{"id":10669,"date":"2018-09-06T14:57:16","date_gmt":"2018-09-06T21:57:16","guid":{"rendered":"https:\/\/www.qad.com\/blog\/?p=10669"},"modified":"2023-01-13T15:03:02","modified_gmt":"2023-01-13T23:03:02","slug":"demand-driven-adaptive-enterprise-the-search-for-relevant-information","status":"publish","type":"post","link":"https:\/\/www.qad.com\/blog\/2018\/09\/demand-driven-adaptive-enterprise-the-search-for-relevant-information","title":{"rendered":"Demand Driven Adaptive Enterprise \u2013 The Search for Relevant Information"},"content":{"rendered":"

[vc_row][vc_column][vc_single_image image=”10662″ img_size=”full”][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]<\/p>\n

Business is Changing<\/h2>\n

Conventional management practices have tremendous amounts of inertia driven by software, consulting, accounting and academic experts.\u00a0 Many of these practices trace their origins back to the 1930s and 1950s.\u00a0 Yet the world looks nothing like it did at that time.\u00a0 The changing global and industrial landscape is forcing companies to behave differently.\u00a0 Consider this astonishing information from the Harvard Business Review:<\/p>\n

\u201cWe investigated the longevity of more than 30,000 public firms in the United States over a 50-year span. The results are stark: Businesses are disappearing faster than ever before. Public companies have a one in three chance of being delisted in the next five years, whether because of bankruptcy, liquidation, M&A, or other causes. That\u2019s six times the delisting rate of companies 40 years ago. Although we may perceive corporations as enduring institutions, they now die, on average, at a younger age than their employees. And the rise in mortality applies regardless of size, age, or sector. Neither scale nor experience guards against an early demise. We believe that companies are dying younger because they are failing to adapt to the growing complexity of their environment. Many misread the environment, select the wrong approach to strategy, or fail to support a viable approach with the right behaviors and capabilities.\u201d (Martin Reeves, Simon Levin, and Daichi Ueda, Harvard Business Review, January-February 2016)<\/p>\n

\u201cIt is not the most intellectual of the species that survives; it is not the strongest that survives; but the species that survives is the one that is able best to adapt and adjust to the changing environment in which it finds itself.\u201d\u00a0Leon Megginson<\/span><\/p><\/blockquote>\n

Companies must adapt and change or their very existence is threatened.\u00a0 But what to change to?\u00a0 How to change and drive adaptation?\u00a0 Is there a safe and effective path to transform a company from an operating strategy developed in the 1950’s measured by financial accounting principles developed in the 1970’s and 80’s to an agile demand driven enterprise capable of staying ahead of today\u2019s hypercompetitive market?<\/p>\n

\u00a0Flow \u2013 Common Sense but Not Common Practice<\/h2>\n

The broad based appeal of \u201cflow\u201d seems to be obvious.\u00a0 George Plossl, a founding father of MRP, in the second edition of Orlicky\u2019s Material Requirements Planning (McGraw-Hill, 1994) said that<\/p>\n

\u201call benefits are directly proportionate to the speed of flow of information and materials.\u201d<\/em><\/p><\/blockquote>\n

Improvement gurus such as Taiichi Ohno, Eli Goldratt and W. Edwards Deming founded entire improvement disciplines on the concept of flow.\u00a0 Early industrial pioneers such as Henry Ford and Frederick Taylor built large manufacturing empires based on this concept.\u00a0 F. Donaldson Brown defined the basics of management accounting on the concept of flow.\u00a0 Flow is obviously common sense.<\/p>\n

Plossl\u2019s first law can be illustrated by a very simple equation featured in the book Demand Driven Performance \u2013 Using Smart Metrics (Smith and Smith, McGraw-Hill, 2013).\u00a0 The equation shows that changes to flow directly yield changes to cash velocity which in turn influences ROI.\u00a0 This equation is easy to grasp for people at any level of the organization and links the velocity at which we move information and materials directly to ROI. \u00a0Yet, if flow is so important and intuitive why does its effective enterprise-wide implementation prove to be so elusive to many organizations?<\/p>\n

\"\"<\/a><\/p>\n

There is an important caveat to this equation.\u00a0 Organizations cannot just quickly push large amounts of data and materials and expect to automatically reap huge benefits.\u00a0 In fact, the only way that data can become valuable information and those materials can be converted to cash is to ensure that both are \u201crelevant\u201d.\u00a0 Thus Plossl\u2019s law must be amended to<\/p>\n

\u201call benefits are directly proportionate to the speed of flow of RELEVANT information and materials.\u201d<\/em><\/p><\/blockquote>\n

With the inclusion of the word relevant, an expansion to the above equation is necessary.\u00a0 This expansion was also featured by Smith and Smith in Demand Driven Performance \u2013 Using Smart Metrics. \u00a0<\/em>This new component of the equation brings to light why an organizational strategy based on flow proves to be so elusive.\u00a0 It explains the frustrations with Lean, Six Sigma and Theory of Constraints (TOC) implementations and why they so often end up being simply lip service or merely a \u201cprogram of the year\u201d in larger organizations.\"\"<\/a><\/p>\n

What directly impedes better flow across organizations is variability.\u00a0 The more variable an environment; the worse the flow.\u00a0 In our more complex and volatile world, variability seems to increasing at a faster rate than we can compensate for it.\u00a0 So, must we give up the quest for flow?\u00a0 Is it simply a pipe dream to never be achieved like the pursuit of perfection?<\/p>\n

No! The key to managing variability is to create visibility to relevant information.\u00a0 When information is irrelevant, the picture is distorted, variability is exacerbated, flow breaks down and ROI is adversely impacted.\u00a0 Thus, the starting point for any company to operating in a flow-based fashion is comprehending and gaining visibility to relevant information.<\/p>\n

The next blog will describe the necessary prerequisites for relevant visibility.\u00a0 Thank you for following this blog series, we look forward to your comments and feedback.\u00a0 Please find Carol Ptak at www.demanddriveninstitute.com<\/a>[\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n","protected":false},"excerpt":{"rendered":"

[vc_row][vc_column][vc_single_image image=”10662″ img_size=”full”][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text] Business is Changing Conventional management practices have tremendous amounts of inertia driven by software, consulting, accounting and academic experts.\u00a0 Many of these practices trace their origins back to the 1930s and 1950s.\u00a0 Yet the world looks nothing like it did at that time.\u00a0 The changing global and industrial landscape is forcing companies […]<\/p>\n","protected":false},"author":131,"featured_media":10662,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2045],"tags":[2496,2497,2498,2499,416,2500,2501,2502,2503,2504,92],"class_list":["post-10669","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-supply-chain-trends","tag-carol-ptak","tag-chad-smith","tag-ddea","tag-ddi","tag-ddmrp","tag-demand-driven","tag-demand-driven-adaptive-enterprise","tag-demand-driven-institut","tag-dick-ling","tag-process","tag-supply-chain"],"yoast_head":"\nDemand Driven Adaptive Enterprise \u2013 The Search for Relevant Information - QAD Blog<\/title>\n<meta name=\"description\" content=\"Demand Driven Adaptive Enterprise - Companies must adapt and change or their very existence is threatened. 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