Turning Inventory Chaos into Enterprise Value: Michael Ryan’s Success Story

Intro  

Welcome to another edition of inspired stories where leaders share their experiences so we can learn from their successes, how they’ve overcome adversity, and explore current challenges they’re facing.

Anthony Codispoti (00:00)
Welcome to another edition of the inspired stories podcast where leaders share their experiences so we can learn from their successes and be inspired by how they’ve overcome adversity. My name is Anthony Cotaspodi and today’s guest is Michael Ryan. From balance sheets clogged with excess inventory to private equity boardrooms hungry for cash. Mike Ryan turned supply chains into cash machines. Founded in 2016,

As the managing partner of the M. Ryan Group, he helps manufacturers and distributors unlock working capital and improve EBITDA, often delivering a 3-5x ROI in under one year. Mike’s 25-year journey includes 15-plus years with GE and Goodyear, where he earned his Six Sigma Black Belt and a reputation for untangling the gnarliest supply chain knots.

whether aligning sales, finance, and operations, or freeing up millions in idle product, he’s obsessed with one thing, turning supply chain chaos into enterprise value. Today, he’s here to explain how boring inventory hides a gold mine and some of the moves any business can make to claim it. Now, before we get into all that good stuff, today’s episode is brought to you by my company, Ad Back Benefits Agency.

where we offer very specific and unique employee benefits that are both great for your team and fiscally optimized for your bottom line. One recent client was able to add over $900 per employee per year in extra cashflow by implementing one of our innovative programs. Results vary for each company and some organizations may not be eligible. To find out if your company qualifies, contact us today at addbackbenefits.com.

All right, back to our guest today, founder and president of the Ryan Group, Michael Ryan. I appreciate you making the time to share your story today.

Mike Ryan (02:00)
Thank you for having me, Anthony. It’s a pleasure.

Anthony Codispoti (02:03)
Okay, Mike, so you’ve worked with some big names like GE and Goodyear. Can you share a key lesson or approach that you learned or developed there that you still apply today at the M. Ryan Group.

Mike Ryan (02:18)
So I would say ⁓ the key lesson I learned, learned at a GE and it served me well, is the idea of, in God we trust, all others bring data. It’s, hey, in God we trust, all others bring data.

Anthony Codispoti (02:34)
Say that again. Say it again, Mike.

⁓ Explain what that means.

Mike Ryan (02:43)
So

what that means is somebody may have a hunch or a suspicion that something isn’t doing as well as it could be or should be. And I’m a simple man. I said, OK, well, let’s look at the data. Let’s see if what you’re seeing or feeling bears out with the data. And likewise, as we go to

quantitatively prove changes that we’ve made have had an impact, right? It comes back to the data. So in God we trust all others bring data.

Anthony Codispoti (03:24)
I love that. Okay, so how did the idea to start the Ryan group come about? What was the trigger there? you’re laughing. This must be a good one.

Mike Ryan (03:33)
I got fired Anthony. That’s the quick answer. I had been VP of operations for a family office owned business. ⁓ Business ran into some challenges and my services were no longer needed. So, you I had… ⁓

getting out of corporate, had started to build a network in Northeast Ohio and just come to love Northeast Ohio because there was just so many good people. And as I’m having these phone calls, I get connected with this consulting firm out in California. And my objective was, hey, is there a VP Ops or VP manufacturing role at one of the clients that they serve? And as I’m having the call, ⁓

guy I’m speaking with, just click. And he says, hey, I’ve got a project, it’s in St. Louis, it’s right in your wheelhouse, would you like to work a project? And I said, well, I’ve got a wife and four kids who have grown accustomed to eating, so yes, I would love to work a project. And ⁓ I had an absolute blast. That first project, it was fun, I just enjoyed it.

realized how much I had learned throughout my career. And one became two, two became three, and then that third engagement, they shared their billing with me. Now, I do math all day every day, and I’m like, okay, I’m getting about 20%, the other guy on the ground with me is getting 20%, the house is taking 60. I now understand why the house took 60. But I was explaining this to him.

Anthony Codispoti (05:19)
Wait,

what do you mean by that? 20 % of what? 60 % of what?

Mike Ryan (05:23)
of the

the billings. So let’s say just for sake of round numbers, it was $100,000 engagement, right? I got 20,000, the other guy on the ground got 20,000. Yeah. ⁓

Anthony Codispoti (05:31)
⁓ Gotcha. So who

brought you in wasn’t the company themselves. It was a consultant that had a project. They were placing you there. So they took the majority of it. Okay, got it.

Mike Ryan (05:43)
Correct,

correct. And now, you know, I fully understand why. I mean, there’s a ton of value in that business development and the relationship. So I was explaining the, you know, 60, 20, 20 to my wife, and she looks at me and she says, wouldn’t it be better to get the 80 instead of the 20? And just like that, the M. Ryan Group was born.

Anthony Codispoti (06:12)
And what was that first project? What did you go in there to fix that was so in your wheelhouse, as you put it?

Mike Ryan (06:18)
It was supply chain and inventory. ⁓ It was a supplier of replacement parts to the ⁓ construction industry. ⁓ Very capital intensive industry, very expensive parts and the manufacturer had too much of wrong stuff and not enough of the right stuff and it tied up a ton of cash.

Anthony Codispoti (06:41)
Okay. It was a giant inventory snarl. So, okay. I touched on it in the interview. You’ve kind of touched on it a little bit, but sort of lay out sort of the breadth of the services that you offer.

Mike Ryan (06:44)
It was.

Thank you for asking. So ⁓ typically there’s a couple of projects that I engage with really that are my sweet spot in my wheelhouse. Number one is the inventory diagnostic. So it’s 30 days or less ⁓ figure out in what ways a business can start to unlock cash and create value with the product they already have. And then the

⁓ Second line of services revolves around sales and operations planning. So sales and operations planning is ⁓ at its core getting the right people to talk about the right things at the right time. So I’ve got a 90 day SNOP kickoff product offering. And then that follows up typically between 12 and 24 months later with an SNOP audit to make sure that the business is ⁓ still maintaining and delivering the results that they need.

Anthony Codispoti (07:54)
Okay, let’s peel back layers a little bit here, get into a little bit more details. Let’s start out maybe explain what fill rate is and a few ways that you can help companies improve it.

Mike Ryan (08:07)
So what fill rate is, is how many times a customer can either call up or place an order online and the business has the product that they need. So for example, if 95 out of 100 orders can be filled, then the business has a 95 % fill rate. And I’ve always looked at it, I a guy named Kevin Ollif who taught me this at

a good year that when there’s a customer who is ready, willing, and able to put cash in your hand, you better have the product that they need when they need it.

Anthony Codispoti (08:47)
So you want that fill rate to be as high as it possibly can. And when that fill rate is low or it’s dropping, what are some things that you typically find are easy levers to pull to fix it?

Mike Ryan (09:01)
⁓ Great question. So when fill rates are low or dropping, it’s because the business doesn’t have enough of the right product at the right time. So one of the first level levers is engaging with sales to really understand what the customers want and what they need and making sure that we can get that product within the lead time that they’re looking for. And

If we can’t, it gives the sales team an opportunity to go back and either propose a solution or set expectations for when that product will be available.

Anthony Codispoti (09:42)
So it’s not always about, mean, clearly you would like to find sort of the solution that makes sure that you have the right product there when it’s needed. But if that’s not the case, then you’re also coaching them on, ⁓ what does that sort of follow-up communication look like with the clients?

Mike Ryan (09:59)
Yes, because it’s another opportunity to interact with the customer, with the client, to say, hey, I heard you, I understand what you want, I want to be able to provide it to you. This is what I know, right? This is my best estimate of when we’ll be able to satisfy your needs.

Anthony Codispoti (10:20)
Right, because I mean, when you’re not able to fulfill that order, you could just say, sorry, no can do. But ⁓ it’s a great opportunity, a great way to lose a client. If you’re able to have like a more structured communication strategy in place, you’ve got a better chance of not losing that person. Maybe you’ll lose them for this order, but not lose them forever.

Mike Ryan (10:43)
That’s right. That’s exactly right.

Anthony Codispoti (10:46)
What are some of the biggest levers that you help companies pull to free up 10 to 30 % of their inventory within six to 12 months?

Mike Ryan (10:56)
So the two biggest levers, right, and this I’m going to apologize in advance because it may sound, ⁓ it may sound pedantic, but the two biggest levers are, hey, let’s sell what you already have, especially if you have excess inventory, let’s figure out a way to spur demand on what you already have. And then the other side of the equation is let’s make sure we’re buying

only what’s needed. And this is where it gets kind of into the, it can get into the weeds of, you know, hey, I need to buy a thousand. The buyer says I need to buy a thousand at a time when the business only needs 200. And in my perspective, that’s an opportunity for the buyer to work with the vendor to say, Hey, listen, I know you want to sell me a thousand, but I don’t need a thousand. You know, what are

some other order quantity so we make sure hey I want to buy what I need but not buy to excess. So it comes down to hey let’s sell more of what we already have especially if it’s in excess and let’s make sure that we’re buying only what we need.

Anthony Codispoti (12:14)
So both of those things, when you say them out loud, kind of sound obvious, right? Like sort of duh. But ⁓ obviously there’s, I’m guessing there are more sort of nuanced strategies that underlie each of those. The one that I’m kind of curious about is how do you spur more demand? You’re sort of saying like, yeah, sell more of the product that you already have.

Mike Ryan (12:20)
Yeah, yep.

Anthony Codispoti (12:40)
Of course, Mike, we would love to sell more of the product that we already have. That’s what we’ve been trying to do. Like, are you coming up with like discount programs or like bundles or like what are some of the creative strategies that you use here?

Mike Ryan (12:52)
So really the first strategy is usually, know, when I encounter a situation like this, it’s not like they have two items or two SKUs that they’re over-inventoryed on. It’s they have 200 SKUs that they’re over-inventoryed on, right? This is kind of a systemic problem. And what I’ve seen happen is, you know, the supply chain gives this list of 200 items and foist it on the sales team and say, go sell it.

And the sales team chokes because it’s like there’s too much, there’s too many items. So what I found is to take that list of 200 and sit down with the sales leadership and say, okay, let’s look through this list. Let’s think about the ones that you have a high confidence that you’re going to be able to sell. And then let’s put together a program. It may be.

you know, hey, we’re going to do a bundle of these three items together and there’s a 5 % discount or 15 % discount. But it’s critical to involve sales in that process because I know, you know, if I’m given a list of 200 items to go to the grocery store for, I’m going to be completely overwhelmed where if it’s, Hey, can you go pick up these five things or these 10 things, right? It makes it more.

It’s a smaller bite of the elephant. makes it more finite, more actionable. And by involving sales in the process and really helping them kind of choose their own adventure, it’s like, okay, well, let’s start with the easy stuff. Let’s start with the things that you think you can move quickly so that the business can turn that inventory back into cash.

Anthony Codispoti (14:22)
Mm-hmm.

Let me ask about the inventory planning and I’m thinking about well I guess this would apply to any product actually not just ones that are selling particularly well. I’ve owned inventory based businesses myself before and we were always trying to calculate how many days of inventory should we have on hand right because this is

The more inventory that I have, the more of my cash that’s out of my bank account and is sitting in that product in a warehouse somewhere. ⁓ But man, the most painful thing is you alluded to before is I’ve got a client, I got a customer, I’ve got somebody who’s ready to buy that thing and I don’t have it. So now they go and they buy it from somebody else. And so I don’t know, the way that we looked at it, and I’d be curious to think if we were even close, is we’d say, okay, what’s our lead time to get product? Right?

Maybe it’s two months ordering from the manufacturer. It’s two weeks to get shipped. It’s a week to get processed going into the warehouse. Okay, so we’ll call it three months. And then we look at, what are our sales fluctuations? And that’s where it got to be really tricky because some months, maybe we sold a thousand units. Maybe some months we sold 3000 units and there’s so much variability in there.

and it wasn’t always seasonal until the time of the year. I don’t know. How do you think about this when you’re coaching your clients?

Mike Ryan (16:12)
So you hit the nail on the head with lead time. That typically is the single biggest determinant of how many days of inventory I need to have on hand. So lead time is one, you hit on the second one, variability is two. The third one is looking at a forward forecast. A lot of businesses look backwards when they’re trying to figure out days on hand. And again, this is where involving sales is critical.

So looking at the forward forecast of what I am ⁓ predicting to sell. And then the fourth variable, and this one can get overlooked, is how often we reorder. So, you know, in the example you shared, hey, from order to receipt, it’s three months. Well,

you could order once a quarter, right? Which means your inventory is going to be a big sawtooth that’s going to spike up and bleed down and spike up and bleed down. Or you can order every six weeks or every four weeks. And what that does is it helps, you know, take that sawtooth and make it a little bit smaller, but really the, I mean, the critical components to figuring out how much inventory I need to carry to buffer against that variability in sales.

Anthony Codispoti (17:10)
Mm-hmm.

Mike Ryan (17:34)
our lead time, forward forecast, and ordering frequency.

Anthony Codispoti (17:38)
And do you have a level of sophistication in your calculations to be able to figure in things like because I like what you’re saying is, you know, rather than, you know, ordering every quarter and I’ve got this big spike in, you know, inventory holding and, you know, then draw it down and three months later we go through the same cycles. Let’s order every six weeks and we keep that sort of sawtooth pattern a little more flat. ⁓ But, you know, then there’s other things to factor in like.

you know, maybe it’s shipping from overseas and I get a discount on that container rate or I get a discount on the per unit production rate. And how does that compare to the cost of holding extra inventory if I’m ordering more? And, you know, at that point, then my brain just starts to melt because like, I don’t know how to do that math in my head or on a spreadsheet.

Mike Ryan (18:21)
Hahaha

Yeah, it can become complex very quick. And this is really where I mean, I call the triad people process and technology and having technology, ⁓ whether it’s planning, you know, dedicated planning software, or some financial modeling software. mean, this that’s where it really becomes critical. ⁓ But it’s funny, the, you know, the, the discount for filling up a container. ⁓

You know, that’s something that, of my favorite stories, this was an early client. I’m standing with the CFO. The CFO is Chris. So Chris and I are standing there. know, Steve comes in the room and he says, I just saved us 4%. And I look at Chris and I said, okay, well, how’d you do that? I bought six months of this raw material.

And ⁓ I looked at Chris and said, do you want to tell him or you want me to tell him? And he’s like, no, I got this. And Chris explains that their, their borrowing base or their, their rate they’re paying 9%. So, you know, while yes, Steve kind of in his lane did a good thing to, reduce costs in the grand scheme of things. was actually going to cost the business more money.

Anthony Codispoti (19:28)
Hahaha

Mike Ryan (19:53)
because they had to carry the inventory, then they would save. it’s kind of a good example or a good opener into helping people see kind of holistically how one small decision here can impact the financial footprint of the business.

Anthony Codispoti (20:16)
Now Mike, I’ve seen that your group advertises a 3 to 5X ROI for many of its clients anyways. What are, again, some of those other strategies, methodologies that you employ that allows you to deliver such significant returns?

Mike Ryan (20:34)
So ⁓ part of it, Anthony, is looking at the 80-20 to understand where the biggest ⁓ points of pain or the biggest opportunities are for a client. especially in the beginning, working with a client, it’s understanding the impact and the effort that’s needed to deliver a win. And in the beginning,

for me, my approach is, hey, let’s rack up some quick wins. Let’s do it fast. They may not be, you know, giant, but they’re they’re big enough to matter. They’re big enough to be material and have an impact. Let’s get some momentum going. And that, think, is one of the biggest things is to say, hey, listen, ⁓ you know, it’s like how you eat an elephant one bite at a time. So let’s take a little bite.

Anthony Codispoti (21:13)
Let’s get some momentum going.

Mike Ryan (21:28)
Let’s, let’s wog the win and then let’s keep going and going and

Anthony Codispoti (21:34)
So I think it might be helpful both for me and the listeners if we kind of dig into a few case studies and so we can hear more particulars. So let’s talk first about the $350 million manufacturer and distributor that had a problem where their inventory was growing faster than their sales. What was the landscape when you came in and what did you do to kind of right the ship?

Mike Ryan (21:41)
Sure.

So the land the landscape was the warehouse was literally bursting at the seams and ⁓ I got brought in because the operating partner so kind of the liaison between ⁓ The private equity firm and the portfolio business said hey Mike these guys got a problem right there working capital is through the roof Their inventory is growing faster than sales. They’re running out of cash so

In that case, ⁓ one of the biggest problems or biggest challenges that that business had was their portfolio was huge and by huge, ⁓ they had 25,000 SKUs and there was a lot of overlap in their portfolio. So, some businesses have kind of the good, better, best approach.

⁓ In this case, it was like good, good or good or best, better, best, best, super best, ultra mega best and all the variations. So, you know, that coupled with a fair portion of their portfolio had minimum order quantities. So in some cases, ⁓ for low volume skews,

Anthony Codispoti (23:06)
You

They had all the variations.

Mike Ryan (23:27)
they were literally buying the equivalent of three years worth of product at one time. So it was kind of a double whammy of portfolio complexity and having to buy in these ridiculous ⁓ minimum order quantities. So with this business, it was a couple things. ⁓ First and foremost, was, let’s go back to the sales team. Are there any programs we can put in place? Are there any promotions?

⁓ that we can run to help kind of get a couple of quick bursts so we can quickly see if this strategy works. And then ⁓ the other approach was to go and work with the product management teams to say, listen, right, you’ve got this one product, ⁓ it comes in five colors, six different sizes, do you need all five colors?

can we go from five colors down to three colors? And as we started digging into it was, ⁓ well, this customer only buys this color. I’m like, OK, well, how important of a customer are they? And I love this. All customers are important. I’m like, ⁓ I’m like, there are some customers that are more important than others. Let’s put it on a scale.

Anthony Codispoti (24:46)
you

Let’s put it on a scale.

Mike Ryan (24:54)
And what we saw was this was the equivalent of like a C customer. They bought intermittently. We had no communication. ⁓ So it’s like, listen, let’s turn the tables and proactively communicate to this customer, hey, we’re discontinuing this color. We have this many in stock. If you want to buy them, ⁓ you’re welcome to them. But we are not going to order them again. ⁓

they bought them all, which was great. So it was really kind of taking that outside perspective of and constructively questioning, know, do we need five colors? Do we really need five colors? And you know, who’s buying, where does 80 % of the sales come from?

Anthony Codispoti (25:43)
Sorry, so this particular instance, did you say there were 25,000 SKUs? that this? And so, like I understand having that conversation like once or twice or maybe five times as an example with the team, but you can’t go through 25,000 individual SKUs and have that conversation one by one. That’s gotta be where some of the tech, where some of the software comes into play to help out.

Mike Ryan (26:02)
No.

this is absolutely where

the tech comes to play. And in this case, a business had four different product managers. So it was dividing and conquering. And it was a really neat process because we involved the product managers, the supply chain and sales and said, hey, we need to do a rationalization, right? It’s not that we want to do it. It’s we really need to do this. So what we did really before we presented the data was

hey, let’s define the criteria of what makes the cut and what doesn’t make the cut. And then using the technology, we could basically go through the portfolio and say, right, this 80%, right, it makes the cut, this 20 % doesn’t make the cut. So it then became ⁓ a process by where, you know, as we went through, hey, these are the ones that fell through the screen.

right, we want to cut them. Then it was okay, give us a reason not to cut. So it was almost like, ⁓ you got to make your case for it. it again, it’s a really the best results I’ve seen and been able to deliver is when it becomes a very transparent and a very collaborative process.

Anthony Codispoti (27:12)
Hmm. Got to make your case.

And so give me some stats, some metrics. What were you able to improve there?

Mike Ryan (27:36)
In this case, it was a combination of we reduced the days on hand. ⁓ We reduced the one of my favorite terms is slob, slow moving obsolete slob, right? It seems a little punchier than just excess slob inventory. We were able to take out, I think it was 12 % of the slob inventory in the first six months, which

Anthony Codispoti (27:54)
Yeah.

Mike Ryan (28:05)
business this size, inventory of this magnitude. mean, was substantial. That was substantial.

Anthony Codispoti (28:09)
That’s substantial. Okay.

All right, let’s do another one. ⁓ $80 million capital equipment manufacturer that had reached its borrowing limit, meaning banks were saying, more lines of credit for you.

Mike Ryan (28:27)
Nope, you’re tapped out. You know, they go to the banker and they’d say, you know, the business would say, more please. And the business, the banker would be like, beat it. So ⁓ in this case, this was really interesting. It was a capital equipment manufacturer and they had a lot of parts that were ⁓ custom fabrications, right? So this isn’t, you go to Granger, you go to Mastercar.

Anthony Codispoti (28:37)
Yeah.

Mike Ryan (28:54)
These were fabrications that were built by metalworkers specifically for this application.

Anthony Codispoti (29:01)
Like

a client places an order and then they make it. So it’s like built for one client.

Mike Ryan (29:08)
they had, so there, would say their base product line was effectively make to stock, but it was, you know, these were big pieces of equipment, long lead times. So they were effectively make to stock, but the businesses customers could, ⁓ customize them, whether it’s color or capacity.

Anthony Codispoti (29:32)
Okay.

So they’re making a lot of these things in advance of a customer ever requesting them so that they’re there and ready for the future order. Okay. All right.

Mike Ryan (29:42)
Exactly, right? Because the

lead time of the fabrication was long enough that if a customer placed an order and they didn’t have the fabrication, it would push out that order another three to six months. So in this case, what we found was, you know, in the beginning of the year, the business had set their budget. They had set their annual operating plan. ⁓ You know, we’re going to

Anthony Codispoti (29:57)
wow, okay.

Mike Ryan (30:11)
⁓ build and sell X number of pieces of equipment over the course of the year. So let’s just say, ⁓ let’s say 10 a month just to make the math easy. So the budget is we’re going to sell 120 of these next year. We’re going to build and sell 10 a month. So the buyer, right, worked with the fabricator, you know, to put the blanket PO in and they started getting in, you know, 10 of these a month.

⁓ the challenge or the rub was sales was not selling 10 a month. Sales was selling seven a month. They’re eight a month. They’re six a month. So because, you know, there was just a complete disconnect between sales and operations and supply chain. So the buyer, right, the buyer had their marching orders and just continue to buy and buy and buy. And.

what we had to do was say, hey, we need to get together. We need to recast the budget, recast the AOP, align it with reality and consume what we have on hand. And this was a really interesting case where the buyer said, okay, I’m gonna call the fabricator and cancel my POs. And I was like, whoa, whoa, stop. I’m like, is this the only person who makes these for you? Yes.

How long have they been making them for you forever? I’m like, well, what’s forever? 20 years. I’m like, okay, odds are that we are a significant portion of their business. We need to have a conversation, right? Because if you just call and cancel, you’re going to destroy this relationship and it’s going to come back and bite you in the behind six months from

Anthony Codispoti (32:05)
I want to pause for just a second. I want to hear how this story unfolds, ⁓ the sort of human awareness from you on that, I think is really astute ⁓ because it’s easy to sort of look at things in black and white and that one person is, okay, I see what you’re saying. I’m going to cancel this order. And you’re like, hang on a second. This is going to have a domino effect. And this is not a bridge that we want to burn. We don’t want to.

know, topple somebody else’s business, especially since it’s an important part of our supply chain. Let’s schedule a conversation and see what we can sort of untangle. I just want to give voice to that because I think that that’s really astute.

Mike Ryan (32:46)
thank you. It was, you know, for me, and this is, you know, I’d say part of the experience I got from GE was, ⁓ GE was the 800 pound gorilla. And when, you GE decided to take their payment terms from 45 days to 90 days, ⁓ there was a lot of vendors that, ⁓ right, that was very, very painful. And, right, I was the…

I was one of the people who had to deal with that. when the client who was over buying, when this came up, was kind of, I don’t know, part of it was maybe an opportunity to put some coin in the bank of karma and say, hey, listen, right? We can’t cut this guy off at the knees. We need to have a conversation. And it worked out well. It called him up and said, hey, listen, I know we’ve been buying ten of these a month.

⁓ We have 30 more than we need right now, which would say I don’t need to buy anything for three months, but I don’t want to do that to you. So instead of 10 a month, can we meet in the middle and say, Hey, we’ll continue to take five a month, right? We know we don’t need them right now, but I don’t want to shut you down either. And, and we put a plan together and it took 10 or 11 months.

to kind of get back to the point where the client’s inventory was balanced and the fabricator kept the doors open because we were able to work this out.

Anthony Codispoti (34:25)
Great. What else, I kind of stopped you midstream. What else were you kind of working on to write that ship there?

Mike Ryan (34:32)
So this was ⁓ another case where there were ⁓ minimum order quantities, parts being bought that weren’t necessarily needed then. ⁓ In this case, a lot of the parts that this business was buying were stock parts or standard parts. And we called up one of the main vendors who was a conglomerate and say, hey, listen, we overbought.

can we ship this back to you? And they’re like, yeah, we’ll charge a 5 % restocking fee. And at that point, the business was like, okay, that’s cool. If I can get 95 cents of every dollar that I spent on that, I’ll take it. I’ll take the haircut because it’s gonna put some cash back in the bank and then help them lower the utilization on their credit.

Anthony Codispoti (35:21)
Wow. And so ⁓ by the time that your engagement with that group wrapped up, were the banks talking to them again, taking their phone calls?

Mike Ryan (35:32)
they were because what I found and this was kind of one of those aha moments along the way is ⁓ the client was very intentional about communicating with the bank in terms of these are the actions that we’re taking. These are the results that we expect. And then they delivered right on those promises. the bank, you know, the bank

saw that as ⁓ the bar were built a ton of trust with them.

Anthony Codispoti (36:04)
Okay, let’s do one more a supplement manufacturer hundred and fifty million dollar supplement manufacturer ⁓ Typically they’d had very high fill rates, but for some reason these fill rates started crashing. What was going on here? How’d you help?

Mike Ryan (36:07)
Okay.

So a couple of things going on here. ⁓ This was, I got the phone call because the operating partner ⁓ said, hey, listen, I’m getting calls from our customers. They’re screaming because we don’t have product that we used to never run out of, right? Something’s changed, something’s different. And ⁓ in this case, it was a combination of two things. One was because they started to get

cash constrained. They could only buy so much raw materials at any one time. And the second one, which really was the key aha moment, was the forecast was literally a black box. So this one individual who was building the sales plan, he was a mushroom. He kind of sat in the dark, worked at Excel, spit out a forecast,

⁓ without any input from sales. I’m talking zero. And as a result, he was projecting that, you know, the sales of the C and D items were going up, the A and B items were going down. And the forecast, you know, besides determining what they think they were going to sell, forecasts also determined what

this business was going to buy for raw materials. So because the forecast was bad, because the forecast was a black box, ⁓ the business was investing what little cash they had into the wrong raw materials. So it was almost a one-two punch where, you know, they didn’t have enough raw materials for the A’s and B’s, the A products and B products, and they had more than they ever needed for the C’s and D’s. So,

in this case it was really ⁓ blowing up that black box and Saying okay. We need to put a tool together We need to actively work with the sales team to say what what do you think you’re going to sell right? Take ⁓ take availability off the table assuming you have all the product you need What are you going to sell how much? when and then the big thing was really being able to ⁓

help the sales team visualize the data. ⁓ The prior planner, besides being a black box, loved to people spreadsheets. And I mean, like just spreadsheets, like megabytes and megabytes of data, but no insight. So it was taking the forecast that we built and literally visualizing it with the team so they could see, you know,

either item by item or product family by product family or brand by brand, what the forecast was going to do. And then they could adjust it to where they said, Hey, I think this is about right. So it was involving sales in the process and visualizing the data to say, okay, we’ve got a good forecast. We’ve got a forecast that sales has confidence in. This is the forecast that we’re going to buy to.

And that turned it around.

Anthony Codispoti (39:51)
Can you recall any specific metrics? Like here was their fill rate before they started having problems. Here was their fill rate when I came in. And then here was the fill rate when we kind of wrapped up.

Mike Ryan (40:03)
So we picked up ⁓ six points of fill rate in four months. So on the A items, they went from 82 to 88 in the first four months. And ⁓ kind of hand in hand with buying what we needed and getting rid of what we didn’t, there was a $4.2 million reduction in inventory. So freed up.

$4.2 million in cash, which let the business reinvest into those A items and B items. So, you know, first four months it went up six points to 88. The next five months, it got up to 93, 93 % fill rate.

Anthony Codispoti (40:49)
Wow,

that’s fantastic. ⁓ know, actually I want to do this one first. What is probably the most common issue that you’ve seen in your career when it comes to inventory planning?

Mike Ryan (41:11)
The most common issue is…

people not talking. It’s communication. It is absolutely communication. sometimes it’s, ⁓ what’s that book? ⁓ Mars and Venus, men are from Mars, women are from Venus. ⁓ Sometimes it’s like that where the supply chain is speaking one language and the sales team is speaking a different language. And they’re literally just talking past one another. ⁓

Anthony Codispoti (41:18)
It’s communication.

Mike Ryan (41:45)
That is the first barrier ⁓ that we need to break down and build a bridge is, hey, let’s get sales, operations, finance, supply chain, let’s get them all in a room and create that common language so we’re all talking about the same thing.

Anthony Codispoti (42:05)
Hmm. Is, would you also consider that to be sort of the lowest hanging fruit? Like if there are people listening now and they’re like, yeah, I’ve got some inventory issues in my place. Not sure where to start. Maybe I can’t afford the Ryan group, or I just want to see what we can do on our own. Like what’s kind of the low hanging fruit that listeners might be able to kind of look for and make a change themselves.

Is it that same like communication thing or is there something else?

Mike Ryan (42:37)
No, I think I would start with understanding what inventory they have. And if they could point to, even if it’s a half dozen items to start, to say, hey, here are six items that we have too much. This is quantified. This is how much ⁓ we have that’s in excess. And then work with the sales team to say, hey,

You know, is there a plan that we can put together to try and create some of that demand? So, so really, you know, I think kind of back to the first question, right? In God, we trust all others bring data. It’s, it’s the supply chain or the planner saying, Hey, these are products that were really long inventory on. then to some extent, kind of going hat in hand to sales and say, I need your help. Right. I need your help.

and say, hey, of these, do you think there’s anything that we can put a program around? ⁓ That I found to be a lot more productive than somebody in supply chain or finance, know, barking at sales and saying, go sell this, right? That’s typically, ⁓ that’s typically kind of productive.

Anthony Codispoti (43:57)
Now you’ve ⁓ written a lot in ⁓ inventory management and forecasting. You’ve written articles on these topics. What’s some of the things that people would find in your publications? What are some of the insights that you’ve shared there?

Mike Ryan (44:15)
some of the insights are really, and this is my, my favorite question, and I’m kind of embarrassed that I haven’t brought it up. ⁓ it’s define the problem you’re trying to solve. There’s people and most people, I think it’s human nature, right? They want to present solutions before they really understand what the problem is that they’re trying to solve. So first and foremost, it’s.

Hey, let’s define the problem that we’re trying to solve. That’s step one. Step two is let’s quantify what it is worth to the business. How much value we can create, how much cash we can unlock if we solve this problem. And then once the problem’s defined, it’s, hey, let’s get the right people in the room to start talking through in what ways we can solve this problem. Because there typically isn’t just one way.

There’s multiple ways. So let’s figure out in what ways we can attack this problem ⁓ and kind of work to ⁓ crush that inventory iceberg.

Anthony Codispoti (45:27)
Looking ahead, Mike, how do you see advancements in tech or just industry trends in general reshaping supply chain management and the consulting work that you’re doing to support it?

Mike Ryan (45:43)
So I think as, I mean, there’s been a ton of development and a ton of iteration the last couple of years, especially around supply chain planning. And I think it’s a combination of while there is absolutely more computing power out there and there’s absolutely more resources that can digest the data, I think where the human element is,

taking that data, taking that information and being able to draw insights out of it, being able to identify trends and then put plans in place to work those trends. So I think we’re seeing a lot more of, it used to be getting the data, crunching the data, that was the heavy lift and just a fraction of the time was spent on creating insights. What I’m starting to see is,

that gathering and crunching time kind of compressing so more time can be spent on developing insights and developing plans to actions those insights.

Anthony Codispoti (46:55)
Are you using AI for any of this yet?

Mike Ryan (46:58)
⁓ I am, yes. Yeah, there’s a couple of AI tools that I use that help, ⁓ I’m going to say do some kind of course analysis or quick first pass analysis to help validate ⁓ some assumptions. So yes, I am.

Anthony Codispoti (47:17)
Okay, how do you see that use of AI unfolding? Do you have ideas percolating on other ways to use it or are you hearing people talk about new tools that are coming?

Mike Ryan (47:28)
It’s a combination of both. I think one of the dangers is

when there is a large analysis or a really deep analysis, it’s validating the data, right? It’s still needing to go back and say, okay, right, AI is not perfect, especially if it’s, we’re asking to do deductive reasoning. ⁓ We need to validate, we need to validate the data. And I think the other danger is, ⁓ you know, people taking the output kind of blindly and just actioning it.

Right? It still needs a second look and there still needs to be conversation around, hey, I’ve come to this conclusion. This is what I recommend. Looking to validate, hey, is this the best path? Is the juice worth the squeeze?

Anthony Codispoti (48:28)
⁓ Let’s shift gears, Mike. I to hear about a significant challenge that you’ve overcome in your life. Maybe it was something personal, maybe it was professional. What was that? How did you get through it? What you learn?

Mike Ryan (48:45)
Um, there’s, I was smiling because I think I’ve been fortunate in that, uh, I’ve, I’ve had a lot of those experiences where, uh, you know, came out the other side stronger. Um, I think one of the challenges is, uh, I remember the first big client that I landed, uh, started out as a four week engagement.

ended up turning into almost a 10 month engagement, know, solve the initial problem. And they said, Hey, Mike, can you help us with this? Sure. Right. Hey, Mike, can you help us with this? Sure. So it was fantastic. Right. I’d like to say for 10 months, I was fat, dumb and happy. Right. I was ringing the bell. I was getting paid. And, you know, when that engagement closed, what I realized was, huh,

I haven’t talked with anybody in six months. So, you know, and I had put some savings away and that first month it’s like, okay, right, it’s time to fire up the business development engine. I feel good. And the second month is, huh, I’m starting to feel a little uncomfortable. ⁓ Cause I don’t know where Menex dollar is coming from.

And then by the third month, was kind of, yeah, it was panic mode. Like, hey, I’ve got a wife, I’ve got four kids, I’ve got a mortgage, and ⁓ I don’t know where my next dollar is coming from. And ⁓ I think part of it was ⁓ because I hadn’t built up a network, it was a little bit easier for me to kind of get that flywheel going again.

But that was, ⁓ I would call that a very expensive lesson learned that no matter how busy I am, I still need to set time aside to continue to sustain relationships and nurture new relationships and keep conversations going.

Anthony Codispoti (51:00)
So having gone through that, two questions I want to ask. The first one is, how did you get through that emotionally? Right? First month, hey, it’s OK. I’ve got some savings. Second month, like, whew. Third month, it’s like alarm bells. ⁓ Were there, I don’t know,

people in your professional network that you could sort of commiserate with or get support from or you were you going to kind of close friends and family members? Like how did you get through that from an emotional perspective?

Mike Ryan (51:32)
⁓ So there were, I’ll say two components. One was my wife. ⁓ She is my rock. She’s awesome. ⁓ I don’t think I would have had the courage to hang up my shingle if it wasn’t for her. And ⁓ the other part is I belong to a group that’s called the Mastermind Group. ⁓ It’s the way I describe it. It’s like having a personal and professional board of directors.

and we help hold each other accountable. So it was being able to bring it to the group and talk through it and realize, yeah, I need to keep talking to people. ⁓ But then they help hold me accountable for seeing that through as well. So ⁓ definitely first and foremost, my wife though.

Anthony Codispoti (52:24)
That’s great. ⁓ I think people need to hear both of these points that you made here because, ⁓ you know, the, the upside of business, that’s great. Like you said, you were ringing the bell, you were getting paid. And then when there’s those slow periods, ⁓ sometimes there’s this tendency, natural human tendency to sort of turtle up to withdraw within. And when you’ve got somebody like your wife in your corner that you can connect with for that

emotional support during those tough times. Man, that is so key. ⁓ And then the other side of it, the professional support from your mastermind group. I am a big fan of having that peer support, whether it’s like in a formal mentor relationship or a mastermind group or an association, like-minded people together. I think people who aren’t doing that are missing out.

Mike Ryan (53:23)
Yeah, I agree. And it’s interesting, know, one of the things you said about kind of turtling up. You know, I found that, you know, especially in the early days of starting the firm, I think that was kind of my default was to turtle up. ⁓ And I learned that ⁓

The best way my wife can support me is by challenging me when I turtle up and saying, hey, listen, right? I’ve had three calls this week. One felt really good. One was okay. One was a dud ⁓ and involving her in the process to say, hey, when it’s going great, I want to celebrate. And ⁓ when it may not be going as great, ⁓ being able to communicate that as well.

Anthony Codispoti (53:53)
Hmm.

I love that. ⁓ people sort of dozed off for a second, rewind and re-listen to that. Because I think reaching out and establishing that connection with people in a safe way, know, people that you feel comfortable with when you’re going through those difficult times is probably the best medicine that I’ve found. It’s probably the best medicine I think exists.

So having gone through that, second question that I wanted to ask you is, how do you approach networking and business development now?

Mike Ryan (54:50)
Great question. So I think there’s a couple things there. One is…

what I’ve learned, it’s called the fishing line and being able to articulate, I help X with Y. ⁓ You know, in the very beginning, I would say, hey, I’m a supply chain guy. And I would spend more time explaining what I didn’t do than what I actually did. So being able to say, hey, I help middle market manufacturers and distributors solve supply chain and inventory problems. And so it’s making it

easier for people to understand in what ways I can create value. And when it comes to networking, it’s understanding, hey, who’s my target audience? Who are kind of my people in terms of people that I can be of service to, or they could potentially connect me with other people who are inside my target market. So

it’s ⁓ understanding that we’re all blessed with the same 24 hours in a day and spending it as wisely as we can will just help create that return on investment.

Anthony Codispoti (56:14)
of it. Mike, for people listening, what recommendation would you have in terms of a podcast, a book, a course, another resource that has been helpful to you, maybe helpful to others?

Mike Ryan (56:30)
So ⁓ one podcast that really helped ⁓ kind of shape my consulting business is called the business of authority. ⁓ Jonathan Stark, Rochelle Moulton, and it’s really a combination of two things. Jonathan Stark, his approach is hourly billing is nuts, right? He’s a big proponent of fixed scope, fixed fees. ⁓ And Rochelle Moulton, her focus is on building authority and personal.

So the business of authority is one that I would highly recommend.

Anthony Codispoti (57:06)
and why the big preference for fixed fees.

Mike Ryan (57:11)
because the way I look at it, when somebody is billing by the hour.

they become incentivized to make the work last as long as humanly possible. And then, you know, the billing by the hour person may think they’re doing well, but then the client is unhappy. And in that case, it’s all about, it’s all about price. It’s not about value. For me, the way I approach things is, hey, let’s start with how much value we can unlock and how much value we can create. And

My approach is I never want a client to have to think about, know, is the meter running if I pick up the phone and call Mike? Right is the meter running if I grab 30 minutes on its calendar? It’s understanding that you know and this comes back to ROI and the return on an investment that right the investment and me and my firm is going to create a multiple for the business so by having a fixed scope right we understand

and the expectations are clearly defined in terms of what’s in and what’s out. And fixed fee means no surprises.

Anthony Codispoti (58:27)
I like that. Mike, what’s your superpower?

Mike Ryan (58:37)
I don’t know if I call it a superpower. One thing I learned, so you’re a little factoid, I grew up on Long Island, New York. Both my folks were cops. My dad and my mom were cops. I think one of the things I learned from my dad is he could speak with absolutely anybody, absolutely anybody. So I think that’s kind of one of the skills that I’ve

that I got from him. And I’d say the other, I’ll call it a strength. I don’t know if it’s super power levels, but I’ll call it a strength is being able to see here kind of what seems to be disparate data points or disparate pieces of information and connect the dots to understand, hey, if I pull this lever here,

or something happens here, this is what happens all the way downstream. ⁓ it can be connecting the dots. ⁓ I can see the, yeah, I can see the chessboard, yes.

Anthony Codispoti (59:43)
You can see the chessboard.

How about ⁓ daily practices that either help get you started or keep you on track?

Mike Ryan (59:55)
Okay, so ⁓ kind of morning ritual, I’ve developed ⁓ exercising as a habit. ⁓ Even those days where I don’t want to do it, I still do it, because it’s a great way to just get moving. And then the other thing, ⁓ morning ritual is like, I have a list of, this is what I want to get done today. And, and it’s not just what I want to get done. But like, this is the next

action I have to take to make progress on this goal. So being very ⁓ clear about what I want to accomplish and that’s the start of the day. ⁓ And then ⁓ evening ritual is I read every night before I go to bed. That’s how I ⁓ kind of mentally shift gears and help ⁓ kind of calm down.

I don’t know, calm down sounds extreme, but it helps me transition from my mind going a mile a minute. Unwind. Thank you, Anthony.

Anthony Codispoti (1:00:57)
Unwind. Unwind. Yeah.

⁓

You know, a lot of times in the moment when we make a mistake, what feels like a big mistake, feels crippling, like this is going to have serious ramifications. When we can look back the little distance in the rear view mirror, we actually look back at that event with some gratitude because we realized that it propelled us in a different direction. Can you think of something that happened in the moment that felt like this is it, this is, but now you look back and you’re like, I’m so great.

Mike Ryan (1:01:38)
The one ⁓ that immediately jumped to mind, had a boss. I was probably, ⁓ God, mid-30s. And I had made a mistake. wasn’t a no lives were lost kind of mistake, but ⁓ I fat fingered a calculation. ⁓ He kind of blew up.

And I came home and I was mad. I was mad at myself. ⁓ I was mad at my boss. And ⁓ my wife looks at me and she’s like, what’s wrong? And I explain it to her. And she looks at me and she goes.

I think you learned something today.” And I’m like, what’s that? She goes, yeah, you made a mistake, right? You owned it. I did. But how your boss handled it, you’re learning exactly how you don’t want to respond or don’t want to react. And like, I went from, you know, kind of being red in the face and upset to like, cool hand Luke. I’m like, you know what? You’re right.

I know I will never treat anybody like that. that was one of those moments that just absolutely stuck with

Anthony Codispoti (1:03:03)
I love that. And this is something that I’ve tried sharing with my kids. I’ve got two boys who are nine and 11. And ⁓ sometimes they witnessed or been on the receiving end of somebody behaving poorly. And they have a hard time sort of understanding or coming to terms with that moment of injustice. I say, and it’s hard for them to understand at this age, but.

I’m going to sort of put it in this context because I think the point that you’re making here is really powerful is that, you know, we’re going to have the good fortune to learn from a lot of positive role models, right? Mentors, parents, friends who are doing things in a way that, wow, I want to emulate that. I like the way that they did that. I like how they carry themselves. I like their process there. And then we’re going to have the opportunity to learn from people sort of on the other side of that coin.

that are modeling a behavior that that does not feel right to me. That is not the kind of person that I want to present as and I’m going to, rather than fueling all of my energy in this moment into anger, which is what you initially did, which is a normal human reaction, I am now gonna step back with a modicum of gratitude for thank you for teaching me the way that I don’t wanna be.

Mike Ryan (1:04:03)
Yeah.

Anthony Codispoti (1:04:31)
Let’s see, what is the biggest growth lever that you’ve been able to pull for your own business?

Mike Ryan (1:04:40)
think the biggest growth lever has been ⁓ being able to articulate more effectively in what ways I can create value ⁓ in helping others understand what the firm does and who the firm helps. ⁓ That for me, and that came from asking people like…

no like and trust to say, I want your feedback. Here’s what I’m putting together. Here’s how I’m trying to communicate. Can you help me make this be as effective as possible? And ⁓ opening myself up to that feedback and their input, I think has been one of the ways I’ve been able to really articulate, hey, here’s where we create value.

Anthony Codispoti (1:05:35)
I’ve just got one more question for you, Mike, but before I do it, want to do two things first. Everyone listening, pause for just a second, open up that podcast app that you’re listening on. Go ahead and hit the follow or subscribe button. And if you’ve got an extra second, you could leave a comment or review. It’s a great way for you to continue to get more wonderful content, great interviews like we’ve had today with Mike Ryan from the Ryan group. And it helps the show out. It helps a lot of other people find us too. So.

Mike, last question I’ve got for you, actually before I ask the last question, what’s the best way for folks to get in touch with you? They’re listening, like this Mike guy’s pretty interesting. How do I have some more conversations with him?

Mike Ryan (1:06:14)
So there’s my website which is Amazon Michael R Y a n group comm the Ryan group comm or on LinkedIn and While Michael Ryan is a fine Irish name. It is far from unique so If you search for Michael Ryan inventory iceberg or Michael Ryan inventory, I will be at the top of the list

Anthony Codispoti (1:06:40)
⁓ okay. And we’ll find those correct links and we’ll include them in the show notes for people. So last question I have for you, Mike, we had a good connection here. Hopefully stay in touch. And a year from now, we reconnect one year anniversary from today and you’re celebrating something big. What’s that big thing that you hope to be celebrating one year from now?

Mike Ryan (1:06:59)
A big thing I hope to be celebrating one year from now is ⁓ some partnerships with some software companies where they have the technology and I bring the people in the process ⁓ in really scaling and accelerating the implementation of sales and operations planning processes.

Anthony Codispoti (1:07:22)
Is that something in the works or this is kind of a new idea that you’re kicking around?

Mike Ryan (1:07:26)
⁓ It’s in the works. It’s been a conversation that’s been in progress for a while and I think it’s figuring out ⁓ really how to create, ⁓ well, number one is, you know, what are the situations where this combination is most effective? And then two is really defining, hey, this is the target, this is the market that we can really create a ton of value for.

Anthony Codispoti (1:07:55)
Michael Ryan from the Ryan Group. want to be the first to thank you for sharing both your time and your story with us today. I really appreciate it.

Mike Ryan (1:08:03)
⁓ Thank you, Anthony, having me. I really appreciate it.

Anthony Codispoti (1:08:07)
Folks, that’s a wrap on another episode of the Inspired Stories podcast. Thanks for learning with us today.