I recently posted this in a Health Procurement forum in response to an article I read, and would like to take it to a wider audience to expand on the discussion. There are a number of reasons why Supply Chain Management in Africa (and the world) is failing. Good discussion will get us into the detail where we can identify core problems and hopefully start generating sustainable solutions, so to get the ball rolling……
The first place to look is society, and how we conduct ourselves in our everyday lives. We live in a Linear world, where everything is focused on instant gratification. At the highest level, politicians’ function to keep their electorate happy and strive to keep their own interests alive within government and also within their political parties and focus only on the next election to ensure they retain power. In the Corporate world, executives strive to keep shareholders happy by focusing on short term results. Employees perform in a manner that keeps executives happy and to protect their jobs. Performance measures focus on cost rather than flow and are structured to promote silo thinking. The resulting local optima has filtered through business into our personal lives, where we act in our personal interests to the detriment of society as a whole. For me, a perfect example of this is how we drive on our roads.
So, you may ask, How does this relate to failing supply chains?
Well, the linear or analytical approach has taught us to break things down to their component parts and analyse them independently of everything else, leading us to see the world in isolated boxes or silos As a result we run our supply chains as independent entities, both within our organizations and within the various industries we operate within. Communication between silos is carried out without all parties having a clear understanding of the big picture. This leads to different interpretations of the same message and actions that are not synchronized. (broken telephone principle). Negotiations with suppliers and service providers are mostly carried out with the view to optimise benefits for our silo at the expense of suppliers and service providers, resulting in compromised positions to secure the contract. This leaves them no capacity to correct errors resulting from the misinterpretation.
In the 21st century where there is such a disparity between long supplier lead times and very short customer tolerance times which are further compounded by the impact of tying up working capital, requires a different level of thinking to that we have used before. As Einstein said, “We can’t solve our current problems with the same level of thinking used to create them”.
We need to remember the law of Supply chain, “All benefits will be directly related to the speed of FLOW of relevant information and materials.” (Plossl’s law amended in the 3rd edition of Orlicky’s MRP), and our roles within the supply chain for each company in the value chain.
To optimise flow and productivity, we need to:
- Create cross functional teams within your organization and across the value chain.
- When communicating, take time to ensure that everyone is on the same page.
- Don’t compromise, identify core problems and solutions as a team.
- Collaborate with suppliers & service providers to ensure a win:win outcome for all.
- Implement smart measures for value chain performance – keep everyone honest.
Remember that at the end of the day, everyone wants to make a positive difference in the world, so ensure that your systems enable and encourage this.
Please add your comments in the comments section below, or send an email to email@example.com. You can also call me on +27 82 777 0922.
About the author
Dave Hudson is a supply chain and operations specialist coach with over 35 years’ experience, and currently 1 of 5 endorsed Demand Driven instructors on the African continent.