The Supply Chain-A Systems view

Supply Chain Rule number eight: Information flows lubricate the supply chain; using appropriate ICT is critical

Information is required at every stage of the supply chain and for all of the levels of supply chain planning. All parts of the supply chain rely on ICT in the planning, operational, administrative and management processes.

Having now established the important and strategic requirements for an organisations supply chain management, we will now look at some required organisational responses. The aim here is to enable effective and efficient supply chain management. We will start by looking at structure.

  1. We need a conscious redesign of the organisational structure and culture. It is common to find here, that the current structure has evolved and is actually now in effect, an unconscious design. Managing the interplay between structure and process is critical because the structure will influence the people and the overall behaviour. The reality here is that all of the system/supply chain output results from all of the connected processes. This means:
  2. Recognising that Structures are stable and fixed, support and contain, yet also, they can constrain and limit. Here structures are usually seen as independent, certain and self sufficient, giving stability and certainty.
  3. Recognising that structure does interact with Processes and that these are transient and variable, they can build up and/or break down outputs and do also involve dependency, variability and have joining interfaces/connections.
  4. The structure and culture redesign must ensure there is internal and external cooperation with all of the players and with a “fluid interdependent cross functionality” that creates trade off decisions, a need for collaboration etc. Effective and efficient supply chains are the ultimate team game.
  5. Ensuring the chosen structure promotes the peak performance of all of the people and the processes. A known solution here is for with a cross functional structure organised around processes not tasks, with as few levels as possible, that has correct manager/worker ratios, and is bottom / up with a team focus.
  6. Designing a gaining culture which needs agreed clear and expected goals, abundant information, uses mistakes as learning lessons and a source of new innovation, where control is delegated, involving collaboration with managers who will sponsor change and have self confidence.
  7. Allowing people to take initiatives, allowing team work to flourish where people understand their part in the whole, providing clear direction with good communications and even workloads in a conducive and enabling work environment.
  8. In designing both the structure and the culture, it is necessary to avoid an over recognition of the hard values as it is the soft values that count and make the real difference, (e.g. as shown by examining the differences between left and right brain thinking/organisations). Soft values are shown by how an organisation is valued and trusted as this comes not only from the financial assets (that are hard and tangible), but also from the goodwill (that is soft and intangible). Soft values are essentially those coming directly out of people, (e.g. as shown when giving guidance, encouragement, support etc).

Besides joining up the processes with the structures, resulting in a joined up supply chain, we also must have joined up thinking; so another organisational response must also include some new thinking:

  1. Recognising that our thinking continuously needs both a self examination and a team examination to give conscious learning and very likely, changing ourselves, and also, what is done.
  2. Ensuring there is joined up thinking from all of the people involved who can then make the correct appropriate changes to the supply chain structures and supply chain processes
  • Having regular thought updates to ensure continuous improvements e.g. use best practice, continue to challenge how we do things etc .

To cement in the above principles, then the following summaries are useful

Summary of Key Messages from Systems Thinking in Supply Chains

  1. Watch for delayed feedback and unexpected variability.
  2. Watch for wider effects that are “away from and out of the box”
  3. The level, speed and flow of information give visibility. This enables the better management of volatility, variability, velocity that can then create value (or, Visibility better controls: Volatility / Variability / Velocity = increased Value)
  4. The chosen structure should promote the peak performance of the people, the processes and the product/services being delivered to customers.

Supply Chain “Must do’s”- Mainly People

  • Use “joined up thinking” and effective relationship management.
  • Recognise that all of the people contribute to reliability in the supply chain (this besides the organisations own staff, and also includes all of the suppliers of products and services).
  • The supply chain is the ultimate team game, relationships are important.
  • Accept criticism as being helpful and respond to feedback (for example, all managers must be interested in being criticised)

Supply Chain “Must do’s” – Mainly Process

  • Manage correctly all of the information flows (and the connected visibility).
  • Recognise all dependencies, variability’s and the interface connections.
  • And then, effectively manage issues such as the dynamic impacts of volume, variety and volatilities to minimize the vulnerabilities.

Supply Chain “Must do’s” – Mainly Structure

  • Change outdated and “anti-flow”, rules and procedures
  • Ban classic silo mentalities, by rationalising the structures and processes, with, “T” shaped people who have both the depth of functional knowledge with cross functional knowledge.
  • Prevent people from working incrementally on “my part only” and not considering others (the whole).