Glossary of Terms of Book "Will the Real Inventory Please Stand Up and Be Counted!" by Dick Dadamo

logo4.gif (11097 bytes)

Sound Bites

Glossary of Terms of Book:
The Laws of Management Physics:
A Handbook for Hands-On Managers

A Management Book by Richard J. Dadamo, Consultant
ISBN: 0-929392-35-3 © 1994, 2000

"Companies suffer more from a lack of good management than from bad managers." Top ten reasons why Stagnant, Inc.'s corporate culture will hamper its growth Companies reach plateaus in their growth, and then are often held back because they don't recognize the importance of culture. The problems below are common in small companies.
10.	There is too much talk about changes and not enough about actions.
9.	Decisions take too long, creating dilutions as the "decision bubble" expands.
8.	Staff's expectations are too low, so they don't support or give a high priority to change.
7.	They don't have enough champions to promote and focus on new programs.
6.	They lack the superstars needed to grow through to the next plateau.
5.	Employees at all levels are not held sufficiently accountable for their decisions.
4.	The company lacks a sense of urgency, particularly in product development.
3.	The tempo of the corporate culture is too slow.
2.	Change is the exception, not the norm, and the rate of change is too slow.
1.	The president doesn’t have the hands-on style and cheerleading ability to produce a high growth rate.

Ten characteristics of an effective CEO With the ten characteristics below, the CEO has a good shot at success.
1.	Common sense
2.	A good understanding of the product, market, and product mix
3.	A strong sense of responsibility and commitment
4.	A proactive but disciplined approach
5.	Market and customer sensitivity
6.	A willingness to stretch and try things others wouldn't
7.	Honor
8.	Sensitivity to priorities
9.	Passion
10.	Basic intelligence

Ten top reasons a president's operating style can damage performance Many presidents fail, not because they don't understand management theory or have a knowledge of the market, but because they have an inferior management style. Below are ten ways presidents' management style can hamper their performance.
10.	They don’t communicate well.
9.	They don’t utilize their staff and board properly.
8.	They don’t have the energy needed for the task.
7.	They don’t hire people who are better than they are.
6.	They demotivate staff.
5.	They don’t set up proper controls or delegate enough.
4.	They don’t have a good reporting and follow-up program.
3.	They don’t believe that the customer is always right.
2.	They do not set attainable goals.
1.	They do not set clear priorities.

Indications that a manager is in over his head

There are many warning signs that a manager is headed for trouble.

He focuses on projects that won't involve conflict.
He isn't stern enough when his people stumble.
He gets on people's backs more.
He is moody.
He constantly changes his mind.
He is influenced by whoever whispered in his ear last.
His attention always seems to be somewhere else.
He forces people to quit instead of firing them.
He avoids tough customer problems.
He won't return customer calls.
He invites his boss whenever an irate customer visits.
He avoids meeting with unhappy salesman.
He delays regular meetings with superiors.
He refuses to take responsibility for problems or failures.
He continuously blames problems on other departments.
He is very insecure.
He won't clearly define his priorities.
He tries to slow down change.
His reluctance to chance failure or lose face influences his decisions.
He starts to communicate less frequently.
He makes inconsistent decisions.
He takes fewer risks.
He makes decisions that defy logic.
He waffles on decisions.

Demotivators

The best way to motivate senior personnel is to remove and prevent those things that destroy motivation.

Boss gives responsibility without matching authority.
Boss's style is to compartmentalize the team.
Boss's lack of honor ("I do well, but my people screw up.")
Boss thinks he is the only one who solves problems.
Boss tells successor of new duties before he tells the previous person they are being relieved.
Boss starts every sentence with "I".
Boss gives negotiating responsibility with no decision-making authority.
Staff members are chewed out in front of peers.
Staff members lose dignity.
Responsible person is not part of important meetings.
Staff doesn't get feedback on suggestions.
Boss is not available as needed.
Staff is always being told how to do things, and are not asked, "How would you do it?"
Staff is put down when they ask for help.
Staff is not given feedback on performance.
Top management lacks integrity.
Trivial policies are pushed.
There is a lack of honesty in one-on-one meetings.
There is a double standard among staff.
Unrealistic goals are set or required.
Boss goes around staff to get to those they supervise.
Boss fails to communicate on company objectives and priorities well.

What is the real cost of quality?

Many believe that the only costs of quality are those related to inspecting and testing the product or service. However, there is a wide variety of costs associated with ensuring -- and not ensuring -- quality.

Testing and Inspection

Management

Inspectors

Product Testing

Environmental Testing

Building in Quality

Redesign

Handling Complaints

Warranty Claims

Rework

Overtime

Repair Costs

Consultants

Scrap and Waste

Reporting

Downtime

When Quality Isn't

Late Deliveries

Field Maintenance

Management Dilution

Lost Opportunities

Lost Business

Will the real inventory cost please stand up?

In evaluating the investment needed and the measure of turns for an inventory, one must look far beyond the material directly associated with building the product.

Obsolete Inventory
Surplus Inventory
Material Return Authorization -- used for trade-ins or to correct a shipping problem
Service Returns -- used to replace defective product
Marketing/Sales Samples and Demos
Evaluation Equipment at customer sites
Product Used in Shows
Product on Consignment (loaned to a customer)
Old Product Lines (not yet written off)
Inventory Stored in Remote Locations
Product Awaiting an Internal Material Review Board Evaluation
Spares Inventory to support field maintenance
Material Being Evaluated by engineering
Material Made Obsolete by pending engineering change notices

Marketing Tips The following are ten sound bits of advice for those who are in or work with marketing management.
1.	What you see isn't always what you get!!
2.	You can take advantage of negative customer situations and turn them in to a positive customer experience.
3.	Management checks and balances on marketing are essential.
4.	Challenges create opportunities.
5.	The real reason companies exist is to serve the customer.
6.	Don't mistake an opportunity for a business.
7.	Acknowledgement must not be mistaken for approval.
8.	Some of the best deals are the ones you walk away from.
9.	The end of a product life can be a very profitable situation.
10.	You can win by losing.

Marketing Tips II

Understanding a few basic concepts can make your marketing effort more effective.

In negotiating, avoid trying to be all things to all people.	Avoid letting your ego enter in product decisions.
Make the task of verifying a plan's assumptions a high priority, and put lots of energy into it.	Don't let too many management layers build up between the company and the customer.
Use titles for your marketing people to your advantage.	Sell to the highest possible level in the customer's company.
Keep your frustrations with the customers from employees.	Treat manufacturing reps as direct sales personnel.
In negotiations, push for "Your price, my terms," or "Your terms, my price."	You can drive a customer away gracefully by raising prices.
Prefer step pricing to volume pricing for large quantities.	Too much backlog can keep you from making competitive deliveries.
Always be aware of how the customer uses your product and what (if any) alternatives they may have.	One person only should be responsible for setting pricing and delivery schedule priorities.
The customer likes to deal with number one.	Focus! Focus! Focus!

What to expect from the sales personality

To get the most from your sales staff, look for the following characteristics.

People with high levels of passion

People who are highly motivated by performance-based rewards

People who will push until they get what they want

People who will go around the system when necessary

Market Sizing

You have to have a handle on the market you're participating in. There are three approaches to accomplishing this.

Macro / Big Picture

Analyze the size of the market your product goes into and estimate the percentage of sales that your product commands in that product.

Available

Analyze the total requirement of your customer base.

Micro

Analyze the total sales revenue of all your competitors.

Fifteen things to do when your small company gets a substantial order from Mr. Big The cultural mismatch between companies of different sizes can create real havoc. These things will help keep the profitable situation together.
1.	Get an attorney involved for your side.
2.	Ensure that cash flow is covered by their payment plan through the entire program and not just up front.
3.	Avoid penalties for schedule performance.
4.	Avoid giving up the family jewels if problems occur in delivery and quantity.
5.	Have the president prepared to play program manager.
6.	Make sure there is a champion for you in the customer's company.
7.	Force a one-channel communications link between companies.
8.	Stay close to their marketing strategy and know their product.
9.	Have strong cancellation charges.
10.	Avoid customer-supplied material.
11.	Enforce payment terms.
12.	Protect your existing income sources in case Mr. Big goes away.
13.	Support the customer if they decide to do it themselves.
14.	Build files to avoid misinterpretation and other troubles.
15.	Treat the relationship like a honeymoon -- enjoy it while you can, but expect it to end.

"Dress" for Success

Succeed in projecting the following images for your customer, and you will succeed in your marketing goals and objectives.

Make the customers see you as having a positive attitude.
Make the customers see you as a winner.

Make the customers want to deal with you.

Create a mystique.

Make the customer see themselves as your partner.

Get the customer to believe you're the best.

Make the customer see you as the first to offer your product or service.

Make the customer see you as the leader in your field.

Click here to Return to Table of Contents of the Book
"The Laws of Management Physics"

RJD Associates, Inc.
Down-to-Earth Management Consulting

42 Nantucket Lane
Aliso Viejo, CA 92656, USA

Tel:
Fax:

(949) 643-1859
(949) 643-3725

E-mail: dick@rjdadamo.com
Contact Dick Dadamo