Author Archives: thedoctor

The UK Needs To Realize There Are Some Arms Races You Don’t Want to Win!

Less than two weeks ago I asked if The Air Force’s Billion Dollar Flop [is] the Biggest Supply Chain Failure in History. I thought it would be years before we saw another contender for the biggest supply chain failure in history. Years, not days. But after reading this article over on Supply Management . com on how “major defence project costs ‘balloon’ by £6.6 Billion” over in the UK, it seems we have a new candidate.

In US Dollars, that’s over 10.5 Billion dollars! And, as per the article, that’s on the 16 largest Ministry of Defence (MoD) projects alone! What about the projects that constitute the other 75% of the MoD budget? How much are they overrun? I shudder to even attempt the math!

I’m sure the UK is still holding a grudge that America revolted back in 1774 and started the revolutionary war (in 1775) which America won when they gained their sovereignty with the Treaty of Paris in 1783, but there are some challenges the UK should just let them win. Beside the fact that it has been 230 years and the UK should just let it go, do they really want top the supply chain failures list?

Customer Service That Takes No Action is Not Customer Service

And if you have no customer service, your supply chain performance metric could be significantly lower than you think! It doesn’t matter that the product ships on time, it only matters that the end customer receives it on time and defect-free. And if the product doesn’t reach the customer on-time and defect-free, your supply chain performance is ZERO unless customer service does something to actively resolve the situation.

It seems that Customer Service is Still Going to Hell and Supply Management hasn’t learned anything yet, as per this recent blog post over on the Supply Chain Management Review that points out that A Disgruntled Customer [is] the Last Supply Chain Link. In this post, the author, Rosemary Coates of Blue Silk Consulting describes her recent experience with Target.com’s customer service and their refusal to do anything when the customer not only clearly pointed out the problem but also pointed out the resolution (which is not the customer’s job).

In summary, the author ordered a gift for Christmas from Target.com, well in advance of Christmas, but when the package didn’t arrive in 10 days, she went online to track it. She discovered that it was scanned at the Target.com warehouse, but never recorded in the UPS system. She then confirmed with UPS that they never picked it up. At this time, she contacted Target.com customer support who refused to do anything, stating that she must wait 10 business days just in case, by some miracle, the package left the warehouse, to be delivered long after Christmas. And then they still did nothing. Target.com didn’t even offer a refund until the author complained about the problem on their Facebook site and Tweeted about it. Were they trying to outdo Best Buy in a race for the customer service Razzie?

This story is absolutely ridiculous. The problem could have been solved with a simple UPS lookup, to confirm the author’s complaint, and a simple call to the warehouse to inquire why the package hadn’t been shipped yet. This would have resulted in a “we don’t know, let’s check” followed by a call-back a little later along the lines of “we misplaced it, it will go out in the next pick-up” or “we can’t find it — it’s obviously lost, we can re-package and re-send or you can give the customer a refund”. And within 24 hours customer service could have called the author back on the open trouble ticket with either a “success, it’s going out” or “it’s been lost, would you like a replacement shipment or a refund”. It shouldn’t take multiple complaints for something a simple phone call can fix. That’s not customer service. It’s customer contempt, and it’s contemptuous in a modern supply chain!

Five Common Sense Ways to Power Manufacturing Growth in a Down Economy

Last summer, Industry Week ran a short article on Ways to Power Manufacturing Growth in a Down Economy that you might have overlooked, as it was short and ran during peak vacation season, but it is quite important nonetheless. This article provided some easy ways to squeeze more value out of your operations.

  • Reduce Market Uncertainty
    There are two big uncertainties that most manufacturers have to deal with: customer demand and supply availability. In addition, raw material costs can often be unpredictable. But all of this uncertainty can be greatly reduced with long-term contracts. As the article points out, demand certainty at reduced margins is often better than demand uncertainty, especially since innovation and lean improvements can often reduce costs year-over-year.
  • Put Safety First
    Accidents cause downtime and result in reduced yields, both of which increase operating cost and eat up margins. Keeping lines up and yields constant is the best way to reign in costs and get the most out of every dollar.
  • Near-Source
    Reduce shipping costs and gain more control over manufacturing processes and costs by using suppliers closer to your manufacturing facility. It’s a lot easier to work out a problem with a supplier in your own state than with a supplier in a different country, as you can just jump in the car and visit the supplier’s location when a face-to-face meeting is needed to resolve an escalating situation.
  • Redefine Value-Add using Customer Value
    Find out precisely what customers want and eliminate all unnecessary features and functions that are not desired by the end customer. It’s not value-add unless the customer wants it. If the customer doesn’t want built-in auto-correct software that messes up 20% of the time in their smartphone, don’t waste money delivering it to them!
  • Encourage Innovation
    Empower, motivate, and reward employees who identify product and process improvements throughout the organization that increase quality or product value (to the end customer) while holding steady or decreasing costs.

The point is that, even if demand is down, margin can still be up.

Wanna Get Lean? Get Mean About Wasted Time, Effort, Production, and Transportation!

Apparel Magazine just ran a great article on “developing leaner product development and sourcing operations” for anyone looking for an easy to understand no-nonsense common sense introduction to going lean. Focussed on correcting the six-lean sins of the product development process in an average organization, the article did a great job of pointing out that if you are wasting time, effort, production, or transportation, you are not lean.

More specifically, a lean organization does the following.

  • Optimizes Time Utilization
    A lean organization identifies those parts of the cycle that take the most time or that tend to run out of control and reins them in with proper processes and controls. In supply management, if the longest part of the process is identifying suppliers who can meet certain needs, then, even before a product design is finalized, the process to identify suppliers with the requisite technical capabilities and production processes is begun. Then, when the design is finalized and the components need to be sourced, the organization simply needs to select the most appropriate supplier from a small pool.
  • Optimizes Effort
    As highlighted in the article, a lean process does not include unnecessary milestone meetings, [a] lack of communication between departments that leads to a re-creation of plans, [the] development of too many designs that do not get adopted, or the creation of unneeded samples. The requirements for a project are clearly identified and all efforts are aligned with meeting those requirements.
  • Optimizes Production
    There are three optimizations here. First of all, the organization avoids producing more units than are needed (in a given period of time). If the known demand is 100, 1000 are not produced in the hope that the need will magically appear. Secondly, the organization does not add features or functions that are not required by, or do not add value to, the end customer. Third, the organization avoids the creation of process silos to insure that one individual or group doesn’t over-engineer a part or value-add service that goes (well) beyond need or cost control requirements.
  • Optimizes Transportation
    This applies to all steps in product design, development, and distribution — not just the final distribution process. For example, sending partial products back and forth needlessly in the design and development process due to poor process design is waste. In production, if raw materials are transported from Africa to South America for refinement and then shipped to China for component production and the components are then shipped to the US for final assembly, that’s just inefficient, especially if the final products are then sold in Europe. That’s losing sight of the supply management forest while focussing on the old cost trees.

Lean is not a mystical, magical, chimera. It’s the systematic elimination of waste by taking a holistic view.