Supply Chains:  IT’s Failed Frontier

I brought my family’s passenger van for repairs at the car dealership where we bought it from.  The van had trouble accelerating especially going uphill.  It would sometimes stall. 

The dealership’s engineer pulled out a portable device which he plugged into an electronic box under the van’s hood.  When I asked what the device was, the engineer said it was a diagnostic computer which could detect and report whatever is wrong with the van’s engine. 

After a few pushes of the computer’s buttons, the engineer reported that there was nothing wrong with the van.  He also checked the oil and other fluids and said the van was okay.   It might be the quality of the fuel I bought from the petrol station, he said.   

But as soon as I made my exit from the dealership, the van again began to slow and stall. 

When I went to the petrol station to ask about its fuel quality, the attendants showed me a very clear & clean sample from the pump.  It was obvious that the fuel wasn’t the cause of my van’s stalling problem. 

When I returned to the dealership to report my van was still stalling, the engineer gave the same diagnoses.  There was nothing wrong with the van as per the diagnostic computer.  It may be air in the fuel filter if not the fuel, he said.  Or he implied that I have poor driving habits.  If I asked if his diagnostic computer could be wrong, he said that was impossible. 

We had a family driver, and he said it may be our exhaust muffler could be dirty and clogged.  We pumped water into the muffler and plenty of black soot came out.  We road-tested the van afterward and the acceleration was great!  No more stalling!  It turns out that the problem was a dirty muffler that needed to be cleaned.  The dealership’s diagnostic computer didn’t sense the dirty muffler, and the engineer didn’t bother to check it in the first place.  Anyway, I and the family driver solved the problem with no help of a so-called sophisticated device.    I never went back to the dealership, nor did I ever bother to consider buying a vehicle from them ever again. 

From the end of the 20th century through the 2020’s, there has been no end to advances in information technology (IT).  We find ourselves often enthralled with new devices and their features, which tech firms frequently churned out. 

IT not only astounds us with gadgets & apps but also impresses us with its specialised fields from code programming and computer equipment design & manufacture to cybersecurity and artificial intelligence.  

Generation after generation of young people choose IT as their career paths.  Even when hiring prospects are low, college students would opt for IT as their majors, as many believe the future will perpetually be bright for graduates with IT degrees. 

The heart of IT is data.  Data, which is the plural for datum, are the raw bits of stuff which we retrieve from whatever we are observing.  Observation itself is a topic of interest.  We not only gather data, but we also seek means to amplify it via tools & instruments, whether it be trivial (e.g., flashlights, earphones) or sophisticated (e.g., radar, sonar, electron microscopes). 

IT is about the hardware and software we build and program respectively to process data.  By process, we mean extract, refine, filter, organise, store, retrieve, secure, & analyse, for the purpose of reaping relevant and useful information.  Data are the raw materials; information is the product. 

Hence, there are many IT activities which have to do with data, such as data mining, data administration, programming, communications, identification, verification, and security.  (There are also opposites to these activities such as theft, hacking, disinformation, and malware coding). 

We have become capable of processing data to produce information fast and in large quantities.   The availability of abundant information has given us opportunities to plan in real time and respond faster to changing situations.  And thanks to portability and communications (i.e., Internet), we can access and share information from just about anywhere with real-time speed. 

We can manage operations remotely, trade electronically without having to go face-to-face, get diagnosed & treated by doctors from far away, and conduct financial transactions via our tablets & smartphones. 

On one hand, we can conclude that IT has made us more productive.

But has it, really? 

By my experience with the car dealership, advances in IT do not necessarily translate to higher productivity.  Aside from the very poor service I received, the result was a disaster, at least to my and my van’s productivity.  My time was wasted; I was made to pay expenses the dealership charged me; and I was unable to use the van for some days. 

It may be true that IT has helped us become more productive in many ways.  We could do many tasks in minutes, if not seconds, which would have taken days, or even weeks, a hundred years ago.  We can download documents instantly versus having to wait for them to be printed & mailed.  We can buy and receive fast-food within an hour by ordering & paying online instead of driving to the nearest restaurant.  We can book concert tickets, reserve seats, and walk straight into the venues without having to register at a counter.  We can hail and wait for our rides at our doorsteps without having to walk and wait at a taxi stand.  IT has been instrumental in providing us more conveniences in less time and at less cost. 

But be that as they may, IT hasn’t been 100% foolproof in boosting productivity.  At least, IT has far to go when it comes to supply chains. 

Many enterprises engage IT professionals to improve supply chain productivity.  For years, executives believed that computerisation was key to making supply chains more productive.  Executives had been mesmerised with the bells & whistles of so-called state-of-the-art IT hardware & software, thinking that every new device and app is a potential silver bullet to optimising supply chains. 

The dealership’s engineer thought I’d be impressed by his diagnostic computer, and I would gullibly accept whatever the computer said, that I would take any information from it as undisputed truth about what’s wrong with my family’s van. 

It wasn’t a new lesson for me that IT, for whatever its worth, does not directly lead to improvements in operations.  IT provides us information, not solutions.  We, not IT, use information to solve problems.  It is also we who decide if the information is useful in the first place. 

Devices and apps the IT profession provides are tools or instruments which enable us to receive information in a timely and sufficient manner.  No matter how advanced or how artificially intelligent IT has become, it will not decide how problems, especially supply chain problems, shall be solved. 

There have been many problems with supply chains.  Inventories are either too high, too low, or are in the wrong places.  It takes quite long for some deliveries to arrive.  Expenses are difficult to tame, and we experience unacceptable losses in merchandise in just about every supply chain step.  Sales forecasts are often off and manufacturing departments either make too much or too few versus whatever elegant plans were agreed to. 

The thinking of many executives of computerising operations is plainly naive.  We can’t fix a family van with a so-called all-knowing diagnostic computer; we, therefore, shouldn’t logically depend on expensive IT hardware & software to automatically solve our supply chain problems. 

Certainly, IT contributed to advancements in supply chain automation such as in industrial robots, automatic-guided vehicles (AGVs), warehouse management systems (WMS), computer-aided design (CAD) & manufacturing (CAM), blockchains & electronic trading, and radio-frequency identification (RFID). 

But as much as we have built in IT infrastructure into our operations, and even brought in artificially intelligent automated decision-making programs, it’s unlikely we’ll see any progress in supply chain productivity unless we, the supply chain professionals & engineers, take the initiative to solve underlying problems. 

The IT profession’s purpose is to provide useful information.  The supply chain’s profession’s purpose, specifically the supply chain engineering profession’s purpose, is to solve problems to improve productivity.  Ambitious IT professionals who thought they could solve supply chain problems singlehandedly had not been successful. Supply chains are frontiers of IT failures, because IT’s purpose is not about solving supply chain problems, but about producing useful information from abundant data. 

About Ellery’s Essays

Losing Less Time with One Step

“The journey of a thousand miles begins with one step.”

-Lao Tzu

We lose a lot of time every day. 

When we fly from one place to another, we would spend time at the airport that would often last as long as the actual flight.  Flight time from Manila to Hong Kong, for example, is one hour and thirty minutes.  But one could spend an hour checking in, lining up at immigration and security, waiting at the gate, and sitting inside the airplane while it waits in turn to take off at the runway.  Arriving at Hong Kong, one could spend another hour while waiting for the plane to taxi and dock on the jetway, walking from the arrival gate to the terminal, and waiting in line at immigration.  The bright side about Hong Kong is luggage is often waiting when one reaches the baggage claim. 

The same can be said for banks.  Many people wait longer in line than what it would take to transact a deposit or withdrawal. 

And we already spend so much time in traffic.  Manila traffic being the worst when it comes to sitting for hours as one’s vehicle crawls almost as fast as a pedestrian. 

We usually complain about how much time we don’t have.  The question is: how efficient have been in using our time?

Many management executives focus a great deal on goals.  When meeting with subordinates, the bosses would ask for or dictate deadlines for tasks.  Subordinates are then expected to meet the deadlines.  Some careers have risen and fallen based on how employees perform versus deadlines. 

Many of us don’t really think much about how long a task would take.  We tend to promise to finish something without so much study as to the amount of time needed.  In many cases, we overestimate or underestimate the time needed to do a job. 

On one hand, it would be trivial.  If the task is straightforward such as following up a payment or ordering a spare part, we may not put too much thought on how long it would take.    But when it comes to important and more complicated projects, we would need to take greater care about the time needed as we consider the needed resources and the risks involved. 

And in many cases, we aren’t careful.  Many projects have failed or has cost more because we made promises we didn’t plan for and ended up couldn’t keep. 

There’s a machine shop near my office that fabricates customized parts for equipment.  Whenever a customer wants an item made, a clerk at the shop pulls out a piece of paper and writes down what needs to be done.  The clerk would list every step of the fabrication process and verify with the shop’s machine operators for what and how much material would be needed.  The clerk then would estimate the cost of the item and when the item could be made available based on the calculated length of time of the process and the waiting time if there are other customers ahead of this particular order. 

Every task we do entails steps and resources.  In order to find out how long a task would take depends on how we plan those tasks and resources.  The simplest method is to lay out the process and list down what would be needed.  Even for complicated projects, making the steps visible for the tasks to be done can be a great help in determining reasonable deadlines. 

Not only do process flow layouts make deadlines easier to set.  They can also help find quicker ways to get things done without sacrificing cost and quality.

We lose a lot of time every day.  We set deadlines that we end up not meeting because we don’t really put much thought on the tasks and resources.  Laying out the steps of a task would make visible what needs to be done and what resources are required.  A visible flow of a process more often than not helps find quicker ways to get things done. 

We waste a lot less time with just this one step. 

About Ellery’s Essays

Originally written July 09, 2019

It’s 2024, and 1984 is Not Far Off

George Orwell wrote about a dystopian future in his book, Nineteen Eighty-Four (1984).  1984 was Orwell’s last novel and it was published in the year 1949.  Seventy-five (75) years later, in 2024, 1984 doesn’t seem far off. 

In the novel, an authoritarian government led by a character named Big Brother monitors its country’s people via an omnipresent surveillance system.  Big Brother’s government via its Ministry of Truth carries out propaganda and persecutes anyone who challenges it.  Citizens are not allowed to express outright their personal beliefs.  If they did, they were subject to prosecution and penalties (e.g., torture, imprisonment).  

We breathed a sigh of relief when the actual year 1984 passed.  Nowhere near was our planet Earth to Orwell’s tragic world.  In 1984, communist totalitarianism was waning with the crumbling of the Soviet Union and democracy was the predominant political order. Nations were embarking on economic paths of prosperity leading to pacts like the Asia-Pacific Economic Cooperation (APEC) and the European Union. 

In 2024, however, times had changed.  The world is more divided.  Many countries, from First World to Third World, have eschewed democracy in favour of more authoritarian policies. Organisations, whether government or private, watch corporations and individuals for any possible wrongdoings, which not only may be illegal acts but also for any behaviour deemed offensive to whoever is watching. 

Thanks to the proliferation of portable devices (e.g., smartphones, tablets), anyone can record anybody and upload images, videos, & audio to online public domains in real time.  We can search historical records to obtain snippets of someone’s past. We can accuse politicians or celebrities of racism, for example, if we capture them making comments about a person’s colour, never mind if it was taken from a private conversation five minutes or fifteen years ago.

Surveillance equipment, i.e., closed-circuit television cameras (CCTVs), are ubiquitously found anywhere such as every street corner, shop, bank, restaurant, airport, train, bus, & ferry terminal, office, & clinic.  Whoever are the so-called authorities can track down anyone they suspect as terrorist, troublemaker, or dissident. 

In 2024, cruel people bully others for what they stood for or for just how they looked.  We think twice about posting anything in public not because we fear criticism but because we dread the possibility of insults & accusations in which even if they were unwarranted, gullible people could believe and judge ill of us.  We don’t need the stress, so we hesitate to express, or at least we opt on the side of caution before we post or communicate. 

In 2024, it has come to the point where anyone can jump to conclusions about our behaviours and appearances from our public online profiles.  People can judge us not even by searching for us or meeting us in person, but by relying on artificially intelligent (AI) software

In 2024, organisations had begun delegating basic decisions to AI algorithms. Security professionals, for example, used AI-powered video surveillance during the 2024 Summer Olympics in Paris.  AI surveillance systems flag authorities whenever they detect unusual scenes or suspicious individuals.   

AI has become the tool of choice of not only security agencies but also human resource (HR) departments, scientists, engineers, marketing & advertising professionals, and government groups.  In short, just about every organisation is finding use for AI. 

Never mind what the doomsday extremists say, AI isn’t poised to become an independently thinking individual which will end humanity; it’s just software that has the capability to use data to make decisions based on programmed criteria.  AI can draft email, automatically text SMS messages, & write books, and it is not far from searching the worldwide web without asking it to, operating appliances autonomously, re-programming industrial robots on the fly, diagnosing our health in real time, and experimenting to discover the optimal chemical formulae. 

AI is becoming an instrument which not only alerts us if we stray from our routines but also to prevent deviations.  As much as it can warn us, it can also notify not only us but other people if it notices digressions in behaviour.  And if it can do that, what would stop it from informing anyone, even others whom we did not even program it to not know? 

And what would stop it from expanding its scope to not only know how we behave but also what we feel, think & express?

Via CCTVs and smart personal devices, AI could also survey what we eat, how we sleep, where we go, what we read, watch & hear, and whom we regularly contact. CCTVs, social media, and AI by themselves can become the instruments of wannabe Big Brothers.

Many of us, of course, are aware of this possibility and we actively gatekeep what we share to anyone whatever the media.  We challenge any attempt of any authority to pry into information we consider secret or private. 

The trend, however, remains as AI and surveillance technologies progress.  Some democratic nations still side with their citizens’ privacies but some not-so-free countries have gotten the ball rolling to an Orwellian 1984 future. 

We are partly to blame for heading towards a 1984 future.  When we gang up (troll) other people in chat rooms, use our devices to record events, and allow AI into our social media software, we prop up the progress toward a Big Brother future.

History is replete with governments and kingdoms aiming to steer their people in terms of their behaviour and beliefs.  Religious sects had persecuted whom they called sinners, heretics, or infidels.  Dictators jailed, tortured, and executed those they labelled disloyal to their regimes.  Bureaucrats censored media and edited history books.  Pyramid-scheme marketing organisations enrol people into doubtful selling tactics and ostracise members who question them. 

You may think Orwell’s 1984 is still too far-fetched and an unlikely scenario, but this probably won’t stop ambitious megalomaniacs or populist politicians from trying nonetheless. 

Influence has become a key work in the decade of the 2020s.  How do we sway others to buy into our views, opinions, & ideas?  How do we get customers to buy what we sell? How do we gather an audience of fans & followers?  And how do we defeat our adversaries?

There really are two options to expanding our influence:

  1. Go to war; or
  2. Collaborate.

Some of us like going to war. In an international training session for senior managers I attended in 1993, one speaker preached Sun-Tzu’s Art of War.  Marketing was about competitive advantage via waging war on rivals.  The aim was to dominate markets; the strategy was to take market share away from the competitor’s products or better yet, put them out of business. 

In war, we vanquish our enemies.  We destroy the competition.  We eliminate the threats.  Going to war seems easy when we believe our world is black & white, that is, we discern those who are for us versus those who oppose us. Anyone who agrees with us is our ally; anyone who does not is our enemy. We, therefore, must unite to attack our enemies in the name of progress. 

Or we could collaborate. Not everyone is our enemy. Whoever is not with us is not necessarily against us.  We can form alliances via empathy and win-win negotiations. 

But collaboration is hard.  Empathy and negotiation require time and patience.  And we don’t have unlimited amounts of both. 

Empathy and negotiation are investments, and we can be innovative in how we use our time and resources just as much as we can be creative in waging war.  In both options, we can use technologies to help us.  As much as we can use AI to identify weaknesses, for instance, we can use AI to identify common grounds for mutual strengths.  

In the year 1984, we laughed that we were nowhere near Orwell’s Nineteen Eighty-Four.  In 2024, we realise we are closer to getting there thanks to nefarious parties exploiting surveillance, social media, and AI technologies. 

We have a decision to make. Do we wage war or collaborate as we aim to expand our spheres of influence? 

If we wage war, we could head toward that dystopian world George Orwell described in his novel.  If we collaborate, we strive towards mutual beneficial relationships despite our individual differences; but it would mean hard work and an investment of valuable time. 

The lesson is there is always a cost to whatever we opt for.  We just need to understand what we can lose versus what we can win. 

About Ellery’s Essays

Rationalising Workmanship

Executives of a dental laboratory asked a consultant fellow of mine to do time studies of their workers.  The consultant and I, however, convinced the executives that we should first do an assessment of their operations.

When we presented our report, we recommended that the executives change the layout of their laboratory and focus on eliminating non-value-adding activities.

The executives were cool to our recommendations and years later, I realised what the executives wanted was an improvement in workmanship. 

The mission of the dental laboratory was to make orthodontic sets (i.e., false teeth) which its customers, who were dentists, ordered for their patients. Every orthodontic set was unique; no two were alike as there is no such thing as a set of false teeth that would fit any mouth or cater to any patient’s aesthetic preferences. 

Dentists would send moulds of their patients to the laboratory where lab planners would match them with job order numbers & instructions.  Lab workers would then fabricate, assemble, & polish orthodontic sets per their corresponding job orders.  The laboratory’s executives themselves would inspect every orthodontic set before they granted final approval to ship the finished sets to respective dentists. 

The lab executives stressed quality above all in training & disciplining their workers in the production of each orthodontic set.  What the executives lacked, however, were standards in labour productivity—they didn’t know how long it should take to manufacture each orthodontic set.  The executives wanted efficiency on top of quality, and this was how they defined workmanship.    

The dictionary defines workmanship as:

Going by this dictionary definition, we notice the following which stand out: 

  1. Art or skill
  2. Quality or mode of execution
  3. Product or result

On one hand, workmanship sounds more like a subjective assessment than one we could scientifically measure.  What one person may judge as satisfactory workmanship may not necessarily be the same from another. 

On the other hand, the dictionary brings forth criteria for how we would assess workmanship, which are skill, quality, & result.     

In industrial settings, we don’t hear much about workmanship as much as we do quality.  We measure quality comprehensively in our factories, applying statistical methods as we emphasise detailed procedures & elaborate specifications. 

Yet, we hear a lot about workmanship when we select jewellery, compare expensive watches, admire custom-made sports cars, browse fine kitchenware or silverware, order hand-made furniture, or try on bespoke business suits or dresses.  We criticise the workmanship of contractors in the construction or renovation of our homes and in how well they repair our appliances and landscape our gardens.    

We sometimes exchange workmanship with craftsmanship or for politically correct gender-neutral purposes: artisanship.  Or, we just equate workmanship with quality or excellence but base either on our own biased standards. 

We should not confuse workmanship with beauty.  Beauty is how much an item appeals to our senses.  Good music, works of art, and the fragrance of fine perfumes, for example, are objects we appreciate as beautiful to our ears, eyes, and noses.   

Workmanship, however, is more like how well we feel a job was done or how a product’s characteristics meet our personal expectations.  We appreciate the beauty of masterpieces artists create, whereas artists criticise the workmanship of their apprentices who assisted in making the masterpieces. 

There is hardly any standard measure for workmanship. But it may be worth it to have one when we expect satisfactory results.  The dental lab executives were on the right track; they saw both quality and efficiency in their definition of workmanship.

If we are to measure workmanship, we should at least have the following in mind: 

1. A very clear vision of what we want

        It’s not only a description but also an image of what we want our product to look like or what results we expect from a service or project.  A picture is worth a thousand words.  Both a narrative description and a vivid image would form our baseline for measuring workmanship. 

        2. A recipe or set of instructions

        There must be a visible set of instructions on how products are to be manufactured and delivered.  Instructions should be step-by-step and in sequence.  And the more detailed, the better. 

        3. A timeline or schedule

        Not only should there be a formal start date & time and deadline, but there should also be expected lengths of time for every step and a visible critical path of events.  (The critical path is the longest path from the start to the end of the project, passing through all the essential tasks to the project’s completion. In other words, the longest sequence of tasks determines the minimum time needed to complete the project).

        4. An agreement between stakeholders and participants

        Both clients and suppliers should share a common vision, recipe, and timeline of the product or project.  There should be a contract or a tangible agreement to foster an understanding between parties on these three (3) aspects.  And everyone should keep in mind that there must be only one vision, recipe, and timeline.   

        Workmanship is therefore about how close or how far better a finished product or completed project is relative to what a client, designer, engineer, and contractor agreed to have done. It seems straightforward enough to measure a product or project against what we envisioned, how well we followed instructions, and if we met our schedule. 

        There would certainly still be qualitative judgments of workmanship no matter how clear our visions, recipes, timelines, and agreements are.  We will always have our own opinions when we inspect products or assess results of projects.  This becomes especially true when workmanship exceeds expectations; the lines sometimes blur between a job well done and a job that ended up more beautiful than we thought. 

        We can also conclude that workmanship is not only about quality but also about performance, i.e., how well and how efficient a product or project turned out.  In another sense, workmanship is one tangible measure of productivity, an ideal we pursue for our personal and professional benefits.  

        About Ellery’s Essays

        The Key to Managing the Future is to Anticipate It

        We do a lot to foretell the future.

        Organizations and individuals invest heavily in analytics and software to know what tomorrow will bring.  Some offer great potential as in the case of Google’s investment in artificial intelligence for wind energy.

        But just as much as it may be worth it to foretell the future, it may be just as better to anticipate it. 

        A large multinational company longed for a system that would ensure continuous supply of pineapple products to customers. 

        The multinational company served customers in its home country as well as from overseas.  Demand varied throughout the year and peaked near religious holidays.  Customers from abroad would buy in large quantities and would send large-capacity cargo vessels to pick up their orders at the multinational’s processing plant. 

        The multinational’s planners not only contended with up-and-down demand but also with uncertain supply.  Supply depended on the daily harvests of the company’s nearby sprawling plantation.  Although the plantation’s employees harvested from fixed areas of farmland each day, the quantity and quality of pineapples received at the processing plant differed one day to the next.  Sometimes the harvest was plentiful; sometimes it was not. 

        The company invested a great deal in research and development (R&D) to ensure harvests were consistent, if not predictable or manageable.  The plantation managers, for example, used chemicals to accelerate ripening to increase harvests when demand was outstripping supply.  But no matter what, harvests remained unpredictable.  A nice sunny day would result in unexpected high yields of pineapple but a truck stuck in mud would cause a shortfall. 

        The company’s planners relied on finished product inventories to buffer the uncertainty of demand and supply.  But their problem didn’t go away.  Some products still went out-of-stock on store shelves and the company at times turned down orders from overseas customers. 

        The company’s executives overhauled their inventory system.  The company’s executives previously had set a single sweeping target inventory level for all of their products.  Planners scheduled production against that one inventory level.  The results were shortfalls and excesses from item to item.  The executives learned that each item had its own identity and behaviour.  There was no such thing as an average item. 

        The company’s executives reset the inventory policies that determined the stock levels for individual items.  Canned pineapple juices, for example, would be set at low inventory levels because the processing plant produced them daily.  Planners on the other hand would build inventories for exported products to synchronize with the timing of arriving vessels. 

        Right after new policies were in place, the company registered record sales as supermarket shelves were well-stocked during holidays and orders were completely filled for overseas customers. 

        Developing inventory policies is a method in anticipation for the future.   It’s not expensive though it does require a significant amount of work.  But as in the case of the example of the company and its pineapples, it would be well worth the effort.

        As much as foretelling the future via investment in cutting-edge technology may offer profitable windfall, anticipating the future through methodical policies may just be as beneficial.

        It isn’t sexy but it works. 

        About Ellery’s Essays

        previously written February 2019

        Making the Most of Ishikawa’s Fishbone Diagram

        Kaoru Ishikawa was a Japanese professor who championed quality improvement.  He is credited with the formation of quality circles, groups of workers & supervisors who work together to improve their operations.

        We remember Kaoru Ishikawa for his namesake Ishikawa Diagram, more popularly known as the fishbone diagram, a tool quality circles would use to identify root causes of problems.

        Via the fishbone diagram, the quality circle spells out a problem which at the onset is more of a symptom, issue, or disruption.  The problem takes up the position as head of the fishbone in which a facilitator asks quality circle participants to share what they think what’s causing it.  For example, if the problem is not meeting a production target, the group may cite possible causes like:

        • Frequent changes in schedules
        • Poorly maintained machines
        • Not enough people
        • Late deliveries of raw & packaging materials
        • Lack of pallets

        The facilitator draws a fishbone showing these causes:

        ‘Not meeting the production target’ makes up the ‘spine & head’ of the fishbone diagram.  The causes a quality circle would bring up comprise the fishbone’s ‘primary ribs’ which connect to the problem’s spine. 

        The facilitator would then ask quality circle participants what they think are the causes leading to each of the primary ribs.  These causes would make up the ‘secondary’ ribs of the fishbone diagram:

        The secondary ribs would not only be causes for the primary ones but also would be factors for the main problem: not meeting the production target. 

        We don’t stop there.  The facilitator would ask quality circle participants what they think are the causes for the secondary ribs.  Thus, our fishbone diagram with 3rd-tier causes may look like this: 

        Once again, these 3rd-tier causes are not only factors behind the secondary & primary branches but also are suspect as reasons for the problem of not meeting the production target. 

        Note that, in this example, there are several causes that resemble supply chain issues:

        • unavailable spare parts
        • delayed arrival of imports
        • rush customer orders
        • vendors asking for payments of unpaid purchases
        • many empty pallets not returned from warehouse

        And we note causes that seem to involve departments or disciplines the quality circle may not belong to or have any direct scope in:

        • no formal training program (human resources)
        • few qualified applicants to hire (human resources)
        • not enough skilled mechanics (human resources)
        • poor sales & operations (S&OP) planning (sales, finance, marketing)
        • limited cash flow (finance)

        Quality circles had been the stereotypes for manufacturing work teams, consisting typically of rank & file workers, operators, & supervisors.  Hence, a downside of quality circles is that the root causes participants may identify could lie beyond their workplace borders.  Cynical observers may get the impression that quality circles are finger-pointing their failures to other functions of the enterprise.

        Quality circles have faded in popularity and some of us may even label them as a bygone symbol from the 1980s quality movement.  This does not mean we should chuck Ishikawa’s fishbone diagram because quality circles are no longer hip.  Instead, we should recognise that there is potential in using it as an effective means to solving problems, especially supply chain ones. 

        As we’ve become familiar with the interconnections of supply chain operations, we’ve been realising that some problems we encounter have root causes linked either to other functions or to our relationships with vendors and customers. 

        Ishikawa’s fishbone diagram encourages us to identify causes to symptomatic problems, whether or not those causes originate from where we work or from shortcomings in our operating relationships with other functions or links in the supply chain. 

        Many enterprise quality improvement training sessions include exercises in drawing Ishikawa’s fishbone diagrams.  But hardly do we see executives, managers, and rank & file staff using the fishbone diagram in meetings or crisis management sessions.  Many of us have relegated the fishbone diagram more as an organisational development or teambuilding training exercise than as a real tool for solving problems or improving productivity. 

        We can exploit Ishikawa’s fishbone diagram if we realise it is a useful tool which any group or individual of any discipline can use.  And please note the following six (6) insights we can glean from using Ishikawa’s fishbone methodology. 

        First, we don’t need to be in a group to use the fishbone diagram.  Individual problem-solvers can use the fishbone diagram by themselves.  We can make our own fishbone diagrams in seeking causes for problems we opted to study and solve.  If we need help, we can research or interview people of different backgrounds to help build the fishbone and validate the ‘branches.’

        Second, if we do work as a group, the members don’t necessarily need to be from a single department or function.  Especially for supply chains, we should enrol people from as many disciplines as possible or at least from those areas that are upfront relevant to the problem.  If we identify causes which our group would have no members to provide details on, then we should invite them. 

        And if or when we do form problem-solving teams, we should make sure that all members do participate.  A team leader is at least a facilitator and as much as possible should not be seen as a superior (even if they may be our bosses).  When it comes to team rapport in drawing the fishbone diagram, team leaders best serve as moderators or facilitators, and nothing more. 

        We also should not categorise anyone we invite as a resource person instead of as a participant.  Doing so makes it look like we treat invitees as inferior non-members, meant to only contribute when we ask them to. By experience, resource people won’t volunteer more information than what we ask. 

        Third, in workplace settings, it would be nice if higher-level executives show support to inter-disciplinary problem-solving teams drawing fishbone diagrams, but if they don’t (and more often they really don’t), we should not stop ourselves from forming problem-solving teams anyway.  The beauty of Ishikawa’s fishbone diagram is that it relies on the experiences and expertise of participants contributing to it, not on executives who are typically distant and not as empathetic. 

        Fourth, Ishikawa’s fishbone diagram is a tool to identify root causes.  It is a means toward solving problems. It is not meant to bring about outright solutions.  Any individual or team should be aware that solving problems is a methodical process in which Ishikawa’s fishbone diagram is just one of several innovative tools we use to look for causes. 

        Fishbone diagrams don’t solve problems; we do. 

        Fifth, as the fishbone diagram lays out all the possible causes to our problem, selecting which one we prioritise to address is an exercise in data gathering, analysis, and evaluation.  We should not just outright choose a cause to solve.  We should do our homework and study the root causes laid out on the fishbone before we determine which one we address as the problem to solve. 

        Sixth, fishbone diagrams aren’t fads.  Just like wrenches & screwdrivers, it is a tool that does not become obsolete.  Tools are useful and beneficial only when we use them (and know how to use them). 

        The aim of the fishbone diagram is to make known all possible (if not probable) causes to a problem, which at the start is more of a symptom, issue, or disruption.  From the fishbone branches, we narrow down and decide which one or few root causes shall deserve our wholehearted attention. 

        We can use Ishikawa’s fishbone diagram either by ourselves as individuals or via groups we form.  Some top management support would be helpful, but we can still form teams and use the fishbone informally by ourselves.  Everyone in a group should participate in drawing the fishbone diagram and we should treat co-members of our problem-solving group as equals by welcoming whatever they contribute. 

        Kaoru Ishikawa advocated for quality improvement in our operations.  He taught us the importance of quality circles and gave us the fishbone diagram.  Thanks to him, we have a useful and effective tool from which we not only can identify root causes to problems but in the long run, continuously improve our operations and our businesses.    

        About Ellery’s Essays

        Productivity is the Priority, Not Customer Service

        My office air-conditioner broke down.  I therefore ordered a new air-conditioner from a reputable dealer.  It took two (2) weeks for the dealer to deliver and install the new air-conditioner. 

        Then the new air-conditioner stopped working three (3) weeks later.  It took the dealer another three (3) weeks to schedule an inspection and finally have the unit repaired. 

        How would one evaluate the service of the dealer? 

        Unsatisfactory?  Downright lousy? 

        Whenever I followed up the dealer, her customer service representatives would politely mention they were swamped with service requests.  There were many customers waiting.  All the dealer’s technicians were fully booked for several days. 

        In other words, if I wanted better service, the dealer would not give it.  The dealer had more than enough customers as it is.  Accommodating my requests for faster service was out of the question.  If I dropped her, she could care less. 

        Would it help if the dealer did improve her customer service?  The dealer would probably say no. The dealer has no incentive to improve her service level because she was getting enough sales from the customer demand.  Many of her customers do complain about the slow service but they come back anyway. The dealer wasn’t about to prioritize service improvements as she continued to reap revenues.   

        If she did hire more technicians, she could perhaps cut her service lead time and accommodate more customers which would increase her sales.  But that would mean investing money to hire and train technicians, not to mention buy additional equipment and tools.  With revenues already growing from continuous sales in air-conditioners and corresponding services, the dealer would maybe hire new technicians to just match the demand.  She would rather not spend more to reduce the customers’ waiting time and providing better service.  The extra cost of improving service would not be worth the extra work and there’s the risk that better service may not necessarily translate to more sales.

        The dealer’s air-conditioning business is supply-driven, that is, whatever the dealer supplies will be sold.  For whatever capacity she has in terms of services, it will translate to sales.  Her preoccupation would be to make sure her staff continuously works to deliver orders and do their service calls. 

        The dealer’s motivation to improve would be in productivity, not service.  She would for sure welcome ideas that would enable her staff to install and service more air-conditioners in a day. 

        It’s a mistake to think that customer service is a number one priority for all businesses.  In the real world, it’s not.  Any business owner would not put in extra effort for her customers if it does not translate to higher sales or lower costs.  In other words, any improvement for customers should be mutually beneficial to the business. 

        About Ellery’s Essays

        previously published June 2019

        Engineering Supply Chain Productivity

        We are only as productive as that of our vendors and customers. 

        If vendors don’t deliver the materials we need when we need it, we wouldn’t be able to make available products no matter how efficient our manufacturing & logistics operations are. 

        And if customers habitually cancel or change their orders which they booked with us, then we would be stuck reworking delivery schedules, or be burdened with excess inventories of merchandise which likely will end up obsolete or destined for the scrap heap. 

        Boeing announced in June 2024 that it would buy Spirit Aerosystems, a company that the aircraft manufacturer spun off some of its operations to in 2005.  Spirit made fuselages for Boeing but due to issues from in both companies’ operations, Boeing executives decided to re-integrate Spirit’s production line with its own.  Boeing would regain, if not improve, its control of the supply chain of key components for its aircraft production lines. 

        Boeing prides itself with its efficient aircraft assembly lines but had unfortunately gotten entangled with high-profile quality & safety issues which resulted in damages to its reputation.  Returning the operations it once outsourced to Spirit Aerosystems was part of Boeing’s effort to fix those issues and prevent them from happening again. 

        But it isn’t only vendors or outsourced service providers which observers blamed for problems with Boeing.  Some of the company’s customers had requested for delays in deliveries of aircraft they ordered.  Some even cancelled their orders, even though Boeing was close to finishing the planes.  The changes in customers’ orders meant not only delays in deliveries but also Boeing getting stuck with unsold airplanes that, as an undesirable addition to its inventory, would tie up its cashflow. 

        The irony was Boeing had invested for years in establishing collaborative relationships with suppliers and customers.  Boeing was once a model of customer-vendor harmony which could be cited as key to its competitive advantage versus its arch-rival, Airbus.

        We manage our operations to make them as productive as possible and to ensure they perform to stakeholders’ strategic expectations.  We can have automated manufacturing lines that can change over in seconds, state-of-the-art warehouse management systems which could store & retrieve items in minutes, and top-of-the-line artificially intelligent information technology (IT) planning networks which could provide real-time accurate reports and production, purchase, & distribution schedules.

        But if our vendors don’t deliver critical materials or customers constantly change their minds about what they ordered, our operations would suffer significantly productivity-wise. 

        We can set the most optimal lot sizes for manufacturing to ensure fewer changeovers and minimise scrapping.  But if batch quantities exceed what customers order, the extra production becomes inventory, and we as operations managers end up hoping customers will buy the remaining stock via new orders.  In most cases, they don’t.

        We can speedily arrange for the shipping of our products for export to other countries.  But if shipping lines encounter delays due to unforeseen circumstances or suddenly upcharge freight rates, we lose not only the timeliness of deliveries to our customers but also find our profit margins getting hit as well.  Just imagine if we were delivering Christmas trees that end up arriving at our customers’ doorsteps in January!

        Shortcomings in vendor reliabilities and fickle customer demands had been common in industries.  Despite the unproductivity it brings to our operations, many such challenges remain unresolved.  We try to ‘manage’ them, that is, we try to adapt our operations, negotiate with (if not threaten) suppliers, streamline our responsiveness, invest in new technologies, or just work harder to plan better.  We even hope that buzzwords like ‘resilience’ and ‘agility’ would spur instant transformation in our supply chains!

        We don’t hire scientists or managers to solve problems although many executives for some reason do.  Scientists aim to explain how our world and our universe work via drawing conclusions from them via observation and experimentation.  Managers plan, organise, direct, and control people and resources to accumulate wealth, gain competitive advantage, build their enterprises’ esteem, and grow the business. 

        Scientists don’t solve problems.  They try to figure out why they happen.  Managers don’t solve problems; they instead work with they have to sustain and develop the businesses they have stewardship over. 

        Solving problems is the primary scope of engineers.  To up the productivity of enterprises, we’d need to solve the problems which are in the way of accomplishing it.  And that’s what engineers do.

        Solving problems, however, is too simplistic a purpose for engineers.  Engineers should not see themselves as passive professionals who obsequiously wait for people to give them problems to solve.  Engineers should proactively seek problems on top of defining them, studying them, and solving them. 

        Barriers to better supply chain productivity remain because the problems underlying them remain unidentified and unsolved.  Supply chain managers limit themselves to the boundaries of the enterprises which employ them, and they deal with vendors & customers only to further the interests of their employers. 

        Supply chain engineers don’t confine themselves to issues within the walls of individual enterprises.  Doing so would defeat their aim to identify and solve supply chain problems.  Supply chains represent operational links within and between enterprises and these links comprise the scope of supply chain engineers.  As much as an individual enterprise may engage a supply chain engineer to solve issues within itself, supply chain engineers do not hesitate to work on problems that go beyond enterprises’ borders.   

        If vendors aren’t delivering on time, supply chain engineers will study the vendors’ and enterprise’s operations. 

        If customers are cancelling or changing their orders causing disruptions to an enterprise’s outbound logistics, supply chain engineers will examine both the enterprise’s systems and customers’ rationales for such issues. 

        Collaborations between vendors, enterprises, and customers result from all three solving supply chain problems together.  And supply chain engineering offers the best help in solving those problems which would make such collaborations realities.

        It is hoped that Boeing just doesn’t “manage” the operations of Spirit Aerosystems as it reintegrates the latter.  Adapting wouldn’t be enough.  Uniting systems or procedures wouldn’t necessarily be the ideal approach.  It would be best if Boeing and Spirit lay bare their issues, define problems, fix them, and re-apply the process with Boeing’s vendors and customers as well.

        About Ellery’s Essays

        Why We Need Policies and Why They Can Make or Break A Business

        https://www.youtube.com/watch?v=lGTkhVGGAzo

        A young businessman had set up a wholesale business selling consumer goods in downtown Manila.  His competitors, however, told him he won’t succeed. 

        Competition was indeed fierce.  There were several wholesalers already established and they sold at cut-throat prices at razor-thin profit margins.  To get market share, the new wholesaler would have to offer better prices without sacrificing profit.  It seemed impossible. 

        But the young businessman was unfazed.  Instead of fighting competition head-on through pricing, he offered better service. 

        He set up a store which looked more like a call centre.  In the store sat sales people on tables with phones.   From opening to closing of the “store,” the sales people would call customers and offer a wide range of consumer products. 

        The businessman via his sales people offered complete delivery of orders in two (2) days but customers could pick up their items at the store or at the nearby bodega or warehouse within the same day of the order.  The sales people also offered discounts for cash payments. 

        The young businessman also hired talented managers to run his sales and operations.  He set up an information system in which his sales people would know the inventory of items in real time and the status of pending orders.  Sales personnel could therefore know what items were available and what were not.  The businessman’s purchasers would know when items were close to out-of-stock and thereby order from suppliers. 

        The young businessman had clear policies for his sales and operations. 

        His sales policy focused on selling to paying customers, not selling to any customer.  The businessman was strict when it came to giving credit.  He insisted on cash on delivery and did not allow customers to pay later.  

        Many customers at first balked at buying from the businessman.  Many customers were small groceries or family-run shops that were not cash-rich to begin with.  They preferred terms of credit that would allow them to purchase as much as a month’s worth of stock and then pay for it as they collected from consumers buying from their stores.   

        But the businessman also had a service policy.  He assured complete delivery of a customer’s order in two (2) days.  A customer can also opt to pick up ordered items on the same day at an additional discount. 

        Customers gradually started buying from the young businessman.  The young businessman convinced customers that having complete deliveries arrive fast was better for their business.  With the assurance of having available items to stock in their grocery shelves, the customers realized they could sell more even if they had to pay cash in advance.

        And so, the young businessman’s enterprise flourished.  It flourished not only because he had a clear vision and strategy.  It flourished not just because he invested in a talented organization and a real-time inventory management system.  It flourished because he had a set of policies that governed how his strategy was executed and how his business would be run.

        Whereas a vision and strategy define an organization’s direction, policies define the principles of the management of the organization.

        Policies are not targets. 

        The young businessman mentioned above did not simply commit to deliver to customers in two (2) days. He set a customer service policy to which his business will deliver in two (2) days or else his sales people will apologize to the customer and ask him or her to either cancel or rebook. 

        Policies provide for clear paths of action. 

        The young businessman had an inventory policy.  He set re-order points for his items that when reached, would trigger purchasers to order from suppliers.  He also had a policy in which his executive manager would buy more fast-moving items when suppliers notify of upcoming price increases. 

        Policies are focused toward functions or to specific areas of the business. 

        The young businessman had policies for each of his departments.  He had policies for hiring and retaining his managers.  He had policies for managing his information technology (IT) hardware and software.  And he had policies for purchasing, warehousing, and transportation. 

        Policies form the bridge between overall strategy and the execution of business procedures.  

        The young businessman had a vision and strategy for success.  His policies connected the businessman’s lofty ideas to realities. 

        For example, one of his strategies was to have a real-time inventory management system that was ahead of its time (the businessman founded his enterprise in the 1970’s).  To do this, he hired a skilled programmer to install a customized inventory information system.  He set policies on the entry of transactional data and instilled daily cycle counting of items.   He achieved the ideal of an inventory management system that accurately showed how much were on stock for hundreds of products at any time.   

        Many companies I’ve worked with have clear visions, objectives, and strategies.  Some are doing very well.  But when they come to me about problems in their business, almost always there was a policy that’s missing or just needs to be cleared up. 

        Policies not only have to be consistent with an organization’s objectives.  They also have to be clear as guides to how an organization would act.  They are no way the same as targets.  They are specific to functions and they are the bridge between executive strategy and procedures at the grass-roots level. 

        Policies determine how an organization is managed and how it will behave with customers, suppliers, and stakeholders.  It can make or break a business. 

        About Ellery’s Essays

        Embracing Supply Chain Productivity in Strategic Planning

        “No, we will not change our sales policy,” the general manager of the consumer goods wholesale trading company tersely said. 

        As I was formerly a logistics manager and land transportation service provider (trucker for short), the wholesaler GM was asking me for advice on how to bring down transportation costs, which had been rising sharply.  And when I did give her my advice, she didn’t like it and replied with the answer above.   

        Transportation costs were one of the wholesaler’s largest expenses and before my conversation with the general manager, the wholesaler’s truckers had been demanding higher freight rates.  Despite coordinated efforts & negotiations between the wholesaler’s logistics staff and their truckers, the truckers remained adamant for rate increases.  The general manager was reluctant tp grant the increases but knew the risk if she didn’t; she couldn’t afford losing delivery capabilities as her wholesale business was growing. 

        I told the GM that one best and quick option to bring down freight expenses was to stop the month-end surges in sales orders. 

        The wholesaler had been offering incentives in which customers can avail of additional discounts when they bought more than PhP 1 million (approximately $USD 17,000) of merchandise within a calendar month.  Sales employees also had monthly quotas tied in with customer orders.  The more customers bought, the more bonuses the salespeople would be entitled to. 

        Because the wholesaler measured sales based on actual deliveries received, customers and sales raced to submit their orders to the wholesaler’s logistics department before the month-end deadline.  Logistics staff, in turn, would work overtime to load & dispatch deliveries to reach customers’ doorsteps before the close of business of the month’s last day.  

        The number of delivery trips dispatched on the last week of a month was typically four times (4x) the number of trips dispatched on the first week of that same month.  That meant truckers had to make available four times more trucking capacities on the last week versus the first week. 

        Truckers procured new trucks and subcontracted vehicles from third parties to augment their fleets such that the number of available trucks would be in lockstep with the wholesaler’s month-end order swings.

        This led, however, to many of the truckers’ vehicles being idle on the first week of the month before they would be needed for the last week’s surge of orders.  Truckers had to shoulder not only depreciation but also overhead expenses to maintain their vehicles on top of the thin profit margins they eked out from their subcontracting arrangements, even though their own vehicles weren’t being fully utilised. 

        Truckers, thus, factored in these expenses in their petitions for higher freight rates.  The wholesaler’s general manager would argue in vain against the petitions but the truckers wouldn’t budge; the truckers weren’t making money. 

        When the general manager, therefore, sat down with me to ask what can be done to reduce her freight costs, I told her that she should study smoothening her month-end order surges.  It was one thing to deliver versus orders triggered from incentives, it was another to fulfil demand based on actual consumption.   It was obvious that the wholesaler was doing more of the former than the latter. 

        It had been proven that consumers buy based on what they need, and don’t wait till the end of the month to do so.  Consumer demand does not skew toward the end of every month, even though they may speculate every now and then.  Without incentives, the wholesaler’s customers would buy products closer to consumers’ buying patterns which would likely be steadier and more consistent week to week.  Exceptions would be introduction of new products or whenever there were price changes. 

        If the wholesaler’s customer orders arrived in steady quantities than in swings, truckers would be able to utilise more of their existing fleet capacities as their trucks would be delivering more or less the same number of trips per week rather than a skewed few-to-many trips from the month’s first week to the last.  Trucks wouldn’t be standing by idly at the start of the month and they would have less need to subcontract from third parties.  The wholesaler would have more leverage to maintain, if not reduce, freight rates as truckers would reap more productivity from their operations. 

        But the wholesaler general manager didn’t want a solution that would disrupt her company’s current sales scheme.  She feared that letting go of incentives would mean lower sales volumes as well as risk losing competitive advantage from rivals (who also did sales incentives). 

        She abruptly ended discussion on the matter after she tersely replied in the negative to my advice.  With that, I just said “okay.”  I packed up, bid farewell, and left. 

        The wholesaler continued to be successful financially and as a market leader.  It continued to grow as prospects for its future remained bright.

        But would the wholesaler’s business have been more better off had the general manager at least considered the idea of ending month-end surges?  Maybe yes, maybe no.  One thing we can be sure of is that productivity of the wholesaler’s operations could have improved.  But apparently, the wholesaler’s general manager didn’t really put much importance to her operations’ productivity. 

        The lack of putting importance into supply chain productivity is common in many enterprises.    

        The president of an exclusive distributor of an information technology corporation’s product line of desktop printers, components, and supplies also had a similarly blunt reply when I advised he should re-examine his sales strategy which were causing sales order surges every month.  “There’s nothing we can do about it,” he responded, as tersely as the wholesaler’s GM said a few years earlier. 

        “How many people buy printers only at the last week of the month?”  I asked.  But the president would hear no more. 

        Sacrificing supply chain productivity to spur sales every calendar month is a symptom of a mindset in which sales & marketing schemes reign supreme in many enterprises’ strategic plans. 

        My stories of the wholesaler GM and the IT distributor’s president echo with others I was asked for similar advice.  From a snack foods corporation, a roof tile manufacturer, a metals importer, a food condiments producer, to multinational consumer goods conglomerates and even an energy utility company, many enterprises adopted strategies centred on short-term sales growths.  Supply chain managers were expected to deliver versus revenue and financial goals rather than improve the productivities of their operations. 

        What exactly do I advise enterprises?  Plan not only for demand creation but also for demand fulfilment.  A business is basically about doing both.  Maybe a business can still grow by creating demand exponentially and fulfilling demand unproductively, especially if competitors are also doing the same.  But we can only imagine what potential breakthrough opportunities could be had if enterprises focused on both the creation and fulfilment of demand in their strategic plans. 

        The following is an example of how a company benefits when it embraces supply chain productivity into its strategic planning: 

        GE Appliances has added 4,000 manufacturing jobs across its nine U.S. plants over the past seven years.
        PHOTO: JON CHERRY FOR THE WALL STREET JOURNAL

        A supply-chain overhaul turned into more than a cost-cutting efficiency plan for one of the largest home-appliances makers in the U.S. GE Appliances says it has managed to double revenue over the last seven years thanks in part to a multiyear effort to reset its manufacturing, tighten control of its inventory and rethink how it manages its production cycle. Marcia Brey, the company’s vice president of logistics, tells the WSJ Logistics Report’s Liz Young GE Appliances began restructuring its supply chain in 2017, years before the pandemic, to better balance production and demand. That effort accelerated as Covid disruptions took hold, and pressed companies around the world to rethink their supply chains. Brey says GE Appliances turned its process on its head, prioritizing real orders to pull goods forward rather than production schedules. The company’s inventory turns have improved some 50% as a result, and sales are up.

        –Paul Page, Resetting Supply Chains, The Logistics Report, 03 July 2024, The Dow Jones & Company, Inc.

        It can be done. 

        About Ellery’s Essays