I interviewed Scott Lowther who discussed the biggest mistakes that he has observed in supply chains over the last 20 years.
Today we're speaking with Scott Lowther, and he's the founder of Supply Chain Alchemy, and the topic is the biggest mistakes that he has observed in supply chains over the last 20 years. Scott, can you first provide a brief background of yourself?
Yes, I can, Dustin. My background started off as actually a chemist. I i progressed through a couple of small companies and ended up at Mobile Oil where I started to get a wider view of what goes on inside a company, particularly around supply chain, production, and procurement. And I got a bit of an interest. So after being there for a bit over 10 years, I fell into supply chain consulting with one of the big five. After working with them all around the world, I went and became a supply chain manager at a large manufacturing company. And then around 2004, I went out on my own, effectively consulting around, predominantly, manufacturing, but it's been everything from mining, financial services, [inaudible 0:01:07] the military and defense. So it's been quite a variety of roles and areas of supply chain experience.
Can you first talk about the importance of people?
Yeah. I honestly think that probably the greatest asset or benefit that any company can get is if they get their supply chain working properly. But I find that supply chain itself is actually quite easy. It's generally the people that cause the biggest issues when you're trying to get your supply chain functioning properly. And one of the things that I’ve noticed is that supply chains that report into a functional area — so they're reporting to sales, or they're reporting to production — tend to have their planning skewed towards that department. And it's really critical that supply chain actually is its own department, reporting on, going through to the CEO. And the reason for that is that the planning process can be independent of any functional area. And that's one of the things that I've seen in a number of organizations, that you see the, I suppose, the planning skewed towards a particular department, which is not necessarily in the best interest of the entire company.
The other thing I've seen is really the type of people they hire. I notice that a lot of people, if you're FMCG, and they're trying to hire an FMCG job, they will actually go out and specify that you must have experience in FMCG. One of the biggest benefits I've seen to companies is, when they actually go outside their area or their own industry, and they start to being in some fresh ideas... Because you find that what is common practice in one industry, that if you transfer that to another, can actually become best practice. And if you keep doing the same thing, you're not going to actually bring in fresh ideas, and you'll end up just doing the same thing over and over.
The other thing I've noticed is people that come straight out of university with a supply chain degree know the theory back to front, but they don't have that practical application to actually implement. So they don't understand what are the implications. And I find that every industry has its own slight nuances that sometimes you have to adapt the theory to suit what is actually going on. And it's really critical that you have some business knowledge that can go and feed into the supply chain. And I think that's really critical, and I've seen consulting, particularly,where they'll come in and say, "This is what you should do," and yet, practically, there's no way that that could actually be implemented.
So they are just some of the things that I think around people are really critical.
Can you talk about the importance of process?
Process — I think it's really important they really don't understand the interactions around their components that make up the supply chain — from sales all the way through planning through to execution. So it's a little bit like holding a balloon in your hand. And if you poke it in one side, there's going to be a bulge that appears in another part of your hand. And it's really important that people understand what are those interactions and that, if I do play with my inventory, what is it going to do? If I extend my supply chain by manufacturing overseas, what is it going to do to my inventory levels, my customer service levels, my forecasting.
All of those components seem to be lost when people just delve down into one little area. And I like to build flexibility into a supply chain. I see people that paint themselves into a corner by saying, "If I go buy this mechanism" — it's the cheapest at this point in time, and they build their entire infrastructure around it, and then when the market or the technology moves, they're stuck. And it's a really big exercise to dig them out of that hole.
I'll give you an example. We had one CEO come to me, and he said, "I want to do a customer survey and ask my customers what they want."
And I actually said to him, that's the worst thing you can do because customers hate it when you ask them what they would like, and then you can't deliver. Or, when you go to deliver, it actually breaks your company. It's really critical that you understand exactly what's going on so that if your customer says, "I want to do this," you either know what the cost of it is, and you know exactly what you can and cannot do. So that's really important.
The other thing is I find that, from a treatment of your entire supply chain, your connected supply chain, includes your suppliers. But I find that most businesses treat their suppliers as enemies, and yet they're a critical component to supplying your customers. And if you work with your customers and your suppliers, you can usually end up with a mutual benefit that benefits both. But I find it very difficult when, again, companies will treat their suppliers almost like the enemy in every little component or cost reduction they can get out of them, they will.
The other thing that I find when you're trying to work out your supply chain or develop the processes that are working around it, if you balance your supply chain... Because normally, when I go into a business, they're fighting fires. So instead of being able to concentrate on planning and executing, they're actually fighting fires with the customers, supplies, and getting things all out of control. So if you can bring your supply chain into balance, then focus on the high points that you can actually walk away with, it's a bit like the theory of constraints. If I've got a balanced supply chain, I'm not fighting fires. I can start to work on how do I improve things.
And they're probably the main things.
But the other thing I find is people often confuse soft with hard constraints. I'll give you an example.A hard constraint is there's 24 hours in a day. A soft constraint is we run our production over one shift. So people assume that it's a hard constraint, and they limit themselves instead of thinking outside the box. And that's probably the main things around process.
Can you explain what's important about technology?
Yeah. Sure, Dustin. One of the things that I find companies do is that they [inaudible 0:10:13] the latest fad, whether it be blockchain, whether it be getting things in the cloud. They don't really understand their supply chain first, so they're looking for a solution to solve their problems. And really, you need to concentrate on the fundamentals. Get your supply chain balanced. Work on those things, and then you'll find that technology, rather than just getting you into a hole faster, actually enhances what you're trying to achieve.
So what we've got to try and do is look at your people, your structure, get the processes operating properly so you understand the costs and everything that it impacts on your supply chain. Use technology to enhance that planning process and execution, and then look to behind the scenes a little bit like re-engineering your LEAN. You're looking to systematize and get rid of the human error aspect. So, in other words, re-type of get rid of all of those components where mistakes can be made.
So you're trying to make things as error-free as you possibly can, and a plain environment is really the way to go. And that's probably the critical things I wanted to get across, Dustin.
Thanks for sharing today, Scott.
About Scott Lowther
Supply Chain Alchemy turning the Lead in your business into Gold