Supply Chain Thinking

I think "supply chain" is the most mis-used term in industry today. If not the most mis-used, maybe it is the most frustrating for me since it is so close to home. Some companies talk about supply chain when the are thinking of procurement, or maybe logistics, or maybe demand planning. In my thinking supply chain refers to 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.

Put more simply - supply chain is everything from cash to cash. Supply chain IS planning, and procurement, and manufacturing, and logistics, and customer service. Supply chain is about optimizing the overall supply chain rather than excellence in one or more functional areas that may detract from excellence in another supply chain work process.

We think total multi-disciplinary supply chain, and we are happy to help you define and optimize yours.

Competitive Advantage

Every company should understand - and continually focus on their competitive advantage, sometimes referred to competitive edge. Your competitive edge is the advantage your company has over rivals in attracting customers and defending against customers. Sources of the advantage include characteristics such as a manufacturing technique, brand name, human skill set, etc that a competitor cannot duplicate without substantial cost and risk. Let us help you better understand and hone your companies competitive advantage! Synchronous experts are available to help ASAP!

What does a commitment to Excellence look like?

Lets keep it simple - I think it is when the company has an obsession with excellence and is never satisfied with the status quo. Executives provide the leadership necessary for change. They articulate the motivations for positive change and communicate them throughout the organization - by actions as well as words.

I would add that a great indicator of excellence is when a companies management team is committed to learn from their customers and markets in order to improve and provide unparalleled quality of products and services?

Want to commit to a culture of excellence, or want to take your current commitment to the next level? Let Synchronous experts help you develop a plan for your organization - we don't believe in one-size-fits-all solutions.

Reverse Logistics

We focus a lot of attention on our clients overall supply chain - the complete cash to cash cycle. Each supply chain work process can be optimized in the context of overall supply chain efficiency. We talk about logistics a lot - from scheduling material at the loading dock to on-time receipt in full at the customers location. But we also work with reverse logistics, and frequently get puzzled looks when we bring it up. Reverse logistics is a complete supply chain dedicated to the reverse flow of products, material, and information for the purpose of returns, repairs, remanufacturing and/or recycling. Most firms expect good to go to the customer and then move on to the next order. Most businesses invlove some level or returns - some businesses who remanufacture and/or lease products get essentially 100% of what they ship to customers back from the same customers. No matter what level of reverse product flow you have in your business, it is better to plan for it and establish a reverse logistics work process. We can help! As always questions or comments are welcome.

What is Cycle Counting?

A key part of 21st century supply chain management is ACCURACY. Cycle counting is an inventory record accuracy technique where inventory is counted on a cyclic schedule rather than the old fashioned annual inventory verification audit style. A cyclic inventory count is usually taken on a regular, defined basis where high value or fast moving items are touched more frequently. Usually some inventory items are counted every day, week, or month. Successful cycle counting typically includes a robust root cause analysis process so that inventory errors are investigated and corrective and/or preventive action is taken to keep the same errors from occurring in the future.

Synchronous experts can help you implement an inventory record accuracy and cycle counting work process. Call us to find out how we can make your business more successful.

Observations from the Road

I traveled to Chicago today, and as a jaded traveler - I had a unique experience. As we approached the gate, I expected the usual rush of everybody standing up, opening the overhead bins, getting their bags and coats, and the usual pandemonium of everybody trying to get off as quickly as possible.

Right before we arrived at the gate, the captain came on the PA system and announced that there was a military escort on board and the captain wanted him to be able to deplane first. The captain asked everyone to remain seated and allow him to get off from row 18, and surprisingly to me everyone complied.

As it turns out there were remains of a fallen Army serviceman in the cargo hold, and this 'military escort' was escorting his body back to his family in the Chicago area. A sobering event, but impressive that a hundred or so otherwise busy business people would accept a small delay out of respect for the military.

Back to Operational Excellence topics tomorrow...

Is "5S" a strategy for Operational Excellence?

Not really. Five S (5S) is a five pronged effort to create a workplace suitable for lean production. The five Ss caome from the original Japanese names, but the common desriptions are:

Sort: seperate needed items from uneeded items and remove anything that is not needed.

Simplify: neatly arrange items for use.

Scrub: Clean up the work area.

Standardize: Says that you will sort, simplify, and scrub everyday!

Sustain: The fifth S says to always follow the first four Ss.

Wer can help with your lean implementation, but as always we like to cherry pick improvement tools from a variety of methodologies to help you improve your operations in a way that makes sense to you - not a one-size-fits-all.

Manage Working Capital - Inventory Record Accuracy

Every business strives to manage and minimize inventory - raw materials, work in process, and finished product. Some firms periodically have a blitz to reduce inventory, smart firms have an on-going work process to make sure inventory is minimized whilst providing for excellent customer service. A key to having smart inventory levels is a continuous focus on inventory record accuracy (IRA). IRA is designed to make sure that the inventory in the warehouse is accurately represented in a firms ERP system. Well implemented, IRA can be a simple, fast process based on statistical cycle counts. Let us help you minimize your working capital with a smart inventory record accuracy work process.

What is a 3PL?

OK - Sorry, my mistake. Yesterdays post on order lead times included a reference to a "3PL" without describing what that means. It is a jargon filled world, but I always strive for clear no-nonsense communications. Implementing Operational Excellence can be challenging enough without introducing any confusion over terms, metrics, and measures.

3PL is shorthand for Third Party Logistics which is an arrangement where a buyer and seller team up with a third party that provides product delivery services. The third party typically provides additional supply chain expertise.

Feel free to send us your comments or questions. Synchronous is prepared to help you with your operational excellence efforts and problem solving across your complete supply chain. Comment directly here or send your inquiries to info@SynchronousLLC.com

Continuous Improvement Tools: FMEA & RCA

One of the foundations of continuous improvement efforts is root cause analysis (RCA). When a failure occurs RCA is used to identify the causal factors and corrective and preventive actions are implemented to make sure that similar failure do not occur in the future. RCA is a great tool, but it is always done after the failure - what tools can we use to prevent failures?

One great tool for your continuous improvement efforts is Failure Mode Effects Analysis (FMEA). FMEA is a procedure in which each potential failure mode in every sub-item of a product or process is analyzed to determine its effect on other sub-items and on the required function of the item. FMEA is typically conducted at the design stage of a product or process, but can be done at anytime. FMEA is a great tool for existing products and processes as part of a reliability improvement initiative.

Please fell free to add your comments to this post. If you would like assistance with your continuous improvement efforts, call us for help. That is what we do!

Customer Order Lead Times

Companies operate in different order lead time environments because customer requirements are very different. Order lead times can be very short - I met a company this week that promises same day shipments when the order is received by 4pm! Order lead time can also be very, very, very long. Some typical lead times are described below from longest to shortest:

ETO - If the Air Force orders a new airplane it expects to wait until it is designed, engineered, assembled, and tested. This is typically described as engineered to order (ETO).

MTO - Often a company has a standard product but does not produce it. or any components, until a firm customer order has been received. This is typically described as make to order (MTO).

ATO - If a company has one or more standard products that use the same components or subassemblies, the company stocks these components but does not build the product until a firm customer order is received. This arrangement is referred to assemble to order (ATO).

MTS - Frequently a company will manufacture a product and even ship it to a forward warehouse, distributor or 3PL before a customer order is received. This is referred to as make to stock and typically has the shortest lead time.

Of course there are many more types of order lead times, depending on the industry and customer needs. Let us help you optimize your customer service by designing a lead time policy for your business.

mrp MRP2 ERP - What do these mean?

Business today covers lots of acronyms. In the early 1970's mrp meant material requirements planning which was an early effort to take a manufacturing schedule and use it to forecast raw material and labor requirements. Good planning!

MRP2 or MRPII refers to Manufacturing Resource Planning which incorporates elements from little mrp but added planning for all resources of a manufacturing facility - master production scheduling, business planning, capacity planning, etc. Great planning!

Today we usually talk about ERP - Enterprise Resources Planning. ERP incorporates mrp, MRP2 and provides a framework for organizing, defining , and standardizing the business processes to plan and control the overall organization. Great business management!

Well done, a solid ERP implementation will allow an organization to use its internal knowledge to seek external advantage. Lets discuss how ERP work processes can help you satisfy your customers with what they want, when they want it, whilst maintaining minimum inventory and maintaining world class customer service.

Lean vs Six Sigma?

I am frequently asked about the difference between "lean" and "six sigma" - are they the same or are they mutually exclusive? My view is that they are different tools that adress different issues. Lean is primarily about reducing waste. Six sigma is primarily about reducing variation. Both lean and six sigma are work processes that have a variety of specific tools, and many tools are common to both work processes. As always, I say focus on the problem you are trying to solve and use whatever tool, tools, or work processes are appropriate to find the solution.