Process design: At Søren Frederiksen A/S, they have developed a process model which fits perfectly with ABC Analyzer. The model ensures that the entire organization stays on track during the ABC strategy implementation. ABC Analyzer is used to transform company data into new analytical insights, and the process model ensures that the analytical insights shape new daily routines, which again translate into measurable results.
“ABC is part of our lifestyle,” says Bo Hermansen, Supply Chain Manager at Søren Frederiksen.
At Frederiksen in Ølgod, Denmark, the company has embraced the ABC philosophy and used ABC Analyzer for the past five years on numerous ABC projects large and small. “We have learned a lot along the way,” continues Bo. “Relatively speaking, creating great analyses is the easy part of an ABC project. It’s the processes and the people that are time-consuming – And that’s what makes it exciting.”
Take-off is critical
The success of a project is determined within the first few weeks: It rests on staff involvement especially in the early phases. “The whole organization has to understand why we are implementing changes. The ABC analyses display data in a completely new and tangible way and suddenly it becomes clear that things have to be done differently – which can be difficult to accept when everyone has been doing their best for many years.”
I believe in keeping things simple.
Bo Hermansen has developed a ‘model’ that guarantees success. “The model includes a great deal of reflection and each phase poses its own challenges that can potentially throw a spanner in the works. That’s why I came up with the model – so we can talk about what’s happening.”
The five phases
- The excitement phase
- The resistance phase
- The prioritization phase
- The defusing phase
- ABC in practice
“I hope other companies can benefit from this ‘model’. It’s not rocket science, but it works,” says Bo Hermansen.
1: The excitement phase: Excitement about the new insights
“In the excitement phase, the facts are placed right in front of you. You sit there wondering “Wow, is that what our warehouse inventory looks like…” and you feel like going straight to the sales department and start cleaning things up,” explains Bo Hermansen.
But before you get carried away and begin changing things, it is important to ensure that the whole organization is with you, especially the finance and sales departments. The two departments are highly sensitive to change and have a great say. By involving the relevant stakeholder you avoid a lot of confusion later in the process.
2: Resistance: Not everyone is cheering for change
Not everyone is excited about the new analytical insights, especially not when it highlights the need for change. There are a lot of feelings associated with ‘professional pride’ and failure to take them into account will invariably lead to a lack of employee involvement. Involving the workforce ensures a greater chance of successful implementation without resistance.
“Dead goods and unsaleability are problems that can be overcome. For example, suggest using campaigns to sell the goods or sell them at a discount on the website and find out which goods can be returned to suppliers,” says Bo Hermansen.
It is important to involve the finance department, management and sales throughout the process and prepare them for what can happen when an analysis has been carried out.
3: The prioritization phase: Management has to make clear priorities
In the prioritization phase, management must respond to the new data generated by the ABC analyses, make ‘hard decisions’ and set the new direction.
“This is the phase where things really get done and management develops a strategy and sets goals. It’s important to establish follow-up goals and to communicate clearly on focus areas. Don’t try to solve everything at once because you can’t,” says Bo Hermansen.
It is important that management sets simple, specific and achievable goals. If management is undecided or avoids making decisions, the prioritization phase can drag on, resulting in indecision, failed projects and unrealized potential.
4: Defusing the results
“The defusing phase is when you have established a strategy and things start working on a day-to-day basis. The first results become visible and people start thinking to themselves “wow, who would have thought this was possible”. This is a measure of success and a measurable result in itself,” says Bo Hermansen. “ABC has become a natural part of daily operations, but it’s still important to ask whether we’ve established the right goals and whether we’re going about them the right way. There’s nothing wrong with reviewing things and reassessing your decisions.”
5: KPIs and annual calendar in practice
ABC in practice usually starts with an annual calendar, meetings are planned a year in advance and people agree on the specific KPIs to be measured.
“If customer service and the ability to supply are to be improved, you must focus on AA products. Focus on which products are out of stock, instead of why – the background story isn’t interesting. Instead, get people to spend their time investigating when the products will be in stock again,” says Bo Hermansen.
Bo recommends establishing a fixed routine: When to meet, what the meeting is about and the goal of the meeting.
Want results? Make sure your employees feel happy and safe
Bo Hermansen’s five phases ensure the involvement of the entire organization, which is key to realizing the potential typically highlighted by the ABC analyses.
”We’ve become very good at realizing the economic potential highlighted by the ABC analyses while ensuring that employees enjoy going to work.”
He goes on to explain: “Predefined goals help people to feel secure and when we feel secure, it’s easier for us to focus on the right things.”
A breath of fresh air
Senior consultants at ABC Softwork are impressed by the original concept and framework for change projects at Søren Frederiksen A/S.
“It’s a breath of fresh air and change management communicated in less of a ‘corporate’ language than we’re used to.”
Troels Jakobsen recognizes the five phases deployed by Søren Frederiksen A/S in many of the companies he works with.
”Søren Frederiksen A/S understands the importance of braking down a change management project into manageable phases. Each step in the process requires specific management strategies and tools. The five phases show that Søren Frederiksen A/S is keenly aware that ABC is about far more than number crunching. The business insights they have gained using the ABC model help to define new operational and commercial strategies that affect the way the workforce deals with customers and suppliers.”