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2013

In my last entry I introduced guiding principles as a concept or means to developing your collaborative extended supply chain.  The guiding principles as I said previously define how you will achieve the objectives that you have defined for your collaborative network, I also think of guiding principles as your first effort in developing your collaborative culture.  Guiding principles critical to defining how you and your partners will interact with each other and also now you will act in situations or activities that interact with your partners.  Guiding principles not only provide guidelines, they also provide support to the collaborative network.


What do I mean by when I say that guiding principles provide support to the collaborative network?  In brief, if you and your partners are following the guiding principles they can be confident that their decisions are beneficial to the entire collaborative extended supply chain network.  I hope this gives you a perspective on how important guiding principles are to your collaborative extended supply chain network.  Let me repeat this to impress upon you the importance of guiding principles - if you are making decisions that follow your guiding principles, you can be confident that your decisions will be beneficial to your entire collaborative extended supply chain network.  I realize that this can be difficult to accept, since it truly embraces collaboration and in fact creates a culture of collaboration and partnership.  It can be very hard to include your collaborative network in you decision making, but it is important to embrace this in order to achieve success, value and full hearted acceptance and commitment from your partners. 


Now let me get into developing your guiding principles by beginning with a definition of principles - “a fundamental truth or proposition that serves as the foundation for a system of belief or behavior or for a chain of reasoning”.  So again, you are building a foundation for a system of behavior and in order to do this you must start by working with your partners.  As I mentioned, you are using the guiding principles as a foundation to your collaborative culture. 


These guiding principles will describe how you will achieve your objectives and will provide the continuum to support the continuous improvements that will become the basis of your successful extended supply chain network.  So think of guiding principles as methods and you will use these methods to achieve your objectives.  So an example of a guiding principle is - partners will interact with each other openly and honestly; another could be decisions made by the partners will be embraced and supported both publicly and privately.  I think it is important that you develop your guiding principles as a collaborative effort with your extended supply chain partners.  You can see, I hope, why I suggest initially that you focus on analysis to identify your key services and suppliers.  You must begin to develop your guiding principles after you define your mission and you must develop your guiding principles initially with a small group of motivated partners because if you start with too large of a group you will never be able to come to an agreement. 


Your guiding principles should be small in number and focus on providing guidance.  I think you should think of your guiding principles as a kind of ‘Bill of Rights’ for your collaborative extended supply chain.  If you think of it in that manner, your guiding principles will evolve and grow as your collaborative network grows.


And now for the audience participation portion of the show…

Have you contemplated the key partners and functions that make up your extended supply chain?  How do you measure the results across the extended supply chain?

In this entry I will provide some suggestions regarding methods that can help you to develop your collaborative extended supply chain network.  This is not a cookbook instruction manual, instead I will focus on what I think are important tools and principles in developing your collaborative network.  The reason behind this type of advice rather than providing a cookbook method is that I firmly believe that guidelines and principles are the best method to develop the most robust network, you must be flexible and comfortable with the benefits of guidelines rather than strict or rigid instructions.


To start with a base guide, or framework, I believe you must treat this initiative the same as you would any project.  Building a collaborative extended supply chain network must be treated as an iterative process and I suggest that you utilize the same methods you would to guide a continuous improvement initiative, execute a PDCA (Plan, Do, Check, Act) Cycle.  In my opinion, this is the single most important guideline to a successful initiative.  This provides the method and the standard tools to ensure that your initiative to develop a collaborative extended supply chain network clearly identifies objectives and delivers on these objectives.  Just because this is a type of social network initiative does not mean that you can just start and hope you are successful, you must follow a process in order to increase the likelihood of your success and as mentioned earlier I believe very strongly that the PDCA Cycle is the most effective method.


The next point that is probably just as important as the methodology is to select your initial group of partners and define your objectives and guiding principles.  These objectives must be defined and agreed to by all of the partners involved in the initiative.  It is important to develop these as a team because it is the first step to developing the collaborative culture.  The objectives will focus on what you plan to achieve and the guiding principle will define how you will achieve the objectives.  The what are things like communication network, types of communications, timing of communications, the benefits of the objectives must also be defined.  The guiding principles as I said define how you will achieve the objectives, I also think of guiding principles as your first effort in developing your collaborative culture.  Guiding principles define how you and your partners will interact with each other and also now you will act in situations or activities that interact with your partners. 


The guiding principles are important for another reason too and this reason gets to my point about guiding principles as a rule book for your collaborative culture.  Think of guiding principles as the rules or advice in how you will act in situations, interactions and activities that include your collaborative partners.  You must put a lot of thought in these guidelines and all of your partners must privately and publicly support these guidelines.  The reason for this is that all of your collaborative partners must agree that as long as a partner is acting in good faith by the guiding principles they can be assured that their actions and decisions support the collaborative network.


In my next discussions I will provide some suggestions for methods to develop your collaborative extended supply chain network.guiding principles.  This is a critical piece to the success of your collaborative extended supply chain network and deserves more discussion.


And now for the audience participation portion of the show…

Have you contemplated the key partners and functions that make up your extended supply chain?  How do you measure the results across the extended supply chain?

In my last discussion I spoke about the importance of analyzing and prioritizing the services to identify your key services and service providers.  The objective of this exercise is to focus your initial attentions on your service providers that will bring the greatest value from your efforts.  This is especially important when you are starting to develop your collaborative extended supply chain network to build acceptance from both your senior management and your first level supply chain partners.  Based on my past experiences you will have a hard enough time gaining the attention and opportunity to develop your collaborative supply chain network because the concept is just beginning to gain traction, but if you can’t present a value proposition there is no way to gain momentum.


So in this installment I thought it would be beneficial to discuss how to go about determining the importance of the services in your extended supply chain.  This can be somewhat of a challenge to start because, after all if the services are not necessary and important, why would they be a part of your extended supply chain?  You would be right about this so we must use a different method in your analysis.  Lets look at it from a perspective of impact on your supply chain due to an outage. 


This viewpoint begins to paint a different picture and would generally move your focus towards the first factor, or level, you should evaluate which is your carriers and shippers.  These are more than likely the first area of impact to your extended supply chain due to an outage.  The second point to remember is that an outage can be caused by much more than a natural disaster.  An outage can be related to a strike or a loss of raw materials for instance.


The second factor, or level, you need to take into account in this analysis is geographical.  This factor crosses over both your transportation because of the ocean carrier and freight expeditors aspect and it also begins to bring into account your product suppliers.  Your off-shore suppliers will begin to increase in importance here because an outage with your offshore suppliers will cause future (future should also be defined) outages of products to your customers.   I’m sure you are already thinking about how much this second factor crosses over with the first factor and your would be correct.


The third factor, or level, are the services and providers that you use either on a periodic basis, or as backup.  These can include suppliers that provide spot purchase support for spikes in volume, or maybe local carriers that provide regional deliveries at a discount rate that reduces your overall shipping costs. 


There are two benefits to performing this analysis; the first is that you identify a clear picture of your services and dependencies and the second is that you identify a clear picture of your business continuity challenges and opportunities.  These benefits should be enough to generate motivation, approval and buy-in from both your internal senior management leadership along with your extended supply chain service providers.


In my next discussions I will provide some suggestions for methods to develop your collaborative extended supply chain network.


And now for the audience participation portion of the show…

Have you contemplated the key partners and functions that make up your extended supply chain?  How do you measure the results across the extended supply chain?

In this discussion I want to expand on prioritization of the services and providers in your extended supply chain.  In my last discussion I referred to the importance of prioritizing services in your extended supply chain network as a means to determining where to start when developing your collaborative partnerships.  You must focus on the value that the service provides to your extended supply chain when planning your collaborative network.  The critical aspect to this exercise is to focus on prioritizing services before you bring your service providers into the analysis.  I suggest this because you should not cloud your analysis with any personal relationships you may have developed with the service providers’ representatives while you are planning your collaborative network.  Instead you should first focus identification of the high value services and then the high value service providers.


Why do I say that you should focus on the value of the services when planning your collaborative network?  The key reason is that in order to gain momentum and acceptance in developing your collaborative extended supply chain network you must first focus on the value and the return on investment.  Another point to help gain acceptance with management across your extended supply chain network you must show business value and return on investment quickly.  Remember, no matter what anyone says this is not about collaboration and partnerships, this is about increasing the value of your extended supply chain!  The quickest way to deliver value is to focus on the services that provide the greatest value to your extended supply chain.  Collaborative networks that focus on the connections are great if you’re Facebook but in order to gain momentum and acceptance with a business initiative you must focus on the value that will be delivered to your company and also your extended supply chain partners.  The key is to focus on mutually beneficial partnerships starting with your highest value services.  This will provide the incentive for both internal and external partners to support and grow your collaborative external supply chain network.


Your exercise in evaluating your services should be segregated into 3 categories, or levels.  The first level is made up of your highest value services across your supply chain  These are the services that would have a major impact to your extended supply chain if there were to be a disruption in these services.  The second level is made up of your high value or very important services across your extended supply chain.  These are the services that would not cause an immediate disruption but must be maintained in order to maintain and improve efficiencies.  The third level is made up of your supporting or back-up services.  This third level will gain importance when services in your first two levels are disrupted for example.


You should recognize the basis for this services analysis because it is the same structure that is generally used to define your social network structure.  This structure allows for clear definition of participants and services and allows you to identify and focus on the key players in your extended supply chain so that you can quickly gain return on your investment.


In my next discussions I will cover the different levels along with a method for building a high value collaborative extended supply chain network.  This high value network will also support your efforts to build a lean extended supply chain network by helping you to focus on tuning the services based on your service value analysis.


And now for the audience participation portion of the show…

Have you contemplated the key partners and functions that make up your extended supply chain?  How do you measure the results across the extended supply chain?

If you’ve followed my discussions you will understand that one of my strong beliefs is that collaboration is a critical factor to the success of any supply chain. I’ve discussed in the past the importance of developing collaborative partnerships to improve the success of your extended supply chain.  So I’m sure that you recognize the theme I’m presenting in this discussion.  I think it is important to cover these points in this discussion again because of the number of partners that can be involved in your extended supply chain.  There are two critical aspects to developing successful partnerships; the partnership itself that is built upon mutually beneficial objectives, the metrics to measure the success of the partnership and the objectives.  In this discussion I will cover some of the points that I believe you should keep in mind when initially building your collaborative partnerships in your extended supply chain.


As I stated in my last discussion, there are very few, if any, companies that support their entire supply chain without engaging other service providers.  These service providers have focused on various aspects of the extended supply chain to allow a company to outsource the support of their needs to these various service providers.  Right, wrong, or indifferent, we have come to a point in evolution of the extended supply chain where a series of partnerships has become critical and even a basic requirement to the success of the extended supply chain.  It is now more important than ever to understand the need of developing strong partnerships and then to develop the methods to select the critical partners and implement the partnerships. 


Successful partnerships do not just happen, they are developed and nurtured based on mutually beneficial objectives and service level agreements.  In fact the best partnerships must include fair and mutual service levels along with the key performance indicators to measure these service levels.  The best partnerships are based on open and honest communications that are focused on mutually beneficial objectives.  The best partnerships require a lot of work in the early development stage.  This effort must be focused on developing the service levels and key performance indicators and the initiation doesn’t just stop there.  In addition to the definition, you must also perform an initial validation of the service levels and the key performance indicators to ensure they are appropriate and effective.  This will take some time and involvement in order to confirm and revise the service levels as appropriate.


Due to the level of effort required to initially develop your partnerships, I think it is important to focus on developing strong partnerships with your key service providers before moving on to your secondary partners.  This exercise must start with an analysis of your service provider network in your extended supply chain.  It is important that you enter into this activity with a clear understanding based on a thorough evaluation of your services.  You must initially focus on defining the services that are critical to the success of your extended supply chain, never start with the partners because this will cloud the evaluation.  My suggestion is that you identify the services based on the value to the extended supply chain and prioritize into three levels (I chose three level arbitrarily).  Once you’ve completed this analysis you can then focus on working with the services providers that provide your key services to develop the partnerships.


The prioritized services will allow you to sequence your efforts and bring the most value to your extended supply chain.  A bit of additional advice, never start with low value partners, the low value partnerships do not provide the reason to strive for success that the high value partners provide.


And now for the audience participation portion of the show...

Have you contemplated the key partners and functions that make up your extended supply chain?  How do you measure the results across the extended supply chain?

In my last discussion I scratched the surface on implementing a lean extended supply chain.  In that discussion I touched on the importance of your partners that make up the extended supply chain along with the suggestion that in order to improve and tune your lean extended supply chain it can mean that you denormalize, or de-optimize, certain functions in order to improve the overall end customer support.  This can be at odds with the classic lean practice in that the goal is to eliminate waste and improve efficiencies in all functions.  This is why I suggest that your view should be the entire supply chain, from raw material to end customer in the store.  This is truly your extended supply chain and in order to succeed you must take the long view and measure success based on your entire extended supply chain that provides a mutually beneficial ecosphere for all partners in that extended supply chain.


A reader of my last entry provided a great overview of the classic Lean principles -

“Historically Lean was predominantly based around reducing wastage (time as well as materials - non value adding exercise) and is not to be confused by JIT (Just In Time) which was sometimes unfairly viewed as an exercise for businesses to become more cash positive versus cash negative i.e. having just the right amount of raw materials around to make what you need to make instead of having piles of widgets around that adversely affects cash flow. The better companies also used Lean as a foundation for their quality control practices as early exponents found that a business can be seriously affected by running Lean programs if the timeliness of products is interrupted by poor product quality.”


I like this description because its clear, concise and provides background to focus the definitions.  The classic principles as you can see are focused on individual departments and then expanded into the company.  The second interesting, and pertinent, point is the comment - “The better companies also used Lean as a foundation for their quality control practices as early exponents found that a business can be seriously affected by running Lean programs if the timeliness of products is interrupted by poor product quality.”  This statement is also pertinent to this discussion because I propose that a key aspect of the successful extended supply chain is the quality of the service that makes supports the end customers.  So I come to this description of the lean extended supply chain - The lean extended supply chain provides a highly efficient, highly stable, end-to-end functionality and capabilities to support the delivery of products from raw materials to the finished product to the end-customer’s door.  The lean extended supply chain is made up of a collaborative network of partners that support the extended supply chain services to deliver mutually beneficial results in the extended supply chain.


The last sentence in my description I think is critical to the success of the extended supply chain.  In the current supply chain industry there are very few examples of extended supply chains that are capable of performing all required activities from the raw material input to the eventual end product output to the end customer.  This being the case it is now critical to develop a collaborative network of partners that deliver mutually beneficial results.  In order to develop the lean external supply chain, this network of partners must commit to the mutually beneficial results including efficiencies and quality to the extended supply chain.


And now for the audience participation portion of the show...

Have you contemplated the key partners and functions that make up your extended supply chain?  How do you measure the results across the extended supply chain?

Recently I’ve been discussing lean principles and practices in the extended supply chain and the benefits of embracing these concepts and practices in the extended supply chain.  Based on these discussions and comments that have been provided by readers I’ve come to realize that this may be a relatively new concept.  The lean concept is not new to the supply chain, however, the concept of extending these principles and practices across the extended supply chain, including your partners, seems to be new.  The additional variation from six sigma or manufacturing lean principles is the use of lean concepts rather than rigid rules.  Lean in your extended supply chain must be viewed from a broad objective of improved efficiencies from the entire extended supply chain which must be viewed from the perspective of the end customer of the extended supply chain and not any individual function or partner within the extended supply chain.


This may be the most difficult concept to embrace because there can be aspects in your extended supply chain that will need to be less efficient in order for your entire extended supply to become more efficient.  This will require developing partnerships across your extended supply chain with the overall objective of developing a mutually beneficial lean supply chain that focuses on the the end customer rather than any individual piece of the extended supply chain.  There are many conditions and scenarios that must be evaluated to improve the efficiencies of your extended supply chain and unfortunately many of these conditions and scenarios can be measured in different manners.  This exercise is not as straightforward as a manufacturing process lean exercise because many of the lean measures or improvements may not make sense until the entire extended supply chain is taken into account.


I’ve danced around what I consider a key aspect of a successful lean initiative in your extended supply and that is the importance that a continuous improvement program plays in the success of a lean supply chain.  This is a continuous improvement program that focuses on the end customer and not any individual piece of the extended supply chain. This exercise is comparable to a classic database design exercise.  What I mean by that is that after you normalize the data base design to capture data in the least number of tables, you then de-normalize the database to improve efficiencies.  This means that you may make one table inefficient in order to improve the efficiencies of the entire database.  So to extend this analogy I am saying that you should be prepared to ‘de-normalize’ your extended supply chain in order to improve the overall efficiencies of your extended supply chain.


The reason why this exercise requires implementation of a continuous improvement program is because there are vast amounts of changes that need to be analyzed and then re-analyzed after other changes to your extended supply chain are implemented.  You must also be prepared to implement and then remove changes as your continuous improvement program progresses.  Experimentation and the willingness to throw away improvements as your extended supply chain changes must be the hallmark of your continuous improvement program.  This program will also require that you become accustomed to being uncomfortable and this could be the most difficult aspect of the program.  


And now for the audience participation portion of the show...

Have you contemplated a relationship with a third party logistics provider?  Have you thought about decisions involved in implementing a new supply chain strategy?

I’ve been discussing recently the methods to implement a third party service provider to outsource parts, or all of your supply chain operations.  These discussions have generated many comments and great discussions.  I thought it would be appropriate based on the interest to discuss again the reasons why you would make a decision such as this.  There are many things that can influence your decisions that can range from a need to upgrade parts or all of your supply chain to a build-up of problems within your supply chain that finally reach a tipping point and force your decision.  Obviously, these types of decisions are better made in an environment that allows careful review and consideration rather than an environment driven and focused on resolution of problems that must be addressed with some immediacy.  However, these are all reasons that will influence your decision and the key decision is whether your supply chain is a differentiating factor in your organization and do you want invest in building the skills and capabilities required to support a robust supply chain?


This may sound like a simple decision and there are many factors that must be taken into account when making this decision, including current priorities, current strategy, current challenges to your company and the supply chain.  While all of these factors will influence your decision, you must not focus exclusively on the current environment when making this decision.  After all, you can initiate a project or program that can address any one or more of the influencing factors without actually coming to a decision on the future of your supply chain.  The decision that must be made will require some soul-searching to address, along with a long term strategic plan.  Any decision that you make will more than likely be part of a longer term business strategy that encompasses both business and supply chain strategy.


Just to complicate your decision a little more, your decision may require that you embrace a short term strategy embracing capabilities that will be replaced by your long term strategy.  Let me explain what I mean by this with an example.  Let’s say for example that you make a long term strategic decision that your supply chain will be a key differentiating factor in your future business capabilities.  Let’s also say that your current supply chain is very brittle and problem prone.  In this simplistic example, you may make your decision that the supply chain should be an important factor in your success.  Due to the fact that your current capabilities are problem prone, you could make the decision to engage with a third party logistics provider to bring resolution to your current problems while you develop your internal capabilities to support your long term supply chain strategic direction.


Of course your situation will be different, with different influencing factors.  I think though that you are probably experiencing various levels of the examples that I covered above.  Of course there will be additional factors influencing your decisions that you must take into account.  My recommendation regarding your decision is to take some time to first document your influencing factors and then to review methods to resolve these factors.  My most important recommendation is that this is a decision with long range implications and as such you should not rush into any decision.


And now for the audience participation portion of the show...

Have you contemplated a relationship with a third party logistics provider?  Have you thought about decisions involved in implementing a new supply chain strategy?

In my last series of discussions I briefly mentioned what I see as two methods of transition; the big bang where the transition occurs over night, or over a weekend, and then the staged transition, where you convert functions over a period of time.  I want to come back to this and spend some additional time discussing these two methods because as I mentioned, I believe this is an important ingredient to the success of your lean supply chain implementation.  As a quick recap I suggested that these methods should be selected based on the team’s and the business’s level of understanding and definition of the business processes and the clarity of business process definition. 


The reason for selecting one method over another is the level of risk that the transition method introduces the the success of the implementation.  In addition, the size of the initiative is also a big impact on the risk evaluation.  In the case of a lean supply chain implementation, however, the size of the initiative is generally large and can seriously impact the business which equates to large risk.  This being the case, it is important to perform both a current ‘as is’ business process mapping exercise and also a future business process mapping exercise.  Many people will tell you that you must achieve a certain level of detail in these exercises, however in my experience the level of detail is dictated by your own level of comfort.  There will be some business processes that are complicated and so will require a greater level of detail than other less complicated business processes.  The reality of the situation is that each initiative will dictate the level of detail required to effectively manage the risk.


Another point that will dictate the level of detail required for your business process mapping is your own organization’s risk tolerance.  If your organization has a high risk tolerance then you can reduce the level of detail in your business process mapping.  The business process mapping exercise can be a valuable activity, don’t be fooled into thinking this is just another fad.  My experience has proven to me time and time again that the risk can be reduced, the quality of the deliverables increased, the duration of the testing and the duration and impact of the post implementation support can be dramatically improved based on the quality of your business process mapping deliverables. 

 

There is another consideration in making a transition strategy decision and that is a comparison of the duration of the transition time period and the post implementation support.  Let me explain what I mean by this - if the total duration of your transition time period and the post implementation support duration is less than the expected duration of a detailed business process mapping exercise I would recommend that you seriously consider dramatically reducing the business process mapping and simply focus your efforts on a quick implementation.


I don’t want to give the wrong impression here that I am recommending a ‘big bang’implementation for the majority of cases.  Quite the contrary, I would say that based on my suggestions and guidelines I’ve outlined above that you will find that most situations will warrant a staged transition.


In my next discussion I will provide my thoughts on estimating your post implementation support activities and phase.


And now for the audience participation portion of the show...

Have you contemplated a relationship with a third party logistics provider?  What is your strategy for supporting increased capacity needs as the economy improves?

This will be my final entry in this Lean Supply Chain Implementation series.  In my previous entries I’ve covered all of the aspects up to transition and go-live.  In this entry I will cover the post implementation support along with the wrap-up and start of the on-going continuous improvement program.  Many people and organizations view the post implementation support, the wrap-up and start of the continuous improvement program as somewhat unimportant aspects of the lean supply chain implementation.  They view these phases as a necessary evil and ramping down the ‘sexy’ aspect of the major implementation.  I view these in a completely opposite manner - these are just the beginning of the most important aspects of your lean supply chain implementation.  These phases, and especially the continuous improvement program is where your benefits are going to come from!


Let me explain why I feel this way - if you’re smart you will focus on getting the the basic solution implementation as quickly as possible to provide a baseline.  This will allow you to begin to measure and identify the aspects and functions that will bring the greatest value.  I learned a long time ago that many designs look good on a piece of paper and as soon as people start using them the value of the design can change from great to trash in an instant.  What I mean by this is that its much better to come to a quick baseline functionality and take some time to learn how to use it than it is to over-design and implement something that you discover does not provide the greatest value.  Your initial value to achieve should be the implementation of the base functionality and replacement of the high cost legacy systems.  After reaching your baseline you will be in a better position to identify the high value functionality to add to the baseline.


My view, that I’ve developed over many years of various types of implementations, is that a focus on speed of delivery provides two benefits; a quick realization of value and then a more stable delivery that allows you to move on to the next deliverable quickly.  Focus on the value add activities and this includes reducing the time you spend in support so that you can cover the cost of your future improvements.  The key method to reducing the time you spend in support activities is to rigorously test your implementations.  A key method to reducing the time required to rigorously test your implementation is to reduce the complexity and size of your implementations.  That is why I am firmly committed to a series of quick small improvements to provide a continuous pipeline of improvements and value added benefits to your supply chain.


I consider this method to be the classic definition of a successful continuous improvement program.  The concept is to build a solid base that you can expand and then focus on delivering the improvements that bring the value to your organization.  I’ve spoken in the past that I like this method because it provides a steady stream of value to the organization which has the potential to lead to game changing improvements.  This method also allows you to revise and correct course quickly and efficiently.


In wrap up my advice is to treat the post implementation and wrap up phase as the important phase of your lean supply chain implementation that it truly is.  I highly recommend an overall strategy of implementing the base line as quickly as possible and then moving quickly to the continuous improvement program in order to implement a program of continuous value delivery.

 

And now for the audience participation portion of the show...

Have you contemplated a relationship with a third party logistics provider?  What is your strategy for supporting increased capacity needs as the economy improves?

Up to now in my recent discussions I’ve covered the foundational and design phases of an implementation for either a new software package or a new third party logistics provider.  I tried to convey the importance of these phases and especially the business process definitions and the integration.  I feel its important to reiterate the importance of these phases; these phases quite simply can make the difference to successfully achieving your objectives and benefits in a flexible, robust and efficient manner which is a key to the long term success of the initiative.   Now in this discussion I will cover the transition and go-live of the initiative. I’ve always looked at the go-live as the ‘pay day’ for any initiative because this is the point where you start banking the benefits and bringing value to the company.


Transition involves developing a strategy that will mitigate the risks that are inherent in any implementation.  The objectives of a transition are to provide a method to convert to the new system or third party logistics provided and mitigate the risk to the business of this implementation.  There are many methods to transition to the new and in addition to the many methods there are also many combinations of the different methods that can be combined in different ways to meet the individual needs or risks to the implementation.  As is the case in so many other initiatives sometimes the combinations can be overwhelming.  The most important thing to remember in these cases is that the key is to choose a method and then fully define the method. 


Transition methods can be grouped into two main categories; the ‘big bang’ method where the transition occurs over night or over a weekend and a ‘staged, or gradual’ method where individual processes, or functions, are converted over a period of time.  Both of these methods have their inherent strengths and weaknesses that must be evaluated and understood in order to make a decision.  Personally, I have a tendency to lean towards the big bang method because while the pain may be sharp, it is over quickly and you can then focus on the problem resolution.  In my opinion, the strengths of each of these methods can also be viewed as a weakness.  As I mentioned earlier in the discussion though, these methods can be combined in manners that will address the objectives and the risks, in other words its not necessary to go ‘all in’ on either method.


I want to leave you with a final point that I’ve come to realize over time and many implementations.  The two methods of transition are generally more successful based on the level of understanding and process definition.  What I mean by this is that a well defined business process will generally be successful with a big bang transition, while an undefined, or poorly defined business process will be more successful with a  staged transition.  This success is related to the level of risk that is related to your level of understanding, in other words, when you have a fully defined and understood business process your level of risk is much lower because the level of the unknown is much lower.  Please keep this in mind when you are evaluating your transition and implementation plans. 


In my next discussion I will get into the next phase of the implementation.

 

And now for the audience participation portion of the show...

Have you contemplated a relationship with a third party logistics provider?  What is your strategy for supporting increased capacity needs as the economy improves?

In my last discussion I covered the importance of clearly defining your current business processes to provide a base for defining your future process.  For whatever reason - and there are countless reasons - while this can be one of the most critical activities to delivering a successful implementation, it is also the most frequently overlooked.  In too many cases, this phase is not given the focus and the importance that it deserves.  So I thought it important to reiterate the importance in continuing this series.  In this discussion I will continue with another activity and foundational deliverable that I believe is also often overlooked and does not get the focus that is critical to its success.  This critical activity is developing a robust and flexible integration layer.  This is also the activity and deliverable that can gain the greatest support when engaging with a high quality third party logistics provider.


A robust and flexible integration layer is easily overlooked and many organizations do not give it the proper attention and importance because of an attitude that it is ‘just interfaces’.  I guess you can say that I’ve been on a personal crusade to increase the respect and the visibility that ‘just interfaces’ deserves.  I’ve covered this in the past and just as a recap let me say that I began referring to ‘just interfaces’ as an ‘integration layer’ to help to change the discussion and also project a new level of importance for what I believe to be a critical aspect to the success of a robust, flexible and lean supply chain.  I believe that the simple overarching fact is that the second most important piece to a successful supply chain is this robust and flexible integration layer. 


This is where I will tie the implementation of a third party logistics provider with the development and implementation of a robust and flexible integration layer.  Think about it, a successful third party logistics provider is good a two things; supply chain execution and speedy, efficient, implementations.  My advice will always be to take advantage of every lead or opportunity that you can.  Sometimes the hardest thing to do is to identify the opportunity.  Don’t let yourself be blinded by the excitement of implementing the new initiative and the third party logistics provider and overlook what could be a critical benefit from the initiative.  A reputable and successful third party logistics provider will come to the table with their own robust and flexible integration layer.  My advice is to take advantage of this engagement to develop the foundation and initial release of your own robust and flexible integration layer based on the concepts that are successful with your third party logistics provider partner.


This integration layer foundation will pay dividends not only as your supply chain grows and changes but also as your business requirements grow and change.  The integration layer provides you with the capability to utilize a ‘plug and play’ strategy to quickly and easily add and change capabilities.  The integration layer also allows you to shield other systems and processes from impact of changing out systems and functionality, thus allowing a more efficient, speedy and stable implementation of future capabilities.


In my next discussion I will get into the next phase of the implementation.

 

And now for the audience participation portion of the show...

Have you contemplated a relationship with a third party logistics provider?  What is your strategy for supporting increased capacity needs as the economy improves?

In my last discussion I began with defining your objectives and requirements so that you can identify and select an appropriate third party logistics provider.  In this discussion I will continue with the activities required for a successful lean supply chain implementation.  I don’t think that it is a requirement to select and implement a third party logistics provider in order to implement a lean supply chain.  I do however feel it is very important to take the time to evaluation your capabilities and objectives for both your extended supply chain and your business on a regular basis in order to take stock and identify potential opportunities.  Anyway, this is just a recap of my last discussion and not meant to rehash the entire thing.  I am picking the path of implementing a third party logistics provider for my implementation discussion. 


The reason that I selected this path is because I think it may be a little scary for some organizations that have not previously undertaken this type of initiative.  In addition to that, I firmly believe that selecting and engaging with a third party logistics provider allows a company to implement new features and functionality that could be provided by software with the added benefit of including the capabilities to utilize the beneficial features of a software package immediately!  The simple reality is that you should follow the same steps to implement a third party logistics provider as you would in implementing a new software package.  The additional benefit of the third party logistics provider is that you also get a team that understands and can take advantage of the software capabilities to your benefit immediately, rather than your team going through the effort to understand and implement the new features.


There are two key activities that must be successful in order to have a successful implementation; integration of the new software (this would be required with or without a third party logistics provider), definition of how the new software/partner would support your business requirements (this would also be required with or without a third party logistics provider).  The key here is to fully map out your business processes in order to understand how to configure and implement the solution.  I can’t emphasize how important it is to perform this business process mapping exercise.  This exercise will allow you to understand and identify the value add processes along with the processes that do not add value.  It gives you the opportunity to make decisions based on facts and not hunches or tribal knowledge.  It gives you the opportunity to make decisions in a thoughtful manner prior to the configuration and go live thus eliminating many of the last minute questions and changes that end up causing issues with the go live and future utilization of the solution.  Most importantly, though it allows you to develop a change management plan that will guide you through organizational changes and training requirements to promote a successful go live.  This change management plan and business process model provides you with a basis to communicate the change to the organization and obtain the buy in early. 


One thing that I’ve learned over the years is that there can never be too much communication.  I have found over and over that the key factor is early and often communications and review.  Change is very scary for everyone and communication is the key to overcoming the unease that is generated by change.


In my next discussion I will get into the next phase of the implementation.

 

And now for the audience participation portion of the show...

Have you contemplated a relationship with a third party logistics provider?  What is your strategy for supporting increased capacity needs as the economy improves?

In my last entry I discussed a process you could use to define your lean supply chain objectives.  My key point was that you should look to define lean in a manner that focuses on improved flexibility and performance, rather than focus on cost reductions.  I also suggested that you develop the objectives and implementation with a goal of covering the cost of your lean supply chain initiative.  While these suggestions may seem to be at odds with each other, the point that I made was that you should increase flexibility and the ability to support increased volumes that an improving economy will bring without increasing your costs.  In other words the savings will come from a delay or even elimination of additional labor, inventory or real estate to support increases in volume.  In this discussion I will cover what I feel are key challenges to implementing a third party logistics service provider in order to meet your objectives.


One of the most significant challenges to implementing a third party logistics provider is quite frankly defining and understanding your objectives.  This may seem a little obvious, but I think we’ve all seen the disastrous results that can come from an initiative without clear and understood objectives.  This is the reason that I covered the objectives in my previous discussion.  The second challenge to implementing a third party logistics provider is to clearly define the activities you want the partner to support.  This is important because it plays heavily into the selection process.  Which leads me to the third challenge; selecting a third party logistics partner.  My advice in this area is do not be blinded by the sales pitch, focus on your objectives and the services that you want the partner to provide. 


You may have noticed that I started calling the third party logistics provider a partner.  This is because I believe that a critical aspect of your selection process is to identify a provider that fits with your culture and can help you meet your strategic objectives.  In order to meet your strategic objectives I believe very strongly that you must develop a strong partnership with the third party logistics provider.  A strong partnership benefits all members in the partnership. It is important that you understand that you are making a decision for a long term relationship.  This is something that you cannot simply change your mind one day and the next go to a new partner.  I cannot emphasize the importance of viewing this from a long term horizon.  This is a marriage of capabilities and that is why I refer to it as a partnership and a partnership is something that requires serious consideration.


I understand completely that it is very easy for me to discuss these points in a few short paragraphs and make these decisions and activities sound simple.  I understand that the reality is that this decision will impact your company significantly for years to come.  I understand that it can be very scary to to make a change as significant as this one will be.  I also understand though that this decision and the success of the implementation can bring significant value to your company for years to come.


In my next discussion I will get into the next phase of the implementation.

 

And now for the audience participation portion of the show...

Have you contemplated a relationship with a third party logistics provider?  What is your strategy for supporting increased capacity needs as the economy improves?