Thank you very much Tony and Miles for presenting and Ronald for facilitating at our info-sharing event held on the 27th May 2021. We had a great turn out at over 140 attendees. Thank you to all those who attended.
Managing inventory risk is a complex process. Organisations continually fight the battle of having too much or too little inventory at any given time. With ongoing changes in demand, being able to balance your inventory investment to mitigate your risk is critical for your business to succeed.
We were fortunate to hear first-hand from industry leaders, Miles Crisp, former CEO of Tarsus Technology, and Tony Sinton, CEO of NETSTOCK on their life time experiences with managing risk in inventory. Some of the topics included:
In addition, we demonstrate how inventory risk management fits into the bigger picture of enterprise risk management.
The purpose of this seminar is to provide an opportunity for participants to benefit from insights into a particular area of risk management that is important for companies that operate with inventory. The session begins with an introduction to the topic by Tony Sinton, the global CEO of NETSTOCK, a ten-year-old, cloud-based provider of inventory management applications to more than 1,600 customers globally. NETSTOCK operates globally, with operations in the USA, UK, Germany, South Africa and Australia.
Tony has spent a considerable portion of his career focused on providing companies with solutions that enable them to manage their investment in inventory more optimally, and so to improve their use of working capital. What makes this field both interesting and challenging is that effective management of inventory risk requires a broad range of complementary skills, and a disciplined approach.
Miles has considerable experience in heading up large corporates with extensive experience in the complexities of inventory management and more specifically at Tarsus when Covid hit and the world was thrown into turmoil. This created huge challenges regarding suppliers, lead times, forex, change in customer demand patterns, credit limits for customers, access to capital with banks tightening the strings and general economic downturn. Miles and his team had to re-invent and optimise their processes in a very short period of time. Miles successfully guided Tarsus through what could be referred to as a perfect storm.
A question Tony asks management is, “How much inventory do you think you should have?” Typically, the reply is “It should be less!” but they have not mathematically calculated what the company actually needs.
So the #1 task is to: Develop a model stock that represents your target investment and availability/service objectives.
In order to establish a model stock each line item’s risk profile will need to be developed. This is done by analyzing the items’ specific supplier performance and forecasting accuracy. Once every line item has a risk profile it is possible to calculate the desired inventory model. The resulting inventory replenishment policy then can be used to drive inventory replenishment recommendations in order to achieve the desired investment and availability targets.
Inventory Risk Profiles have two components – Risk Drivers and Risk Multipliers. The Drivers of risk are Supply and Demand risks. The Multipliers are Lead Times, Order Cycles and Constraints.
The Inventory Management Maturity Curve is useful when considering new and improved technology and processes. Understanding where you are and appreciating it is a journey to become “best in class” is necessary to obtain the early wins and benefits. Trying to introduce complexity and sophistication on an immature foundation will in all likelihood fail. In conclusion, I would add that obtaining executive participation is required no matter where you are on the curve. For a deeper dive on this subject please contact Tony@netstock.co
Following Tony, Miles Crisp speaks eloquently and candidly about the many lessons that he learned concerning the challenges involved in managing inventory risk, and optimising the return on investment in inventory.
Key insights shared by Miles include:-
-Keeping your inventory securely
-Transporting your inventory securely
Risks to an organisation
When it comes to running a business there are a lot of moving parts with inherent risks everywhere. Risks include strategic, emerging, operational, IT (systems, cyber, information and data management), finance (liquidity, market, credit etc.), inventory, supply chain, regulatory (compliance), reputational, people, external environment (competitors, price wars, macro-economics, micro-economics, technology disrupters, labour, society, environmental, climate change, government, infectious diseases, civil unrest, unions, unemployment, disasters, geo-political etc.)
So, how, at an executive management level does one gain a sense of comfort that the risks in your organisation are being managed effectively? How do you avoid nasty surprises? How do you know:
As executive management it’s impossible to keep your finger on the pulse at every level of your organisation. How do you gain visibility of what is going on in your organisation?
Fortunately enterprise risk management provides an excellent framework to assist you with a top-down approach. However, it essential that the high level view is underpinned by low level detail which is accurate and up to date. Risk management is ‘part art’ and ‘part science’. Yes, we require human judgement but this must wherever possible be underpinned by real-time metrics from operational systems. Risk Management, in order to be an effective decision making system, needs to provide up to date dashboards of current and emerging risks integrated with real-time metrics from operational systems.
In addition, risks do not occur in isolation and therefore an integrated approach rather than a siloed approach is required. If certain risks start materialising in one area of the business, one needs an early warning system of where the knock on affects will be felt and the speed of onset. For example, if the supply chain risks start materialising (such as they did / do with Covid), they need to trigger an early warning to those running the demand side of the business (i.e. sales and marketing). In a large-scale business, it is impossible to know where all the knock affects exist, unless they are documented in a living system.
So ideally, we require a top-down approach, guiding and coordinating the objectives at every level of the organisation in line with the strategic vision of the organisation and this must be underpinned by a bottom-up approach ensuring that the risks at the strategic / exco level are relevant and updated not only by human judgment but by live system metrics:
Executive management is dependent on access to information that provides the correct insights in a timely manner. Both NETSTOCK and BarnOwl are premised on the basis that such insights are facilitated by using appropriate dashboards. Since BarnOwl operates as a corporate wide risk tool, it is possible to include specific KPIs from NETSTOCK in BarnOwl.
Enterprise Risk Management, when implemented effectively, becomes a brilliant strategic management and communication tool driving a coordinated effort from top to bottom and kept up to date by living system metrics supported by human insight.
http://www.barnowl.co.za/knowledge-centre/ and http://www.barnowl.co.za/videos/
Tony Sinton email@example.com
Ronald Laxton firstname.lastname@example.org
Miles Crisp email@example.com
Jonathan Crisp firstname.lastname@example.org
Cheryl Keller email@example.com
Once again thank you Miles, Tony and Ronald for your time and for your informative presentation and thank you to all those who attended our info sharing session. We look forward to seeing you at our next info sharing session. Please keep a look out for our upcoming events at: http://www.barnowl.co.za/events/
Director – BarnOwl GRC and Audit software
BarnOwl is a fully integrated governance, risk management, compliance and audit software solution used by close to 200 organisations in Africa, Australasia and the UK. BarnOwl is a locally developed software solution and is the preferred risk management solution for the South African public sector supporting the National Treasury risk framework. Please see www.barnowl.co.za for more information.
Tony studied a BCom, Finance degree at the University of Witwatersrand but soon realized his passion lay in the operational side of business and commenced his inventory optimization and management career. Tony began his journey as Managing Director of EXECULINK Inventory Optimization. Following the acquisition of ExecuLINK by Barloworld, he took the role of President of Barloworld Optimus USA.
Today, Tony is the group CEO and co-founder of NETSTOCK, the first fully cloud-based inventory management solution. Tony provides strategy on supply chain management and has spent the last 36 years enabling thousands of companies worldwide to improve the management of their inventory.
B Com CTA Chartered Accountant (S.A.)
Miles is currently Group CEO of Tarsus Technologies Group. He is also a Partner at Schuitema Consulting, a consultancy specializing in Care and Growth leadership development. Prior to that Miles was CEO of SecureData Ltd, a company listed on the Johannesburg Stock Exchange before being acquired by Tarsus Technology Group in March 2014. Before that he was Group CEO of O’Keeffe & Swartz Consulting (Pty) Ltd, a group of enterprises employing some 800 people in the business of direct sales of simple insurance products to the public and related administrative services.
Miles was with previously with Deloitte (14 years) where he led various teams and initiatives, in South Africa and outside of South Africa. Miles was member of the Deloitte South Africa Exco for 5 years. He led his division in the EMEA region for 6 years. Miles cut his teeth before then with a ten year stint at Anderson Rochussen Crisp, a professional practice that he co-founded.
Miles grew up in Harare and was a student for four years at Rhodes University in Grahamstown.
AFFILIATIONS (SOCIETIES / ASSOCIATIONS):
Miles is 57 years old and a passionate mountain biker with the scars to prove it. He has been married to Liz for 33 years and has 2 gorgeous adult daughters
Ronald Laxton is the Managing Director for NETSTOCK’s business in Africa. Prior to joining NETSTOCK, he was the founder of a company that sold, implemented & provided consulting services on ERP solutions. He has also worked in the business intelligence arena, and has provided executive consulting services to a number of companies in the software industry in Southern Africa.
Ronald is intellectually curious and loves the stimulation of being exposed to new learnings, insights and challenges. He has particular interests in working in the areas of decision analysis, the development of go-to market strategies, managing change, and working with companies to improve success with recruitment. His extensive experience with ERP systems prepared him well for his role at NETSTOCK.
Jonathan Crisp has a BSc Honours in Computer Science, as well a Risk-Based Internal Auditing certification. He has over 30 years’ experience in the IT industry and is one of the founding directors of IDI Technology Solutions.
IDI are the owners and software developers of the BarnOwl GRC and Audit software solution which is the preferred GRC solution in the public sector, endorsed by the Office of the Accountant General (OAG) of South Africa.
Jonathan is an active member of the Risk Intelligence Committee at IRMSA (Institute of Risk Management SA) and is a member of the IIA (Institute of Internal Audit SA).