Supply chain lessons to live by

Lesson

Supply chain management, as an organized field of study, is relatively new. Depending on what key event we choose in order to peg the birth of the field, it is either about a hundred years old (dating back to the publication of the seminal book The Principles of Scientific Management by Frederick Taylor), or about thirty or so years old (when the term “supply chain management” was used in print for the very first time). Either way, we can agree that it is a young field, and perhaps because of that, supply chain management has generally valued the practitioner’s knowledge quite highly. Theory and tools are always useful, but especially in fields that have not been studied academically for very long, life in the trenches has a lot to teach us.

I have been quite fortunate in this respect – in addition to my own experiences, I had the benefit of absorbing the distilled wisdom of several mentors who were generous with their time and their knowledge. Here’s what I learned from them, on how to succeed at managing supply chains well.

Get your fingernails dirty

This may seem obvious, but if you want to learn lessons from the trenches, then spend time in the trenches. Don’t take any aspect of supply chain management for granted, whether it’s plan, source, make or deliver. While it may not be practical to spend your entire career working on every aspect of supply chain management, make hands-on learning a cornerstone of your career planning. When you visit a warehouse, don’t just admire the automated pick-and-pack system and make polite noises – be insatiably curious and find out what goes on there, day-in and day-out. When you visit a manufacturing plant, find out how goods are produced, how they are tested, and why products sometimes fail inspection. Try to understand why lead times are what they are, and what plant management is doing to make their operations predictable and efficient. You never know when some little nugget of information you pick up from touching and seeing supply chains will be critical in saving you and your company someday.

Know your supply chain

On the surface, this may seem to be a repeat of #1 above – but it’s not. This is not about learning supply chain management first-hand – it’s more about knowing every nook and cranny of your own supply chain, from one end to the other. This notion of end-to-end supply chain management is very important – many novices, and even some experts, mistake supply chain management for finished goods distribution. It’s obviously a lot more than that – all the way from the sourcing of raw materials to the production of intermediates and finished goods, to distribution, logistics, customs and regulations. The point is, if you’re accountable for delivering a product to your paying customer, you need to know every inch of the path it traverses to get there. This obviously includes the metrics that you measure supply chain performance with: lead times, capacities, inventories, costs, fulfillment rates, and cycle times to name a few. But it also includes an understanding of your constraints, vulnerabilities and strengths, as well as the people who are responsible for the product at each node along the way.

Plan well

In this results-oriented world we live in, it’s easy to fall into the trap of thinking that good execution is everything. And perhaps it is, but good execution doesn’t just happen because people are focused and do their jobs well. Good execution is a natural consequence of relentless planning, while failure is a frequent consequence of the lack of it. As Eisenhower once said, “Plans are useless, but planning is indispensable.” And in the context of supply chain management, planning means determining what should happen and when at every node of the supply chain, from end-to-end. If you just focus on finished goods distribution, without due consideration of what happens upstream, then you may be setting yourself up for a bumpy ride. Planning also means consideration of different time scales – from the longer business planning time horizon, to the much shorter time periods associated with production plans for the manufacturing floor. As the time horizon becomes longer, the level of detail in the corresponding plan and the frequency of the planning activity both diminish.

All this may seem like an awful lot of work, especially when the plans themselves often bear little resemblance to reality due to changes in the assumptions or the environment. But believe me, the alternative is much worse. You will either end up working twice as hard to react on the fly, or not having any work at all by virtue of having been fired from your job. And finally, planning well means using the right tools. Depending on the size and complexity of your supply chain, make sure you have the horse power to get it right. If you have an Enterprise Resource Planning (ERP) system, leverage it to the hilt. If you don’t have an ERP system, lobby vigorously to at least get the planning tools you need, and deploy them so that their use becomes a part of daily life in your supply chain.

We live in an information rich universe, where we are bombarded every day with news of the latest innovations and techniques for improving supply chain performance, whether it’s demand-driven networks, lean supply chains or advanced planning tools. But in the midst of all that, we shouldn’t forget the basics that provide the foundation for making the improvements possible. And there’s no better way of reminding us of the basics than some lessons from the trenches.

© Tharuvai Ramesh

Advertisements