So, there I was back in 2001, sitting in front of a computer screen considering how to improve my companies’ operations and of course reduce the costs thereof, I had just started working there as Supply Chain Manager and after a month of getting into the system, I decided college was over and I had to get to work. My first task was dealing with a local baby food manufacturer in the Middle East, part of our international food chain (Heinz). One of the production units was a rice processing station. Basically, they would buy rice from a local supplier, receive it, clean it, grind it and then bag it for further use in the next production cycle. A whole messy process.
Now, we are meant to be an international company, so a daughter company owned by Heinz has access to the same Heinz sources. My first task was to find a new source of rice, it took me all of half an hour going over the Heinz suppliers lists to find a rice and rice product supplier in Liverpool, UK. I contacted them and found out that they supply a finished ground rice product at the same rice it costs to buy the raw material. So, hey presto, a new supplier that made an entire processing unit redundant. The savings were enormous, and the direct impact on one of the products was a reduction of 35% in its overall cost. Add to that the 25% reduction we added by changing the packaging supplier and I had successfully reduced the cost of one product, baby rice powder for making rice pudding, by 60%! Oh, I forgot, they added a unique branded plastic clip to use for opened bags, I also re-negotiated the price with the manufacturer since their local purchasing manager hadn’t done that in 10 years, reducing the clip price for all their products by 15%.
Or perhaps the time I was employed as production engineer for a medical device company, and my job was to transfer the R&D to production. This of course require various GMP compliance in this case it was only 510K so it was easier. However, what did I do, I looked at the product, and IV pump, it is made up of a frame, an infusion pump and a microprocessor with software system to manage the pump. Now there are certain things an SCM doesn’t do and that’s get involved in the science and technology of the product, that’s what you have R&D and Product Managers for. What an SCM can do is look at the packaging around the product, look at the materials used in making the product and look at the systems used for manufacturing the product. In this case I decided, together with marketing to maintain a certain pleasing aspect of the overall design of the product, but I had carte blanche to change materials for the frame and casing and pump itself. A total reduction of 85% was reached when transferring the originally designed product to general production. Again, no use of any methodology, just plain old common sense. This enabled us to design the manufacturing process in a way that met the new structure of the device.
So, what has all this got to do with TOC, Lean and JIT…absolutely nothing. I didn’t use any one of these systems. I merely used my eyes and common sense. The first principle of SCM is to use your brain, to perceive and understand what is going on around you. To look at the system and immediately identify “constraints”. You might say that I processed the situation using TOC, I most probably did, but I didn’t actually think of any model when I was busy searching for an alternative supplier, nor did I even consider the overall effects the change would have. I acted on instinct, the instinct honed by years of systems analysis and supply chain processing. Most of all I used my imagination, and when I realized that I had a source of material that would bypass an entire manufacturing process I grasped it with both hands and didn’t let go until the first container was in our yard.
So, what did I do? I walked through the company offices and facilities, spoke to everyone from manager to floor sweeper. Understood the whole process and then in my head broke it down into materials, resources and process flow. As Einstein stated, Imagination is the world, knowledge is limited. So, why limit my ability to process information, I first used my imagination and once I did I found many solutions. By using my knowledge base, I managed to process the various options in my mind in order to limit them to reality.
Summary: If you want to be a successful supply chain manager, don’t limit yourself to theories and models. Don’t try to fit the system into a set of systematic processes, first of all walk around, talk to everyone, understand what everyone is doing. Ask questions, even simple ones like, where do you go to drink your coffee, or how many times a day do you have to stop your machine? Get all these little bits of information and build a visual picture of this specific world. Then look at all the suppliers and the various standards that limit your material sourcing variety. Add to these constraints the methods being used to deliver and process the material at every stage, imagine any number of fantastical changes, then separate the materials planning from the materials processing and start limiting your wild ideas into real life possibilities.
Message: Use your imagination first, understand the process from every angle and every level, then imagine what would be a perfect system and only then limit yourself into fitting the current process into your new system using the various methodologies and tools available.
I remember enjoying the Theory of Constraints book a few years back.