Ellery's Essays

Solving Problems in the Midst of Crises

We who are supply chain veterans have encountered many crises in our operations.

Over the decades since Keith Oliver (and Mr. Van t’Hoff) coined the term, supply chain management, we have had our share of challenging crises. But even as many enterprises recognise their critical importance, supply chains remained a not well understood branch of business.

That changed at the height of the CoVID-19 pandemic.

After the World Health Organisation formally declared the coronavirus pandemic on March 11, 2020, nations enacted lockdowns which shut down supply chains around the world.

Panic-buying consumers emptied grocery shelves almost overnight. There were shortages of food and hospital supplies as demand spiked and vendors were unable to deliver provisions.

When pharmaceutical scientists developed vaccines to counter the virus, governments finally relaxed restrictions. Supply chains were able to flow again.

The crisis from the pandemic, however, had thrust supply chain management to the forefront of global media attention.

Events relating to supply chain disruptions became headlines:

Suez Canal, March 23, 2021

The Ever Given container ship runs aground at the Suez Canal blocking shipping traffic between Asia and Europe. The incident dominates global news headlines and even though salvage crews finally were able to dislodge the ship in less than a week, newscasters and analysts fanned speculations of increased costs in freight and merchandise arising from delays caused.

Bloomberg Supply Lines, September 22, 2021

“The amount of time it’s taking for chip-starved companies to get orders filled stretched to 21 weeks in August, indicating the shortages that have crippled auto production and held back growth in the electronics industry are getting worse. Chip lead times, the gap between ordering a semiconductor and taking delivery, increased by 6 days to about 21 weeks in August from the previous month, according to research by Susquehanna Financial Group. Volkswagen’s truck division Traton SE became the latest manufacturer to warn the global shortage of semiconductors has jeopardized deliveries.”

Ukraine, February 24, 2022

Russian military forces invade Ukrainian territory, setting off alarm bells in global commodity markets. Prices of wheat skyrocket as nations sought alternative sources. It didn’t help when Western nations from the United States to European countries slapped sanctions on Russia, further crimping supply not only of wheat, but also of crude oil and various minerals.

The war degraded into a stalemate that resulted into bitter divisions among global traders. Businesses adapted to the fighting but the war and the growing political divide between East and West remains a looming risk for supply chains.

Panama Canal, August 25, 2023

Panamanian authorities announced restrictions in the passage of ships through the Panama Canal, a vital waterway shortcut between the Atlantic and Pacific Oceans. Low water levels from a drought in Panama had limited canal lock operations, resulting in long queues of ships waiting to pass through. Shipping lines re-routed their container ships either through the West or East Coasts of the United States or via the long route around the Southern tip of Latin America. Shipping cost increases and delays resulted for customers and vendors in North America and Europe.

Panamanian authorities announced an ease in restrictions on April 15, 2024, as they welcomed optimism that the upcoming rainy season will revive water levels at the Panama Canal. Supply chain professionals were cautiously hopeful.

Pfizer Plant, Rocky Mount, North Carolina, USA, July 19, 2023

A tornado ripped through a Pfizer pharmaceutical facility. Fortunately, there were no fatalities, but the damage and resulting shutdown of the facility had aggravated the already-strained supply of drug products to US hospitals.

The Rocky Mount facility was able to restart operations four (4) months later, although not yet in full swing.

Red Sea, November 19, 2023

Houthi rebels based in Yemen began attacks on shipping at the Red Sea, starting with a hijacking of a commercial ship and later via drone & missile strikes on merchant vessels.

The rebels continued their attacks despite retaliation from a coalition of American and Western forces. Shipping lines, meanwhile, suspended passage of their vessels through the Red Sea, which has added expense and lead times to transportation between Asia and Europe.

Baltimore, Maryland, USA, March 26, 2024

The container ship, MV Dali, departing from Baltimore’s harbour, collided with the Francis Scott Key bridge, causing it to collapse. Quick thinking port authorities within minutes stopped traffic from crossing the busy bridge, preventing hundreds of motorists from falling into the Baltimore port’s bay (unfortunately, six [6] construction workers didn’t make it out). In the aftermath of the collapse, salvage crews removed enough debris to open a temporary channel for stranded ships to pass through and allow some operations at the port to resume.

Commentators and so-called expert analysts had urged enterprises to prioritise resilience and sustainability. Their rationale is that supply chains need to prepare for risks and adversities. They have pushed organisations to adopt renewable energies, cutting-edge technologies (e.g., artificial intelligence), and risk management.

Supply chain managers should invest in better planning & information systems such that they could be more flexible to changing demand, especially given global events (e.g., war, calamities) may affect our business environments.

So-called experts and wannabe consultants offer a lot of solutions. Many, however, don’t tell what the problems are in the first place. They equate crises with problems without understanding that crises are likely more the effects from problems which we failed to identify and solve.

We usually don’t solve crises; instead, we manage them. We try to moderate effects, counter threats, or minimise risks. We move to get ourselves and others out of harm’s way or work to reduce the inconveniences. We hunker down or we try to escape.

In the aftermath of crises, we recover and heal. If a crisis festers (e.g., burning platforms), we look for quick fixes. We pick up the pieces, but we skip solving problems exposed by a crisis. We urgently find ways to get things back to track to where we left off, but we don’t review what happened, how we responded, and what we should do better next time. If we do, most of the time we implement solutions without first defining the problems.

The strength of our supply chains lies in not in how well we weather crises but in how well we identify problems and implement solutions which contribute to our operations’ productivities despite the risks and adversities.

Problems accompany crises. The trouble is we don’t solve them as much as we manage crises.

Enterprises and economies have experienced many supply chain crises and survived, if not even prospered.

But despite what we may call resilience in our operations, we have not really made our supply chains more productive. We did not really identify or solve many of the problems that underlined the crises we experienced.

Because we have not yet addressed, if not even sought out, these problems, we have not optimised our supply chains, at least to the extent that they would be well-prepared for the next crisis.

Most of us don’t like problems because we equate them with crises and the disruptions they bring.

But crises are not problems. They either give us problems or they are the results of them. Problems are the root causes of crises or weaknesses in our systems and structures which crises expose.

We don’t want to experience crises, but we should seek and identify problems so that we can develop solutions to either mitigate, counter, or defend against crises.

In crises, we may turn to our leaders. In problems, however, we need the right people to solve them.

Executives manage crises. Inventors, entrepreneurs, & engineers solve problems.

Organisations should have the talent, systems, & structures to not only weather crises, but also the incentive, initiative, and creativity to find and solve problems.

It starts with us not only counting on executives to manage crises but also enrolling all of us in the supply chain hierarchy to participate in the problem-solving process.

About Ellery’s Essays

Are You Looking for a Problem?

In the 1980’s, Procter & Gamble had a cost improvement program dubbed “Deliberate Change.” The purpose of the program was to tap all levels of the P&G organization to find ways to reduce cost.

The Deliberate Change program encouraged P&G employees to look for ways to reduce costs. There were extensive training programs focused on “creative problem solving” which encouraged brainstorming and using the right criteria for solutions.

All in all, the Deliberate Change (later renamed the Cost Improvement Program) helped save P&G millions in dollars worldwide and boosted P&G’s efforts to double its business by the end of the 1980’s.

P&G rewarded cost improvement teams which came up with innovative and effective cost reduction solutions. This motivated employees to seek out problems and solve them. At one point, teams were claiming so many cost improvement solutions that the company had to have steering committees actively screening the ideas to make sure they were indeed contributing real and effective savings.

The cost improvement program became an integral part of P&G’s culture of innovation and entrepreneurship. People who left P&G brought the “problem-seeking” mindset to other organizations and contributed effectively to companies’ bottom-lines.

The success of the P&G Deliberate Change program was in getting employees to seek problems, study them, and solve them. It is quite unheard of today in many companies for managers to tell employees to find problems. It is more of a rule that managers tell employees to avoid problems; employees instead should try to prevent them or find quick-fix solutions. Some companies would only go as far as putting up suggestion boxes for employees to contribute ideas where often, the suggestion boxes would remain empty or if there’s any, the suggestions would just languish in the boxes without anyone bothering to read them.

Many successful entrepreneurs start with a problem than with a solution. Netflix began when founder, Reed Hastings, sought a better way to rent movies.¹Uber started when founders, Travis Kalanick and Garret Camp could not find a taxi one night and decided to find a more convenient way to go from one place to another.

But as much as success comes from solving a problem, being continuously successful happens when one does not stop looking for problems. P&G’s Cost Improvement Program has evolved to one where the organization searches the outside world for innovative ideas.

But as much as ideas drive success for most enterprises, it is how well problems are solved that an idea becomes successful.

But it has to start with recognizing there’s a problem to solve. And before one recognizes a problem, should one wait for it to arrive, anticipate its arrival, or seek it out even if there is no urgent need of one in the first place?

Successful organisations solve problems. Successful entrepreneurs develop ideas that anticipate and solve problems. Continuously successful people look for problems to solve.

About Ellery’s Essays

This essay was originally written on Januar 18, 2019

¹Adrian J. Slywotsky, Demand, (New York: Crown Business), page 2

Discerning What We Can Change versus What We Cannot

A long time ago I tried to start a business in which I’d deliver basic consumer products to small provincial stores. I’d buy products from major wholesalers and sell them at small profit margins. I’d offer my customers products at close to wholesale prices and I’d deliver items as soon as there were ordered.

As soon as I started selling, however, distributors of the same products made life difficult for me. They’d stop my delivery truck and told my crew to leave the area because my business was infringing on their “territories.” When the delivery truck returned, they threatened them with legal action. They then threatened my customers, saying there would be no more deliveries of products.

I ended the business as soon as it started because of the endless harassment.

In the present day, the same customers I used to sell to can now buy almost anything they want thanks to the internet. By accessing e-commerce websites, provincial stores can buy the same products I used to sell and lots more at competitive prices. Many provincial distributors have closed shop as costs have climbed and margins have shrunk. The few that remain are very large and have updated their information systems to accommodate e-commerce but they struggle to stay competitive against upstart entrepreneurs selling rival merchandise.

Sometimes it feels downright impossible to make a change where we would like to see one. And sometimes it’s hard to stop change when we don’t want one. The distributors in my time didn’t want change and I had a hard time making any with my business. In the present day, distributors face a changing business landscape which requires constant adaptation.

Sometimes we need to be creative and persistent in finding change and making it happen. Sometimes change just happens when and where we least expect it and we have to be quick to adopt it else we fall behind or worse, we become obsolete or irrelevant.

Take traffic, for example. Manila (Philippines) traffic is one of the worst in the world, if not the worst. Countless ideas have been thrown for more than a decade to alleviate the chronic daily gridlock. Nothing has worked and commuters have had to endure hours in buses, trains, and cars to move around the city.

But in the last few years, Waze and other navigation applications have become popular as they help motorists move through traffic.

Motorcycles and bicycles have become the vehicles of choice for many people as they have enabled riders to weave through streets with less difficulty.

Businesses are using app-linked couriers, messengers, and transport providers to deliver their products. And as mentioned above, e-commerce is becoming the preferred choice of consumers to buy groceries, clothes, and all kinds of merchandise which are delivered to our doorsteps via a click of a computer mouse.

The traffic is still there but people have adopted. Change was made in how people navigate through traffic and how people buy the things they need or want. Much of the change was unexpected and much of the effect went beyond people’s expectations.

So, for the rest of us who did not expect change or have not yet fully accepted it, we end up scrambling to make up for lost ground.

For the rest of us who want to enable change, it can be a frustrating fight that tests our patience and resolve. But the potential rewards can be very much worth the trouble.

What can we do to make adoption of change or the enabling of change not only easier but also beneficial?

It starts with first discerning what we can change versus what we cannot change. We can’t change traffic but we can change how we work around it. We can’t change a distributor’s “territory” but we can change how products are marketed and delivered.

To find what we can change and what we can’t, we need to understand an issue from all sides and find a side where change can be made.

We’d need to define the problem before we can make a difference.

“Grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.”

-Reinhold Niebuhr (American theologian)

About Ellery’s Essays

This essay originally written January 06, 2019

Engineering for Versatility, Not Resilience

When we analyse the gaps in our supply chain operations, it isn’t just about how wide the differences are in how we’re performing versus what we’re aiming for. It won’t only be about variances between targeted & actual results, but it will also be about how well we respond to and handle risks now and in the future.

Gaps, in the supply chain engineering context, are the disparities between the ideal and the present states of the structures & systems of our operations. Gaps represent the differences between the performances we want to achieve versus how we are currently doing. Gaps are the obstructions, divides, and barriers that stand in our way toward our ultimate objectives.

Adversities are dangers, perils, hazards, threats, and menaces that cause disruption (if not disaster) to our operations. Risks are the possibilities these adversities manifest themselves as unwelcome outcomes. Emphasis is on the word, possibilities. We’re never sure how and when risks will become adversities. We just know they can and will eventually.

Many so-called experts push for resiliency as the answer to mitigating risk and minimising the effects of adversities. In supply chain management (as per SAP), resiliency is “the ability to respond quickly to operational disruptions through flexible contingency planning and forecasting – from material sourcing to logistics and the final delivery of products and services.”

Resiliency, however, is more of a buzzword than it is a desired attribute. It stresses responsiveness via “flexible planning and forecasting.” When it comes to reducing risk and adversity, we need to be more than responsive and flexible. We need to not only bounce back from disruption, but we also need to counteract, if not avoid, risk. It’s not resilience which we need, but versatility.

Versatility denotes our supply chain’s readiness to transform itself as the need arises. Versatility is the means to change whatever we’re doing such that we uphold & continue our track record of operational performance. Versatility is not only flexibility or the ability to switch or adjust; agility, the speed to make any change; and adaptability, the range of operability under different circumstances. It’s not only about coping, which is what resiliency means, but more of engineering our operations to be versatile.

Versatility is about solving problems before they become looming threats.

In 2005, then United States President George H. W. Bush asked his cabinet secretaries to plan for a possible pandemic. President Bush felt that the American government was not prepared to handle a pandemic like the influenza outbreak of 1918.

The Bush administration laid out proposals to stock up on medicines and develop protocols to respond to a pandemic threat. Bush’s then Secretary of Homeland Security, Ms. Fran Townsend, recapped:

“Thus was born the nation’s most comprehensive pandemic plan — a playbook that included diagrams for a global early warning system, funding to develop new, rapid vaccine technology, and a robust national stockpile of critical supplies, such as face masks and ventilators.”

Unfortunately, even though President Bush’s cabinet secretaries initiated steps to make the plan a reality:

“…large swaths of the ambitious plan were either not fully realized or entirely shelved as other priorities and crises took hold.

Efforts to sustain the pandemic plan waned under succeeding US presidents.

When CoVID-19 arrived in America in 2020, the Trump administration referred to the 2005 Bush plan to respond to the threat. The US government sped the development & distribution of mRNA vaccines in record time, which likely saved lives and mitigated the coronavirus pandemic’s economic impact. It wasn’t a grand success but thanks to a former president’s forward thinking in 2005, the worst of the 2020 coronavirus was blunted.

The Bush administration’s pandemic plan was remarkable in that it was a “playbook,” which stressed “a global early warning system,” development of a “new, rapid vaccine technology,” and “robust national stockpile of critical supplies.”

The doctrine of the Bush plan was about responding to a pandemic threat via attacking the pathogens that would be causing it. It was about organising people and resources to solve problems. It wasn’t about preparing the government to be resilient, e.g,, locking down the country, but to be versatile, e.g., being forewarned about the threat before it arrives, studying what it is, & developing countermeasures via pre-planned medicine & vaccine protocols.

Gaps in supply chain operational performance include how we deal with risks. Risks are possible, if not probable, adversities—perils, menaces, barriers, divides, & obstacles—which would disrupt our plans.

So-called experts preach resiliency as the answer to mitigating risk. But it’s not enough. What we need more is versatility, the ability to flex, adapt, and be agile as the need arises. It’s about addressing the root causes and fixing them in our operations.

To be versatile isn’t about just being ready to respond or hunker down but instead be organised to solve whatever problems that are the root causes of the adversities awaiting us.

Engineering supply chains is about solving problems, not enduring them.

About Ellery’s Essays

Engineering for Risk

Kobe Hanshin Expressway, Before & After Restoration from 1995 Earthquake

The earthquake that hit Kobe, Japan in on January 17, 1995 lasted about twenty (20) seconds but with a magnitude of 7.3 on the Richter scale, it was enough to kill 6,400 people and damage up to 120,000 structures. The disaster disrupted the nation’s economy as the earthquake destroyed Kobe’s seaport, wrecked railways, roads & bridges, and shut down numerous manufacturing facilities. Critics chided the government’s slow initial response amid the disbelief that Japan’s much vaunted earthquake-proof infrastructure did not withstand the tremblor.

In one week, however, electricity service was restored in Kobe. Gas and water supplies were fully operational in four (4) months. Industries resumed manufacturing and national production output was back on track. Four (4) years later, Kobe’s infrastructure was rebuilt.

From the lessons learned from the Kobe earthquake, the Japanese reinforced many roads, buildings, & bridges and revised disaster response policies. Japanese engineers since then had continuously invested time & resources to better improve structural designs such that they would withstand another strong earthquake like the one that hit Kobe.

The big test of their improvements came on March 11, 2011 when a magnitude 9 earthquake hit the Tohoku region north of Tokyo. The earthquake and accompanying tsunami killed an estimated 20,000 people and destroyed roads, bridges, and railways. The tsunami overwhelmed seashore defences at the Fukushima nuclear power plant and caused a catastrophic meltdown. The economic impact was estimated at $USD 360 billion.

Most of Tokyo’s high-rise buildings, however, survived the swaying and came out practically unscathed. Engineers attributed this to ongoing improvements in structural design since the Kobe earthquake although the Japanese were once again shocked by the unprecedented damage and deaths. Critics again complained that the government was slow in responding to the disaster.

Ten years later, in 2021, Japan virtually recovered from the Tohoku earthquake with most infrastructure restored (except for the damaged nuclear power plant which will probably entail decades of cleaning up radioactive materials). Engineers may have learned lessons from the 1995 Kobe earthquakes but officials concluded that they needed to do better.

If there was common denominator in the lessons learned from Kobe and Tohoku earthquakes, it was that we should not believe we can learn everything we need to know from one or even two disasters. There will always be something we didn’t foresee, something we did not expect. We should always be anticipating different scenarios and seeking solutions to potential problems.

There was one other lesson.

Disasters may not happen often, but it doesn’t mean another won’t happen again and with much worse effect. Disasters occur when we least expect it and even though we may be able to predict or anticipate some of them, they likely can still hit us with more damage and disruption that we thought.

Of course, there are disasters which don’t turn out worse than we anticipated. A typhoon may veer at the last minute, sparing our cities. Or an unexpected heavy rain puts out a forest fire which was threatening a community. Before a container ship collided with the Francis Scott Key bridge at Baltimore in the early morning of March 26, 2024, first responders stopped traffic heading to the bridge in about 90 seconds after the harbour pilots issued a mayday alert; many motorists and riders (except for an unfortunate construction crew) were saved from tragedy as a result.

It’s not only that we learn a lot to mitigate the impacts from future disasters; but it’s also we realise there will be new lessons when they do occur. Every disaster is unique and thus we should always be open to learn new lessons when and after they happen.

The Japanese accept their country is prone to disastrous earthquakes, not to mention tsunamis, typhoons, and even threats from neighbouring nations. What is going for them is that they don’t give up learning, despite whatever frustrations they may feel when what they thought were solutions to risks didn’t prevent heavy casualties and losses.

The Japanese know they must not only learn from their mistakes but also that they should explore potential ones. We must identify and solve problems even though they may at the moment be just figments of our imaginations.

It is not risk management, but engineering for risk.

About Ellery’s Essays

The Problem Map

When we undertake projects like constructing an edifice, assembling an airplane, installing new information technology (IT) systems, we first assess & plan the scopes & requirements. We confirm our vision for the project, do a reality check of what we have currently, and analyse the gaps we’d have to bridge or bypass.

We identify the opportunities & challenges from the gap analysis, and we then define the problems which underlie them. The solutions we formulate would determine the tasks we’d need to do to build our supply chains. Tasks are the components of every project roadmap and supply chain projects are no exception.

It’s easy in some projects to enumerate the tasks. Typical projects such as the construction of houses, assembling of ships & planes, and introduction of new software can be straightforward in many cases. Problems are foreseeable or have been solved from experience with similarly previous projects; the solutions & corresponding tasks are known.

Not so for supply chains, however, and for any supply chain for that matter. Supply chains are individually distinct from one another, even for those with products or services that may seem identical. No two (2) supply chains are alike; we could never build one that would be totally the same as another.

Because every supply chain is different, the project scope would entail developing one practically from scratch. As much as we could tap previous experiences with other seemingly similar supply chains, we’d be encountering and solving problems which would be exclusive to the project we’d be working on.

Building supply chains aren’t only about developing infrastructure or acquiring assets (e.g., ports, storage & handling facilities, transportation, factories, raw material sources); it’s also and more about putting in systems & structures for optimal operational performance.

To figure out what systems & structures we require, we would need to solve the problems stemming from the gaps between our present state and aspired future state of operations.

We develop a problem map that summarises opportunities & challenges we gleaned from our gap analysis. A problem map is a list of those fuzzy issues. (A problem map is not a problem tree nor is it a fishbone diagram, which are more of problem hierarchies which visualise possible root causes).

Example of a Supply Chain Problem Map (Fuzzy Issues)

Fuzzy issues are our starting descriptions of problems we identify as adversities or challenges to the building of our supply chains. They are not yet the problems per se as we would need to clarify & refine the issues & their root causes.

A problem map such as in the figure above is a first-draft scope of what would be involved as we build systems & structures for our supply chains. It goes without saying that it could look quite intimidating.

About Ellery’s Essays

Resigning to but Reducing Red Tape

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We encounter red tape in just about every transaction we undertake. It’s burdensome, annoying, and always a waste of our precious time.

Red tape is a scourge, and it should be eradicated.

But we don’t and we won’t get rid of it because not only do we resign ourselves to it, we accept it as an instrument organisations use for whatever purposes their leaders have in mind.

Red tape represents the complicated & often inconvenient regulations, procedures, & requirements many organisations impose to anyone doing business with them. Even though the term may have originated sometime during the medieval ages, red tape has been with us since the dawn of civilisation.

Historians attribute the phrase, red tape, to the tape or string that tied together government documents in the 16^th century. Red-taped bundles of documents would be presented to European monarchs for them to read and decide on issues. The expression, “cutting through the red tape,” meant the unbundling of the said documents.

We experience red tape in government and private organisations.

For example, in the Philippines:

It may take up to six (6) months to secure a permit to construct a building because applicants not only are required to submit numerous documents to be submitted but also would wait for weeks for city hall officials to review & approve applications.
Buying and operating a diesel generator requires permits from at least three (3) different government agencies, which also are subject to renewal & inspection every calendar year.
Every corporation in the Philippines must submit financial statements separately and under different formats & guidelines to the country’s tax authority (Bureau of Internal Revenue[BIR]) and Securities & Exchange Commission.
Philippine citizens are subjected to lengthy procedures and expensive fees in applying for visas to enter foreign countries.
Private business employees enrol in several agencies when they are hired for the first time. They need identification (ID) numbers & cards from the Social Security System, for Philippine Health Insurance (PHIC), for Home Development Mutual Fund (to avail of housing loans), and from the BIR.

These red tape examples contrasts with Philippine government leaders’ calls for more investments and business entrepreneurships, and discourages direct foreign investments from enterprises from other nations.

Red tape, however, can be deliberate means to discourage individuals.

For instance, owning and registering firearms in the Philippines requires a very cumbersome application process with the Philippine National Police (PNP). Carrying guns is not the same as possessing one, as per PNP regulations. Each requires separate applications and permits, in which each, respectively, is complicated to comply with.

Organisations try to reduce red tape in welcoming or serving customers. For instances:

Banks offer pre-approved credit cards to selected clients to woo them away from competitors.
Local governments set sup “one-stop-shops” in which new businesses can apply and secure permits from different agencies from just one designated place, instead of having to go to different offices or sites.
Airports set up automated self-service kiosks which allow select passengers to check-in without having to wait in line.

Ideally, there should be little, if no, red tape in the transactions we do daily. Unfortunately, for various reasons (most of which are silly or illogical), governments & organisations subject us ordinary people to the complexities and inconveniences of red tape bureaucracy.

We resign to it, but we shouldn’t stop seeking to reduce, if not eliminate it.

Red tape via the time we waste and the resources we spend impedes our productivity. The less red tape, the more productive we can be.

And we could use all the productivity we can get in this competitive world we work in.

About Ellery’s Essays

Understanding the Supply Chain Engineering Roadmap

We know what we want, i.e., we have a vision.

We know where we’re at versus what we want, i.e., we did our reality check.

We see the disparities between our present-state & future-state performances, i.e., we mind the gaps in our supply chain operations.

The next step in building our supply chains is to make a roadmap, a series of steps which taken together would lead us to a desired future state of supply chain performance. These steps would bridge or bypass the gaps we identified by comparing our present operations to what we envisioned.

It sounds like Project management methodology, in which we define and plan tasks, resources, accountabilities, and schedules for a complex undertaking. Typically, in project management, we identify which tasks goes first and determine milestones, the points on a project’s path in which we meet the criteria for a task’s achievements. We also determine whether our accomplishments are aligned with our objectives.

But the roadmap of building supply chains is not composed of tasks, but solutions, in which we address problems the gaps we had identified represent. Project management is more about making a solution into reality, as the project which we are undertaking is by itself the solution (or set of solutions) to a problem. In managing a project, we know what we need to do; we clarify the tasks, plan the support, assign the people who’d be responsible, and determine the schedule and costs. In the building of supply chains, however, we define and solve problems from the gaps we observed in our operations. We make visible the challenges from the realities of individual operations, we look for the root-causes, and we clarify the problems of each; we then set out to solve them.

Managing a project is like planning a road trip through known territory. We are familiar with the terrain and the traffic. We make out a route via streets & highways to reach our destination. And we estimate how long and how much it will cost it will take to get there. Our roadmap is a route passing through existing territories and networks.

Drawing a supply-chain-building roadmap, however, is not only like planning a road trip but also constructing the road itself. The territory between the starting point and destination requires development. It’s like building a highway through a jungle. We would need to survey the terrain, obtain resources, determine the best pathways, and invest in the infrastructure. We would need to build the road for the roadmap.

Unlike project management, drawing the supply chain roadmap identifies problems from performance gaps in supply chain operations. The problems and their respective solutions are what would be the components of the roadmap from the present state to the envisioned future state. We just need to plan which ones we solve first.

Given that the supply-chain-building roadmap is focused toward solving problems, we’d not precisely know how long and how much we would need to complete it. The purpose of the roadmap would be to lay out the problems we can expect to encounter and must solve,

It may be argued that there are already structures & systems in place. There are already established manufacturing & logistics networks and multitudes of vendor with long track records. There are functioning global supply chains in place. Why would we need to build new systems & structures?

Despite the existence & growth of local & global infrastructure (e.g. ports, ships, trade routes, manufacturing & logistics facilities) many supply chains have stagnated performance-wise. An extreme observation would be that supply chains have become trapped in their own infrastructure.

Supply chain management has generally been about working with available resources, systems, & structures. Managers improve operations based on what exists, such as ports, trade routes, facilities. Enterprises have put a lot of focus, for example, on transportation turn-around times, outright inventory reductions, and head count cutbacks to uplift their operations’ productivities.

But working with what we have can go only so far in improving our supply chains. Many supply chains have plateaued in performance such as inventory turnovers and delivery performances staying flat over time. It doesn’t help that disruptions such as weather & climate disturbances (e.g. drought limiting port traffic at the Panama Canal), security diversions (e.g., ships avoiding Red Sea missile attacks), and more complicated regulations (e.g., requirements to disclose supply chain sources) have made it more difficult to optimise supply chains.

Managing supply chains per se is therefore not enough. We need to build better structures & systems from the ones we have at present. The supply-chain-building roadmap we would draw would be about solving the problems in setting up new structures & system based on the gaps we had observed between our present-state operational performances and desired future-state results.

We know our vision, we accept our reality, and we see the gaps that we need to close. We identify problems in building our supply chains, and plan which ones we will solve in sequence or simultaneously, bearing in mind that the problem-solving path we choose to take would be consistent with our vision.

About Ellery’s Essays

Mind the Gap

We see the sign in many railway stations around the world: mind the gap. It’s a reminder, if not a warning, for us to watch our step as we cross the space between the train from the platform. As much as we may take it for granted, if we don’t watch our step, we can fall into the gap and risk injury.

Gaps are the spaces that separate us from where we are and where we want to go. They can be small and easy to cross just like those between trains & platforms. But they can be large like rivers or oceans in which we would need to ride on ships or plans to pass over them.

Gaps, in the supply chain engineering context, are the disparities between the ideal and the present states of the structures & systems of our operations. Gaps represent the differences between the performances we want to achieve versus how we are currently doing. Gaps are the obstructions, divides, barriers, and adversities that stand in our way toward our ultimate objectives.

Gap analysis is the third (3^rd) step in building supply chains. It follows the first step of envisioning, in which we define the future state, what we want our operations to be like. And it comes right after the reality check, in which we diagnose the present state of our supply chain operations.

In both the envisioning and the reality check, we actively collaborate with partners as much as we coordinate with our colleagues. In both steps, we seek consensus on the aspired future state as we acknowledge our present state.

In gap analysis, we compare both the future state and the present state. Even if it may seem obvious, the purpose of this step is to measure and appreciate the gaps between the present state of operations versus the activities we aspire for the future state.

We know what we want our supply chains to be. We envisioned it.

We know where we are currently, what is our present state, because we did a reality check.

We then identify and assess the gaps between the present state and the future state, we look at and figure out how to bridge the divides between both states.

Gaps could be small, or they could be large. Some may seem simple to resolve; some may seem overwhelming. Some may not be very clear, if not invisible, to observe.

To gauge the gaps between the present state and the future state, we first confirm what our goals are vis-à-vis our envisioning. We then assess our present state via our performances versus these goals.

The general manager of a high-end (i.e., luxury) furniture exporter firm is dissatisfied with the long order-to-delivery lead time to customers. The exporter sources raw materials & manufactures in Southeast Asia, and transports finished items to waiting clients in North America and Europe.

It can take up to three (3) months from the time customers place their orders to when they receive the products. Customers have complained that is too long and the general manager agreed.

The general manager observed that it takes up to one (1) month to manufacture an item at the firm’s factory in Southeast Asia. The GM, with the help of consultants, therefore, did a gap analysis.

It takes up to twenty-nine (29) calendar days from the time the factory receives a job order (document requesting & authorising manufacture of a furniture item) to the time items are shipped (as in loaded on a container van & dispatched from the factory).

The general manager noted there was a lot of waiting time between production steps and saw that he could narrow down the factory job-order-to-shipment lead time to four (4) days.

He broke down the manufacturing process to three (3) major operations: fabrication, assembly, & finishing, and found that he could pinpoint gaps in each.

It then became a matter of identifying specific areas of improvement in each operation to shorten the lead manufacturing time. These identified areas of improvement would be up for problem-solving by supply chain engineers. We just have to figure out which ones we prioritise.

We face gaps wherever we go and in whatever we do. Many are small and easy to cross; some require intervention such as building bridges or booking transportation to cross large bodies of water.

Whether they be small or big, we mind the gaps we meet, otherwise, if we are careless, we risk falling into them and incurring injury or expense.

We analyse gaps as the third step in building our supply chains. We try to consider all of them in identifying where best to transform our operations for the better. The cumulative effect of closing the gaps in our supply chains do lead to better business results.

Once we know the gaps in our supply chains, we then figure out which ones we want to close or address from first to last. This sequence, if we would call it that, would be the basis for the fourth (4^th)) step in building our supply chains: drawing the roadmap.

Meanwhile, let’s make sure we mind the gaps we run into.

About Ellery’s Essays

Transitioning from Yesterday’s Trade Routes to Tomorrow’s Supply Chains

We use maps to guide us to a new destination. If we don’t have one, we’ll end up lost and asking people on the way for directions. We then would remember the route we took in case we’d return to where we went.

Thanks to apps like Waze, Google Maps, and Apple Maps, it’s easy to figure out the shortest & fastest routes to just about anywhere, whether we drive a car, bicycle, or scooter, or walk. Getting lost in the woods (or even lost at sea) is unlikely as long as we have a smartphone handset and mobile Wi-Fi connection.

We didn’t have these conveniences not so long ago (as in up to the turn of the 20^th century) and our forefathers had it much rougher before then.

But we still follow most of the same routes our ancestors travelled many years ago.

We as people have been doing business with each other since the dawn of civilisation. Farmers & fisherfolk would sell their harvests & seafood to bakers, butchers, & artisans. The trading led to marketplaces and then to villages as populations grew. Villages would trade goods with others nearby, who would then trade with others further away. Before long, merchants would be shipping goods across seas and mountains.

Merchandise trading has been a business endeavour for generations. We sell minerals, livestock, & crops in exchange for items we hope would be of higher value, such as gold & garments (and weapons & human slaves, which in the past was not yet frowned upon socially, morally, or legally).

As the trading became more lucrative, merchants sought more stuff to buy & sell. The competition (which also in the past meant wars & conquests) got fiercer such that kingdoms & merchants encouraged explorers to go further out.

Explorers didn’t know where to go and had no idea who’d they meet. Their purpose was to discover and negotiate with any community they’d run into and obtain both supplies (i.e., food, water) and acquire items which may be of value to return home with.

It wasn’t easy. Some explorers died of disease on the way. Some were robbed, killed, or taken prisoner. Some got lost and never returned. Some fought among themselves and ended up stranded or missing.

For those explorers who did succeed, that is, met & established rapport with tribal chiefs and overlords of empires, trade agreements were established. Explorers returned with hefty cargoes of valuable merchandise. Merchants and kings, impressed with the new items and wanting for more, invested more ships & caravans to ply the new trade routes.

These trade routes became the springboards for the awesome global supply chains of our modern day & age. From caravans of camels & mules, we today have kilometre-long freight trains crisscrossing vast territories via elaborate railway networks. From galleons sailing for months across oceans, we have super-size ships laden with hundreds of steel container vans moving to & from continents in a matter of days. From the guilds & merchants who produced textiles & trinkets, we have sprawling factories churning electronics, appliances, automobiles, garments, petroleum, minerals, furniture, etc., by the millions. Jet-fuelled aeroplanes, large storage & handling facilities, computers, & apps, some unheard of as recent as the early years of the 21^st century, complement the volumes of trade transactions that take place every day around the world.

We have resorted to advanced technologies to make our supply chains more efficient. We have automated manufacturing & logistics operations, applied artificial intelligence to our purchasing & order-to-delivery transactions, invented apps to guide our transportation vehicles (and inevitably make them self-driven), and integrated our planning & order-to-delivery information systems.

We have also made our supply chains more sustainable and governable. We had made our organisations more ethnically and gender diverse, had tapped renewable energy sources, and had become more compliant to ethical & socially accepted norms & regulations.

We benefit from present-day supply chains in that we can avail of so many products & services from almost anywhere in the world at short notice. Modern supply chains are a far cry from the trade routes of the past.

But, despite the technological advances and the availabilities of products & services in quantities unprecedented in human history, have our supply chains become more productive than the trade routes of the past?

If we define productivity as fulfilling customer or market demand within stipulated schedules, at specified quantities & qualities, and at values desired by stakeholders, we still have plenty of room for improvement.

Demand has grown in leaps & bounds as trade routes transformed into the complex supply chains of the 21^st century. As we can get more, we want more. Our supply chains, therefore, are in a constant state of constraints in capacities & bottlenecks.

Relationships established via negotiations & agreements are the foundations of the trades that our supply chains operate from. It was like that in the past and it still is today. Despite how much of our trading has become complicated and big through time & globalisation, we continue to manage our supply chains based on terms & conditions of our contracts. How we run our operations depend a great deal on what we agreed with vendors, service providers, & customers.

Our contracts with our vendors and customers had largely focused on results. We settle & commit on prices, volumes, specifications, & schedules. How we will fulfil those contracts are entirely up to the individual enterprises; we don’t care how our vendors will supply us as long as they do.

It may be time that we confront this kind of thinking because it may be what has been impeding further improvement to supply chain productivity.

Despite the popularity of technologies, from automation, AI, to digital (whatever that means), supply chains have not gotten any better. On the other hand, supply chains in the 2020s have found themselves getting greater attention for shortages, delays, and higher costs. Our supply chains are stagnating. It’s no help that adversities (e.g. piracy, natural disasters, political wars) are dragging down our businesses as much as, if not worse, than they did in the past. Supply chain managers have been struggling to satisfy demand and at the same have been busy untangling messes caused by disruptions.

Collaboration with our partners (vendors, service providers, & customers) is key to unlocking more improvements in our supply chains. We need to tie in our enterprises’ operations with our partners as we establish common-ground targets in prices, volumes, specifications, & schedules.

How do we do that? It’s not that enterprises have tried to collaborate. As much as they have, it hadn’t seemed to work. It’s not only because partners hesitate to trust each other, but also because they have no idea how to interconnect their operations. We have become so accustomed to working within the boundaries of our businesses and leaving it up to others to source, serve, & deliver. We didn’t care and we saw no reason to, at least until our supply chains have plateaued in performance & growth.

We are realising collaboration does not just mean negotiating & fulfilling agreed contractual obligations on our own. It means actively cooperating in tying & optimising operations together to attain mutually beneficial results.

Optimising, however, is not included in the supply chain manager’s job description. Management is about planning, organising, directing, & controlling. Managers also improve systems & structures, but they don’t optimise them. This is because optimisation involves building systems & structures to attain loftier results.

Optimisation is the purview of engineers, not managers. Engineers build systems & structures to optimise facilities & operations to achieve the best possible results. We manage by working within systems & structures. We optimise by changing them.

To optimise our supply chains, we must, therefore, not rely on the management of supply chains but by building them.

Building our supply chains would be unprecedented for many of our enterprises. We never really did since the debut of the trade routes. It would be a break from the traditional negotiation-to-contract I-don’t-care-how-you-do-it process. We’d be working together with partners to create operating relationships that are mutually productive for every participant.

It’s not something we would expect many enterprise leaders to outright accept. As of the mid-2020s, executives, managers, and academics are stuck to the notions that management can optimise supply chains via advanced automation & digital technologies. Many stubbornly believe we can manage adversities, risks, & fickle external regulatory & economic environments.

We don’t just work with what we have when times change, we also undertake necessary changes to adapt to our evolving world. We also sometimes lead changes to our world when we proactively initiate changes.

We have many conveniences today that our ancestors (and we ourselves) didn’t have just not so long ago. Thanks to these conveniences, we can avail ourselves of items & services from just about anywhere in the world at almost a moment’s notice.

Greater convenience, however, has led to greater demand growth. And while we tackle adversities which have not really gone away since the early days of trading history, we find our supply chains stuck in a performance plateau.

Collaboration via contracts has not been satisfactory. We need to collaborate to tie interconnect and optimise operations. Optimisation means changing our existing systems & structures, not just working with what are already there. We would need engineering expertise to build our supply chains as management by itself wouldn’t be able to do it, as it was never part of its job in the first place.

It won’t be easy as many of us do not accept that the management of supply chains by itself won’t make them any better.

It wasn’t easy for explorers to discover the trade routes then. It won’t likewise be easy for today’s engineers to build the new supply chains of tomorrow.

About Ellery’s Essays