Supply Chain Illustrated

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Challenge your Paradigms

As I grow older – strike that – As I learn more, I sometimes reflect on why some of my past initiatives have failed.  Or better yet, why I couldn’t imagine a solution that now seems obvious.

Supply Chain is complex.  Our full brainpower, imagination and outside the box thinking cap is required.  If we can’t get creative, we will not reach the solution.

Here are three real roadblocks we must overcome to break free.

  1. We cannot imagine a new scenario with different job titles and responsibilities. Our paradigm is set for our existing work structures and job responsibilities. We envision the same departments and job functions to which we’ve grown accustomed.
    • Creating new departments is easier than reimagining the current ones, but when you try to jam new information into your existing structure, it’s a bit like trying to sit 8 people at a table that sits 4. No one will be happy.
    • If you look at new scenarios and opportunities, and your response is that “it won’t work because we aren’t organized for it,” then your imagination is broken.
  2. Despite all our best efforts to keep things running smooth, problems still occur.  Our blindness to the truth of the situation keeps us from seeing that it is “Because of the method we use to keep things running smoothly, we actually cause the problems.”
    • We measure success by how many parts per hour can be produced and then we wonder why we have more parts than we need.
    • We ask for reductions in inventory and then we make decisions and provide tools that require that we increase inventory.
    • We focus on reducing cost, which makes us less agile. Then we demand that our people and processes be more agile.
  3. We are looking at the wrong end of the problem.  We use a forecast that we know as 80% accurate at best. As we get closer to delivery time, we see that either the quantity or the due date (or both) has changed. And then we scramble to react to that change, putting immense effort into course correction.  We still think the solution is to improve that 120-day forecast.
    • We need to stop using an incorrect forecast to precisely plan today’s activity. Using an imprecise goal and expecting a precise result is insane.
    • Focusing on a 120-day forecast when your customer gives you changes only 2 weeks from the delivery date is not focused correctly.
    • The gap between the customer’s willingness to wait and our cumulative lead time for production is growing. A plan that starts with a long-range guess will cause more and more chaos as we get closer to delivery.

We are working harder and harder to force our customers to fit into the limitations of our Material Requirements Planning (MRP).  We must determine how our MRP can be updated to remove the limitations that prevent us from achieving our customer service goals and calm the chaos our employees face every day.

I’m taking questions if you’re curious.

John Melbye, President, ASCM Twin Cities

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