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2016

One supply chain thought-leader recently said, “the closest supply chain managers can get to the magic bullet is supply chain visibility.BUFFER as Tank Metaphor.jpg

 

It is true: supply chain visibility is fundamental to maximizing return on investment (ROI) in the supply chain, of course. And, the goal of supply chain visibility should be, first and foremost, FLOW—allowing trading partners near real-time access to relevant data so that relevant materials are supplied at the proper time.

 

Creating a digital supply chain should never be an exercise in technological prowess or the acquisition of fancy new software without first giving way to the proper thoughtware to make it effective.

 

Also, Carol Ptak, writing at Beet Fusion, cogently reminds us: “For information to be shared, it must benefit both the sharing party and the using party. This requires different thoughtware about what that win-win could and should be.” We will never get the data flowing between supply chain trading partners if there is more burden than benefit.

 

What data needs to be shared to be most effective?

One proposed solution to supply chain data sharing is end-to-end visibility of all orders. However, our feeling is that this will only lead to further information overload.

 

Sadly, far too many supply chain partners are already swimming in their own data, and struggling to sort out from it what is relevant for action. New big data projects may have actually exacerbated the problem, rather than adding anything that provides clarity of action and priorities.

 

To now also add gigabytes of data from external sources will probably not contribute to greater clarity. In fact, it will likely make it more difficult for supply chain participants to separate relevant from irrelevant information. It is only the flow of relevant information that contributes effectively to the flow of relevant materials in the supply chain.

 

Consider this example: suppose two supply chain partners do business on 3,000 SKUs and, on those SKUs, the buying partner typically has ten (10) customer orders per day. End-to-end visibility (just between these two trading partners) would mean 30,000 lines of data would need to be exchanged between the firms.

 

However, it is very possible that only a small number—perhaps fewer than 100 SKUs—actually require the attention of supplying partner on any given day. Supplying the raw customer order data would provide no information to help the supplying partner prioritize their actions.

 

Beyond that, multiply that volume of data by the number of trading partners that might be involved on the inbound and outbound sides of a typical supply chain, and the result may be the need to process, classify and prioritize millions of rows of data daily in order to determine what actions need to be taken to keep relevant materials flowing in the supply chain.

 

Simpler is Better and More Effective

We propose visibility into the BUFFER STATUS of each SKU-locations (SKULs) traded between partners. A buffer status board might looking similar to the accompanying figure (simplified to exclude locations data).DDMRP BufferStatusBoard.png

 

Priorities are already clearly visible. Priorities are a combination of two (2) factors: the COLOR indicated and the BUFFER STATUS (percent). As for color, it is (naturally) RED before YELLOW, and YELLOW before GREEN. As for BUFFER STATUS, the smaller the number, the higher the priority.

 

If these data are supplied from a demand-driven MRP (DDMRP) or demand-driven S&OP (DDS&OP) model, then the buffer status is actually a reflection of the virtual buffer status (not on-hand or “available” quantities). This means that the following factors have already been included in calculating the color and percent factors presented:

  1. Quantity on-hand
  2. Quantity (if any) for orders due today or past-due
  3. Order spikes within the order-spike horizon
  4. Quantities already on a replenishment order (open PO, for example)

 

The replenishment quantity (ReplQty) coming from a DDMRP or DDS&OP model would also already have taken into consideration the factors listed above, and they would be accurate up to the moment they were last refreshed in any data exchange between supply chain trading partners.

 

These few rows of data (as in the supplied figure) may be the summation of hundreds, or even thousands, of individual transactions within the trading partners operating environment. Nevertheless, everything the supplying partner needs to know about priorities for action can be found on one line per SKUL.

 

The trading partners only need to agree upon the execution parameters—such as who initiates replenishment orders and under what circumstances, for example.

 

If—and hopefully it is so—the supplying partner is also executing in a DDMRP or DDS&OP environment, then it is easy to incorporate these values into purchase or production commitments and determine their own buffer status for finished goods, intermediate components, or raw materials as may be required.

 

Don’t Let Complexity Stand in the Way of Flow

 

The simplicity of this approach dramatically reduces the amount of data that must be shared, transmitted, received and processed by the trading partners in a digital supply chain. So, let’s just K.I.S.S — Keep It Simple, Stupid!

 

 

What do you think? Please leave your comments here, or feel free to contact us directly, if you prefer. Thank you.

 

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It seems all too clear that a large number of the executives and managers with whom we come in contact in the course of our consulting business have resigned themselves—to a greater or lesser degree—to a daily routine in their enterprise where 20 percent, 30 percent, or maybe even 40 percent of their time, energy and other precious resources are squandered on Change - Resistance To.pngfirefighting and other cost non-value-added efforts.

 

Many of these executives and managers have quietly concluded that real and lasting improvement will come about only by some miracle or, perhaps, at some point in the far distant future. Not a few feel as though they have tried everything they know to try, and have seen little real or lasting improvement in their operations or their bottom-line.

 

It’s Out of Our Hands

Sometimes this sense of resignation to fate stems from the thought that the whole problem is out of the hands of management. In fact, the executives and managers may feel that the problems are actually outside their enterprise entirely. They may believe that challenges they face are caused by external forces such as customers, suppliers, or even, geography. And, since these are clearly outside their reach, there is nothing they can do about the situation except fight the inevitable fires that are destined to break out.

 

Our experience in coming to the aid of such clients, however, is that this sense of helplessness is often the result of simply being unable to properly identify, or the misidentification of, the cause-and-effect chains of events that lead to the outbreak of fires. Since they have tool or experience that guides them in reducing their environment to logical cause-and-effect thinking that will help them identify the underlying causes, it is easier to simply say, “Something out there—outside our direct control—is causing undesirable effects about which we can do nothing effective.”

 

After working with such clients, they frequently begin to realize that what they have really been saying is, “We can’t agree on what causes these problems—whether it’s really our customers, or our suppliers, or our business processes, or something else—so we really cannot take any meaningful action to address these problems either.”

 

We Can’t Possibly Get Those Kinds of Results

Dozens of case studies—and even academic studies*—have shown that the tools and methods to which we want to introduce the management team produce outstanding results when conscientiously applied. Here are the kinds of results that are typical:

Lead-Times: Mean Reduction 69%

A mean reduction in lead-time of 69% emerged from the sample of thirty-two observations, all of which reported reductions. Over three quarters of the sample experienced reductions in lead-time greater than 50%.

Cycle-Times: Mean Reduction 66%

In every case where changes in cycle-time were reported, the reports showed a decrease, or improvement in cycle-time. Fourteen observations made up the sample for change in cycle-times.

Due-Date-Performance: Mean Improvement 60%

Improving due-date-performance is synonymous with meeting delivery promises to customers. A mean improvement of 60% emerged from the sample. Twelve observations made up the sample for change in due-date-performance. Several organisations experienced improvements of over 100%.

Inventory Levels: Mean Reduction 50 %

Reducing inventory is associated with reducing lead-times in a DBR system. A mean inventory reduction of 50% resulted from the sample of 28 observations.

Lead-Time and Inventory Reduction: Correlation 0.77

Goldratt and Fox (1986) claim that when DBR** [Drum-Buffer-Rope] is applied to a manufacturing system, the reduction in lead-time is strongly correlated with the reduction of inventory level. This research verifies the claims of Goldratt and Fox, as shown by a 0.77 Spearman’s Rank Correlation. This analysis was conducted on a sample of thirteen observations where organisations provided data on changes to both lead-times and inventory levels.

Revenue / Throughput: Mean Increase 68% (outlier exclusive)

This variable represents the amount of money coming into the organisation. All reports represented increases in revenue or throughput. The impressive mean increase of 68% excludes one outlier, a 600% increase at [one major company] achieved within one year. Five organisations, from the sample of eighteen, reported increases in revenues in excess of 100%, within one financial year.

 

Despite the overwhelming evidence, it is amazingly difficult to get managers and executives to consider making the changes that will help them on to these kinds of outcomes.

 

Why?

 

Maybe it’s because we’re a technology company; and technology companies have earned a reputation for making big promises about results, but subsequently failing to deliver on those promises.

 

But, in this case, we’re not selling technology. We aren’t selling new software or hardware. We’re simply trying to sell them new thoughtware—new ways of seeing, thinking and acting.

 

The Obstacles Are Too Great (or Too Many)

If we get to the next step in our discussions with the management team, the next hurdle is usually stated somewhat along these lines: “Yes, but our company—or industry, or situation—is different (or, unique). What worked for XYZ Company can’t possible work for us because….”

 

Here’s the thing: every company is unique. Every company faces a unique set of challenges and circumstances with a unique set of minds to attack the challenges they face.

 

Nevertheless, there are more similarities about how economic and management principles work than there are differences. While the specific application of these principles will be unique to each company, the underlying principles that make them effective will remain unchanged.

 

This is hard concept to grasp. But it is a necessary concept if you and your management team want to move forward in a meaningful and effective way.

 

Others Won’t Support This New Approach

The last refuge for those hoping to escape change is to blame others. “This won’t work because our employees—or customers, or vendors, or someone else—won’t support it.”

 

This usually means there are unverbalized fears that still need to be quelled. Moving into the unknown future always means there is some risk. It is an inescapable fact that all our knowledge and facts are about the past, while all our decision-making must be about the future.

 

We can try to help you and your management team minimize the risk, but we cannot completely do away with risk.

 

And the only way you and your management team can do away with all risk is to close the doors to your business.

 

You will either continue to face your risks and challenges in the old way—daily firefighting and the associated profit-swallowing expenditures—or you will find fresh, new and innovative ways to meet those risks and challenges.

 

It’s really up to you.

 

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So, what really does keep you hooked on firefighting, expediting and other costly methods that bring no lasting improvement? What keeps you and your management team from examining new, more effective options for improvement? What reasons—or, excuses—do you hear most often in your company?

 

We would like to hear from you. Please leave your comments below, or feel free to contact us directly. Thank you.

 

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NOTES:

* Mabin, Victoria J., and Steven J. Balderstone. A Review of Goldratt's Theory of Constraints (TOC) - Lessons From the International Literature. School of Business and Public Management, Victoria University of Wellington, New Zealand. 2000.

** Drum-Buffer-Rope has, since this report was written, evolved into a more comprehensive supply chain management system sometimes referred to as demand-driven MRP (material requirements planning) or DDMRP

 

 

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I know you’ll find this hard to believe, but I tell you, it’s true: Up until this week, I had never, ever watched a whole Star Wars episode (film) from beginning to end.RogueOne.png

 

I’m not really sure what provoked me to go see this one. Maybe I was intrigued with the title “Rogue One.” Maybe, too, I was intrigued by the trailers’ reference to taking on what seems to be an enemy too overwhelming to ever defeat.

 

In any event, I went to see Rogue One this week.

 

As you can see in the accompanying table (below), I found a lot of relevance to what we do as a company, and to what we see happening with our clients (in too many cases).

 

Star Wars – Rogue One

Your Supply Chain

The problem

The Evil Empire continues to oppress the galaxy

Continual firefighting, expediting, high logistics expenses, and excess payrolls and overtime expenses continue to oppress (depress) your company’s bottom-line

Increased awareness

Imperial transport pilot Bodhi Rook defects, bringing with him a halographic message from Galen Erso, making Rebel leaders aware of a defect he has built into the Death Star’s reactor design

A consultant who has defected from “the Dark Side” (read: traditional inventory and MRP methods) brings your company news that there is a fatal defect in traditional MRP logic and related methods

Reluctance exhibited

Many of the Rebels don’t believe that the halographic message is real, or that it is possible to overcome the Evil Empire

Many executives and managers in your company don’t believe that there is a defect in “the way we’ve always done things” or that it is even possible to make dramatic improvements to the bottom-line by trying new methods

Overcoming reluctance

A small, but dedicated, group of Rebels believe that it just might be possible to defeat the Evil Empire—especially if the alleged defect in the reactor design exists; Besides, continue as they are today is to continue without any real hope for the future

A few executives and managers in your company begin to believe that a real change is possible if the alleged defect in traditional approaches to inventory and supply chain management is real and can be overcome; Besides they are tired of the constant firefighting without real hope for the future

Commitment to try

The small band of dedicated Rebels decides they must try to do whatever it takes to defeat the Evil Empire and expose the self-destructive defect in the Death Star’s reactor

The small group of executives and managers decides that they must try to bring long-lasting and effective change so that their bottom-line can (finally) see some real growth and their “evil” competition can be overthrown

Giving their all

The dedicated Rebels realize that only being half-in will doom the entire effort to failure; They decide to give it their all

The executives and managers recognize that this new approach means doing things in a radically different way; They want to do a “pilot”, but realize that whatever venue they choose for their pilot must be wholeheartedly committed to the new processes and approach

Success

When the small band of Rebels demonstrates some success in reaching their initial goal against the Evil Empire, the rest of the Rebel forces join in

The small group of executives and managers choose one plant as their “pilot” and codename the project “Rogue One”; When the other managers and executives see the levels of success being achieved under “Rogue One,” they are anxious to see the same results in their own operations

 

Do We Have Bodhi Rook’s Thankless Job?

I guess, sometimes in our role as consultants, we sometimes feel like the defecting Imperial transport pilot, Bodhi Rook. Our message isn’t believed. People suspect that, somehow, the message is a “trick”—an attempt to get them to take foolish actions that may jeopardize their larger mission (which is, probably, survival).

 

Even though our clients are frequently under the oppression of an invisible “Evil Empire,” they find any offer of hope almost beyond belief.

 

Even though our clients are clearly engaged in an ongoing and, all too frequently, a no-win battle in which they see themselves constantly expending huge resources—time, energy, management attention, and money—they still seem to have a tremendous reluctance to hear well-intended and well-founded offers for real hope.

 

Traditional MRP as the “Death Star” with an Inherent Defect

Joe Orlicky was to the development of traditional MRP (material requirements planning) what Galen Erso was to the development of the Imperial Death Star. The difference is that Joe Orlicky never intended to build a fatal flaw into traditional MRP. The first edition of Orlicky’s Material Requirements Planning sold more than 140,000 copies.

 

The flaw was not intentionally built into MRP. Nevertheless, to some extent the flaws existed from the beginning. Still, traditional MRP was quite effective in the world of the 1960s and 1970s (the book was published in 1975), when the methods were developed, articulated and first implemented.

 

Today’s supply chain world is much, much different than that world. So much different, in fact, that the vast majority of companies still running traditional MRP software—that is, almost every major ERP system on the planet today—find that their supply chain managers absolutely must supplement their MRP output with spreadsheets, external databases, home-grown applications or even whiteboards in order to perform their jobs effectively.

 

That should be evidence enough to executives and managers that something is broken. But, alas, they still find it hard to believe that “a fatal flaw” truly exists in the “Death Star” of traditional MRP.

 

Overwhelming Evidence of Success

Despite the fact that all of the published literature shows that companies who implement a conscientiously applied program of DDMRP (demand-driven MRP) have achieved dramatic improvements in their top-line, bottom-line and every key metric (like lower inventories, shorter lead times, and higher customer service levels), we always consider ourselves fortunate if we can gain the hearts of a “small band of executives and managers” (read: heroes) who have begun to see a new vision of what could be for their company. (Contact us: We will be happy to send you documentation on achieved results in case studies.)

 

Why do you think that is?

 

Why not become a “hero”? Take the journey.

 

 

 

We would really like to hear from you on this matter. Leave your comments below, or feel free to contact us directly, if you prefer.

 

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If your supply chain is not undergoing transformation, you are falling behind. If you have not seriously reevaluated your strategic objectives and tactics within the last year in light of new methods and options now available to you, your supply chain is becoming a part of history—not the future.

 

Strategy to Effectiveness.png

What does it feel like to be wrong?

Ask your co-workers or friends: “What does it feel like to be wrong?”

 

They are likely to respond with words like: “embarrassing,” “awkward,” “humiliating,” or “uncomfortable.”

 

But they are not really describing what it feels like to be wrong.

 

What they are describing is what it feels like to find out that you’re wrong!

 

There’s a big, big difference!

 

Actually, what it feels like to be wrong is exactly what it feels like to be right! –Until you find out that you’re wrong.

 

That is the danger! It’s what we think we know that holds us back!

 

We love our job!

Our job is to help our customers create a durable competitive advantage by helping them discover those areas where old thoughtware is holding them back.

 

We recognize that, as outsiders, we will never know as much about your business and your industry as you and your management team probably do.

 

But our job is not to give you answers.

 

Our job is to ask the right questions in order to help you discover where old, outdated (perhaps, formerly) “right” thinking might be holding you back from transformations that can lead to significant—not incremental—improvements in your bottom-line.

 

We are confident that we can help you achieve big breakthroughs in a partnership that adds value to your enterprise through a combination of

  • Provoking strategic thinking about things like positioning of inventory across your supply chain
  • Introducing proven tactics for configuring your supply chain and monitoring its performance
  • Designing sound business processes that help you hold onto your new-found advantages
  • Training key personnel to support the new approach
  • Applying effective technologies that will support your new strategies and tactics

You are not alone

Even many leading firms are still struggling to comprehend just where they stand in their own journey toward supply chain excellence. So, you are not alone in this.

 

Frequently we find that there is little or no alignment between the corporate strategies and supply chain tactics and execution. No wonder that significant and sustainable bottom-line improvements are almost impossible to achieve.

 

After all, an organization that is divided—at war with itself—is nearly always in a constant state of firefighting. It simply has not the time, energy or management attention needed to achieve breakthroughs.

 

We can help you and your team learn to work effectively as “a system,” and even extend that effectiveness up and down your supply chain by engaging with your trading partners.

 

Our demand-driven, outside-in helps introduce new thoughtware. This new thoughtware aids in identifying what needs to change from the major strategies down to the hands-on details.

 

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How are you approaching supply chain transformation? What are you doing to overcome the inertia of believing you are “right,” while new innovations may not be given consideration at all? Where have you found success? Where have been your biggest challenges?

 

Let us hear from you. Leave your comments below, or feel free to contact us directly.

 

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Lots of our clients, when we first begin working with them in the creation of a process of ongoing improvement (POOGI), find themselves struggling to make headway in any real transformation. Instead, despite their best efforts and the investment of no small amount of time, energy, and money, they find little is gained—especially when measured in terms of bottom-line growth.

 

The letter below was written to such a client.

 

The contents of the letter refer to “Manufacturing 4.0” or “Industry 4.0.” This is a reference to the four stages of the Industrial Revolution, which can be outlined as follows:

  1. Industrial Revolution 1.0 – the original: transformation from hand-crafting to mechanization with water and steam power
  2. Industrial Revolution 2.0 – transformation to mass production, the assembly line, and the use of electrical power
  3. Industrial Revolution 3.0 – transformation to computerization and advanced automation in manufacturing
  4. Industrial Revolution 4.0 – transformation to cyber-physical systems

 

This letter talks about the importance of transformational leadership in getting to the place where benefits can be reaped from any significant transformation within an organization or supply chain.

 

*********************************************DeathtoStock_QuietFrontier-12.jpg

 

In light of our discussions during my last visit to your site, I found an article entitled “Transformation to 4.0” in Automotive Design & Production to be on-point and worthy of further consideration.

 

The article features a discussion with Fred Thomas, DELMIA Apriso Director of Discrete Manufacturing Industries at Dassault Systémes (www.3ds.com).Thomas has observed what we, too, frequently find to be true. “It’s easy to forget that Excel is the tech of choice in plenty of plants.”

 

I often point out to our clients that, if Microsoft Excel stopped working tomorrow, nearly the entire U.S. economy would slowly grind to a halt. The position in which you find yourself today, with the heavy lifting for data management and planning being done by a series more-or-less interrelated and connected Excel spreadsheets, is not at all unusual. However, the fact that it is typical does not, by any means, suggest that it is optimal.

 

Fred Thomas goes on to point out another truth in today’s typical enterprise: “[N]o one [says], ‘I don’t have enough data.’ What they don’t have is insight into the data.”

 

The article continues: “And what they need, Thomas says, is a business case that will convince them that… change makes economic sense: ‘You have to see real dollars in the value proposition.’”

 

For an organization that is capable of growing its top-line well into the future, like your own, the key to growing the bottom-line is being able to sustain and support significant growth in Throughput (revenues less truly variable costs) while holding the line on growth in operating expenses. If an organization has to keep adding support staff because underlying systems are too inefficient, ineffective or wasteful, then bottom-line growth falls way behind top-line growth. You may have already been experiencing this.

 

Using slightly different terms, our discussion held many parallels to the final few paragraphs of the “Transformation to 4.0” article:

 

One of the things that gets little attention in all of this discussion of The Future of Manufacturing is something that has been key in 1.0, 2.0, 3.0, and, yes, 4.0: leadership.

 

Thomas says that it is fundamental for there to be an understanding of the technology, for there to be a strategy and a vision that will elevate an organization “to the next transformational level in manufacturing.”

 

Thomas points out: “That has to be led and pushed by an executive sponsor. Companies need a leader who will push the vision and the strategy.”

 

Without it, there may be a lot of tech. But as advanced as it may be, its effectiveness is likely not to be what it could or should be, regardless of what it’s called.

 

I must say that I am pleased and encouraged by you and your firm’s renewed energy and excitement about moving forward with the consummation of your POOGI implementation in the coming few months. I hope we can work together to sustain the new-found enthusiasm.

 

Please let me know your thoughts. I look forward to hearing from you again soon. Thank you.

 

Yours truly,

*********************************************

 

How about your comment? How would you reply?

 

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A new year is coming up. Time for more New Year’s resolutions and goal setting.Goals for 2017.jpg

 

You and your supply chain will face a fresh set of challenges in 2017. We know it can be hard to decide what your focus should be when thinking strategically about your supply chain.

 

You’ve made some decisions

You and your team have met. Driven by a review of the big challenges you faces last year, and—in no small part by signals from the board of directors and shareholders—your company has come up with the following list of top-level goals and results targets:

  1. Maintain on-time shipping performance (customer service levels) at or above 95 percent
  2. Reduce to and hold inventory financial investment to no more than N days inventory on-hand (DOH)
  3. Improve critical supplier on-time delivery time to an average of greater than 85 percent
  4. Reduce lead-times for the top N percent of products we sell by Y percent
  5. Cut total cost of in-bound and out-bound logistics by N percent when compared to previous year

 

What happens next?

In this article, we could ignore what happens in most companies about the time these goals get published to the rank-and-file of the organization. We could just go on to talk about theoretical tactical planning to achieve these goals that will be put on paper and handed upstream to the C-suite. We could list things like…

  • Develop individual personal development plans for each member of the supply chain management team
  • Develop in-house or add personnel with advanced project management skills and certifications
  • Conduct fresh ABC analyses with all critical suppliers to reset min/max stocking levels and tactics for lead-time reductions
  • Create and implement new (reduced) production batch-sizes to aid in the reduction of lead-times
  • And so forth…

 

Wow! Tactics aligned to our strategies! We are all set to rock-and-roll!

 

This makes us sound like a real business enterprise—in your dreams or on TV!

 

Forget about the fact that there is no actual or meaningful correlation between the tactics suggested above and the goals being promulgated to the organization. Just forget about that.

 

What really happens next, when these types of goals get set in most business enterprises, is the grumbling starts.

 

“What the heck? Who told them we could maintain 95 percent customer service levels on only N dollar-days of inventory? We have 20 additional dollar-days on-hand now, and we’re barely keeping our promises to our customers!”

 

“We’ve talked with our key suppliers for three years in a row now, and we haven’t seen any real or consistent improvements in average lead times. What makes them think it will be different this time?”

 

“What do you mean cut total logistics costs by N percent?!? How the heck do they think we’re able to keep our customer service levels so high? They can’t have it both ways! It’s just not fair.”

 

“Sure! It’s fine for those guys to hand down these kinds of goals. They don’t have to figure out how to get it done. These just aren’t realistic. I don’t even feel like trying, since I know we can’t make them happy.”

 

Here is the problem

The achievement of high customer service levels, lowest optimal inventories, high levels of on-time performance by your suppliers, reduced lead times, and lowest (optimal) logistics costs are not achieved by setting goals and measuring progress against them.

 

Very few companies achieve success this way.

 

Why?

 

Because setting goals like these and measuring progress against them is like a baseball team manager trying to manage his team by watching the scoreboard or league standings.

 

It’s the little things that count

The baseball team manager needs to see, measure and manage the little things like on-base percentage, which means coaching his team on managing the strike zone when they’re at the plate.

 

If he pays attention to—and measures—the little things, odds are he will see better results on the scoreboard, as well.

 

Year after year, Toyota achieves all of these “goals” (listed above):

  1. Extremely high customer service levels
  2. Very low inventories
  3. Well above-average vendor delivery performance
  4. Below-average lead times for their industryLEAN TPS House diagram.jpg
  5. Below-average total logistics expenses

 

They achieve these results with almost unequaled consistency. But they don’t do it by setting goals in the boardroom and promulgating them to the shop floor.

Instead, they achieve these lofty “goals”—and are profitable—by building their whole “house” with a very singular focus: FLOW.


Everything at Toyota is focused on assuring that nothing in the supply chain hinders the flow of product to their customers.

 

Here’s the truth: Having the lowest inventory levels while achieving high customer service levels and better than average lead-times is a result of six crucial and interdependent factors:

  1. Producing only to actual demand (this does NOT mean make-to-order)
  2. Governing production and the release of materials by the rate set by the system’s constraint(s)
  3. Reasonably buffering the constraint(s) to assure that they are never starved
  4. Maximizing the uptime of the constraint(s)
  5. Procuring materials so that the gating processes are not delayed (leading to starvation at a constraint)
  6. Ensuring the reliability of all processes that support buffers at the constraint(s)

 

What do all of these crucial processes do?

 

Support FLOW. That’s it.

 

Learn how to take charge of these matters—that is, how to configure and maintain metrics that (like the baseball team manager) keep your supply chain team focused on the few tiny things that lead to more wins—and your team will also achieve the grander top level goals that keep the folks in the C-suite happy.

 

We can help you learn the strategies and tactics that will help you get to your goals. Contact us for more information.

 

 

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