Does your supply chain learn from its mistakes? 5 key steps towards continuous improvement.

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How often do your Supply Chain team just repeat the same old same old. We all tend to see the same issues time and time again but do we actually do anything to resolve it. All too often the Supply chain tends to be whipping boys for deep-rooted problems within a business that prevent it from being effective, however, it’s important to remember that we can, as a function look to introduce improvements to be both more efficient and effective.

Basic principles of Continuous Improvement

Continuous improvement methods such as Kaizen are prevalent in manufacturing circles but service functions can sometimes be slow to adopt often making the mistake that these great practices are not portable to service processes.

A continuous improvement plan doesn’t need to be complex it simply needs a process that allows you to do 4 key things.

Plan – What are you setting out to achieve and how will you do it?
Do – Execute your plan
Check – measure your performance on your plan
Act – implement some actions from your review of performance.

One of the most important things (surprisingly neglected at times) is to set yourself a plan and objectives – for example this might be halving the inventory levels – it might be improving schedule adherence or it might be to halve customer rejects whatever the objectives are documented them in a plan, with measurable targets and timescales.

You’ll also need to consider two key ingredients –
1. A standard process (that people are supposed to follow)……and
2. Measurable data.

The whole point of CI activity is to base your actions on facts and data and not just knee-jerk reactions of what you think might fix it today. Continuous improvement programs invariably get results because they follow a process
So, looking to get started? Here are 5 tips for continuous improvement in a supply chain environment.

1/ Use KPI’s for what they are meant for –
Most (if not all) business use some form of key performance indicators. KPI’s are great but they should form part of the Check element of your PDCA process and you should not just look at them and then let them gather dust but you should look to use them as the basis for your action plan.

2/ Listen to feedback
Another often overlooked input into improvement is to simply listen to what your supplier network is telling you. No doubt you have supplier business reviews? If so make them work for you – don’t just use them to beat up the supplier but use them to also get constructive feedback on what issues you as a customer cause and what you can do to improve the supplier’s performance. This step alone can generate some hugely significant ideas (often ones you might not have considered).

3/ Document your processes
If you’re looking to improve – make sure you capture what you do now. Have you got your processes standardized and documented? Does everyone know what they should be doing and when? This should be seen as one of the first steps in improvement.”

4/ Look to implement a culture of continuous improvement
Once you’ve got your processes documented and the whole team is working in a standard way the next step is to encourage improvements. Continuous improvement is not a one man job and your whole team needs to buy into the principle. An army of improvers can achieve great things! Following simple programs like PDCA doesn’t have to be complicated and should be envelope the whole team.

5/ Set objectives
It seems obvious but set yourself targets. Don’t over-reach but don’t make them too easy either. In your plan, set out what you want to achieve and by when and then religiously measure and analyze. Without targets, your department will probably drift along aimlessly chewing around the periphery of issues without ever really grasping at a coherent plan to improve. Objectives focus everyone’s attention.

There are countless other things you can do to deliver improvements but the above should get you started and is a simple enough concept to flow out to your team. As a final step, remember to be selective about your improvement steps – look to deliver on achievable improvements that will deliver results. Don’t waste your time and focus on issues that might not deliver significant improvement return. Remember it’s your time and resource you’re putting into this so you want to make sure you get an appropriate rate of return from the effort.

Have some feedback on continuous improvement within the supply chain? We’d love to hear about it in our comments section below.

How important is demand planning in Supply Chain

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In our recent post on overstating sales forecasts in SIOP, we touched upon the process of demand planning. In this post, we thought we’d delve a little deeper and touch on a few of the reasons why this activity is so important whether you work in manufacturing or the service sector.

For many, the function of demand planning is, perhaps, the most crucial aspect of any company. At it’s basic it is a business process and encompasses managing and collating future requirements (some real and some forecast) for the products/services of the business. This strategic function then usually co-ordinates (or helps too) the alignment of production functions to meet the demand.

As a consequence, this function has the significant bearing on the success (or not) of the company and its financial status.

If you’ve worked in manufacturing companies, chances are you have come across the demand planning function. They will typically be responsible for managing the demand for goods made and therefore have a hand in predicting what raw materials and bought in goods are required.

Demand Planning inputs and key functions

For the function to flourish it requires various inputs such as:

* Timely and relevant data,
* High levels of data integrity
* Excellent lines of communication with supporting functions
* Suitable management systems (often MRP)
* Knowledge of supporting functions (i.e. to help in capacity planning)

When it comes to one of the more demanding functions, that of generating consensus forecasts, demand planning is usually both the gatekeeper (data doesn’t enter MRP without sign off) and arbitrator (they usually help in the fine tuning of forecasts). Once the data has been entered into the system, through processes such as SIOP, if the forecast is not being met then the demand planning function reacts accordingly (under appropriate controls) to tune the demand signal. The advantage of the function is that it provides a constant monitoring and view that can be provided to management to help determine trends and issues.

Demand Planning Systems

When it comes to systems many firms utilize a form of MRP. When it comes to these there are laterally 100’s of software packages that support effective demand planning such as Oracle, SAP etc. These software tools often support associated processes such as capacity management and in today’s connected company infrastructure more and more are looking to use the same process at all outposts of the business using standard processes across the enterprise independent of location. This is especially important where the requirement is to simply and rapidly review demand data and inventory levels across the company.

While there are some criteria in determining where demand planning sits within the organization it will normally be housed in either Operations or Finance but regardless of how you organize it, having an accurate and timely view of demand across the whole of your company is indispensable and helps you meet the needs of your ever demanding customers.

Have some thoughts on the role of demand planning? Be sure to use our feedback section below.

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