Dear Reader: If you wish to get the most out of this article, we strongly suggest that you take time to find and read Parts 1, 2 and 3 in sequence. Then this last portion will make far more sense to you.
In working with our clients and helping them come to grips with the reality of what is working—and, more importantly, what is failing to work—in their enterprises and supply chains, we employ one of the Thinking Process tools known as the Current Reality Tree (CRT).
The CRT is a logical effect-cause-effect structure that we help our clients’ management team build from what they know about what is happening in their organization and across their supply chains. A portion of such a CRT is in the accompanying figure.
The Deadly Embrace
Not infrequently, as we discuss the logic cause-and-effect in a firm’s CRT, the team is somewhat startled to discover that there exist in their operations one or more negative feedback loops. We call such a negative feedback loop a “deadly embrace.”
When we read through a couple of these examples, I think you will readily see why.
Deadly Embrace Number 1: Entities 3 and 13
Let us take a moment to read through the logic presented in the deadly embrace between Entities 3 and 13 in the accompanying figure:
IF  we frequently get into a jam and rob inventory from one order to satisfy another [order], THEN  we frequently find it difficult to determine effective actions and priorities; AND IF  we frequently find it difficult to determine effective actions and priorities, THEN, it is likely that  we will frequently get ourselves jammed up and end up having to steal inventory from one order to satisfy another, more pressing, order.
I think you can readily see why this is called a “deadly embrace.” Once you start down this path, where effective actions and priorities are uncertain, then any action can be justified and rationalized to put out the most pressing “fire” at this moment.
But, I think you can also see that there is no answer to this dilemma. This cycle will repeat itself until something gets fixed that actually prevents us from ending up in this downward spiral.
Deadly Embrace Number 2: Entities 2 and 4
Another common failure is exposed in this deadly embrace. Here is a read-through from the CRT:
IF  we have significant variability in our deliver performance, THEN  we must expedite inbound and outbound shipments too frequently. AND IF  we are frequently expediting inbound and outbound shipments (with limited resources), THEN  chances are we are constantly having to shift priorities and take corrective actions based on spur-of-the-moment expediencies, rather than based on unshakeable principles. AND IF that is true, THEN  it is likely that our lead times are frequently—or, at least, regularly—longer than our customers’ tolerance for delivery (at least on given line items on any given day). AND IF  our customers are intolerant of our delays in shipping, THEN  we must expedite frequently to keep our customers reasonably happy. BUT ALSO IF  our priorities are constantly being shifted about by today’s “emergencies,” THEN  we will always have significant variability in our delivery performance.
What a mess!
Nevertheless, I can say with reasonable certainty that most of you who have to deal with supply chains, and even internal sales and operations planning (S&OP), have experienced this frustration. In fact, you have probably experienced such frustrations, even without being able to logically articulate just why the whole situation was so darned frustrating to everyone involved.
Toward Improving the Whole System—and Making More Money
This, then, is the power of the Thinking Processes revealed: this kind of diagram (the CRT) helps everyone see the real challenges being faced by “the system,” not by individual departments and functions. Blaming and finger-pointing can fall by the wayside and everyone can begin working on things that will really help the whole system improve.
It is those things—those few things—that will help the whole system get better meeting its systemic goals—indeed, that will help the company and supply chain participants make more money!
We would like to know how you go about identifying “deadly embraces” and systemic goals (versus departmental goals) and metrics. Please leave your comments and questions below. We would be delighted to hear from you.