This is the sixth, and final post, in our first series of posts designed to introduce you to problem solving strategies that you can use to attack your sourcing and supply chain problems.  Last Sunday we discussed some methodologies that you could use to evaluate a solution.  Today we are going to discuss ten general problem solving strategies that you can apply during the problem solving process to increase your chances of success.

( 1 ) Think of options without immediately evaluating them.

Although several options may be applicable to your problem, chances are one will be better than the others.  If you focus on one option too quickly, you might get “tunnel vision” and miss a better solution.

( 2 ) Set a goal

Make the outcome specific.  For example, “I want to decrease spend in this category by at least 10%”, “consolidate my supply base for non-critical indirect commodities to at most four suppliers per commodity”, or “decrease cycle time by 20%”.  It’s often easier to work towards a specific goal.

( 3 ) Avoid distraction

Good problem solving takes time, and distractions can significantly slow down the process.  It takes time to get into it, collect and organize all the information and your thoughts, and come up with a good plan of attack.  Every time you are interrupted, you will spend a considerable amount of time just working your way back to where you were.

( 4 ) Shake things up

Sometimes working in a new place, or at a different time, can be as helpful as trying a different approach.  Anything that stimulates those neurons is a good thing!

( 5 ) Make sure you have enough time

If you just spent a week coming up with an optimal sourcing strategy and award allocation for one key strategic direct material, you should not expect to do an entire category of ten strategic direct materials in anything less than six to eight weeks.  Sure, you will get better, and faster, as time goes on and learn to apply economies of scale, but only to a point.

( 6 ) Don’t work in a vacuum

Just like it helps to ask an expert, it also helps to bounce ideas of a colleague now and then.

( 7 ) Be positive

Negativity does not help, especially in problem solving.  Thus, do what you can to maintain a positive mood.  For some people that might be a well lit botanically decorated workspace, for others that might be metal blaring through the Altec-Lansings.  Whatever works! And remember, proving there is no solution is a valid solution!  It might be impossible to consolidate your supply base to only three suppliers for a given product and retain the desired amount of supply chain flexibility.  But if it is, a well constructed model run through an appropriate solver will prove it.  (And variations on that model will tell you the best you can do.)

( 8 ) It’s a Challenge!

If you don’t like problems, then it’s a challenge.  If you don’t challenges, it’s an opportunity.  And we all like opportunities.   This will help you keep a positive mood.

( 9 ) Be Confident in your abilities

A positive mood is good, but confidence is better.  If you think you can not, there’s a statistical psychological significance that you will not.  If you think you can, you have a much better shot.  And when you get right down to it, most problems are not that new or that difficult that you will not be able to solve them with a little brain power and a lot of hard work.  Although global supply chain problems can be hard, we are not talking P=NP or quantum gravity hard.  (Fortunately!)

( 10 ) Persist, Persist

If at first you do not succeed, try, try again.  And maybe even again.  I have a rule.  A Murphy’s rule, but a rule.  “You never get it right the first time.”  I’ve never encountered a counterexample in any realistic situation.  Never!   We live in an age where technically dependent accomplishments are so fundamentally complex, that we are virtually guaranteed to make a mistake the first time, because we are only human.  That’s why we have advanced QA processes, six sigma, and other tools to help us get it right (which limit the amount of exposure when we get it wrong the first, second, and even tenth time). 

Your first idea, even if it helps, will in all likelihood not be the right one.  And unless you’re inconceivably lucky, chances are the second idea will not be appropriate (or ideal) either.  There’s a reason they say “third time’s the charm”.  We may not get it right the first time, but we are intelligent, learn from our mistakes, and gradually make our way to the right solution, no matter how hard it is.  So keep trying – no matter what.  And as time goes on, you’ll solve harder and harder problems and devise better and better solutions, and learn a lot in the process.  If you need to, take a break, revitalize yourself, and then continue.

This concludes our first set of posts in the problem solving series. 

This is the fifth post in a series of posts designed to introduce you to problem solving strategies that you can use to attack your sourcing and supply chain problems. Last Sunday we discussed three methodologies that you could use to find a solution. Today we are going to discuss methodologies you can use to evaluate a solution and determine whether or not it is acceptable or if you should continue looking for a better one.

The first methodology you can use is to estimate the costs and benefits. For example, if your strategy to reduce spend is to switch carriers to a carrier quoting a lower truckload rate, calculate how many shipments will actually qualify as a truckload, how many shipments will go at the less then truckload rate, and add up the cost. Then factor in any associated switching costs. If the total savings are still a material percentage after all factors are taken into account, then you have a partial solution. However, if the savings do not meet your objective, you will have to find another partial solution or look in an entirely different place.

The next methodology you can use is trial and error. There are two ways you can go about this. The first way is to implement the best solution you can identify for a minimum trial period (equal to the minimum amount of time it will take to determine if it is having any effect), collect all the information you can, and analyze the solution. For example, if you were trying to consolidate your supply base but could not decide which group of four suppliers out of a candidate set of six was the most appropriate, you could take your best guess, allocate the award accordingly for two quarters, and track the progress. If progress was good, you’d continue with the strategy. If progress was mediocre, you’d know that you were probably close and look for a few tweaks, such as switching out one or two suppliers or tweaking the purchase order process. If progress did not improve (or got worse), you’d attack the problem from a different angle with your revised knowledge and find a different solution.

The second way to use trial and error, which may not always be possible, is to implement two (or more) competing options that you are having difficulty evaluating to see which option is actually best. For example, let’s say you are trying to determine whether or not you should continue to spend your time sourcing non-strategy indirect commodities or outsource the categories to a third party organization that specializes in procurement of indirect materials. If you have done your research, you’ll realize that some parties report substantial success while others see very little benefit. In this situation, you could outsource half of your indirect categories for a trial period and keep the other half in house. If the procurement organization obtains significantly better performance then you (have traditionally) obtain(ed), then you know that outsourcing is the way to go. If the procurement organization does not obtain significantly better results, then maybe you should maintain internal control over your indirect categories for the time being and analyze the situation again in a year or two.

The point is that you have options, and you should not be afraid to try them. Sometimes you get surprised.

Next Sunday we will discuss some general strategies that will help you with every stage of the problem solving process.

This is the fourth post in a series of posts designed to introduce you to problem solving strategies that you can use to attack your sourcing and supply chain problems. Last Sunday we discussed six strategies that you could use to help you find the root cause of a problem, which is the first, and most important, step in constructing a model. Today we are going to discuss three methodologies for finding a solution, and some associated strategies that you can use to apply the methodologies.

The first methodology you can use is to start with a potential solution or solution to a related problem that you might be able to modify to your current situation. The following strategies can help you out here:

( 1 ) Apply and Adjust

Apply the related solution, look for issues, and attempt to adjust the related solution to make it work. If you are currently trying to lower spend on a commodity, and you already lowered spend on other commodities in the same category, try to apply the same techniques that you already used.

( 2 ) Work backwards

Work backwards from your goal until you have a reduced problem that the starting solution applies to. Then try to extend the starting solution forward. This also works if you don’t have a starting solution, as it can help you identify one. If you are trying to design a transportation network, start with the receiving points and work back to the original shipping points.

The second methodology you can use is to make use of what psychologists like to call “external aids”, or methodologies that go beyond simply applying the basic process in conjunction with your internal knowledge. Some examples, or strategies, are as follows:

( 1 ) Ask an Expert

If you know someone you can ask who knows more then you about the problem and potential solutions, ask. They might be able to provide you with a solution or at least point you in the right direction quickly. Generally speaking, the best learn from the best.

( 2 ) Research the archives

Although this does include looking in books and magazines, it also includes researching the vast amount of information available on the internet. If someone already solved the problem why do it again?

( 3 ) Try Applied Theory

Do not be afraid to test out an academic theory if you have a hard or unique problem, even if it is new. For example, general economic principles and theories are widely applicable and might help shed some insight. Sourcing and supply management texts might hold the answers, as might the leading blogs, such as Spend Matters, e-Sourcing Forum, and Procurement Central.

( 4 ) Try the Scientific Method

Especially if the problem is technical, engineering, or R&D oriented. Simply put, this means systematically collecting data to test a hypothesis, applying certain types of research design and analysis methods to the data, and being skeptical about the results. This is especially true if you are trying to determine the best source of supply of components for a new prototype, especially since 80% of the total costs can be locked in during the design phase.

( 5 ) Try Mathematics

Mathematics is a universal language, and the foundation of our physical sciences. Sometimes an appropriate mathematical representation makes a problem trivial. Considering that just about every decision support and optimization tool makes use of mathematics, it’s always a good starting point.

The third methodology you can use is to do it the old fashioned way and use logic and brain power to find the answer. Basic strategies you can use here are:

( 1 ) Reason by analogy

Often the actual solutions to similar problems as well as the methodologies used can help you with your current problem. Let’s say you are trying to redesign your purchase order process. If you recently redesigned an invoicing process, there might be strong similarities.

( 2 ) Use deductive reasoning

Deductive reasoning involves the progression from a general rule to an application in a specific instance. For example, collaboration often improves processes and lower costs. This general rule can be applied to each relationship you have.

( 3 ) Use inductive reasoning

Inductive reasoning involves drawing on specific instances to form a general rule. If switching negotiation strategies on other commodities on the category reduced cost, then maybe new negotiation strategies are the right solution here as well.

( 4 ) Question assumptions

We make assumptions all the time, many of which are based on untested theories. If we have problems finding a solution, we should question the validity of those assumptions as we could be looking in the wrong place.

That concludes our introduction to solution finding strategies. Next Sunday we will discuss some generic methodologies you can use to evaluate a potential solution and determine whether or not it is acceptable or if you should continue looking for a better solution.

This is the third post in a series of posts designed to introduce you to problem solving strategies that you can use to attack your sourcing and supply chain problems. Last Sunday we discussed three strategies that you could use to help you simplify the task, which is often the best methodology you can use when trying to formulate a difficult problem. Today we are going to discuss five strategies for identifying the root cause of a problem, which is one of the keys to model construction, the third step of the operations research modeling process.

( 1 ) Define before and after

Problems arise as the effect of an observable action and are easily identifiable by their after effects.

First example: your need to reduce spend on a core category.
Why? The procurement plan that was implemented was inappropriate for the category.
Effect: your spend for the period was higher then it should have been since not all expected savings were captured.
Fix: Find a way to improve the process so that all negotiated and identified savings materialize.

Second example: you use too many suppliers for basic commodities.
Why? A proper supply base was not designed up front.
Effect: you are using dozens of suppliers where only three or four would do.
Fix: put a plan in place that identifies preferred suppliers, contracts at best rates, and make sure mechanisms exist to enforce it.

( 2 ) Organize information into a table, chart, or list and look for patterns

For example, lets say total cost of ownership on one commodity in a category is calculated as significantly higher per unit then it should be. Create a table that breaks out the cost components and compares them, as percentages of unit spend, to the other commodities in the category. If, for example, the average freight on the other commodities is 10% and you see freight for this commodity is 15%, chances are this is (one of) your cause(s). Without this comparison, you might not be able to easily identify where the excess spend is.

( 3 ) Try to make the problem worse

This might sound ridiculous, but it will help you validate that you understand the problem. Let’s say your purchase order process is taking too long. If you fully understand the process, you should be able to add an extra step that lengthens the process by a predictable amount. Then you can be sure you understand the process appropriately and that the technology you ultimately select to automate it will be the right one.

( 4 ) Compare situations without the problem

For example, let’s say one supplier is consistently late with shipments. To try and understand why, look at suppliers who are consistently on time. Are communications being handled the same? Are they using the same systems or different systems? Is it potentially a problem with the 3rd party carrier?

( 5 ) Consider multiple causes and interactions

Not all problems will have a single cause and a single solution. In the case of our consistently late supplier, it might be due to delays in supplier acknowledgement and delays in third party carrier deliveries. Look for all potential sources to make sure your fix is the best one.

Next Sunday we will discuss some strategies that will help you in the fourth step of the operations research modeling process, finding a solution.