ADR's assessment matched the conclusions that the board already had reached — trouble meeting fill rates, leading to excess inventory, necessitating a supply chain transformation — and this gave Creativity's senior management a degree of confidence in the consultants' knowledge and abilities, according to Dr. Birou. "We were totally honest about what we observed," she says, "and because our conclusions mirrored what upper management already knew, the CEO and the board of directors trusted us, trusted that we were being honest with them, and that we would have the knowledge of what was really wrong and the vision for what needed to be done."
The first step that ADR recommended was promoting Nick Lazarou to the newly created position of vice president of supply chain management, recognizing his analytical background and replacing the then-head of purchasing, whose experience did not include the skills needed for the new position. Lazarou previously was vice president of product sourcing and planning at Creativity, working on vendor relations and performing a variety of analytics employing the ERP system and a business intelligence tool from Cognos. In short, unlike the former head of purchasing who had a background more in operations, Lazarou already had a supply chain orientation and an analytical mindset, and he seemed a natural fit to head up a reorganized supply chain function at Creativity.
Under the new organizational chart that ADR proposed, the supply chain organization came to encompass four functional areas: forecast management, product analytics, replenishment planning and new product development planning. Previously, the company's buyers ostensibly worked as demand planners, too, but in fact they had little time to devote to the forecasting side of their job, according to Lazarou. Under the reorganization, staff had dedicated roles focused on one of the four functional areas. "That would allow our team members to emphasize their strengths and rely on others to supplement their weaknesses," Lazarou says. In addition, to support the forecasters, Creativity implemented a forecasting software package recommended by ADR and called SmartForecast Enterprise, from Belmont, Mass.-based Smart Software Corp.
ADR's consultants helped Creativity craft the job descriptions for each position in the reorganized supply chain function and assisted in assessing current skill levels and training the company's staff for their new roles. Much of the training focused on adopting a new mindset, moving away from the old ad hoc, "reactive" purchasing process toward a metrics-driven supply chain approach that made use of data from the company's own ERP system (particularly the manufacturing resource planning module) and customer systems (such as Wal-Mart's RetailLink), as well as the insights provided by the SmartForecast solution. The new approach also required significant collaboration, both internally — among product development, sales and purchasing staff — and externally with suppliers and customers. ADR helped map out the internal collaboration within Creativity, and the consultants offered advice on how to handle relations with suppliers and customers, although Creativity's staff handled those external contacts themselves.
Successes — and Success Factors
Creativity announced the supply chain reorganization in mid-April, and within four months the company already was seeing the results of the new approach: fill rates for key customers were approaching 100 percent, while Creativity's inventory levels had fallen by nearly 20 percent at the same time that Creativity was experiencing a double-digit increase in sales. The rapid turnaround impressed ADR's Jim Kiser. "They did a whole remake of the business, with a redefinition of their responsibilities, and the way that they adapted to their new roles was just amazing," he says. Creativity CEO McLain acknowledges that the transition to the new supply chain organization in such a short time was not without its challenges, but the rapid pace of change also had some advantages. "We had to keep running with the old system while we trained and identified people to fill various positions," he says. "We had to ask people to come in on Saturdays and to work late hours. But they were up to the challenge because they saw, almost immediately, the benefits that could be reaped from the changes."