Thursday, June 7, 2012

Automated Store Replenishment – Volume XVII


Key Performance Indicators, once referred to as ‘Critical Success Factors’ (CSFs) are the backbone of every enterprise. I prefer the term Critical Success Factors because it has a better meaning to me—things that MUST occur in order for a business to survive.

CSFs are the results of Critical Assumption Sets. These are things that you and your managers consider to be ‘the truth’ about your business and the industry you serve.

Most humans develop their own sets of critical assumptions over a lifetime and these things we store away as ‘truths’ may be guarded carefully, unchanged throughout our lives. They govern the way we act and think in almost everything we do and sometimes in ways that we might not even be aware. The process works something like this:
A.      Have I seen this situation before?
B.      What is it probably leading me toward?
C.       Accept/Reject?

The problem with assumptions is too often they create automatic responses beyond our control. Here’s an example: When I was 13 years old, I went on a field trip to the visit the Tennessee State Penitentiary. Two things have stuck in my mind over these past fifty years. One was the electric chair and the table where they strapped the recently executed down and broke their bones so their contorted bodies would fit neatly into a coffin, and the second was the smell of cabbage being cooked in the mess. I admit that boiled cabbage taste pretty good, but I cannot stand to be in an environment where it is being cooked. Why? It should be obvious. The smell of cabbage cooking brings back memories that are too horrible to contemplate.

If a psychiatrist were to try to determine why I disliked that particular smell he wouldn’t have to look too deeply to find the answer; but other things far worse, might cause me to make the wrong decisions resulting in more serious consequences than looking for a different place to eat.

In order to study something as elusive as assumptions, we are faced with the task of measurability. We have to somehow be able to quantify our assumptions and then take them apart piece by piece proving or disproving their validity and we have to always remember that things that were true yesterday may or may not be true today.

While working with retailers for over three decades, I am always amazed when I encounter resistance in areas where I know I am right. I have to accept the fact that others who might think me wrong are basing their opinions on a completely different set of assumptions and they are just as determined to prove themselves right as I am in proving them wrong.

As a salesman, I will always remember the adage that no one likes to be sold, but they love to buy. It is not hard to understand why. When you try to push someone, their automatic response is to push back, even when you are trying to push them out of the path of a speeding bus. “Have I seen this before? What is it probably leading me toward?”

You will never convince someone they are wrong, I don’t care how hard you try, because the response to push back is programmed in our DNA and you can push me as hard as you want; I may even fall over in a ditch, but I will never willingly let you shove me around.

The ironic thing about this is the mechanism works even within ourselves. When I say things like, “Less inventory means more sales,” or “Lowering prices means greater profits,” or “Let your employees audit your stores,” I realize that it irritates the dickens out of most of you, because I know that it may challenge everything you have learned in business. You respond in kind with “Everybody knows customers will not shop in stores that looked picked over,” and “I can’t lower my prices, I’m barely making enough to pay my bills now,” and “Employees steal! I don’t want them covering up shortages.” All of these things may be absolutely true because your assumptions, true or not will prevent you from even considering alternatives.

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