The art of supply chain management!

For many people working in supply chain management or even outside of it, it works based on processes, formulas and metrics. This is also at the core of supply chain training and certification.

But the truth is that the most effective and efficient supply chain operations and supply chain leaders go beyond these basics. Like many of our current problems, they stem from people only thinking about the sheer mechanics of the supply chain.

The best supply chains and their leaders have mastered the ART of supply chain management!

Stuck in mechanics

It starts with education and certification. So many of the institutional units that teach Supply Chain focus on mechanics.

The curriculum typically includes areas such as:

  • mathematics and statistics
  • Quantitative Analysis
  • Lean and 6 Sigma
  • production control
  • inventory planning
  • Logistics, warehousing and distribution
  • project management
  • systems and processes
  • Finance, Accounting and Economics
  • Procurement, purchasing, sourcing and negotiation
  • Law, ethics and professionalism

Basic training in all of these areas and disciplines is excellent and mandatory for anyone wishing to work in the supply chain. A well-rounded education or certification increases the value and perspective everyone will bring to their job.

Even if you want to specialize in one area or another, it is important to have an overview of all these areas. Specialists still need to have a basic understanding of other fields as it is inevitable that you will come into contact with these people in some way at some point in your career.

However, as with many academic educations, if you are just learning the mechanics, the actual educational value is limited. For example, when I finished university, I felt I was taking more than just the course material and grades with me. I had learned deep analytical skills, organizational and planning skills, study skills and more. I could apply these higher and more enlightened abilities no matter what I do.

I had experienced this scenario many times in my career. There were many people who were experts in mechanics, but they didn’t have the skills or the art to make breakthroughs.

Inventory Improvement – Managing with mechanics vs. applying the art of management

In one situation, my boss asked me to lead the company’s inventory turnover improvement initiative. It was a daunting challenge and the survival of the business required bringing inventory back under control.

As I considered how I would approach this task, I knew that failure was not an option. I thought of the many predecessors who had dealt with stock improvement and had failed. They were all very smart people who understood the mechanics of supply chain and project management, but their approaches always fell short.

Typically, they choose one area of ​​inventory management to tackle first. Maybe it was lead times, excess and obsolete inventory, or parameter management. They would then think about the changes they wanted to make, pilot it for a longer period of time, look at the results, change their approach and try to roll it out more widely.

This approach invariably took a long time, looked at only a microcosm of the problem, produced few results, and made a discernible difference to overall inventory turnover performance. Not only that, any progress made was never sustained because the culture and organizational sacred cows always went back to the old ways.

They were stuck and focused on the mechanics. They failed to understand that there is a much larger ecosystem at play that affects stock levels. They failed to recognize numerous and often conflicting components, processes, resources, systems, third parties, resources and management, all of which played some role in determining our inventory.

I quickly realized that I needed to approach this problem from a very different perspective. I didn’t have time for pilots. I didn’t have the time to make changes to systems and countless sub-processes. I didn’t have the time to tackle one area at a time and move on to other areas one at a time. And I didn’t have the time to just focus on tweaking the mechanics.

I knew I had to tackle the entire inventory management ecosystem at once. I had to look at everything holistically. I had to think beyond just sub-optimizing the mechanics. I had to recognize and manage all the dynamics and forces affecting stock levels. Basically, I had to introduce the concept of change management or change leadership to break through the old ways and achieve breakthrough results.

I needed to go beyond the mechanics of supply chain management and apply the tools and techniques associated with the art of supply chain management.

First, I sat back and very simply outlined the key processes and levers that governed the rate at which inventory flows in, through, and out of the organization. I ended up with 6 main processes that needed to be guided.

Then I decided I needed to take a very holistic approach to driving this transformation; what I called the “attack on all fronts” approach. I needed to drive improvements across all dimensions simultaneously: key processes, customers, functional areas, metrics, facilities, and finally culture

A project approach focused solely on optimizing the mechanics of inventory management was necessary, but not sufficient. A holistic approach was necessary and sufficient, which at the same time was aimed at optimizing all the forces and dynamics at work.

This was the necessary differentiation. This was the art of supply chain management as opposed to just the mechanics of supply chain management.

We focused on the fundamental challenge and change of cultural behaviors. We have attacked all sacred cows, all change blockers and all people stuck in the old ways.

We have focused on breaking the barriers of change. We focused on leadership not management, major process changes, field behavior and opportunity exploitation. We have set challenging goals, used a top-of-the-mountain approach, focused on results rather than effort, communicated frequently and intensively, and driven a process of disciplined governance.

These were the techniques and tools that differed dramatically from a mechanical approach. Changing parameters or formulas was secondary, but still necessary. The quantum leap to an approach focused on holistic change leadership was the difference.

The result? In 9 months our inventory turnover performance has gone from worst in the industry to number one in the industry. We’ve removed over $400 million from inventory, improved delivery performance and customer satisfaction, reduced inventory write-offs and inventory costs by tens of millions of dollars, increased profitability by over $25 million a year, and increased ROI the invested capital increased by more than 50%.

Best of all, the results achieved last for years. In addition, we had made a fundamental, positive change in the company’s culture, resulting in a truly high-performing organization.

The application of the Art of Supply Chain Management was the reason for this remarkable shift. If we had only focused on the mechanics, we would have had the same mediocre results in the past.

It is this art of supply chain management that needs to be taught and imparted by educational and certification institutions and further strengthened by corporate and industry development programs.

The art of supply chain management for the future

The future of the supply chain is the digital supply chain. Based on end-to-end, real-time electronic connectivity, the digital supply chain will dominate the strategy, design and operational structure of all future businesses.

But creating a digital supply chain requires a lot of vision and investment. And not only investments in capital.

There are numerous technologies that will be part of this design: Blockchain, Virtual Reality, Autonomous Vehicles, Big Data, Control Towers, Predictive Analytics, Machine Learning, Robotics, Software as a Service (SaaS), Supply Chain as a Service (SCaaS) . ), and more.

However, all these technologies are the modern “mechanics”. The mere implementation of any of these measures does not lead to the final vision of a highly functional, advanced supply chain. There are too many forces affecting the success of these implementations if it is just a project to implement one technology or another.

You can see that in many projects that fail or fall far short of expectations. Approaching a new project or system implementation “mechanically” fails to recognize that people are involved and that cultural behaviors and long-proprietary practices play a role. Invariably, forces will conspire to prevent a project from succeeding.

Success requires applying the tools and skills of the art of supply chain management. A change leadership workstream needs to be a core dimension of your efforts. There must be a holistic view of all dimensions of the ecosystem. Only then will you have the chance to bring about dramatic changes.

The same applies to the future and the digital supply chain. Implementing just one of these new and exciting technologies is not enough. The art of doing this successfully requires an unwavering holistic approach.

Conclusion

Understanding and managing the mechanics of any supply chain is critical. Possessing this knowledge is the basic requirement for every supply chain professional.

But if you really want to create disruptive change, if you really want to achieve unprecedented results, and really want to advance your career and the success of your company, you need to develop the skills that come with the art of supply chain management.

Holistic management, cultural and behavioral changes as well as change leadership are the core competencies of Art of Supply Chain Management.

To the extent that colleges, universities, professional institutes and businesses can provide opportunities to learn and apply these skills, supply chains and their practitioners will thrive and differentiate themselves from the rest of the crowd.

This is the art of supply chain management!

Originally published February 15, 2022.

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