Do the Right Thing Right

Defining the Problem

The first step of every problem-solving process I know is “Define the Problem” – easier to say than do.  

A military unit I commanded was tasked with supporting the Special Olympics.[1] We were to have several hundred disabled athletes staying in military billets during the competition.  I was concerned about being able to adequately respond to medical emergency and asked the officer-in-charge to ensure we had communication in each building.  The captain returned the next day to say that he had contacted the Signal Brigade on post and they would schedule a special training exercise during the competition in the barracks area so we would have radio communications 24-hours a day.  However, we would have to pay for the fuel to power their radios from our training funds. 

I asked the captain to define the problem and he responded that he needed $5,000 to pay for the fuel.  Each time he finished his explanation, I would again ask him to redefine the problem.  He was becoming more and more frustrated with my inability to understand and finally blurted out, “Sir – you told me to get communications in those building.”  At that point, he realized that the problem was getting communications and the $5,000 was one of the means to do so.  It became apparent that he had not yet walked through the barracks and we agreed that would be a good next step.  Two hours later he sheepishly reported that there were working telephones in each building.

This is an example of a well intentioned and highly motivated young person creating a solution before understanding the problem. 

He had a hammer and was searching for a nail.

Once the problem is defined, it is not locked in concrete.  New circumstances or an improved state of information should cause a manager to review and possibly revise the problem statement.  I’m a disciple of The One-Minute Manager by Ken Blanchard and Spencer Johnson and have often used a white board to define the problem and then print the problem statement to give to the person tasked with the mission.  A particularly talented young captain came back a month later to give me a status report and I realized that he was not solving the problem I gave him.  He was equally convinced that he was correct so I asked him to produce the problem statement I originally gave him.  He did so and he was in fact working on the original problem statement.  I then realized that in my thought process, consciously or subconsciously, the problem statement had evolved but I had not shared this evolution with the person tasked with solving the problem. 

The lesson to be learned is define the problem, share it with team, and keep everyone – including you – focused on the same goal.

---

[1] The Special Olympics is a wonderful experience for everyone, not just the athletes.

Competitive Advantage

It doesn’t matter if you have the greatest product on the market at a great price with outstanding customer service, if your competitors can do it better.

You have most likely heard of the two hikers being chased by a bear.  
One hiker says to the other, “Why are we running – we can’t out run that bear.”  The second hiker responds, “I don’t have to outrun the bear, I just have to out run you.”

The point of the story is how much competitive advantage do you need and how much are you willing to pay for that advantage?  In making capital investment to your company, you can attempt to make a quantum leap ahead of your competitors.  The greater the lead, the greater the cost of investment in technology, equipment, training, and perhaps higher wages for a better trained work force. 

In addition to the cost, you will also incur risk.  Will the technological leap be successful?  Will you be able to recover your costs through increased productivity?  Will the future market demand the capabilities you are creating?  The technological leap you are creating is based on current technology.  Will there be a new breakthrough which makes your innovative concept prematurely obsolete? 

Using the example of our hikers, what if a huge lead over your companion causes you to run into another bear or down a dead end trail?  Will the facilities, equipment and processes you are creating be flexible enough to be economically modified or expanded to meet unforeseen circumstances?

Do you need a 50 yard lead over your competitor or will you settle for a five yard lead.  That five yard lead will still keep you from getting eaten (at least not first) but it will cost less, involve less risk, and be more flexible to meet future demands.

What Should You Expect From Your Supply Chain Manager?

A good warehouse or distribution manager does not necessarily make a good supply chain manager and vice versa.  Their perspectives are different.  The distribution manager is focused on detail and accomplishing short term tasks.  The supply chain manager is focused on the entire system, from receipt of an order to receipt of payment and maintaining a competitive advantage and controlling costs well into the future.  That requires forecasting future demands, business trends, and emerging technology, especially since it can take months and even years to successfully modify a supply chain. 

The roles of a supply chain manager and a distribution manager are complementary; they must work as a team.  I have known only two people who could excel in both roles. 

Here is what I look for in a good supply chain manager.

• An enabler rather than a naysayer.  I want someone who loves challenges; who will tell me how to make something work, not tell me why it won’t work.  A good supply chain manager should never say “no,” but should also have the courage to say “can’t” when appropriate.  When forced to say “can’t,” a good supply chain manager, like any good manager, will then offer alternatives of what can be done.
• Analytical.  A supply chain manager needs to define success; develop metrics to measure success; and identify opportunities for improvement. 
• Creative.  Someone capable of developing innovative solutions and constantly seeking ways to improve existing procedures.     
• Demanding and constantly seeking excellence.  Supply chains consist of a multitude of routine but essential tasks.  In one supply chain I identified 25 different functions which had to be successfully performed to successfully fulfill an order.  If each function was properly performed 99% of the time, less than 78% of the orders would be successfully fulfilled.  “Pretty good” isn’t good enough.
• A leader.  Even with automation supply chains involve people – usually a lot of people.  To achieve the proficiency necessary to remain competitive the supply chain team needs to be motivated in addition to being well trained.  That requires a leader.
• A visionary.  A successful supply chain manager must be able to look ahead and envision a system which will be successful in the future.    
• A communicator.  The supply chain manager must collaborate with customers and other company managers.  It’s not enough to define a vision, he/she must be able to communicate that vision to all levels of the company and convince colleagues to support it. 

Who Cares About the Supply Chain

The simple answer is every smart business person.  A supply chain starts with a concept for a product or a service and only ends when payment is received for the delivered product or service.  No one person owns it short of the CEO.  Managing the supply chain is a team effort.  Ignoring the supply chain results in missed opportunities or incurs unacceptable risk.

A supply chain offers three opportunities to add value to your business.

• Reduce operating costs;
• Improve service to gain a competitive advantage;
• Reduce risk.

Improving your supply chain can give you a significant and unique competitive advantage.  Increasing sales by a dollar yields 5-15 cents, depending on the profitability of the company.   Reducing a dollar of costs in the supply chain yields one dollar.  Furthermore, the methods used to increase sales, such as increased advertising, discounts, or even new products, are apparent and can be copied by competitors so the advantage is short lived.  Supply chain improvements are often invisible.  When obvious they are not easily duplicated as each supply chain has unique characteristics.

Your supply chain satisfies a customer only when the right item is delivered to the right place, at the right time, in acceptable condition, and with the proper and complete documentation.  Fail just one and the transaction is unsatisfactory.  A well engineered supply chain enables you to provide services consistently better than your competitors.  An efficient supply chain allows you to charge less for your product or service.  The prize is market share. 

The supply chain is essential to your business; interruptions are damaging, supply chain failures are disastrous.  It takes a string of successes to build a reputation and one mistake to destroy it.  Borrowing a phrase from George Will, a good supply chain team “does the routine well, so they have to do the spectacular as often.” 

People talk about optimizing a supply chain, but supply chains are too complex and dynamic to be optimized.  Supply chains must be constantly evaluated and constantly managed.  The goal should be constant improvement. 

It is never too early to involve the team.  Decisions made in designing the product can have major impacts in producing the product and getting it to the customer.  It is better to consider supply chain implications in the concept development stage than redesigning the product or packaging while racing your competitor to the market place.

To ensure your supply chain is operating properly, you should:

1. Manage your supply chain as a system and not a collection of independent parts.
2. Consider the supply chain in making marketing and sales decisions. 
3. Understand how and where to use automation.  Computers do not necessarily increase efficiency.
4. Capture appropriate supply chain data and make it readily available to decision makers. 

Performance Measurement

Army General Bruce C. Clark said, “An organization does well only those things the boss checks.”  Checking does not mean that you don’t trust your employees.  Active monitoring allows you to identify areas for improvement but also to “catch employees doing well.”  Positive reinforcement is a powerful motivator. 

The devil is in the details and nowhere is this truer than in developing a good system of metrics. 
It doesn’t matter if you call it performance measurement, key performance indicators, metrics or some other term – it all boils down to evaluating how well your team is accomplishing desired results.

“If you don’t know where you’re going, any road will get you there.”

The first challenge is to decide what you want to accomplish.  I’m amazed at how often I observe people neck deep in the details before defining their desired goals.  Even when the mission is clearly
defined, it is so often forgotten.  Managers are pummeled by daily crises, big and small, real and imagined.  Therefore, just don’t define the mission, regularly pull it off the wall and see if you and your organization are still aimed in the right direction. 

Once you have defined the desired goals, decide what data you need to determine if you are accomplishing them.  This sounds obvious but in evaluating companies, I often find that a company’s goals and metrics are not aligned, often as a result of the following:

• Institutional memory or “we’ve always done it this way.”  Managers change the goals but
  don’t change the metrics so the team is moving towards an obsolete goal. 
• Information isn’t readily available so the team measures data that is easy to find. 
• Perfect information is not available.  It is sometimes impossible to get exact data, such as lost sales or customer satisfaction.  In those cases, a good estimate is better than ignoring the function. 
• Starting with the details rather than the end result.  This is inefficient and more importantly could result in key areas not being monitored. 

To create an effective system of metrics,

• start with the organization’s mission,
• decide what functions are essential to the accomplishment of that mission,
• identify the key actions for each function and measure those actions.   

This process identifies mission essential tasks and identifies unnecessary or unimportant actions that are sapping resources and diverting focus.

• Measuring performance requires valuable managerial time.  Make your metrics efficient by measuring only essential items on reasonable schedule.  A function working well can be measured less frequently than one needing improvement.  Make your system flexible as well as efficient.

Two final comments:

Ensure your metrics motivate desired results.  In one organization, the sales were measured monthly against goal.  In order to meet the sales quota, sales personnel would promise expedited delivery or accept orders that they knew would be returned.  These and other practices did not increase sales but did increase our handling and transportation costs.

Balance authority with responsibility.  A transportation company was measuring the average weight per truck in order to encourage efficient use of vehicles.  However, another organization booked the cargo.  The unit being graded did not have the authority to turn down inefficient bookings and in order to meet the goals was under reporting the number of truck that were available for commitment.  Therefore, in order to meet a metric over which they had no authority, they were under reporting a function which they did control.  The organization which was responsible for the booking was not being held accountable so the poor performance continued unabated.

What is the Supply Chain?

The supply chain is one of the most discussed and least understood concepts in business.  Many
people consider the supply chain to be sourcing of supply and materials.  Others equate it to logistics.  Each definition is correct depending on its application.

I consider the supply chain to be all encompassing.  It begins with a product or service concept and is not complete until payment has been received.  Some refer to this as the “value chain.”

My first experience managing a supply chain was as an Army lieutenant in England.  Our collective mission was to move ammunition from a mine in central England to Germany.  One officer was responsible for removing the ammunition from the mine.  Another officer was responsible for moving the ammunition by truck from to the port.  I was in charge of loading the ship for movement to the Continent.

 

In the mine, small trains powered by electric batteries moved the ammunition.  The batteries were old which limited operations to a few hours a day – the remainder of the day was spent recharging the batteries.  As the mine was scheduled for closure, the depot commander saw no reason to invest in new batteries which significantly reduced the flow of ammunition to the port.

The officer in charge of the highway movement limited operations to daylight hours to avoid
overtime costs for night driving.  This further limited the flow of cargo into the port.

These actions minimized costs at the mine and for freight, but they significantly extended the time it took to load the ship as we were always waiting on cargo.  The additional port costs and lease of the ship far exceeded the cost of new batteries for the trains and driving at night.  I’m sure actions I took to minimize the cost at the port added to the costs for the road transportation and mine operation as well.

Each of us had attempted to optimize our individual link in the supply chain.  However, our actions increased the costs in the other links and ultimately increased the total costs of the entire
operation.  We optimized the links but sub-optimized the system.  This is a clear example how not to manage a supply chain. 

Ironically each of us received a letter of commendation for our cost saving initiatives, which proved our seniors at that time did not understand supply chain concepts any better than we did.  

The Three Functions of Being a Successful Boss

In my career I’ve been the boss and I’ve been on the staff.  Both jobs are challenging and have sufficient opportunities to contribute to the organization’s success but being the boss has it's unique challenges.  On occasion I’ve been asked, “What does the boss do?”

 The boss is responsible for everything the organization accomplishes or fails to accomplish.  He/she meets this responsibility by performing three functions.

1. The boss creates a vision for the organization. An old saying goes, if you don’t know where you’re going any road will get you there.  The boss’ job is to define the long term destinations (e.g. 3 or 5 year plan) and the intermediate objectives (e.g. 1 year plan) required to achieve the long term objectives.  A smart boss doesn’t do this alone – he/she seeks the advice of those in the organization and outside experts.
2. The boss then leads the team to create a roadmap to achieve the vision.  This roadmap is based on an assessment of where the organization is today and what resources (time, money, equipment, training, expertise) are required to complete the journey.  
3. The third and most important function is creating the proper work environment.  An ideal work environment is:

• Ethical.  You can’t trust your employees if they don’t trust you.
• Empowering.  Employees know that honest mistakes will be forgiven as learning experiences.  In a work environment where honest mistakes are punished, employees will avoid taking on additional responsibilities or tackling difficult problems.  I would rather have a team that each day does eight great things and makes two honest mistakes rather than a team that does two great things and makes no mistakes.  
• Trusting.  Expect great things from your employees and you will rarely be disappointed.  Respect should be mutual.
• Based on team work.  Everyone, regardless of salary or title, should share a common goal and make a contribution to achieving the organization’s vision.   

A successful boss is leader, a manager, a visionary, a cheerleader, a teacher, and a member of the team.  It’s that simple.