We received a large number of interesting letters over my column a few weeks ago on “Simplifying versus synchronizing your supply chain.” We are really busy at SCDigest right now (thanks!), and so as I do a few times a year I am going to take the easy way out and let our readers write most of this column.
But first, in my review and comment last week on the 2006 CSCMP conference, I suggested all of us, myself most included, should stop spending lots of time in presentations describing the current transportation challenges of fuel surcharges, tight capacity, driver shortages, etc. It’s starting to become “blah, blah, blah.” So, henceforth, a few things I have “in the can” excepted, I am going to swear off that recitation. I have even come up with a (not so good) short hand way to do it, that I make freely available to all: RISCED.
- Rates (rising)
- Infrastructure (lousy in the U.S.)
- Service demands (customers keep raising the requirements)
- Capacity (who’s got a truck?)
- Energy (ok, I needed a vowel, and used this instead of fuel)
- Driver shortages
So, now we can just put “RISCED” on our slides, and summarize the whole set of challenges in one word. I am open to improvements in the acronym. An SCDigest polo shirt to the one with the best idea.
Also, to see our all new video review of CSCMP, which I promise you'll enjoy, you'll find it here: CSCMP Video Review. Did you attend? You might even see yourself!
To briefly summarize the earlier column, I wrote that at a high level there seemed to be two somewhat opposite supply chain strategies: simplification or synchronization. Right now, simplification seems to be really “in,” and we noted some examples of supply chain execs suggesting “synchronization” was too hard. The questions: Is that right? Can you/should you do both? If you focus on simplification, do you commoditize the supply chain?
Consultant Henry Camp stated: “It is obvious to me that you are onto something. We see so many companies spending thousands of dollars per seat for computer systems which promise to track, integrate and manage the complexity in their supply chains. There is no pretense of simplification, rather just more and more artificial intelligence to out think the complexities.”
John Griese from Frito-Lay observed that: “There is no magic bullet in technology that will simplify and synchronize a supply chain. If you are lucky the system will automate some of the activities allowing less manual effort which will reduce the people required or allow them to focus on optimization. Any organization needs to focus on identifying the objectives of their supply chain strategy then prioritize implementation based on benefit. Develop the tools, processes and behaviors in support of these priorities in house. The benefits of supply chain synchronization are often achieved through trial and error until you determine where the most and simplest return is coming from.”
But this supply chain manager from a consumer durables companies, who as you can understand wished to remain anonymous, noted the downside of simplification: “Like the companies you mentioned, we are on a supply chain “simplification” mission. There is always room to simplify processes, but I think you hit the nail on the head when you discussed that this may lead to a loss of competitive advantage. I’m afraid we are going to simplify ourselves right into mediocrity.”
The always interesting Jon Kirkegaard of DCRA says you can and should do both, and notes an interesting parallel from the airline industry. “The classic complexity theory example of American Airlines vs. Southwest Airlines is a decent metaphor for your readers. AA through the use of over zealous optimization technology and a wide variety of assets and hub and spoke networks has built inherent complexity into their model. Southwest with single airplane asset type (737s) and simple point-to-point routes is a quite simple operation and much less problematic to plan and operate. However, both need to synchronize plans for routes, capacity, pricing, freight etc. or their whole service model (customer experience) breaks down. The conclusion is to simplify the interface to the internal and external operation.”
That last point is especially interesting.
Scott Brown, a supply chain manager at Plexus, said we had really hit on “tender spot” for his company, which is focused on better synchronization right now, and he offered these excellent thoughts: “Our approach is to "simplify through synchronizing" not the other way around. Both are important. I am amazed at the over-thinking that goes on with regard to this topic. People try and swallow the whole elephant rather than break it down into one bite at a time. The fundamental premise of lean and specifically pull-based supply chains is one of synchronization to achieve a simpler process. Is it prohibitively software intensive? No. That is unless you try and shoe horn it into traditional ERP/MRP and some APS systems that are based on an entirely different and incompatible model and set of assumptions.”
We’ll print these and other letters in full over the next few weeks.
We had a lot more, but these are some of the excellent highlights. We’d love still more feedback, especially around whether simplification can lead to commoditization.
Is “synchronization” a good supply chain objective or not? Is it too hard, or too reliant on software? Are simplification and synchronization compatible, or somewhat opposite strategies to pursue? If you can synchronize, do you gain advantage? Do you have a better acronym that RISCED?