Integrating Supply Chain Management
What Is a Supply Chain?
Introducing the First Article Lab 3
Defining the Supply Chain 5
A Little History 9
The Supplier 11
N, Inc. 12
What Is the Role of the Supplier? 14
Taking an In-Depth Look at NAFTA’S Effect on
Maquiladora Plants 15
N, Inc. Revisited 20
What Is Supply Chain Management (SCM)?
What Is Management? 22
Types of Managers 23
What Type of Manager Are You? 29
The World-Class SCM Manager 29
A Discussion of Change 35
Models for Change 38
How Do We Manage Change? 43
A Model 67
A Strategy 70
A Structure, the Managed, the Managing 72
N, Inc. 75
Supply Chain Management Integration 76
Successful Change Management 84
Quality Functional Deployment (QFD) 89
Total Quality Management (TQM) 90
Process Re-Engineering 98
ISO 9000 101
NS, Inc.—A Global Supply Chain Nightmare 102
Supply Chain Technology Transfer to Third World Countries 103
T in Q, Mexico 107
N in B, Indonesia 110
Some Additional Thoughts 111
What Are the Tools of Supply Chain
Meeting PPI, Inc. 117
SCM Tools 119
What Are the Measures of a Successful
Supply Chain Management?
The Role and Purpose of Measures 129
Some Examples of Measures 130
The Role and Purpose of Control Systems 133
An Industrial Example—Managing Your Supply Chain Using
Event Management 134
What Is the Best Measure for Your Organization? 139
What Does It Take to Create a World-Class
Supply Chain Environment?
World Class 141
Developing a Lean Environment
What Is Lean?
Defining Lean 145
The Facilitator 152
Lean Tools 153
How the Lean Process Works 155
What Are the Acceptance Tools of Lean
What Is an Acceptance Tool? 163
Some Success Stories 174
Reviewing a Few Examples of Acceptance Tools 177
Appendix 7-A: The JoHari Window Assessment Test 209
Appendix 7-B: The Values Systems Survey 215
Appendix 7-C: The PA-PT Survey 219
Appendix 7-D: The Situational Leadership Survey 221
What Are the Technical Tools of Lean
What Is a Technical Tool? 233
Mapping the Process 234
Identifying Improvements 241
Some Success Stories 248
Reviewing a Few Additional Examples of the
Technical Tools 248
What Are the Measures of Lean Success?
Why Are the Lean Improvements So Dramatic? 271
Appendix 9-A: Glossary of Terms 279
Creating a Lean Supply
Chain Management Environment
How to Create an Integrated World-Class
Lean SCM Environment
How Do the Principles and Goals of Lean and SCM Align? 290
More Examples 293
Industry’s Mandate 294
Summary and Conclusions
Supply Chain Woes 295
About the Author 297
There are two concepts in management that have become somewhat disassociated but that need to be integrated closely together. The first concept is Supply Chain Management (SCM). Integrating the linkages of the supply chain is an extremely complex task, especially if you are trying to integrate these linkages internationally. Supply chains can be as simple as going to a farmer to buy strawberries or as complex as involving thousands of suppliers, manufacturers, shippers, and retailers. But the failure of any one of the steps in this chain results in the failure of the entire supply chain. Customers do not care about why a product was late or why it was wrong; they only care that it was wrong, and they expected it to be correct.
Supply Chain Management (SCM) integrates networks of international companies into a structure that allows them to optimize performance as a collective unit. The integration starts with the vendor’s vendor and ends with the customer’s customer. Three key measures identify the successful performance of the international supply chain:
• Cycle time performance
• Operating cost minimization
• On-time performance and customer satisfaction
Information exchange within the supply chain is critical for its successful operation. This requires an openness and trust among all the entities of the supply chain. It also requires a mechanism for the efficient transfer of this information. Traditional methods of information transfer, such as fax, phone, or even e-mail, are too slow. Internet, intranet, and extranet information accessibility allowing all entities in the supply chain to monitor the performance of every other entity is critical to international competitive success.
The second concept that needs to be reassessed and that needs to be integrated in conjunction with SCM is Lean. Lean is a tool that facilitates the elimination of waste. And waste can be identified in a multitude of resource areas. Any, and probably all, of the resource areas identified as part of the supply chain contain waste. Lean is the methodology that identifies the waste and then utilizes a bag of tools to attempt to eliminate this waste. The more waste that is eliminated, the greater the value-added time, resulting in greater throughput, lower costs, increased capacity, and reduced cycle times. In the end, utilizing Lean principles provides a supply chain that is more efficient and more responsive to the customer, and therefore more competitive.
If every organization in the world worked in exactly the same way, this book would have been very easy to write. Unfortunately, however, no two organizations work alike. Even when the organizations are producing the same output and are right next to each other, they often operate differently because of management style and methods, or corporate influences. Therefore, it is impossible to come up with one book that can claim to be the perfect way to run all organizations. This reminds me of Newton’s law for organizations: For every manager with a perfect solution there is an equal and opposite manager with a perfect solution.
This book contains simplistic SCM and Lean ideas that have proven to be enormously effective. Most of them will fit any organizational environment (and I have personally experienced some strange organizations), but they are not all intended to fit perfectly in every environment. This notion brings us to the purpose of this book: this book is designed to be a starting point in discovering the power of leaning out your supply chain. With that as our goal, we can now move forward in improving our supply chain performance.