Sometimes, we’re not as honest as we should be in managing our supply chains.
Over the years, I’ve played a lot of golf. That also means I’ve played with a lot of people.
One problem a lot people have is constantly coming up short on approach shots into the green.
The blame game usually follows every shot that lands just short.
They’ll blame the course markings claiming they’re inaccurate.
Then supposedly there’s wind up high that can’t be felt at ground level.
Maybe it was the lie that caused the ball to come out heavy.
(And sometimes they just shake their heads lost for a reason.)
Here’s the reality: They always overestimate how far they hit their clubs.
Why do they do this? Well, often it’s because they’re embarrassed to admit that they’re not as strong as they would like to seem.
That’s unfortunate. And totally unnecessary.
The irony is that the solution is simple:
- Go to the driving range and record how far they hit each type of club.
- Use this data to make better club selections on the course.
- Make the fact based decision even when in a potentially emotional situation.
Honesty is the Best Policy
We should use the same approach with the supply chains we manage.
Establish a fact base first. This should not be hard given all the data organizations collect.
But they’re useless if all you do is make pretty PowerPoint charts with them.
Establish a routine business process to compare your supply chain planning assumptions versus actual results.
This is where things sometimes break down.
Managers can be reluctant to publish less than ideal supply chain master data (meaning, the planning assumptions) for fear that it will reflect poorly on them. So they insist on using targets that are not representative of reality.
As you can imagine, you can’t build an effective supply chain plan if your basis is inaccurate data.
For starters, review the following:
- manufacturing and transportation lead times
- manufacturing yields
- production capacities
You may realize that you’re planning to overly optimistic assumptions. For example, you’ll probably find seemingly trivial handling time scattered in between supply chain processes.
A few hours here and there may not seem like much. But they can make a big difference when added up.
Why You Should Care
Maybe having an inaccurate supply chain plan doesn’t seem too problematic.
Are these more concerning?
- constant stock outs of a life saving drug
- writing products off because of low shelf life
- low profit margins
A bit of a high price to pay don’t you think?
This kind of manager is no different than the golfer who constantly comes up short on approach shots. Neither is planning to reality.
The good news is there is an easy fix. Simply, include a comparison between planning assumptions and actual results in your sales and operations planning (S&OP) sessions.
You’ll immediately increase transparency. More importantly, you’ll initiate valuable fact based discussion across your supply chain.