Am I the only one struck by how often companies seem to have poor supply chain processes? Why is this?
Now, nearly six years into Supply Chain Digest, I don’t believe I have ever actually specifically addressed this topic before.
What just strikes me is that virtually 100% of the time that there is a new supply chain or logistics initiative, companies find that the processes they have aren’t getting the job done. My question is, why does it take so long to figure that out? I have some thoughts, but first a quick bit of history.
It may seem hard to believe, but it was just in 1993 that MIT’s Dr. Michael Hammer (who died in 2008) wrote the seminal book Reengineering the Corporation. It was that work that brought the term “process reengineering” into every day business speak. The book had dozens of examples of businesses that had rethought processes; often, they involved examples of processes that, in length, took many days or weeks from end-to-end, but for which the actual time that real work was done might be hours or even minutes.
There is certainly some heritage to Lean thinking and value-stream mapping there, but the immense popularity of Hammer’s book seems striking to me now in the sense that just 16 years ago many companies had simply not thought about process improvement in this way.
Somewhat in parallel, there was a growing realization that automation, enabled by the incredible rise in corporate computing and networks, didn’t accomplish much if it was layered on top of poor process.
Microsoft’s Bill Gates once said, “Automating bad processes just allows you to do the wrong things faster,” and he was one of many that have offered similar sentiments.
All of us, right now, are using supply chain processes that aren’t as efficient, effective, or robust as they could be – but it takes us a long while to change them nevertheless. I am surprised at how often perceived supply chain leaders acknowledge that they had fouled up processes in one area or another when they present some success story later on.
Below are my thoughts on some reasons why supply chain processes are so often not what they should be:
- Inertia: Most managers, including executives, simply are more comfortable “staying at rest” than they are driving constant change. It may even be partly hard wired into our brains to usually act that way. If we have been doing something the same way for a long time, the natural tendency is often to stay that way.
- Things Change: Related to inertia, processes that were once good go bad because things change and processes don’t. In this crazy and volatile world we live in now, this is more likely to be true than ever. The obvious implication is that you have to relook at processes more frequently than ever.
- Managers/Executives Just Don’t Know: One thing I have learned over and over again in my career, including now running Supply Chain Digest is this: if the details of a process are invisible to you as a manager or executive, you are obviously unlikely to push for that process to change. I often make myself go through, in detail, a process that I am not personally involved in executing, and it seems that virtually 100% of the time I find opportunities for process improvement – sometimes dramatically so. Sometimes, I am astounded how bad the process is that people are living with.
- Job Preservation: Again related to the above, the people that are involved in poor processes may be highly unmotivated to call this out to superiors because they (too often correctly) fear that process improvement could, in fact, land them out of a job. While the company may have a large incentive to stop doing something that shouldn’t be done, the individuals doing it often have a large incentive to ensure that step in the process continues on forever.
- Processes Must Evolve: In general, things progress in evolutionary ways. So, you are unlikely to get to process nirvana on the first attempt. It takes evolution and continuous improvement – and companies often don’t have the wherewithal or culture to continue that evolution over time.
- Leaning of Staffs: I continue to be astounded at how lean so many supply chain organizations are running today. What that means, in practice, is that everyone is so busy and so stretched that just getting one’s day-to-day job done – staying one step ahead of the devil – is difficult enough. Who has time for process improvement in that environment? To give just one of many anecdotes, I spoke with one global logistics manager at a medical devices company last year who said that he and his small team were so stretched that they simply had no time to make the changes that he knew they needed to take out costs and move to higher levels of performance.
- Cross Functional Challenges: Today, a high percentage of opportunities for process improvement involve cross functional processes. That, of course, means a whole set of issues, and a significant amount of effort and often pain to bring the functions together to identify the opportunities and roll out the new process. It's simply much easier to stay out of that morass.
- Lack of Technology Enablement: Clearly, many opportunities for process improvement depend on some sort of technology enablement to make it happen. If the resources or appetite for such an investment – whether internal or from external software providers – is not there, then opportunities for process improvement can be thwarted.
So, what we are left with, it seems to me, is this: processes tend to change when: (1) a new executive comes in who demands a new way of doing things, often bringing with them process models that were successful for him or her from a previous life; (2) a major new technology initiative is undertaken, forcing companies to relook at processes and opening opportunities for new levels of automation and efficiency; or (3) there is a crisis or other “near death’ experience that forces companies to do things differently if they hope to survive.
Having said that, I believe that the vast majority of companies have many opportunities for supply chain process improvement laying rather openly right before them. This is clearly part of the drive to push Lean and Six Sigma beyond the factory floor to the broader supply chain. Most aren’t there yet.
For execs and higher level managers, I would also encourage a lot more “management by walking around.” Do it enough, and process improvement opportunities are sure to emerge, as I can attest first hand.
Why do you think companies are so slow to address poor supply chain processes? What would you add to Dan’s list? Do you agree or disagree that we live with a lot of poor processes today? Let us know your thoughts at the Feedback button below.