12 SCS:ROUND TABLE DEBATE DECEMBER 2008 SUPPLY CHAIN STANDARD
www.supplychainstandard.com
Dave Food suggested the need to
understand: “What is it that’s negotiable in the
order? What is acceptable and what is not?
Telling the customer you are going to be late is
one thing; not telling them at all is
unforgiveable, but common.”
Organ said: “From the customer environment I
definitely want to know if things are going wrong
– but I also want visibility of how things are going
– has it been made, is it on the truck, do I have to
book a half day off to receive it? Information is not
just operational, it’s also about customer service,
and we may be underestimating the level of
desire for information.”
Or conversely, suggested Food, we may not be
understanding the significance of information. If
we are short of microchips for a product that is
slated for a promotion, we’ll pay for the personal
courier. Other products don’t need this. We need
to understand why this order is so significant, and
that means we need information coming back
from the customer.
Visibility
The visibility ought to be there, said Organ. “It
interests me that firms make massive investment
in IT and then only use 50 per cent or less of the
capability. I’ve yet to see a supply chain that you
can view end-to-end from one ‘dashboard’, and
yet the technology, the connectivity, is there.
Perfect visibility must be part of the answer to
the perfect order.” But, asked Martin Dixon, former
consultant for Schenker: “What do you define as
complete visibility?” As Gratton pointed out, it
depends where you are in the supply chain. “A
manufacturer is interested in raw materials;
some-one further down the supply chain
probably isn’t. Systems will show you where
everything is, but few people want to see
everything all the time.
“But there should be at least one person who
wants to know everything – because it tells you
how your business is working. Someone has to
be able to ask for a complete landed cost
What is it that’s negotiable
in the order? What is
acceptable and what
is not? Telling the
customer you are
going to be late
is one thing;
not telling
them at all is
unforgiveable,
but common.
analysis plus the impact on service levels.
Things are going in the right direction – there
aren’t so many cases of companies only knowing
a container has arrived when they receive the
demurrage note.”
Also important, suggested Davies, is the
question of supply chain resilience. The panel
concurred, citing examples from the number of
brands of DVD player that all come from
essentially the same factory, to the fuel protests
of a few years ago, or lack of port capacity, which,
as Dixon observed “could seriously upset the
perfect order”. And, said Organ: “That’s why I say
we’ll never have the perfect order. There’s only so
much contingency planning you can do, or
realistically do anything about.”
“Discipline,” said Hough, “is the key – only
change things when everybody agrees. Take
Toyota – if you try to do something outside the
‘Toyota system’, you get slapped.” He likened the
problem to that of airline baggage handling
(which, he claimed, does now actually work at
Terminal 5 Heathrow). “We have runners [standard
bags], repeaters [common items that may require
something different, like golf clubs] and strangers
[unusual items such as orchestral instruments].
“The answer is to make the process fit the 60-80
per cent of runners, adapt it slightly for the
repeaters, and accept that the strangers may have
to be handled quite differently. Identify the
specials and treat them in a special way. Don’t
treat everything as special just because someone
is shouting at you.”
Promotions
As happens at almost every round table, someone
(in this case David Gratton) mentioned
promotions. “Someone decides to offer say three
in a pack as a special offer. Suddenly, that’s a
product that didn’t previously exist. There isn’t
time to have the packaging done at the (cheaper)
source end, so you have to outsource to a
repackaging specialist. And they may do these
promotions every year, but they never think far
enough ahead.” Organ confirmed that “Somehow,
25th December is a continual surprise.” The moral
being, said Dixon, that if processes are being
driven by the norm, you have to treat promotions
as exceptions, and you need a process for
exceptions. (This later prompted the rebellious
thought: if “normal” supply chains are so disrupted
by promotions, what happens to the supply
chains of furniture sheds on the one week in the
year that they don’t have a sale on?).
But despite the recession and everything else,
the general consensus seemed to be that
complexity, from globalisation to promotions, will
continue to increase (although, suggested
Gratton, preferred sourcing locations may move
around ever faster).
There is enough technology around, Hough
suggested, including RFID – but “people just
aren’t using the systems properly”. And overall,
while we may never be able to guarantee the
perfect order, we certainly have the ability to
move an awful lot closer.
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