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OPINION Freespeak Why do we fail as supply chain professionals even with experience and confidence? By Nigel Lewis After Spending 18+ years in the Supply Chain Indutry with various roles started from 1989 I remember my 1st job was with a courier company carrying courier bags to customs (45kgs each), flying as On Board Courier to various cities to handover the consignment, jumping on pickups to pull pallets out, climbing on flat rack containers to measure out of gauge cargo, sticking dangerous goods protocol for air shipments at airports, filling customs formalities and walking 5 kms to find a transporter to handover documents and not 38 Link January 2011 forgetting driving the forklift when no one is in the warehouse as Grand Prix Motor racing...... that was challenging being on the ground and learning operations. I wish to share with you my experience on where we go wrong and how to avoid such risks. Bottom line for a SC Pro is execution, delivery and drive the process which should be KPI driven. Processes are driven by people. End of the day goods have to be delivered from point A to point B. Let me explain to you what the basic risks we have in SC. Planning: The most important aspect for any organization is planning... and planning... You can have a wonderful ERP (million dollar) but if you don’t plan well, what can your ERP generate? Reports are based on data entry and accordingly output is generated? (Junk in – Junk out). We spend hours in Board rooms with wonderful “colors” in power point presentations of Forecast / Budgets but in reality it’s just an assumption which has to be converted into reality or do
we play with numbers? (Most of the time we discuss the future years as this year and the year ahead is locked I presume. But.... Trends.....?) Anyway, I am here to advise the risks and way forward. If you don’t plan well with the right mindset (whether aggressively to please the Board with numbers or defensively to cover sales force/ customers) the company can fail not just with Cash flow, Inventory or Slow moving. But, in a nutshell can affect the company’s growth and the FUTURE too. Planning to me is the heart of the organizational strategy which has to be put in play and action. Planning (Demand Planning) is a vast subject which books are written on but a good Planner comes with experience and is one who understands product knowledge, market trends, company norms/ growth path /numbers to Hit/systems & process. Master Data / Product Hierarchy maintenance team: Every Company has its own SKUs and New SKUs (Innovations / Promotions etc..) but the ERP or the system has to maintain the Master Data Creation to the Perfect T. If everyone depends on exploiting the system, the conclusion is that data has to be 100% correct which will eventually help the complete Order to Cash or Complete Supply chain process. Goods in Transit / Import Process: Every company depends on Imports (could be finished goods for Exports/ Distribution or Raw Material/Packaging Material for a factory to produce the finished goods). Lets get this process to the basics. We all know that once a supplier triggers the shipment to a consignee, the consignee starts planning his inventory turns based on GIT / Transit times / shipping time from Port to Port (including transshipment cutoffs) based on global shipping company websites and communication follow-ups done at both ends. But imagine a critical container is required for a supplier to produce finished goods and the container shows on a website it will have a specific ETA and factory plans production. Could be that the ship is delayed, the transshipment at the port was late, the mother vessel came in late, the container had a leak, customs discharge port delayed the process to handover to your transporter? What could be the repercussions for the factory to stop its line and don’t produce. Why do we depend on ETA and why don’t we plan on ATA? This is not rocket science but such process breakdown can cause financial losses. How can the procurement department who is responsible to place orders with the Supplier, Planning & Production Department and Logistics and Operations Department who get sandwiched between these departments execute and bring the physical container to plant when in reality the box never came for one of the above reasons has made this Logistics and Operations department a failure? Goods in Transit have to be clearly used as inventory stock control rather than depending on these goods to a just in time business model to support the business. Why do we depend on websites when we can pick up the phones and check with local offices, ports if the ship has called in, communicate well? 75% of the issue here is Communication or it becomes a Chinese whisper. Inventory control: This does not require explanations but in a simple lay man’s language. Every company should have the right products to sell rather than have products which become obsolete and become dusty in warehouses which eventually are written off from financial books and scrapped. (Even scrapping costs are increasing these days.....!) Millions are spent on ERP and even WMS but if your start of entering data is not correct imagine the reports of your inventory accuracy. Even if you use RFID, Data capture and data transfer has to be checked and verified in a timely pattern. Money and time is spent on physical stock count but when the physical stock count sheets have to be data entered into Excel or systems what happens if some entries are wrong. Imagine the physical recounts and then systems don’t match. A good inventory controller is the one who Supply Chain can be learnt only in time. Its taken time and efforts to understand what are ground realities Freespeak OPINION is experienced, not one who just studies a course in college and takes on an Inventory role. Older the wine better it tastes is what I can say for Inventory control. People and people are the most important point I wish to make in SC. You may have a million dollar ERP, best processes and procedures, fantastic new equipment / forklifts / shelves / state-of-theart warehouse and tons of money but its imperative that you have the right people to run your SC models. People should be motivated and dedicated. The Positive attitude is important (example is if you have an inexperienced staff compared to an over confident staff, its better to give training to an inexperienced staff and develop him than to have an overconfident person who can make blunders.) You may have a great team but if you do not have an experience leader how will you row the boat to shore? People drive SC and most important thing is being a good listener, no staff of yours is interested in a leader who only preaches but a balance of being & bringing discipline and also motivational skills is a must. I don’t want leaders to be diplomatic but be transparent to your team. Every team player is unique in his temperament but it’s for the company and individuals to coach them and train them. Some professionals don’t need increase in salary they just need some one to guide them from the problems and issues they face. Every staff is not just focused on money, salary increase or career growth there are other issues too. Never Judge a book by its cover. Let me conclude by saying that a good supply chain professional is one who understands and anticipates risks and proactively delivers first and then goes about trouble shooting on what went wrong. Never think that if you have years of experience you have achieved the complete know how of SC, take pride in learning even from your peers. A good SC leader will always push his team for appreciations and awards. Supply chain is a team effort and if you have a positive mind to take up challenges as it’s not a routine job, its robust and challenging. If you feel Supply Chain can be learnt from books only, you are sadly mistaken its taken time and efforts to understand what are ground realities. January 2011 Link 39
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