Once upon a time in a town not unlike this one, there was a hot dog vendor. He had a good cart, and every day, he bought the freshest hot dog buns and only the very best hot dogs. The hot dog vendor was up early and worked until after dark making sure everything would be spic and span for the next day. Once the cart was loaded with all the essentials, he would make his way down the intersection that had good traffic, there, he would display his wares for sale, he even had a small sign that read “The Very Best Hot Dogs”.
As time went on, his customers told friends and neighbors about his hot dogs, and every month, he sold more and more. Eventually, he found that his cart was no longer big enough to handle the volume of business that he was doing, so he made a deal with the land owner at the intersection and built a hot dog stand. The day before the stand opened, he cleaned his cart, wrapped it tightly in plastic, and put it into storage.
The stand was a hit, business kept growing, and the stand got bigger too. The hot dog vendor decided to put up bigger signs, one to the west of his stand about a 1/4 mile, and one to the east of his stand the same distance, and once again, business grew. He increased his bun and hot dog orders, hired some help, and was quite prosperous.
While all of this was going on, his son was away at the University, studying economics. When his son returned home, he was distraught with his father, “Father” he said “Don’t you know that the economy is a mess, the dollar is weak, our country is in great debt, you’re risking everything you worked for with this silly expansion!” His father responded, “Son you must be right, after all, you’ve studied at the University”!!
The hot dog vendor proceeded to take down the big signs, and soon he realized that business was slowing down, he cut his bun and hot dog orders, laid off the extra help, and sold half of his stand. Over the next few months business got even slower, so he sold the other half of the stand and dusted off the old hot dog cart. When his son visited some time later, he said ...“You were right my son, the economy is a mess, thank you for setting me straight”.
Tuesday, April 13, 2010
Monday, March 29, 2010
The Supply Chain Moves Up
At the Extended Supply Chain Conference in London recently (as reported by AMR’s Kevin O’Marah), an informal poll indicated that 62% of highest ranking supply chain professionals report to the president/CEO/GM. This is up from 51% last year. While not a scientific survey, this indicates a growing recognition of the importance of supply chain management to the health and success of the organization. An additional indicator: only 8% report to the head of manufacturing – down from 15% last year. I think this second data point is equally significant. In Kevin’s words: “Looks like companies are steadily migrating away from an old-school industrial model, where supply chain serves the factory, toward one where supply chain includes manufacturing”.
My heart is in manufacturing but we can’t let ourselves focus only on our own issues and challenges. No factory is an island – suppliers and customers are critically important to everything we do in manufacturing and Supply Chain Management is the mechanism for coordinating, collaborating, and working effectively with those trading partners.
This blog is focused on Lean and Green concerns and those most certainly extend beyond our four walls. Most manufacturers have made significant Lean improvements within the plant but fewer are working toward a Lean supply chain. Supply chains link co-dependent entities.
Anything we can do to help our partners get leaner helps us and vice versa. The same goes for green efforts. Concerns like recyclability and the reverse logistics of getting products and materials back up the chain to where they can be reprocessed, re-used or properly disposed of all require joint effort and planning and are more successful when all parties are cooperating in the effort.
The supply chain doesn’t work for manufacturing; manufacturing is one link in the chain. While the bulk of an organization’s internal resources might be dedicated to production equipment and labor, in most industries materials are by far the larger portion of cost-of-goods-sold. By the way, everything we do is focused on making what the customer wants and needs, isn’t it?
Who does your head of supply chain management report to?
Visit www.daveturbide.com for more articles on Lean, manufacturing and Supply Chain.
My heart is in manufacturing but we can’t let ourselves focus only on our own issues and challenges. No factory is an island – suppliers and customers are critically important to everything we do in manufacturing and Supply Chain Management is the mechanism for coordinating, collaborating, and working effectively with those trading partners.
This blog is focused on Lean and Green concerns and those most certainly extend beyond our four walls. Most manufacturers have made significant Lean improvements within the plant but fewer are working toward a Lean supply chain. Supply chains link co-dependent entities.
Anything we can do to help our partners get leaner helps us and vice versa. The same goes for green efforts. Concerns like recyclability and the reverse logistics of getting products and materials back up the chain to where they can be reprocessed, re-used or properly disposed of all require joint effort and planning and are more successful when all parties are cooperating in the effort.
The supply chain doesn’t work for manufacturing; manufacturing is one link in the chain. While the bulk of an organization’s internal resources might be dedicated to production equipment and labor, in most industries materials are by far the larger portion of cost-of-goods-sold. By the way, everything we do is focused on making what the customer wants and needs, isn’t it?
Who does your head of supply chain management report to?
Visit www.daveturbide.com for more articles on Lean, manufacturing and Supply Chain.
Thursday, March 18, 2010
Green Collaboration
A recent local newspaper article told the story of a small group of manufacturers in Athens, GA that has started getting together on a monthly basis to brainstorm how they can help each other improve in the areas of waste reduction, energy conservation, water conservation, carbon footprint, etc.
This is a really good idea. Because the companies are likely in different industries, they can approach the issues from different perspectives and bring new ideas to the table that will benefit the other participating companies.
Since they share a local presence, by joining together they can have more influence on government agencies and other resources (recycling contractors, trash collection and landfill, etc.) through their larger collective voice and buying power. There could be some common suppliers, especially for indirect materials and supplies that can be approached as a buying group or consortium. They could encourage carpooling or vanpools among neighboring plants rather than just company-by-company. They might even share facilities that are not in constant use like conference rooms or meeting facilities.
It’s possible that they may find ways to more directly help each other. Scrap or by-products from one company might be useful to another. They may be able to share resources like wastewater processing facilities or power/heat cogeneration.
By sharing ideas across different industries, energy and resource saving practices can ‘cross-pollinate’ much in the same way best-in-class benchmarking can bring innovative breakthroughs from one industry to another.
Not all of these ideas are strictly ‘green’ – some are just about saving money. But that’s another kind of green that companies are always interested in.
Plus it’s so easy – traveling from one local company to another for a face-to-face meeting is a short walk, not a plane ride. Read similar articles at www.daveturbide.com
This is a really good idea. Because the companies are likely in different industries, they can approach the issues from different perspectives and bring new ideas to the table that will benefit the other participating companies.
Since they share a local presence, by joining together they can have more influence on government agencies and other resources (recycling contractors, trash collection and landfill, etc.) through their larger collective voice and buying power. There could be some common suppliers, especially for indirect materials and supplies that can be approached as a buying group or consortium. They could encourage carpooling or vanpools among neighboring plants rather than just company-by-company. They might even share facilities that are not in constant use like conference rooms or meeting facilities.
It’s possible that they may find ways to more directly help each other. Scrap or by-products from one company might be useful to another. They may be able to share resources like wastewater processing facilities or power/heat cogeneration.
By sharing ideas across different industries, energy and resource saving practices can ‘cross-pollinate’ much in the same way best-in-class benchmarking can bring innovative breakthroughs from one industry to another.
Not all of these ideas are strictly ‘green’ – some are just about saving money. But that’s another kind of green that companies are always interested in.
Plus it’s so easy – traveling from one local company to another for a face-to-face meeting is a short walk, not a plane ride. Read similar articles at www.daveturbide.com
Tuesday, March 2, 2010
Do You Miss Trade Shows?
Microsoft Dynamics has scheduled a virtual user conference for May of this year. Infor held a similar event for its user community last fall. While this a great opportunity for users to catch up with product changes and plans, learn more about software functions and processes, and hear about other users’ successes and experiences, it is not really a suitable substitute for an actual in-person conference.
While better than nothing – in these days of greatly reduced budgets and travel restrictions – I’ve always felt that attendees learned at least as much, and often much more, from the informal discussions that take place over lunch, in the aisles of the trade show, and in the lounges and hallways around the conference venue.
While both companies feel, justifiably, that their virtual events were successful (Dynamics did a virtual conference in 2009) if you talk to insiders privately, they generally share the same sentiment. Face-to-face really is a superior and more beneficial experience.
This is not intended to criticize Infor and Microsoft for doing their conference virtually. While many of the other software suppliers just canceled their conferences altogether, these companies are making a sincere effort to reach out and communicate with their user community in a cost-effective and efficient manner. Bravo! I hope that when the economy recovers to the point where we can get back to reasonable business travel, these companies will hold a real in-person conference. You (and your user community) will be glad you did. And for those vendors that canceled and did not try the virtual approach ... maybe you missed an opportunity to connect with your user community despite the current economic realities.
While better than nothing – in these days of greatly reduced budgets and travel restrictions – I’ve always felt that attendees learned at least as much, and often much more, from the informal discussions that take place over lunch, in the aisles of the trade show, and in the lounges and hallways around the conference venue.
While both companies feel, justifiably, that their virtual events were successful (Dynamics did a virtual conference in 2009) if you talk to insiders privately, they generally share the same sentiment. Face-to-face really is a superior and more beneficial experience.
This is not intended to criticize Infor and Microsoft for doing their conference virtually. While many of the other software suppliers just canceled their conferences altogether, these companies are making a sincere effort to reach out and communicate with their user community in a cost-effective and efficient manner. Bravo! I hope that when the economy recovers to the point where we can get back to reasonable business travel, these companies will hold a real in-person conference. You (and your user community) will be glad you did. And for those vendors that canceled and did not try the virtual approach ... maybe you missed an opportunity to connect with your user community despite the current economic realities.
Monday, February 8, 2010
Is it Supply Chain or Value Chain?
In this week’s AMR Research First Thing Monday email (February 8, 2010) Kevin O’Mara discussed the term “Supply Chain” versus “Value Chain” and whether the latter may be more appropriate these days. Specific terminology like this is intended to enhance communication and define specific ideas, processes, or programs. This kind of hair-splitting, however, might have the opposite effect. I’m reminded of the transition from MRP to ERP as the suppliers tried to position their products as newer and more modern than traditional MRP which, at the time, was already decades old.
After the release of elaborate definitions by analysts and the expenditure of lots of marketing dollars by suppliers, the new term came into common use. The truth, however, is that ERP was just a new term for what already existed – an evolutionary descendent of the technology approach of combining business applications to include more of the enterprise in a synergistic, collaborative whole. It appeared for a time that “Supply Chain” might replace ERP as the standard term for this kind of system but it doesn’t seem to have gotten the attention and backing of a critical mass of marketers.
In any case, the APICS Dictionary (11th edition, available online for members at www.apics.org) defines the two terms this way:
SUPPLY CHAIN: The global network used to deliver products and services from raw materials to end customers through an engineered flow of information, physical distribution, and cash.
VALUE CHAIN: The functions within a company that add value to the goods or services that the organization sells to customers and for which it receives payment.
Given these definitions, I believe that supply chain is a more appropriate term to describe the systems and processes. I don’t even object to using Supply Chain or Supply Chain Management (SCM) as a replacement for ERP to describe the systems we use to keep all this together and functioning effectively. Personally, I have been using the term “Enterprise Systems” to try to side-step the whole acronym debate.
Nevertheless, Supply Chain professionals are focused on enhancing the value-adding activities within the chain and eliminating those that do not add value. Most people view that as a “Lean” focus because the term Just-In-Time is considered hopelessly passé. Read more articles by Dave Turbide at www.daveturbide.com
After the release of elaborate definitions by analysts and the expenditure of lots of marketing dollars by suppliers, the new term came into common use. The truth, however, is that ERP was just a new term for what already existed – an evolutionary descendent of the technology approach of combining business applications to include more of the enterprise in a synergistic, collaborative whole. It appeared for a time that “Supply Chain” might replace ERP as the standard term for this kind of system but it doesn’t seem to have gotten the attention and backing of a critical mass of marketers.
In any case, the APICS Dictionary (11th edition, available online for members at www.apics.org) defines the two terms this way:
SUPPLY CHAIN: The global network used to deliver products and services from raw materials to end customers through an engineered flow of information, physical distribution, and cash.
VALUE CHAIN: The functions within a company that add value to the goods or services that the organization sells to customers and for which it receives payment.
Given these definitions, I believe that supply chain is a more appropriate term to describe the systems and processes. I don’t even object to using Supply Chain or Supply Chain Management (SCM) as a replacement for ERP to describe the systems we use to keep all this together and functioning effectively. Personally, I have been using the term “Enterprise Systems” to try to side-step the whole acronym debate.
Nevertheless, Supply Chain professionals are focused on enhancing the value-adding activities within the chain and eliminating those that do not add value. Most people view that as a “Lean” focus because the term Just-In-Time is considered hopelessly passé. Read more articles by Dave Turbide at www.daveturbide.com
Tuesday, February 2, 2010
9 Priorities for 2010
Recently, Chain Link Research held a webinar in which they discussed the results of recent research on goals, challenges, efforts and impediments for the supply chain in the coming year. The results were interesting but not surprising.
1. The top priorities are customer satisfaction and responding to changes in the market (flexibility and agility).
2. The biggest challenge is forecast accuracy. Efforts are (and should be) focused foremost on the forecasting process, which was also cited as the most difficult challenge.
3. The top impediments are all people-related – organizational inertia, a reactive (fire fighting) culture, lack of manpower and corporate politics.
4. Perhaps the biggest surprise, and the best news in these survey results, is that cost reduction is not at the top of the list of goals. Respondents did, however, mention difficulty in meeting cost reduction goals as the number two challenge (presumably they’re already set and ongoing). Cost cutting, while necessary in challenging times and always a high priority for resource managers at any time, is reactive and does nothing, in-and-of itself, to promote the growth and long-term health of the business. An all-encompassing focus on costs often leads to deterioration of skills and capabilities (lack of investment in training, education, process improvement) and short-term actions that end up costing the company far more at a later date to remediate the damage done.
Better forecasts, shorter lead times and greater agility, a more effective planning process, improved customer satisfaction, and all of the other priorities listed in this research all contribute to an improved bottom line either through higher revenues and/or direct and indirect cost reductions. These are permanent, systemic improvements that continue to pay back year after year.
It takes an investment to achieve these kinds of improvements – money, surely - but also an investment in time, effort, and emotional energy. That can be difficult when the challenges of everyday business are overwhelming. But it’s an investment that is absolutely necessary and does deliver an outstanding return on that investment.
Read more articles by Dave Turbide at www.daveturbide.com or click here
NOTE: Dave Turbide is listed on the ChainLink Research Advisory Board but did not participate directly in this study.
1. The top priorities are customer satisfaction and responding to changes in the market (flexibility and agility).
2. The biggest challenge is forecast accuracy. Efforts are (and should be) focused foremost on the forecasting process, which was also cited as the most difficult challenge.
3. The top impediments are all people-related – organizational inertia, a reactive (fire fighting) culture, lack of manpower and corporate politics.
4. Perhaps the biggest surprise, and the best news in these survey results, is that cost reduction is not at the top of the list of goals. Respondents did, however, mention difficulty in meeting cost reduction goals as the number two challenge (presumably they’re already set and ongoing). Cost cutting, while necessary in challenging times and always a high priority for resource managers at any time, is reactive and does nothing, in-and-of itself, to promote the growth and long-term health of the business. An all-encompassing focus on costs often leads to deterioration of skills and capabilities (lack of investment in training, education, process improvement) and short-term actions that end up costing the company far more at a later date to remediate the damage done.
Better forecasts, shorter lead times and greater agility, a more effective planning process, improved customer satisfaction, and all of the other priorities listed in this research all contribute to an improved bottom line either through higher revenues and/or direct and indirect cost reductions. These are permanent, systemic improvements that continue to pay back year after year.
It takes an investment to achieve these kinds of improvements – money, surely - but also an investment in time, effort, and emotional energy. That can be difficult when the challenges of everyday business are overwhelming. But it’s an investment that is absolutely necessary and does deliver an outstanding return on that investment.
Read more articles by Dave Turbide at www.daveturbide.com or click here
NOTE: Dave Turbide is listed on the ChainLink Research Advisory Board but did not participate directly in this study.
Wednesday, December 30, 2009
Product Design Should Consider the Life – and End of Life
The last two articles I’ve written for the APICS magazine “Enterprise Insights” department (to be published in the January/February 2010 and March/April 2010 issues), deal with “green” and “sustainability”. In the second one, I wrote about designing a product with its end-of-life in mind – reuse, reprocessing, recycling, and responsible disposal. Coincidentally, the following item appeared in the SME Daily Executive Briefing on December 29, 2009:
Considering "End Of Life" Issues For Electronics Could Benefit Manufacturers.
The Chicago Tribune (12/28, Hopkins) reported on "Harrison Kim, an assistant professor in the University of Illinois Department of Industrial and Enterprise Systems Engineering at Urbana-Champaign." Kim studied the lifecycles of electronic gadgets and the associated costs, "and found that the time to think about...'end of life' issues is before the small electronics are even designed." Specifically, Kim "analyzed how design differences affect product recovery and determined that manufacturers are losing money by not reusing components." Fewer than 5 percent of retired phones "are recycled or reused." Kim said, "These are profits currently neglected." One way manufacturers could benefit, he said, is by designing products that were modular. Such products would also "appeal to the environmentally-savvy consumer."
There are regulations in Europe – RoHS and WEEE – that govern the electronics industry with specific requirements for recycling and safe disposal. You can be sure that the same kind of regulation will be implemented in the U.S. in the foreseeable future and similar regulation will apply to other industries as well as electronics. Why not get ahead of the game and start thinking about end-of-life in products you are designing today? Chances are good that this effort will pay off in future compliance as well as enhancing your image with an increasingly “green” oriented customer base. Read more articles by Dave Turbide at www.daveturbide.com or click here
Considering "End Of Life" Issues For Electronics Could Benefit Manufacturers.
The Chicago Tribune (12/28, Hopkins) reported on "Harrison Kim, an assistant professor in the University of Illinois Department of Industrial and Enterprise Systems Engineering at Urbana-Champaign." Kim studied the lifecycles of electronic gadgets and the associated costs, "and found that the time to think about...'end of life' issues is before the small electronics are even designed." Specifically, Kim "analyzed how design differences affect product recovery and determined that manufacturers are losing money by not reusing components." Fewer than 5 percent of retired phones "are recycled or reused." Kim said, "These are profits currently neglected." One way manufacturers could benefit, he said, is by designing products that were modular. Such products would also "appeal to the environmentally-savvy consumer."
There are regulations in Europe – RoHS and WEEE – that govern the electronics industry with specific requirements for recycling and safe disposal. You can be sure that the same kind of regulation will be implemented in the U.S. in the foreseeable future and similar regulation will apply to other industries as well as electronics. Why not get ahead of the game and start thinking about end-of-life in products you are designing today? Chances are good that this effort will pay off in future compliance as well as enhancing your image with an increasingly “green” oriented customer base. Read more articles by Dave Turbide at www.daveturbide.com or click here
Subscribe to:
Posts (Atom)
