NOTE TO READERS: In order to gain the greatest benefit from this article, please find and read Parts 1 and 2 in this series before proceeding.

SupplyChainMgt CRT 1D Roots.jpg

Management Oscillation

 

In Part 2 of this series, we discussed some of the various “problems” that lead to longer lead times and poor on-time delivery performance in enterprises and supply chains. But, as we are seeing in our Current Reality Tree (CRT), these are not really “problems.” Instead, they are the Un-Desirable Effects (UDEs) of something deeper and more systemic than the “problems” themselves.

 

The fact that they are UDEs rather than the real, core issues, explains why we can never get them to go away. We can sometimes quell the symptoms for a while through our firefighting efforts, but we never seem to be able to sustain the kind flow we would really like in our supply chain.

 

In fact, because a “solution” in one area seems to produced undesired results in another area (another metric), we find ourselves as managers and executives constantly wavering between different—and, sometimes, totally opposite—decisions and actions.

  • Sometimes we run large batches in production in order to help keep “costs” down. But, when push comes to shove, we will direct production to break set-ups and run smaller batches in favor of the FLOW necessary to get products out the door at the end of a month, end of a quarter, or may just when a key customer demands action.
  • Sometimes we encourage our buyers to buy at the lowest possible price—once again, to keep “costs” down. But when the burden of excess inventory begins to negatively affect our cash-flow, or we find the warehouse running out of storage space, we are just as likely to issue an order to stop all excess purchasing. “Buy only what we need for production and sales in the near-term,” we decree.
  • Sometimes we put down our executive “foot” and place hard and firm limits on overtime “costs,” only to reverse ourselves a few weeks later because we absolutely “must” get some delayed orders out the door and into customers’ hands, or we need to get more shipments out the door now so that revenues can be recognized in this month or quarter.

 

What are we seeing?

 

We are seeing the unmistakable manifestation of UDE number 8: “Actions and priorities are constantly changing.”

 

Expediting

 

While, on the one hand, managers and executives expend large amounts of time, energy and money seeking “efficiencies” in their operations and supply chains, they appear to be, all the while, content to also spend considerable time, energy and money on one of the least efficient exercises in their whole operations. That operation is, typically, expediting.

 

As some have wisely observed, expediters spend half their time running around trying to figure out what needs to be done to meet the fickle demand of the present situation, and the other half of the time running around trying to get those things done.

 

Somehow, just reading that description, there seems to be an air of inefficiency just coursing through the whole concept.

 

So, why do we sustain the role of “expediter”?

 

The answer is simple!

 

He or she is our chief fire fighter. We see no alternative other than to let the whole place “burn to the ground.”

 

Variability

 

Interestingly, by the time we get to the “roots” of our Current Reality Tree, there are really no surprises at all.

What is stirring up all the commotion and giving rise to all the other UDEs on our shop floors and in our supply chains?

 

It is our well-known nemesis: variability.

 

So, the question really needs to be asked: Why don’t we deal more effectively with these root causes, if they are so well known?

 

Is Variability Our Unbeatable Foe?

 

While we can all be 100 percent certain that it is—and always will be—impossible to eliminate all variability from our operations and supply chains, the advocates of demand-driven supply chain management methods have amply demonstrated over dozens of implementations that it is possible to create a strategic and tactical system that will allow variability to be effectively tamed through proper recognition and management.

 

The keys to managing variability include:

  1. Strategically positioning and sizing buffers of time, capacity and inventory in order to stop variability from being passed on to capacity constrained resources or resources that are outside your control
  2. Dynamically managing buffers sizes in order to keep them in tune with the dynamic changes in supply and demand
  3. Using forecasts for long-range planning and buffer adjustments, while using actual demand data to drive actions in production and your supply chain
  4. Employing metrics that provide for the flow of relevant information in a way that also supplies what is needed for fast, accurate decision-making and setting of priorities for actions

 

If variability—as the root cause of so many fires being fought day-after-day—is attacked directly in using these principles, so many thing (up in the CRT) will go away. Undesirable effects will be transformed into desirable effects. A great many companies have proven this is so.

 

IMPORTANT NOTE: Becoming “demand-driven” does NOT mean becoming make-to-order.

 

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Let us know your experiences along these lines. We would be delighted to know what you have tried and what has worked, or failed to work, for you. Leave your comments below.

 

                                                           

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