Taming the Supply-Centric Thinker?

Yesterday I spoke to Christine. She lost her job on Monday. Over the last year, her company completed multiple mergers and acquisitions. Christine was an avid leader in supply chain. She was well-respected. Why did she lose her job? The answer is complex. Christine was trying to make improvements at her company in a world of transactional thinkers.

The leaders of Christine's company were largely supply-centric thinkers. They forged their careers on manufacturing plant floors and understand a production schedule. They do not understand a demand plan. Terms like MAPE, MPE, and Bias are not well understood and there is little tolerance for a discussion of supply chain planning or the role of demand. If you feel like you are the bird on the left side of the wire, and if you are a Christine, here I share five recommendations:

Focus on Business Outcomes not Technology Implementation. The biggest mistake that most companies make in supply chain planning is focusing on technology implementations versus business outcomes. Don't make this mistake. If you are in a demand role, measure forecast value add (FVA). Drive continuous improvement and actively communicate and market your work. As you reduce bias and error translate the improvement into a supply-side value proposition (areas like required inventory levels, number of schedule changes in production and improvement to customer service). Build an understanding with executives of the supply-side context so that transactional thinkers can understand the value of the work. Don't expect supply-centric leaders to speak the language of demand. Instead, translate it into a value proposition that a supply-side thinker can value.

Don't Expect Your Execs to Get It. Market and Share the Impact of Your Work. Use simulation and design thinking to help the execs understand the impact of demand error and the importance of understanding error to designing buffer strategies. Start with the finance team and educate the group on the importance of form and function of inventory and the role of demand in designing and implementing inventory strategies. (Most finance teams see inventory as a big pile. Help them to break it down to understand the impact of demand and business changes on the network.) Track the impact of the continuous improvement programs in demand management on the requirements for the types of inventory.

 Actively Seek Better Answers. Test the "fit of the demand engines/technology solutions yearly and work with the technology solution providers to do demand tune-ups." The best way to accomplish this goal is to 'back cast' using history of the prior two years to forecast the current period and measure the fit of the outcome.

Help Leaders to Understand the Impact of Complexity. The supply chain is a complex non-linear system. The impact on the system with demand volatility is far-reaching. In your analysis, measure the impact of complexity on intermittent demand. Communicate this in "supply-centric terms." Complexity is like cholesterol. There is good complexity--changes that drive revenue/profitability--and bad complexity--business decisions that only add cost. Help your organization to make conscious choice through an active program to manage complexity.

Drive Growth. Use the supply chain as an engine of growth. Identify business opportunities and actively test and learn. Constantly evaluate sales and marketing tactics to understand lift and value. In the process, be good at your job. Use your insights to build your circle of influence with commercial teams to have a seat at the table. Widen your circle of influence (people in the organization that know and respect you) , but avoid the circle of concern. (The circle of concern is the area where you may have an opinion, but you have no influence to make change.) Working in the circle of concern is political suicide.

I hope this helps. Good luck to all of the supply chain planners in organizations trying to make a difference. Meanwhile I am going to help Christine get a new job. Let me know if there is a need in your organization for a strong, energetic and innovative supply chain leader.