Supply chains encompass most, if not all, of what we use in our daily lives.
And for those of us who work in them, the supply chain professionals, we only have one basic task:
Fulfil Demand
And when we do that task:
They expect nothing less.
We can’t afford to be less than perfect and we can’t afford to be unproductive.
Because when those few customers, who we didn’t serve perfectly well, complain, we will be asked to explain. Never mind if we served up to 95 out of 100 customers perfectly well, we’d be marked for why we didn’t deliver to the five (5) who didn’t get what they wanted as specified.
And when we are not productive, when we didn’t perform the goals well enough within criteria set by our superiors, we’d be accountable. We’d be asked to not only explain but also how we plan to do better. Never mind if we already are doing the best we can.
Will five (5) out of 100 customers of a fast-food establishment accept late deliveries of their orders? Of course not.
Will the mothers who bought the five (5) defective diapers out of 100 on the supermarket shelf be satisfied? No.
Will the passengers of the five (5) cancelled flights out 100 scheduled of an airline be glad that they won’t be flying to their destinations? Unlikely.
We must be perfect in serving all our customers. And all the time. We may boast we served most customers, but when at least one customer is not served as expected, we suffer the brunt of the complaint. We are expected to be perfect.
Our superiors will also insist that our supply chains must be productive. As much as we may perfectly serve customers, they will remind us we need to be productive as well.
Productivity is a broad term in which executives and entrepreneurs have widely differing interpretations.
Many have equated productivity to efficiency. It’s not.
Productivity is essentially meeting enterprise goals within predetermined criteria. It’s about achieving objectives that exceed strategic expectations and meet our superiors’ standards.
Unlike the single perfect order measure for demand fulfilment perfection, productivity covers a wide range of areas such as costs, sales, collections, production, deliveries, yields, defects, and output per person-hours.
For us to be productive, we need to perform well in a variety of parameters that enterprise owners pre-determine, based on their individual expectations. Owners and stakeholders would have their own meanings for productivity and we supply chain professionals would be expected to meet whatever standards they set. We’d be asked to commit to meeting those individual expectations productively via targets related to those parameters. We’d be asked to be productive in meeting all targets.
Demand fulfilment is a partner of demand creation. Both comprise the basic tasks of what enterprises do. Whether profit or non-profit, whatever the industry or organisation, the enterprises we work in create and fulfil demand.
Creating demand entails generating it and tapping it from the markets the enterprises sell their products & services to. Fulfilling demand is about satisfying it via making available those products & services for the markets to obtain and use.
Supply chains are the prominent models for demand fulfilment. Their coverage from the sourcing of materials to their transformation to finished products & services, and the subsequent delivery thereof, make them the excellent means for customers to get what they want when they want it.
During the years of the coronavirus pandemic from 2020 to 2022, supply chains have been in the limelight as shortages occurred and prices spiked for commodities and products around the world.
Industrial titans responded by promising to do better by getting their supply chain acts together. They changed vendors, moved manufacturing operations, built & cut back inventories, and aggressively hired more staff. They abandoned lean and just-in-time practices and shifted to just-in-case inventory management. As costs crept up towards the latter part of 2022, the same industrial titans have reduced staff and are thinking twice regarding capital expenditure investments in new facilities.
Executives and entrepreneurs have also joined the bandwagon of buying & installing high-end information technology hardware, software, & artificial intelligence as well as automation such as robotics & remotely operated equipment (e.g. drones, self-driving material handling vehicles).
At the same time, industrial corporations have put money in environmental, social, & corporate governance (ESG), given prevailing hot-button issues regarding climate change and organisational diversity.
The common thing lacking, however, is the absence of a clear-cut playbook. Many firms have no stand-out road map or any agreed-to methodology to holistically manage supply chains to bring about perfect & productive results.
Certainly, there has been much discussion about supply chain management, including how it’s very much become the forefront of management priorities, and how talent for such has become very much valued.
Academes and consultants have not offered, however, much of any real concrete solutions that would upgrade supply chain performance. Much has either been piecemeal (e.g. inventory management changes, new planning software, process mapping, organisational training) or plainly proposals for spending for new tools, programs, or gadgets (e.g. new computers, software, automation).
We, therefore, have seen no real improvement in supply chains despite the attention and investment. Inventory swings, operating expenses, freight traffic & rates, and organisational head-counts have continued to be at the mercy of whatever the market demand is and whatever the decisions of upper management. Supply chains have and will likely remain reactionary to the initiatives of demand creators and to the intuitive decision-making of superiors.
We who are supply chain professionals shall continue to be expected to be perfect in delivering to every customer who orders and to be productive in meeting all the enterprise’s demand fulfilment goals. Never mind if performance measures say we’re doing great versus target, we must be perfect and productive every time we deliver an order or make available an item to any customer.
Can we do something? Yes. But it requires a change in mindset, starting with the idea that solving supply chain problems isn’t via management, but via engineering.
Supply chains have structures and systems, just as enterprises and organisations do. Managers, however, don’t build structures & systems; engineers do.
We need to realise that we can’t manage our way to perfect & productive demand fulfilment because we can do only so much with existing structures & systems. To improve supply chains, to continuously improve them to ultimately become perfect & productive, we need to build new structures & systems, if not innovate them. And to do that, we need engineers, not managers.
Engineering, supply chain engineering, is where the path leads to get to perfection & productivity in demand fulfilment. Nothing else.
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