Aligning for Agility in your Supply Chain. Where is the Disconnect?
Robert walks into the meeting with the leadership team of the local manufacturing plant. Robert is the CEO of the company, well liked by most and successful by almost any standard. Everyone is waiting to hear what he has to say. Today’s topic is some new strategy along with the related goals for the next few years. It seems that the future looks bright and significant growth will be achieved through the next two years. How will we achieve that growth and what will be the target numbers? That’s what today’s meeting will start to unwrap, hopefully.
Julie is waiting anxiously. She is both filled with anticipation and at the same time nervous about the expectations. The company is making money and the future looks bright. No one’s job is in danger this morning. Will the goals be realistic? Will there be clear directions that lead to specific actions on the part of her team? Julie is the Supply Chain and Operations Manager for the division. She knows her division and team are performing well, but much of her success is due to never-ending heroics by her team and more than a few lucky breaks. If only their success was future-proof.
As the meeting concludes, a couple things have the room buzzing with excitement. First, there is a renewed focus on acquisitions. Though we are informed that there isn’t anything currently in the pipeline, the expectation is that acquisitions will create a 50% increase in top line revenue. Second, a new distribution strategy and market penetration will result in a 100% increase in demand at our local plant. It is uncertain how any acquisitions may impact our local team, but it’s always possible.
Matthew is sitting quietly alone, in the back of the room. He looks stunned, and it is obvious that he is hastily making his evaluation of this new information and at the same time trying to determine his own strategy to respond to the huge increase in demand. Matt is the Materials Manager for the plant. As Julie approaches, she thinks she sees a brief flash of desperation in Matt’s eyes. He quickly recovers and asks Julie about her thoughts on this exciting development.
“Can I be Frank?” asks Julie. Matt smiles, because he knows she is referring to their former boss Frank, who always had a negative outlook, no matter what the news. “It just seems like we are always barely keeping our balance or one step away from drowning,” Julie continued. “When our systems and processes are so dependent on luck and hope, how will we ever support a 100% increase in demand?”
Matt takes a moment to collect his thoughts. “What was that program you were telling us about a few months ago?” he asked. “Something about focusing on our capabilities, and tying our operational strategies to the corporate vision, wasn’t it? I only mention it because you brought up hope and luck as a strategy, and that reminded me of that earlier conversation that seemed to provide an alternative.”
Julie slowly starts to nod. “Matt, you’re right. I’ve been thinking we need to stop trying to improve our reaction-based responses and develop a strategy that proactively focuses on agility. We need to find solutions that prevent problems in the first place, not continue to solve problems after they have occurred.”
“What was the program called?” asked Matt.
Demand Driven Material Requirements Planning is the starting point,” replied Julie. “But once implemented, it opens up possibilities into Demand Driven Sales and Operations Planning and others as well. It not only allows us to manage our inventory levels differently, but finally gives us a framework allowing a calculated and process-based way to make decisions.”
“If I remember correctly,” prompted Matt. “There was also a way to connect the strategic plans, like 100% increase in demand, to our daily or weekly operational actions. And once we focus on what the customer is asking for, we can stop producing large batches of what we don’t need.”
“Thanks for reminding me about DDMRP,” said Julie. “I thought at the time that there was a key value for us in that methodology, but in all the confusion of our daily lives, it had slipped my mind.”
Matt grinned. “I think we better bring it to the top of our priority list, based on this new information. If we have struggled up until now, with a large increase in demand, we’ll definitely need to upgrade our approach.”
“One thing is certain,” said Julie. “Business as usual can’t continue to be our path forward. The tools we have been using are barely allowing us to avoid drowning. If a better way exists, that conforms with the fast-moving world around us, it’s time to explore that idea.”
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John Melbye, DDLP, DDPP, CSCP