15 Dec Three Questions to Ask your Supply Chain
As we approach holiday shutdowns, it may be a good time to ask some general questions about your supply chain. While we can see much more than 3 questions, here are the three that we have recently seen as top-of-mind by executives:
Are we planning or are we executing? This can be a loaded question, since the answer should be both. However, we need to see a healthy dose of planning and execution and an optimal ratio of each. What is the difference? In manufacturing organizations, execution is the physical manufacturing or movement of your products. Planning is the work which happens up an to that point, whether it is the 1 day before, 1 week before, 1 month before or so on. While this distinction may sound simple, we are always surprised how many “execution-oriented” leaders feel they are doing planning. Why is this important? Usually when something is wrong – quality, customer service, inventory levels, we find that the plan was the culprit, not the execution. These issues can be acted upon in the days/weeks/months before the actual execution. One way to help assess a plan and the ramifications of changing the plan is performing “what-if” scenarios, which is discussed in more detail here.
Does the organization have an optimal amount of information to do their job? Optimal is the key phrase here. We have seen organizations with very limited information, which leads to limited insight. Other organizations have too much information – information overload. To help answer this question, you can stop for a moment and think about various decisions you have made. How correct were these decisions? On the incorrect decisions, would those decisions have been different if you had different information? Another question to ask: would others have made the same decisions based on the information in their hands? Here is a key question: did you and your organization have the same information? The answer to these questions can lead you down a new path of how you use information and your team collaborates with this information.
Do I have information or insight? This question stems from a recent discussion with a supply executive. We asked this question, and the response was “what is the difference?” Our answer may be different than others:
Information is what happened, insight is what you can do to affect an outcome.
Most of the organizations we serve have enough information; it is what is done with the information and how this information supports your business. The best way in which information can support a business is via analytics. We have discussed supply chain analytics here, including a definition. How do we determine if we have information or insight? Find a crucial KPI and determine if the KPI is within an acceptable range. If not, can you immediately determine why, why and why? The three whys refer to the ability to dig into 3 levels of assessing what is causing this KPI not to be where it needs to be.
Lets use an example KPI of OTIF – On-Time-In-Full:
- OTIF is 92%, below the 95% we desire.
- Why? One plant is 82%, causing the average across all our facilities to drop.
- Why? One customer’s shipments are 70%.
- Why? A specific supplier’s quality is not consistent, causing too much re-work, causing delays.
With this insight, we can now focus efforts, which can positively impact the KPI in question vs. seeing a problem and not be able to take action.
And there you have three questions to ask your supply chain. If you have any more, please share them in a comment here.