Follow up on Response Management

Randy Littleson of Response Management had a few comments regarding my initial post on Response Management. As I learn more about Response Managment, I offered this comment at his site regarding Response Management and Quick Response Methodology (QRM):
In your comments, you have referred to "breakthrough" in responsiveness that can be achieved by empowering the many stakeholders involved in making course corrections due to unexpected events in the day. From my reading of Response Management (albeit a cursory one at this time), it seems to be a software backed tactical level planning, weigh the options and impacts, decision making (and probably prioritizing) system i.e. consisting of a DSS (Decision Support System) side as well as certain processes that use this DSS. This probably fills a gap that has existed with Supply Chain Planning tools (that remain at a more strategic and long term horizon level) in that they cannot really get down to the nitty gritty of operations. ERP tools have recorded information at all levels of the firm but they do little more than that. I hope that I have captured the gist of the Response Management approach.
Of course, any tool that does some if not all of the above piques my interest greatly.
What QRM does is something quite similar in that it also gets down into the nitty gritty of operations - however it is very much from the planning point of view. With its attendant DSS, QRM plans the structure of the manufacturing system for those very situations wherein Response Management has been highlighted above.
So in a sense, they're competing ways to solve the tactical issues of daily operations at a level not addressed effectively by SCM/Simulation/ERP systems.

posted by AJ @ 4:22 PM 0 comments

The blind spot in cost calculation...

Early on in my career (i.e. just after my undergraduate degree), I interviewed with BCG. (The only thing I learnt from those heady days was not to be a pompous arrogant ass). Personal distraction aside, I worked through a case with one of the consultants about "saving" a business making tractors from almost certain ruin given such and such market conditions. Coming from a mechanical engineering background, I was not only completely sold on the importance of R&D, good product design, quality etc etc but also unwilling to brook any spending cuts in those areas. The "answer" (or the best supportable answer most likely) to the case was cutting R&D and product development costs for the tractor manufacturer and redeploying those funds to marketing and what not. That and a love for engineering that couldn't be hidden meant a ride on the road less taken and this during the Asia Financial Crisis of 97-98 (though it quite felt like 97-2000). Today, I have come full circle and its taken me 8 whole years - I still love engineering, trust marketing to elucidate value (not create value), am skeptical of accounting variances and varied accountants (though I realize the value and the limits thereof of accounting practice) and might still fail the BCG case again - taken honestly. Though, I work in supply chain consulting and using a quantitative and optimization approach, I am always keenly observing the limits of what works and what is plain hooey even if it is based on incontestable numbers - that might seem rather piquant but even incontestable numbers come from contestable underlying philosophies. And its precisely this underlying philosophy that this article at Panta Rei: Gemba Keiei, Chapter 6: The blind spot in cost calculation is all about.
Let me jump right in:

Just in Time is the design of production activity to be closely synchronized with customer demand according to the three principles of Takt Time, One-Piece Flow, and Downstream Pull. One of the major goals of Just in Time is to prevent the mother of the 7 wastes - overproduction - by making only what the customer needs, when they need it, in the right amount.

And thus manufacturing became an art. There is the science of manufacturing, the logic of manufacturing and the art of manufacturing. The above statement encapsulates what can be termed the logic of manufacturing. But somewhere in elucidating the above logic, manufacturing turned from being a science, from numbers, yields, WIP and lead times into an art. The art is the whole thing subsuming logic and science together into a practical effort.

Taiichi Ohno begins the chapter by saying that there is a misconception in the minds of people who calculate cost. They believe costs can be lowered on the basis of volume produced without considering the actual customer demand.

Well, it depends on where you draw the system boundaries. It is not that either of the above logic described is incorrect but one has to look at the completeness of the description. Costs can be lowered on the basis of production volume = economies of scale, nothing wrong here. However, the system drawn up here doesn't take any inputs from any agent outside the purview/control of the firm when it calculates its manufacturing cost. In this day and age, when a firm goes through its product design and development process, it is not averse to getting customer input at critical design junctures or in the whole design process - doing so mitigates serious risks and thus future costs down the line. Why should manufacturing be any different? The key customer input here - the true nature and magnitude of customer demand. Sometimes demand data is simply unavailable or too difficult to obtain from customers and if manufacturing proceeds without taking efforts to control the risks that such uncertainty introduces in their business model - then system failure is not far off. Adopting JIT as a manufacturing philosophy means creating a system where customer demand uncertainty is reduced by waiting sufficiently long enough until the manufacturer can "see the whites of his customers' eyes" before acting.

Ohno says "Make only as much as the customer will buy. Don't make things the customer won't buy" but the cost accountants reply "What are you talking about? Of course it's cheaper to make 20 than to make 10." Ohno recognizes that in terms of simple math what the accountants say may be true but says the reality of costs is not so simple.

Its not the simplicity of the math as Ohno says but the simplicity of the system that the accountants have drawn up and by which they practice their craft. The real world is not just that simple and we ought to adapt ourselves to mitigating uncertainty and risk wherever possible.
However, Ohno makes a larger point next which harkens back to the incontestability of numbers that are available when it is the underlying philosophy that is actually the source of contest.

Here he introduces the famous three equations for cost. Mathematically they are the same. They are very different in terms of the point they bring across. The equations are:
1) Price - Cost = Profit
2) Profit = Price - Cost
3) Price = Cost + Profit

Mathematical axioms are not subject to change by definition and therefore there cannot be anything logically untrue in the above statements. However, the question to us who have to act always is - what variable/constant is known, what are fixed/changeable and what are the underying systems that deal with the three variables/constants above?

In the case of equation 1 the market is competitive and the price is set by the customer.
In the case of equation 2 you need to make a certain profit, let's say $0.25 per unit. So here you have to increase the value and increase the price so that if your cost is $1 you can now sell it for $1.25.
In the case of equation 3 the math may be the same but the underlying thinking is different, says Ohno. If $0.25 is a fair profit and the cost per unit is $1, then you may set the selling price at $1.25. However if the customer can purchase the same thing elsewhere at $1 then you can not set the price this way.

Nothing mysterious here. All you've got to do is choose your mode of competition or adapt a hybrid mode of competition - you can deliver value while trying at the same time to drive costs (what's the definition of cost agian?) out of your system.
Here is something to savor from Taiichi Ohno:

"Costs do not exist to be calculated. Costs exist to be reduced."

Now, should an accountant's performance be based on cost reporting or cost reduction? You decide.

posted by AJ @ 10:45 AM 0 comments

Archived webinar on Inventory Optimization in Electronics

An archived version of the recent webinar on Dynamic Inventory Optimization presented by the Electronics Supply Chain Association (ESCA) is available here. Registration is requied and free. The webinar will be available for a year from now. I found some of the items in the presentation especially from the Aberdeen Group as well as IBM's DIOS group quite interesting and that makes watching the webinar well worth your while.
Some of the other documentation relating to the webinar is also available here:
1. IBM's DIOS brochure
2. Case study of application of DIOS at a company

posted by AJ @ 4:29 PM 0 comments

You can't plan your compromises ... Yes, you can.

Randy Littleson of Kinaxis on Response Management blog has a post about how firms are often kicked into "response mode" where in they're trying to respond to the latest fire that is about to kill their customer service ratings. Isn't it always like that or doesn't it always feel like that? He is of the opinion, no doubt earned by consulting practice that it is virtually impossible to plan out the activities of the firm such that you can avoid/significantly mitigate the "response mode" state of affairs.

These deviations from plan are happening literally hundreds of times throughout the day in most organizations. It may be a key customer calling, a field failure that needs to be dealt with, an unexpected delay in receipt of a critical part of any number of things that "just come up."
At the core to solving these problems is compromosing. Teams need to get together and figure out what tradeoffs and compromises need to be made on the spot to solve these types of problems....and they need to do so while weighing the impact on the rest of the business.

Well, you could if you wanted to.
Quite simply, you either have to have excess capacity built into you system (not so good idea) or have a system that operates at or near the lowest total lead time (better idea). I'm not saying that you'd be able to handle every "response mode" crisis hands down this way but a significant portion of the response mode crises ought to be mitigated by advanced planning. But that requires a different way of thinking and applying i.e. bringing in the fruits of applied queuing theory into the firm's activities. One of the highpoints of my graduate education was putting this into practice - through Quick Response Methodology (QRM). QRM is the brainchild of Dr. Rajan Suri at the University of Wisconsin-Madison and I was part of a team that consulted with a manufacturing firm with the specific objective of reducing their lead times for spare parts.
If you're facing any of the below:

• Our biggest customer is demanding faster response time ...


• We provide a high degree of customization, and JIT is no longer helpful in our low-volume, high-mix environment ...


• Our shop floor has become very efficient, but it takes too long to get out a quote or process an order ...


• Our own response time is fine, but our supplier is another story ...

Then, you should give QRM a try (it is grounded in a fair bit of lean thinking to which a definite quantitative focus has been supplied through dynamic modeling based on applied queuing theory). Some of the benefits of QRM:

• Decrease your manufacturing costs


• Increase your market share


• Fill customer orders faster


• Boost product quality


• Introduce new products rapidly


• Eliminate waste and inefficiency


• Secure your manufacturing future

By the way, I'm glad to see that the firm that I consulted with P&H Mining is doing quite well (what with the commodity boom et al these past few years) and there is an article here that highlights their success with QRM.
While compromising within the different functional groups of a firm is always a good idea, it is not the best answer to the problem of "response mode" crisis. Try QRM instead.

posted by AJ @ 8:43 AM 0 comments

Smarter, faster and cheaper Supply Chain Technology...

Logistics Management has an article on their website (Free registration required to view the article) which summarizes a survey of current trens with respect to SCM technology - likes, dislikes, loves and gripes. The respondents were surveyed about the type of SCM or related software that they intended to purchase/upgrade/deploy in the near future, important factors w.r.t SCM software and who in the firms made the decision to acquire SCM software. This is the kind of response that any SCM consultant or SCM software maker has to be keenly watching - hopefully not as a first source of industry trends but as a sort of secondary confirmation.
The article gives an idea about the content of their survey sample:

The final survey sample included logistics and supply chain managers from both large and small companies, with annual sales ranging from less than $49 million to $1 billion or more.

Some important takeaways (which are succintly graphed in the article as well):

1. Six types of software are most commonly used in logistics today. The most popular are warehouse management systems (WMS), used by 61 percent of respondents, followed by enterprise resource planning (ERP) at 55 percent and transportation management systems (TMS) with 34 percent. Rounding out the list are supply chain planning (32 percent), import/export management (15 percent), and yard management systems (YMS) with 10 percent.
When it comes to upgrading or purchasing software, WMS and TMS are at the top of readers' shopping lists. Supply chain planning and ERP applications are close behind.
This year's survey also highlighted an important trend in on-demand ("pay-as-you-go") solutions. Some 28 percent of readers already use such systems, and 34 percent expect to purchase them within the next 12 months.
2. Ultimately, readers said, the most important reasons for purchasing supply chain software include the right features for their operations, quality of service and support, compatibility with existing solutions, and configurability. All of that is aimed at achieving one overarching objective. "The number one attribute that companies tell us they're looking for is integration of their internal supply chain," says John Fontanella, senior vice president and research director, supply chain services, at Aberdeen Group. "That is head and shoulders above everything else."
3. Eighty percent of the respondents who plan to buy supply chain solutions expect to spend less than $1 million on software, training, and integration. Most are currently evaluating vendors, and a smaller percentage have already decided which vendor they'll buy from. Respondents typically rely on a team that includes corporate management, information technology, and warehousing/distribution/logistics, among others, to make those decisions.
In exchange for their investments in supply chain software, one-third of the respondents expect a payback within 12 to 18 months.
4. Fontanella adds that a 12- to 18-month ROI is not only within reason, it has become a necessity. "It's not an unreasonable expectation at all," he says. "A technology vendor that can't deliver that will be out of business."

All of the above seems just about right except the last point. T'is all well and good to expect an ROI within a 12-18 month timeframe but to place that squarely on the shoulders of a technology vendor smacks of the COTS (Commercial Off The Shelf) problem and how firms tend to view software solutions - as a magic wand. And that is singularily unhelpful.

posted by AJ @ 10:54 AM 0 comments

The Interactive Global Supply & Demand Chain Map

Supply and Demand Chain Executive has on their website an interactive global supply and demand chain map that has identified enablement options and solution providers for the different functional areas in the SCM space. (Note: The map requies Macromedia Flash Player to work properly).
Look at the map here.

posted by AJ @ 9:04 AM 0 comments

Taking a peek at mySAP (Strategic Supply Chain Design area)

What is the scope of mySAP's solution space? While dealing with SCM, one has to meddle with the ERP system that one finds within a firm. mySAP is one of those leading ERP providers that is making inroads into the SCM space as well. Here is the solution space of mySAP as outlined on their website.
The main solution function areas are captured in the figure below (which I shamelessly copied from their site - I wonder where the jury of copyright matters rests on the matter?).


Each of the solution areas has its own mini-web site which explains some of the capabilities ensconced therein. So let's go one by one starting bottoms up:

1. Strategic Supply Chain Design: Three areas under this category.

• Supply Chain Definition : You can model every part of the supply chain (such as locations, transportation lanes, resources, products, and so on.) using the Supply Chain Engineer in SAP APO. The Supply Chain Engineer allows you to place locations on a map and link them with the corresponding transportation lanes and product flows. Furthermore, you can drill down to all elements belonging to the supply network, or request information about single or combined elements in the network. For example, you have the ability to see which products belong to a particular location. You can also add products to this location or modify the location's master data. Master data can also be transferred from SAP R/3 bzw. SAP ERP using the Core Interface (CIF). Materials are limited in their validity and availability. This has to be taken into consideration throughout the entire supply chain management solution. A central maintenance instance for interchangeability relations is offered that provides information for all planning applications. This secures consistent planning of discontinued material stock before using follow-up material stock. For a service parts supply chain, the supply chain definition is extended with the Bill of Distribution, which not only describes a location hierarchy but also allows the modeling of virtual locations (which are physically the same locations as aggregation locations in the location hierarchy, but are logically only used to model the direct customer facing demand of those aggregation locations), virtual consolidation regions (to consolidate the demand of several locations for slow moving parts) and inventory balancing regions.

The Supply Chain Engineer in SAP APO sounds a lot like the tool that I developed (based on the transshipment model) that allows for strategic level planning for supply chain components. The great thing about the Supply Chain Engineer is the integration that it provides with the ERP system which is how it should be ideally.

• Supply Chain Monitoring : The Supply Chain Cockpit (SCC) consists of a highly intuitive, graphical interface that acts as the top enterprise planning layer covering all planning areas such as manufacturing, demand, distribution, and transportation. All employees in the Plan -> Source -> Make -> Deliver cycle of supply chain management can use it to their advantage. As the gateway to SAP APO, the SCC makes dealing with a vast supply chain easier and more manageable. SCC allows you to:
  
  • Create individual work areas so several planners can work simultaneously on different parts of a supply chain.
  
  
  • View the supply chain from all angles, down to the smallest detail, to minimize the complexity of the relationships among supply chain components.
  
  
  • Measure supply chain performance with KPIs (key performance indicators) that are stored in SAP Business Intelligence (SAP BI).
  
  
  • Respond immediately and accurately to new developments by tracking alert situations.
  
  
  • The SCC can be configured to suit conditions within a wide variety of industries and business situations.
  
  
  
  

Now, we take a step down into the actual nitty-gritty about supply chain planning. I take heart in the integration of several supply chain roles that the above function area provides above while simultaneously bringing to their tables information about every nut and bolt that has been catalogued and tracked in the ERP system. I can only wonder about the information overload but I suppose some improvement in the meta level aggregation of data will be provided sooner than later.

• Alert Monitoring : The Alert Monitor is a stand-alone SAP APO component that enables a unified approach to monitoring planning situations. It notifies you of any critical situation that occurs in one of the SAP APO applications, such as Demand Planning, Supply Planning, Production Planning and Detailed Scheduling, or Transportation Planning and Vehicle Scheduling. Alerts are displayed in various ways, either directly in the Supply Chain Cockpit, in the cockpit's control panel, in the application, by e-mail, fax, pager, SMS, WAP pages, or the SAP Enterprise Portal inbox. Using a series of event triggers and alarm conditions, the Alert Monitor can automatically identify problems in the supply chain. It can also monitor material, capacity, transportation, and storage constraints. In addition, it can handle metrics such as delivery performance, cost flow, and throughput. It reports exceptions, including orders that exceed forecasts or orders that fall short of forecast and therefore may lead to excess inventory if production is not adjusted accordingly. Based on this monitoring process, you can readjust plans whenever needed.

This is the closed loop effect in action when it gets applied to the supply chain area. Whether you planned it right or not, designed it right or not, you ought to get information about how well things are working in the real world. I suppose you could track/monitor your favorite performance indicator here. However, I am wary of something. If you're familiar with control theory, you'd appreciate the explicit definition and structure of open and closed loop systems i.e. systems are constructed with the underlying structure made quite explicit - you wouldn't be hunting around for implicit feedback loops. The above three areas when taken under the Strategic Supply Chain Design functionality is an implicit analogy of the control systems methodology without any elucidation of where and when that analogy fails to transform from the control theory space to the business space. Or in other words, one can never be sure of where to attach the feedback loops and more importantly what parameters (whether they should be first order, second order or even third order differential terms or their rough analogical business terms) ought to be put in those loops. Rather as indicated by the Alert Monitoring function, you are alerted to what you wanted to be alerted about which readily implies that the feedback loop is given over to construction by individuals who may or may not be sophisticated about systems thinking. After all, you often hear about velocity in the supply chain and that is a good first step in this direction but where do you hear about acceleration - in ramp up? In practice however, ramp up is often treated as a special case where in all hell may break loose at an inopportune time.

2. Supply Chain Analytics:

• Service Fill Monitor : Service fill monitoring provides an up-to-date view on the fill rates for direct order fill, redirected order fill, or referred order fill rates. Fill rates can be determined either on an order line or on a quantity basis. The service fill monitor allows analyzing specific product segments or specific locations within the service parts supply chain.

This is a first order customer service performance indicator which is entirely within the purview of a firm's activities. This indicator will only tell you about the overall performance of the firm with respect to specific product segments or locations within the firm. A low reading here means that there is a problem somewhere and not much more. A high reading here might indicate that assets and resources might be inefficiently positioned or used.

Service Loss Analysis : Those orders that could not be filled by the promised ship date and time, are considered as service loss. The service loss analysis provides help in performing a root cause analysis of the service loss by storing the situation of the supply chain at the time of service loss, attempting to classify the loss reason into predefined categories, and keeping the combined data available for later manual analysis.

Another first order customer service indicator which is related to the first one above inversely - Service Fill Monitor.

Supplier Delivery Performance Rating : Supplier Delivery Performance Rating is an analytical tool which allows to measure the suppliers' logistical performance and compliance based on ASNs received for expected shipments, the quality and timeliness of those ASNs, the received shipment quantity compared to the promised and the capability of suppliers to respond to changes in the supply plan within the bounds defined in the supplier contract. The result is a weighted score of the above categories. The tool allows analyzing the overall supplier score as well as drilling down by supplier location, delivery location, product group etc.

This indicator gives the firm the chance to be the top dog when it comes to monitoring the fill rate/loss rate with respect to your suppliers.

Inbound Delivery Monitor : The inbound delivery monitor analyzes shipments from a supplier to the supply chain network or within the network and determines average transportation times for all segments as well as deviations. It compares the measured leadtimes against predefined standard times and creates alerts when late shipments are to be expected.

If you wanted to dig down into the actual performance of a suppier, you'd look here but then if you've reached this level of detail, you either have too much time on your hands or there is some problem with your supplier.

Key Performance Indicators : Key Performance Indicators (KPIs) provide a means of judging the performance of business processes internally by time period, collaboratively with others within your supply chain, and externally by benchmarking against similar companies. mySAP SCM supports the metrics in the Supply Chain Operations Reference (SCOR) model created by the Supply Chain Council, and includes more than 300 pre-configured supply chain key performance indicators (KPIs), such as Delivery Performance, Forecast Accuracy and Return on Assets. These measures can be used as they are, or modified and enhanced to fit your specific situation.

The information goes on to detail over 300 pre-defined performance indicators that are available. The question of how the feedback is to be structured seems quite relevant here. Even if one imagined that the 300 indicators can be reduced by an order of 10, keeping track of 30 performance variables is too complex for an operations level guy. All I can say is - STRUCTURE, STRUCTURE, STRUCTURE. Without an underlying structure of a business model and its specific loops - this is a dead end when it comes to making decisions on the basis of so many variables.

Strategic Performance Management : On a strategic level, SCPM gives you the feedback needed for true closed-loop supply chain management-- which is key to driving continuous improvement, delivering superior performance over time, and ensuring that your supply chain continues to be efficient and competitive. Here there are two areas of concentration:

• Balanced Scorecard SEM-CPM (Corporate Performance Monitor) supports the definition, analysis, visualization and interpretation of key performance indicators and Balanced Scorecards and thus increases the effectiveness of managerial strategy finding and implementation. Elements of SEM-CPM are Value Driver Trees, Measure Catalogs and Management Cockpit scenarios. SAP SEM with its component SEM-CPM offers innovative concepts for the interpretation and visualization of Key Performance Indicators (KPIs). The concept of the Balanced Scorecard, for example, includes non-financial measures in the enterprise performance management and thus goes beyond the scope of regular management reporting.


• Sales and Operations Planning in SAP APO. Allows monitoring of various plans from sales, marketing and manufacturing to keep in line with the overall business plan.
  

It is hard to see how the SCPM , a category of performance indicators, as described above achieves a closed-loop supply chain solution because most of the above corresponds to the firm in itself and not the firm's supply chain. Sure enough, some of the firm's activities have a direct impact on the direction and execution of the supply chain but that is an indirect performance evaluation.

Operational Performance Management : On a day-to-day operational level, the solution provides constant surveillance of key performance measurements, and automatically generates an alert when there is a deviation from plan, so that you can keep processes working at maximum efficiency. The Supply Chain Cockpit in SAP APO allows constant surveillance of the entire supply chain. And the Alert Monitor and Broadcasting functions draw attention to bottlenecks and allow you to inform users of potential problems in their area.

This is a category of performance indicators dealing with day-to-day operations and problems there in.

Supply Chain Analytical Applications : Applications Analytical Applications provide the basis for measuring and optimizing across the entire supply chain. It is more than just reporting; it is a closed-loop scenario that feeds information back into the transactional systems. It includes the collection of data from various operational systems (including non-SAP) to create the basis for Analytical Applications. Data from Dunn & Bradstreet and Nielsen can be collected as well as data from the Web. Analytical Applications also include alerts, workflows, and what-if analyses.

Frankly, I don't understand a word of the above. The notion of feedback as outlined above would indicate the readjustment of certain parameters within the ERP system based on the analysis generated by the SCAA (Supply Chain Analytical Applications). But that implies that the SCAA rather than being strategic level planning tools and applications, they refer to tactical and operational level analysis tools which would implement the notion of fine tuning. Do they?

Collaboration Performance Indicator : In an increasingly collaborative environment, it is important to measure the performance of the interactions of every partner involved in the supply chain. This is exactly what Collaboration Performance Indicators (CPIs) do. A Collaboration Performance Indicator (CPI) is the measure of performance associated with the responsiveness of all organizations involved in a process with cross-organizational interdependencies. The information provided by a CPI can be used to determine how an organization's cooperation compares with an agreed-upon standard, and is therefore a key component for this organization's joint move towards best practice.

Again, it seems to be a repition of some indicators from Supplier Delivery Performance Rating set of indicators but I don't think that I can say anything more about this until I get some first hand information.

The next functional area is Transportation, which will be addressed in a future post.

posted by AJ @ 1:23 PM 0 comments

Supply Chain Assessment isn't child's play. You need a true specialist.

So advises Jane Lee, a director of supply chain solutions at SupplyChain Consultants in the June edition of GLCS. She begins her article by saying what may seem as obvious but in a fad fed world, it may not be first on your agenda.

The first step to improving your supply chain is very basic: you have to understand what is working and what is not./blockquote>
And that's the segue for introducing supply chain assessment as one of the key competencies that a supply chain consulting firm should possess. Therefore, how does a firm evaluate which supply chain consulting firm to employ to fo the assessment?

Many consulting firms will claim an expertise in almost anything. A firm that does consulting on finance management, corporate strategy, shareholder value and oh-by-the-way supply chain effectiveness is frequently a "jack of all trades, master of none".

The number of qualifications in the above statement ought to give one pause. Why doesn't she just say what needs to be said - that a jack of all traders is a master of none.

Firms which focus entirely on analyzing and improving supply chains have a large institutional knowledge base of what has and has not worked in scores of other companies, enabling you business to leverage other companies' mistakes.

Couldn't have put it better myself though I might have added a qualifier here where it is necessary - was another consulting company involved in that failure or not? Then again, maybe not - another commandment to savor - Thou shall not put a gun to your own foot.
Jane's distilled recommendations on supply chain qualifications:
1. Choose practise over theory when it comes to knowledge
2. Choose consultants with domain/industry specific knowledge
3. Choose a listener over spouter
4. Choose consultants with an ear for red flags
All of the above are great tips for choosing a supply chain consultant. I would add the following:
5. Choose someone who can adapt their recommendations to you existing systems/be prepared to change a lot of things
6. Choose someone who can base his recommendations on hard quantitative analysis (like a decision support system) rather than soft fluffy feel good terminologies. Of course, I wouldn't consider LEAN or Best Practices as soft fluffy feel good terminology - that goes without saying.
The latter half of the article deals with how a typical supply chain assessment looks like:

1. The level of coordination between different operations from forecasting to manufacturing to order fulfillment as well as effectiveness of the current supply chain planning operations
2. A comparison of the operations with best-in-class operations to determine areas of improvement
3. An assessment of the IT system being used to support the supply chain, to identify specific gaps and improvement potential
4. Business process changes and organizational needs to support a best-in-class supply chain operation

Jane warns about the following which I think is important to know:

Studies show that implementations of even the best information systems tools, without accompanying business process changes have not produced the expected results.

Jane expands on what a firm should expect from a supply chain assessment:

1. A map of the current state of the supply chain
2. A map of the desired future state of the supply chain
3. A list of "low-hanging fruit" improvements that can be made at little/no cost
4. A detailed, prioritized, step-by-step path forward to move from current state to intermediate states to future states and the associated organization, business process and tool changes in order to make the progress
5. A database of the firm's historical supply chain for internal analysis and improvement
6. (Three points collaspsed into one) Customer analysis and segmentation using lead times, pareto analysis and customer service criteria
7. Identifying trends within the firm's supply chain operations and execution

posted by AJ @ 1:23 PM 0 comments