SUPPLY CHAIN MINDED

Supply Chain software – Do we really still, Know the basics?

CONTRIBUTION BY STUART EMMETT – freelance independent trainer and consultant who trades under the name of Learn and Change

The US Federal Aviation Authority (FAA) published a report in 2013 which concluded:

“Pilots were losing touch with their aeroplanes: the computers that control them were so accurate and reliable that the pilots built up a huge level of trust in them while losing confidence in their own abilities to manage the craft”.

Unfortunately under certain circumstances the computers can’t cope and hand control back to the pilots, disconnecting the autopilot.

“There is a fundamental misunderstanding going on between man and machine,” warned John Hickey, the FANs deputy associate administrator for aviation safety. “We have to fix that.”

Are there any parallels here to the use of software and ICT in the supply chain?

I believe there is a direct parallel, as in my training work, especially covering inventory management, we commonly find most delegates have little ideas of the key drivers that underpin inventory decisions, for example, on what to order and on when to order. When asking questions on what the key drivers are, generates a response that “the computer does all that for us”.

The reality here for many, is that it is the software systems, which make inventory decisions. This is an actually an understandable reality, as it is quick, it saves making many manual interdependent calculations, and, there is no need to understand any of the statistics or any of the details used, by the systems algorithms.

For most of the time, being on “automatic pilot” does work well. Indeed, not everyone needs to know all of the “full details”.

However, this does not work when something goes wrong, for example, when the key driver’s change. As these changes will likely remain invisible to the system operators; then the inventory is not being effectively managed. Just one common example of this is where an inventory or MRP program is using fixed supplier lead times. When these become variable, this means, that wrong decisions are inevitably going to be made by the system.

When we have explored this lack of basic knowledge further, we find the people when first employed, started out, by sitting in front of a PC and were shown, which keys they had to press on the PC. At one level, that maybe acceptable, but at a management level, what next happens, is that over time, these new starters get promoted in management. So now today, after over 20 years wide use with for example, inventory management systems, there is now, often no one, left in the organisation, who understands what the key drivers are, or, understands the basics of the software program.

Indeed the only people, who will know, are the software supplier, specialist consultants and trainers. Now, when things will inevitably go wrong, then the organisations response will often be to say “it is a computer error”, followed on eventually by, “we need a new system”.

This is a potentially dangerous situation for any organisation that has any dynamic and interdependent process, like inventory management. The resultant problems are for example, overstocks on most items and out of stocks on some other items; with overall, too much stock being held. Here we now have a warehouse that has become “a bank vault holding too much money”.

In summary therefore, let me re-paraphrase a part of the FAA report:

“Managers are losing touch with their business: the managers have built up a huge level of trust in their systems, and having false confidence in their own abilities to manage. Unfortunately under certain circumstances the computers will get it wrong; control must always be in the hands of the managers”.

To further quote from the FAA report:

“The FANs report catalogued a chilling list of the skills pilots are losing; it included all the basic skills a pilot is expected to have”.

Fortunately for pilots, aircraft and the passengers, the systems continue to work well, and even including the three well known major catastrophic aircraft losses in the last 12 months, air travel is still by far, the safest form of travel on a per passenger mile basis.

However, subcontracting operating control away from managers to system designers is potentially catastrophic. The expression “know the basics” is a salutary learning lesson for all of us in the supply chain.

Unfortunately however, too many managers would seem to believe that the basic knowledge is below them and is unworthy of bothering with.

This “problem” is also similar, in one sense, to an experience of meeting a senior manager who wanted the tools to implement Supply Chain Relationship Management (SRM), but, they did not want to know anything about the importance of relationships between people and the T-word (trust). Why do some choose to ignore the common acceptance that just about all we do in the supply chain is 70% people, 20% Process and 10% ICT; however investment is made the other way round? I have some answers, but, that will have to be another article.

Reference: Sunday Times 5th January 2015, “Pilots sidelined by computers in today’s cockpits”

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