence.
 
But, it’s good marketing. If I promise something as impossible and I also offer the cure, I’m guaranteed to get some attention. And, make good money offering and upgrading my training and certification options for years and years.
 
I’m not blaming the participants here, they don’t know any better. If I’m blaming anyone, it’s an organization that perpetuate the gloom and doom difficulty of managing project. Teaching skills which have little or no effect on their primary mission––to finish project on time and within budget––is despicable.

Some Documented Results

 
But, don’t take my work for it. A Price Waterhouse Coopers surveyed 10,649 projects, across 200 companies, and in 30 countries. The survey results include a 50% failure rate.
 
Even more damning is a 2014 report from the PMI itself. They surveyed 1,100 accredited members and here were their published results:
    • Only 38 percent of projects finish on time and within budget, according to new research by Project Management Institute (PMI).
    • “Organizations continue wasting $109 million for every $1 billion invested in projects and programs,” according to Mark A. Langley, president and CEO of the Project Management Institute.
    • Within the last year, only half of projects finished on time and 55 percent finished within their initial budgets, according to the 2,800 project management leaders surveyed.
Remember, these are results from their own members. And, from their website, you find drivel like this:
 
“The PMP adds value. CIO magazine ranked the PMP as the top project management certification in North America because it demonstrates you have the specific skills employers seek, dedication to excellence and the capacity to perform at the highest levels.”

An Alternative Approach to Planning & Managing Projects

For us, it took a few weeks and the thinking of the project teams involved to develop a way to make the project management process efficient and effective. We use an express stakeholder analysis to collect the minimal effect dose of information we need to start project planning.
 
Then, we use a 10-step planning process to create a solid, good enough project plan. We use the software execution rules and performance indicators to compete projects on time. Of course, there is a monthly fee for the software, but based on the new business we were starting to see, the software is paying for itself.

One More Interview and a Glimmer of Hope

When our last interview made his way through the door, I didn’t want to hear any more about the conventional project management approaches. Denton Johns introduced himself. His angular face, broad shoulders, and the fabric on his dark, brown suit strained against his shoulders.
 
I asked him to sit and gave him our standard “this is who we are and why we you should consider working here” pitch. He listened. He craned his neck as if he couldn’t hear me well.
 
His resume showed about five years of project management experience. He also listed the time he worked on his family farm. it showed the bookkeeping activities he was responsible for and all the animals he bred and took care of. And, he had also designed and developed the farm’s on-site processing facilities. Impressive.
 
Then I asked him, “I see you have your PMP certification. How many projects have you delivered on time and within budget?” My end of the day questions were a little more straight forward and direct.
 
Denton said, “Well, none, actually. A few were cancelled before we could finish them. I never worked so hard on the other ones, but there was only so much we could do.”
 
I have a feeling that I’ve heard this before. Some of the other interviewees said about the same thing. We’ve had seven interviews and it was turning into a wasted day. It seemed like the trend would continue. But, I pressed on.
 
I asked, “What tools did you use to plan and execute your projects?”
 
Denton said, “We tried to follow the standard PMI process. But, we had to cut some corners because they took too much effort. Getting agreement was difficult and we were getting pressure from our customers to start work as soon as we could. We also used MS Project to plan our projects after completing the work breakdown structure.”
 
“And, did you use any advanced plug-in for MS Project or did you use it right out of the box”, I asked.
 
He said, “It was right out of the box. Honestly, what frustrated me was it was like playing wack-a-mole after each update meeting.”
 
My eyes looked into his. I waited.
 
He continued, “Every time there was an update, I had to scramble and find the right thing to focus on. I have to admit, it was not easy to keep everyone pointed in the right direction. I’m sure we could have done better, but there was never enough time to get everything done.”
 
I said nothing. Again, Denton had the same story, the same tools, and the same results. When were people going to learn. Or, at least, stop digging when they found themselves in a deep, dark hole. I took a breath.
 
“One more question, Denton, if you don’t mind,” I said.
 
He nodded.
 
I asked, “Do you think your project management education was worth it?”
 
He said nothing.
 
I said in a tone louder and firmer than usual, “Let me see if I have this right. It’s clear you are used to hard work. But, you spent about two years and hundreds of dollars on knowledge which didn’t appear to help you get the promised results.”
 
The others in the room were looking at me now. I continued in a louder voice, “Working on a farm, you are used to using the right tools for the right job. But, you used project management tools that were either dull or broken.”
 
Denton sat stock still. I could see the sweat forming along his upper lip.
 
With some restraint I added, “And, the experience you have running the family business is impressive at anyone’s age. But, I can’t see where the value of the PMP certification is for you. So, why do you want to still be a project manager?”

The Turning Point 

Denton said nothing.
 
I looked at him and waited for an answer. I was surprised when it finally came.
 
He finally said, “I know project management is a valuable skill and I want to find a better way with a different company to make a positive impact on the world.”
 
Now is was my turn to say nothing. I bowed my head and collected myself. I made a small note on Denton’s resume and passed it to my HR Director.
 
I said, “Denton, I’m sorry for blowing up on you and I didn’t mean to do it. There are too many people in the same position you are in and I hate to see good talent go to waste.”
 
He smiled and nodded his appreciation of my comments.
 
I asked, “How would you like to come back for a second interview? We can start over on the right foot. I won’t ask you about any past project management experience, but I’ll go into more detail about how we do things around here? I know you will like what you see.”
 
He said, “I would like that. And, thanks for the apologies, but honestly I’ve wrangled bulls tougher than you.”
 
I smiled, shook his hand, and walked him to the front door.
 
Meanwhile, the problems the projects intended to solve get delayed or don’t get solved at all because many of them are running on old, obsolete ways of thinking. They have little chance of success.
 
For some companies to sell the dream of learning how to deliver projects on time and within budget while offering no useful knowledge is a business based on hot air. Some folks thrive on hot air. But, aren’t good results what everyone is looking for? Some organizations don’t think so.
 
Thank goodness for our small bubble of sanity that we’ve created for ourselves. Thank goodness for folks like Denton who are open and willing to learn new things. I am feeling hopeful as I head for the front door myself.

Describing the Key Elements of Our CCPM Methodology In Five Minutes

The early morning drive into foggy downtown is uneventful. The show will take place at one of the buildings in the distance. At the Police headquarters building, to be specific. A text appeared late last night requesting my presence at the Chief’s office. A request, right. The Chief is not known for making requests.
 
Pulling into the parking lot even at this hour yields only one Visitor space. I pull in and head for the front door. The building is a new, three story affair which can only be described as urban chic. There is an attempt at modern art in front of the entrance. It looks like a large mobile hanging upside down over a child’s crib. It turns slows seeming under its own power.

0800

 
Once inside I sign in and I’m directed to the elevator. I punch the button for the third floor and make my way to the Chief’s office. 0800. Right on time. The Chief, Harold Brown, is sitting in his admin’s deck signing documents.
 
Without looking up, he says, “In my office.”
 
I walk in and he follows me and closes the door. Behind me I hear the rustling of fabric and the squeaking of leather against the leather of his equipment belt. I wait. I remaining standing.
 
He says, “Sit.”
 
I sit.
 
He says, “You and your company finished our Labor Day projects on-time, a few days early in fact. I want to know how you did it. No bullshit. No sales speak. No modesty. Get me? I need to know because if a company like yours can pull off a miracle using the method you used, I’m going to make sure we know about it. We might start using it for our projects.”
 
I say nothing.  I expecting to be chastised, once again, for some perceived fault in the way our company handled his project. It’s good for us that very few company can do what we do. I’m sure if there were more options the City would have found someone else over the years. In our industry, and like many others, everyone’s performance is as poor as everyone else’s.
 
I take a deep breath and say, “Chief, I…”
 
“And, you’ve got five minutes. Go,” says the Chief.

Key Element #1

 
“One of the keys to our success is the new software we use. It’s based on a few principles. We know the task and resource dependencies, assigning the skills we need to do the work, and adding task duration estimates that don’t include any safety time.”
 
“I know what you are taking about. It’s called the critical chain method. One of my project managers told me all about it. Give me the meat. Quit stalling. What else can you tell me?” the Chief say.

Key Element #2

 
I say, “The other key to our success was the way the project team collaborated on the project network building. After collecting a few pieces of critical information, the project team focused on getting the planning done. Unlike prior meetings, where we are at each others throats and pointing fingers trying to find some to blame.”
 
He said, “That is unusual. I’ve trained my folks to be direct and make sure they get what they want.”
 
I said, “They still tried. For example, when the Lieutenant wanted to make the major change in the middle of the project. She wanted equipment at the intersection of Cedar Springs Road, Olive Street and McKinnon Street. I was able to show her these changes would delay the project by two weeks. We will still do the work and I have a proposal in to get it done. But, without a view of the CCPM schedule in the software it would have turned into a win-lose situation.”
 
“She is still upset about it, but I can see your point,” he says.
 
Do I detect a softening of attitudes. I’m going to take it as a good sign that he sees my point, but that’s all I’ll do.

Key Element #3

I say, “The CCPM schedule is the basis for the weekly task assignments. We gave all your folks 24/7 access to the project’s dashboard. At anytime of the day or night they could take a look at what tasks were schedule to be started, which one’s were underway, and which one’s were completed. Other than the kick-off meeting and the final sign-off meeting, no formal status reports were issued.”
 
“Not issuing weekly status reports is something I want to talk more about sometime, but what else made the difference with this project? You’ve got two minutes left,” he said.

Key Element #4

“The final piece of the puzzle, once we had a workable schedule everyone agreed on, we used the project buffer to check for any deviation from the plan. Some tasks exceed their estimated duration, but the buffers provided protection. Remember we didn’t include safety time in the tasks. So the slightest deviation from plan is easy to spot. This is simply a predicted effect. And, whether a task finishes late because it started late or it started on time and Murphy held it up doesn’t matter,” I said. Exhaling.
 
He says, “So you knew at all times if you were going to meet the due date or not.” He said it as a statement. “I assume in your project management world that would be considered an unfair advantage.” He said it with a grin.
 
He should know. He gained national attention for using a remote control robot to blow up a gunman a few years ago. The gunman had rampaged through downtown, killed two police officers and injuring a half dozen more civilian. The final stand off occurred inside an abandoned parking garage. The gunman was trapped, but in a well concealed area. When negotiations failed, the remote control robot, wired with a hand grenade, was sent to write the last chapter of the gunman’s life.
 
I said, “Yes, the buffer management tool, and a few other tools, helped make sure we knew were to focus our attention. And, even more important, where not to focus.”
 
As my words trailed off, the Chief stood, his imposing bulk hurtling around his desk. His outstretched hand surprised me, I shook it, and he said, “Good job. Well done. I still don’t know how you did it, but I’ll be sending another proposal to your company for a major infrastructure upgrade we are planning.”
 
“You’re welcome, Chief, any time,” I say.
 
I’m not sure he heard me since his back was turned and he was half way down the hall.

0805

The Dark Cloud of Too Many Late Projects

Our project managers know we want to finish projects on time. Every time. And, with the scope and quality expected by our customers. But, there are still some projects managers who think this isn’t their primary objective. I’m about to set them straight.

Tom Berenson is a tall, lanky man with short hair and black, plastic frame glasses. He lumbers into my office and takes are seat as if he’s about to sit on a basket of eggs. Tom has three projects to manage and all are at risk of being delivered late. His slack face and undisturbed demeanor pervades the room with a sweet hint of molasses.

“Good morning Tom,” I say, “Good work getting the final installations done on the Pittsburgh project. How’s the rest of the project coming along?”

I know exactly what task is holding up this project, but I’m trying to establish rapport. Tom needs to know he’s on solid ground with me. He has four kids and a wife to support after all.

Tom says, “The permits from the local telecommunications company aren’t back yet. I’ve called them to find out where they are, but all I get is voice mail. The network guys we are promised by the customer haven’s been available either. In the meantime, I have our networking guys busy on the two other projects I’m working on.”

Tom is doing good work. I’ll give him that. The work that’s getting done that is. The customer hasn’t complained about anything we could consider a quality issue. And, I have no issues with his budget, but since he’s behind that’s not a good measure of performance.

But, Tom was part of the planning process and provided input to the project’s tasks and the estimated durations. My problem is that the projects are projected to finish late and the work planned is taking longer than we expected.

At some point, sacrifices will have to be made if Tom wants to finish his projects on time. These sacrifices are going to be in the areas of going over budget or cutting the scope of the work somehow. How these things might happen is anyone’s guess. Or, Tom can continue to do good work and stays within budget and /or delivers the full scope expected, there is a high probability the project will be late.

Around here, I’ve stressed what it is to be a good project manager. It means doing quality project management work––stay within budget, deliver the full scope and to finish projects on time. I don’t see how Tom is going to do these things. Knowing Tom like I do, he is willing to sacrifice due date performance while meeting the budget and delivering the full scope.

I wanted to be a clear as possible with Tom, so I said in a flat, firm tone in my voice, “To be perceived as reliable around here, you must finish projects on time. It’s because on-time performance is one of our key metrics. We value being trusted, dependable, accurate, and honest. And, important parameters like scope and budget are intertwined with time. They must also be satisfied. I don’t think the Pittsburg project is going to help us meet any of these objectives.”

He nodded.

Then he said, “I agree. I’m trying to do a good job, and believe me, meeting the due dates is always on my mind. But, there wasn’t enough time to do a proper plan.”

I said, “A proper plan is one in which the customer agrees with. How did that meeting go?”

Tom said, “We never had a formal kick-off meeting. They dictated a due date to us and I’m trying my best to meet it.”

There it is. When you are not getting the effects you want, look at the chain of events leading up to the effects you are looking for. Tom has skipped an important step in the process and not confronted the customer with the proposed plan.

His best wasn’t good enough, but I continued trying to understand his side of the problem. I said, “So, the customer never reviewed the tasks within the project. They don’t know who was assigned to the work. And, they don’t know how long the software predicted the project would take?”

“That’s right, said Tom, “We couldn’t wait around for them forever, so we got started and so did they. And, when we ask for the resources they promised to provide to this project, they aren’t available when we need them. The work these resources do for their own company always seems to take priority.”

“Getting commitment from project resources when needed is difficult under those conditions,” I said.

Tom said, “I’m stuck between a rock and a hard place here. I’ll miss the due date if I continue on like this. I’ll get the project done, but the budget will suffer. Or, I can find a way to speed things up by working some overtime or bringing in some help from one of our contractors.”

I said, “But, that will drive our costs up, too. And, I don’t see an easy way out either except…” I hesitated and didn’t want to say what I was thinking. Would Tom say it for me? We stared at each other. Each waiting on the other to speak.

Tom said, “The project due date is the date the customer wants. Since we didn’t have a formal kick-off they don’t understand what it’s going to take to complete the project that they want. I’m sure they asked for all the equipment and system for a reason. And, the benefits their system will bring are what they are interested in.”

I nodded.

He said, “What if I go back to the customer with a proposed re-plan of their project that shows the date we can get all the work done without going over budget. It will have a new due date, if they agree to it then it will be a date which will be easier to meet.”

I said, “That’s what I was hoping you would say. That’s our only shot at satisfying all our objectives. You can also include in the meeting the fact that the issues they were supposed to solve during testing took twice as long as they expected. That should give you more bargaining power.”

Tom bent over, pressed his hands to his knees and stood up. He looked at me and said, “I’ll take care of it. The current due date looks a bit arbitrary to me anyway, so there’s a good chance we can get a new date. I don’t want to be the one who drags our due date performance down.”

He spun on his heals far more gracefully than someone with such a tall frame. He didn’t have to duck his head as he left my office, but a few strands of hair brushed the door frame anyway.
Late

Our Big, Lovely CCPM Multi-Project Portfolio Problem

Current Status

The number of projects planned or re-planned using the CCPM method stands at 26. This is about two thirds of all our running projects. We have made progress. But, the amount of effort I have to spend poking my nose into some projects seems too high. I intervene far too many times and I’m worried about it.

The project performance indicators are showing we may hit the wall soon if I don’t find a way of avoiding it. The wall is the promised due dates for the projects I’m intervening in. What is the number one reason project managers miss their due dates? They run out of time. Why re we running out of time? And, I’m paranoid. Murphy is waiting to trip us up.

Each project manager has had some time to learn how to lead a CCPM project. The ability to focus on the same set of critical chain tasks can be described as stability enhancing. That’s a good thing around here. And, my ability to get confident answers to “where is the project stuck” questions is satisfying. The answers appear after a few clicks of the mouse. Everything seems to be going fine at the project level.

The Search for Less Expediting

But, why is there still too much expediting from my portfolio level? Some of the projects we recently re-planned required us to go back to our customers and confirm the new dates. Of course, each customer was skeptical of our new dues dates. But, what could they do? We already had the contract and some said they expected us to be late anyway. Sigh.

Staring at the screen or procrastinating over what to do next was not doing anyone any good. Admitting to yourself you are out of your depth is not an easy thing to do either. Yes, the promises we made to our customers are one thing. My promises to our own folks and to our company was another. I have to look into the eyes of these people. How am I going to feel if some day I realized they hadn’t been taken care of? Especially, when I was in a position to do so.

Get Help If You Need It

The tightness in my stomach was worsening. The dizziness is starting to build in my head, so I picked up the phone and called Gary, our non-software salesman. I tracked him down on a beach in Cost Rica. He said the sun was shining and the morning paddle he made around the deep blue inlet was refreshing. But, he had a few minutes for me.

I asked, “With so many projects running under the CCPM rules, why hasn’t our portfolio performance improved at the same rate? I’m concerned we won’t deliver as late as we used to, but I’m not sure we’ll deliver on the dates promised either.”

“I’m glad you called,” he said, “I only have a few minutes, but let me ask you a few questions. How many of the CCPM planned projects do you have running right now?”

“All of them,” I chuckled, “Since they were already underway, we re-planned them and started them as soon as everything checked out.”

“OK,” said Gary, “we may have to check your decision to do that, but here’s another question. What are your most loaded resources?”

I said, “I’m not sure. As you know, we haven’t hired or fired anyone in the past several months. So, the total resource pool hasn’t changed much.”

Gary said, “I know what may be going on, but you will need to check these things yourself. I’m being called away.”

“No problem, what do I need to do? I don’t have a lot of time myself, but I’m sure they are for different reasons that yours,” I said.

Gary says, “Since you, the manager of the project portfolio, do not know the most loaded resources concerns me. You also started projects as soon as they are re-planned. This also concerns me. You may have inadvertently overloaded your resource pool by starting some projects too soon. If you have started projects too soon it’s easy to create multi-tasking between projects. And, when multi-tasking increases, what happens to lead times?”

“Lead times always go up,” I say. I’m glad Gary is being blunt with me. I need some motivation and some clear thinking to get past the tightening screws in my stomach.

Gary says. “Look into the Pipelining process documentation. You will find your answers there. You may find some projects should not have been started right away. In other words, you re-started them too soon. Sorry, that’s all I have time for. I’ve got to go.”

Do Your Research

The phone went silent and I was left with a daydream from a beach vacation long ago. Anyway, we took great care to cut the multi-tasking within projects, it would be a shame to now have multi-tasking between projects. If we have exceeded our resource capacity that would explain it. I clicked on the software documentation and found the Pipelining section.

In the Pipeline section of the User Guide, I read that the Dynamic Drum synchronizes the release of all projects with the Pipeline status. The Dynamic Drum is focused on maximizing the throughput for the entire portfolio of projects. This is what we are missing. Gary and I talked about this a long time ago, so I continue reading.

The User Guide also says the Dynamic Drum is forward looking, not based on historical results or the past use of the resource loading data. This must mean the resource the software is using as the drum resource changes as projects are stared and introduced into the portfolio’s pipeline.

The Dynamic Drum Feature

I click on the Dynamic Drum button and walked through the predefined steps. I ranked the projects and watched the software highlight the resource selected as the Drum resource. It’s our Video Developers. They are the one’s which provide the customer code for the unique features our customers want. Almost every project uses them.

I check the status of the resource loading on another screen. Sure enough, our Video Developers are overloaded. But, so are a few others that I was not aware of. My intuition only goes so far, doesn’t it? I used to be able to tell which resources were overloaded in the past because I worked in the company for so long. I know these people. But, with the changes we’ve made, my intuition isn’t as well developed. I’m going to have to rely on the software to help me after all.

The two things Gary was worried about are indeed true. We have too many projects running and a few resources are showing overloads. I remember now, the earlier we start then the earlier we will finish is not correct. Gary went over this with us. Our new mantra should be, “To finish early, start as late as possible.” I started projects too soon. I didn’t want to lose any time. Folks were already working on these projects and didn’t want to lose momentum. These may all be good reasons, but missing the due dates was not worth it.

Gary’s prediction may be right. If I run the software’s Dynamic Drum the recommended project Start Dates may delay some of the projects from starting today. It will show some projects were released ahead of time and effected the resource use across the portfolio. If I change anything now, it would cause a major wave of disruption across the portfolio. It’s time to call a staff meeting and explain our situation.

A Group’s Problem Needs a Group Solution

Right after lunch, most of my staff are assembled in the conference room. It was a hot afternoon and rush of air conditioning was audible in the background. Jim and Karen came in together, but sat on opposite sides of the room. I know they have been seeing each other on the side, but it was none of my business. At least not until it started to effect their performance.

I started the meeting by saying, “We’ve got a problem. I’m sorry I didn’t catch this sooner, but we may have too many projects running. Too many projects in execution means we have overloaded our resource pool. Not every resource in our resource pool, but a few which many of you have on your projects. Too many overloads, too much multi-tasking, and too long lead times.”

I shared the screens I had looked at earlier. I showed them which resources were overloaded. And, showed them which resource the software suggested as the Dynamic Drum.

Jim asked, “What happens if you take the software’s suggestion?” Jim was wearing a pin-striped short sleeve shirt. Unusual for him, his thick hair was not perfectly in place.

Let the Software Support You

I said, “The software will suggest the optimal start date for each project in the Pipeline status. To include the already running projects in the calculation we need to place them back into the Pipeline. Only then can we understand how many projects our resource pool can handle.”

I let that sink in for a few seconds and said, “And, I don’t know how long these already running projects will stay in the pipeline. But, we have to take some of the load off our resource pool and improve our flow. Improving our flow will improve our throughput. And, improving our throughput will have a positive effect on almost every project’s due date performance.”

The frustrated faces stared at me. I was afraid of that, but when you find yourself in a deep hole, stop digging. We had to find a way out or all our work over the past few months will have been for nothing.

I searched for the right words and said, “I’m sorry for the hassle, but here’s what we are going to do. I’ll put every running project back into Pipeline status. I’ll run the Dynamic Drum process and let the system suggest the start date for each project. For those projects with a start date of today, we can put them back into execution. For those with suggested start dates in the future, we’ll redeploy the effected resources. These re-deployments may help the running projects finish sooner.”

Accepting the Software’s Suggestions

The software staggered the start dates of a few projects and left many of the project back where they started. We exposed capacity for the few resources which were overloaded before. We also exposed capacity for most resources which were not overloaded to begin with. They were redeployed to the running projects. This extra capacity may be enough to improve our flow. The resulting throughput improvement will help us deliver all our projects on time. Makes sense.

But, the main thing I learned is that I can’t run away from my responsibilities. I can’t hide from them because I’m afraid to proceed. The longer the procrastination, the larger the pain. So, what’s worse, the big pain of tomorrow or the tightness in my stomach and the dizziness in my head today? I’m glad Gary was there to point me in the right duration. We all need people like him to get us off the X.

Promising Results

A few weeks later, the first CCPM project we promised to deliver on time was delivered two days early. The projects due by next week were also performing well.

Multi-tasking is the single greatest contributor to poor project performance. And, as difficult as it was to reschedule our projects, is was a major breakthrough for us. It is key to not over-schedule our resource pool. It’s also the key to improving the stability and the throughput of our company.