Dots, Dashes, Spaces – The art of the Part Number

Ahhh…part numbers such little inconsequential things – such a pain to get right. A colleague of mine is working in an organisation which is about to implement a new supply chain IT system – they have the joy of being part of a merger which is pitching several diverse business units together – they’ve taken the view to centralise their Supply Chain and my friend is part of the process of deciding how their new system will operate.

He’s got a real headache at the moment each of the businesses being merged runs it’s own IT solution and they all have different rules with regards to Part Numbers – He’s in charge of migrating inventory data and defining policies - he’s found Part Numbers like the following (these are all based on a theme)

123XYAZ Qty 4 Packets

123XYAZ.42

123XYAZ 42

123XYAZ*not to be issued*

123 XY AZ-42

Etc….

Guess what – there all the same item – and most numbers had stock associated with them! – the parent organisations had lax control over who entered part numbers within the IT system and as you’d expect over time – all hell broke loose!

So what’s the answer? – Well they’ve taken the right step in defining a policy on data entry – they’ve also agreed to limit who can create part numbers and put a formal process behind it – but ultimately there in for some fun discussions and a lot of work in rationalising these (there’s several hundred thousand part numbers in the combined systems) – although actual unique parts will be much lower than this….so what’s the moral in this tale?…..on the one hand it could be to formalise the process and don’t let this happen in the first place…on the other – the lesson in this is don’t get involved in supply chain mergers!

Managing Supply chain risk

The other day we were investigating an inventory forecasting tool – we’d invited a solutions company to present and the salesman was showcasing his product – during this he put the spin that this application had other attributes in that it was not just for inventory but could be used generally within the business to help model the business activity over time and help us spot and reduce business risks..

A good point well made we though - risk management within business is often seen as a bit of a dark art and sometimes (incorrectly) overlooked or incorrectly overstated (CEO’s facing on the big headline risks rather than the small ones that can really bite).

Within the world of supply chain risk management is particularly pertinent as the relationship between supply chain and the end customer is tightly bound. Take the example of a stock out – this I’m sure happens in most businesses every week – however this small problem - a failure to supply goods – can not only result in inventory problems or manufacturing delays but can have a direct relationship with lost sales and lost customers. Therefore not only is the challenge identifying the risk but understanding the possible outcomes when that risk is realized.

As we all know, the world of supply chain is complex with many stakeholders and processes – the risks within it are many – for example there are risks associated with suppliers – they may go out of business, there are financial risks – e.g. fluctuating exchange rates – there are “front page” risks such as Geo-Political and there are technical risks such as Obsolescence.

Perversely in recent years we have seen supply chains through leaning activity increase their exposure to some risks – in years gone by we have seen how many organisations have utilised their “fat” as a risk management mechanism – overstocking is a prime example of that. Lean organizations can suffer greatly because they have reduced the buffers that their organisations once – had – this isn’t necessarily a bad thing but as with most business issues one of the key mitigations for risk is having an appropriate strategy – think of project management disciplines – how many businesses have a risk management (and mitigation) strategy.

Going back to our IT sales guy - technology can of course offer some assistance it can help model what if’s and raise awareness but alone it isn’t the answer – risk management takes strategic thinking and management information to ensure that the right decisions are made.

So what does this mean for Supply Chain execs? Well ensuring that there is a level of awareness within the organisation is a must for one - for example – take your supplier profile – are there any small niche suppliers that you rely heavily on? What’s there financial position – how much do they rely on you? What’s your spend by currency? How would a significant change to exchange rates affect you? Overall Risk and Risk Mitigation is something we should all preach – awareness and avoidance – build it into our business culture and constantly monitor it.

Gibson HD 6X Innovation vs Supply Chain

Happening right now in Anaheim is the NAMM show (http://www.thenammshow.com/). NAMM is an internationally renowned music industry trade show for music manufacturers. No doubt NAMM will showcase many exciting new products from those presenting at the show, some of those products will probably represent use of the latest cutting edge technology and product innovation. While innovation is what keeps businesses secure in the long term, It’s worthwhile considering the impact on the supply chain of new products, especially those showing a significant level of design change.

A good case study for this is the new Gibson HD 6X Pro which will be shown off at NAMM. Gibson claim that this is the most revolutionary leap forward in guitar manufacturing in 50 years. Gibson (www.gibson.com) have been making guitars for over 50 years and have numerous manufacturing plants dotted around the world and are one of the most renowned guitar manufacturers. If you look at the industry itself, the guitar itself has more or less remained fairly static for many years with the basic premise consisting of a small set of commodities – i.e. wood, electrical components, plastics, chrome etc all coming together on the production line or craftshop to form the final product. With increasing competition (from the far east) Gibson has a need to differentiate itself.

Gibson’s new HD 6X Pro guitar mixes traditional guitar manufacturing “hand oiled mahogany neck, smooth frets, classic humbuckers for traditional tone” with ultra modern technology which allows the output (which Gibson call Hex output) of each string to be digitally processed as Gibson state on the website, “Imagine using six guitar amplifiers – one for each string – or recording six strings individually onto a computer”.

The Gibson HD6X with it’s use of modern electronics is certainly innovative with the way it embraces modern technology. This builds on a shift within the industry that has in recent years seen manufacturers like Line 6 enter the market which was once relatively low technology and dragging it into the modern era of consumer electronics. The Line 6 Variax can impersonate the sound characteristics of a multitude of guitars and has, unsurpringly, some complex electronics and materials inside.

From a components point of view Gibson have added a number of new components to the traditional make up including new controls, pickups, electronics, outputs. The HD6X also ships with it’s own special set of strings and therefore there is a supply chain dependency for through life support of the product.

Clearly then products of this type indicate somewhat of a departure from the usual fare. But what does this mean to the likes of Gibson’s supply chain. Well, as products get more innovative, supply chains need to evolve to keep pace. First off new components may need new suppliers, new storage conditions, different skill sets and technical know how within it’s purchasing community. Through life support of the product may radically change resulting in new repair schemes, different spares requirements etc. A radical change in products may need a quantum shift in the company – suppliers in new geographical areas. Innovations can mean a requirement for whole new skill set within the purchasing community – take Gibson’s shift from relatively old school commodities to high end electronics. Without a doubt it’s supply chain has had to adapt to compensate for this shift.

Clearly the biggest assistance that Supply Chain can get is advanced warning and time to react. The musical instrument industry is not unique with innovating it’s products but a substantial innovation (or complete re-design) can wreak havoc with existing supply chains, sometimes requiring completely new complimenting supply chain strategies. The old adage therefore of design and Supply chain requiring a close working relationship remain truer today than it’s ever been. Given the change that product innovation can inflict on the supply chain – radical innovation can be a risky road to follow - but the rewards of being a successful early adopter can reap huge rewards.

Supply-Chain World 2007

A date for your diary if your reading in the US.

The Supply-Chain World – North America 2007 Conference & Exposition is happening from from 19-21 March, 2007.

It's always great to go to these industry get togethers - do some networking and finding out what's happeing in the world of supplychain

Supply-chain.org states that "The primary focus of the 2007 SCW program regards needs of supply chain managers, their suppliers and customers. Keynote speakers include Ed Oakley, chairman & CEO of Enlightened Leadership Solutions, Inc., who will discuss “Mastering Supply Chain Management: Balancing the Hard and Soft.”

The conference will also feature new training courses based around the SCOR model.

Check out http://www.supply-chain.org/cs/root/news_press/view_news_release?pressrelease.id=90 for more details

Visual Supply Chain Metrics

Following on from our previous post on Supply Chain metrics it’s worth discussing the use of visual metrics in the workplace.

In today’s age of modern computer systems and technology it’s surprising sometimes to see how few organisations have a handle on how their business is doing – it’s all the more surprising to see the affect this has on desk level operatives such as buyers or warehouse staff.

It’s not radical to assume that if people don’t have clear objectives and are knowledgable about how the business is performing that they’ll continue to work as they always do.

So how do you compensate for this – well one area that we recommend to our clients is that the business grasps the use of visual management and information sharing with both hands, performance management should become part of the organisational culture. There are a variety of methods in doing this.

The more technically savy organisations may make this “business intelligence” part of their organisations intranet – encorporating hierachical views of the companies data and measuring this against set targets. Some businesses take the step of consolidating this data and emailing it out as a monthly brief to all staff. How it’s presented isn’t necessarily too important the ability for staff to tap into the management reports is though.

One other common method is the use of management boards – we deploy these in some organisations and they tend to be localised (to specific departments). We just use common garden white boards where we fix the monthly management reports to. We then run short (but sharp) management briefings with staff regularly (we run a 15 minute business brief on a Monday) to discuss the organisations performance (eg, output figures, performance against budget etc) and the coming targets for the week.

Where the business is underperforming these sessions represent an ideal time to discuss how the situation can be righted – we run in parallel to the reports and actions list where we list owners and actions of specific tasks that have been generated by the Visual Supply Chain Metrics. Our “management white board” is just past the entrance to the office – you can’t miss it and it’s visible too all. The key output from this is that everyone shares in the departments performance and everyone knows the departmental objectives.

The old adage “you can’t manage what you can’t see” is truer now than it’s ever been – sure Supply Chain metrics are important – they help you see what’s happening – but it doesn’t stop there – so many business produce a Business Intelligence monthly pack and then file it away!

When it comes to supply chain metrics we say!

• Display them
• Share them across departments (be proud of your performance)
• Discuss them
• Review them

Supply Chain Collaboration Systems

One of the buzz words from Supply Chain systems resellers is the joined up enterprise – the likes of SAP, JDE, Microsoft all exude the benefits of joining your supply chain Collaborating with both internal and external customer and suppliers.

Microsoft state of it’s AX range “Microsoft Dynamics AX brings together people, processes, and technologies wherever they are located worldwide” (http://www.microsoft.com/dynamics/ax/product/overview.mspx)

The technology is nothing new and the ability to share data with suppliers has been around for many years now (think EDI) – the internet has opened this up tremendously and now you have the ability to tender for your requirements, track your procurement transactions – pay your invoices on-line to name just a few processes that were handled manually ten years ago.

Industry have certainly embraced the principle – but how many have integrated deeply is up for debate - We’d love to start a discussion on collaboration and how you’ve integrate with your suppliers and partners and what benefits you’ve realised.

Is there anyone out there who’s being really innovative with their collaboration – any ideas of best practice – comment away!

Procurement Training

One thing we often come across is businesses looking for training for Procurement staff – clearly there are some good organisations out there that provide professional development (www.cips.org). However for smaller organisations the costs of putting staff through professional courses can sometimes seem a little daunting (often they resort to buying in this knowledge by stating specific educational qualifications on job vacancies).

However for many organisations they won’t want everyone trained up to this level – but will expect some procurement training focussing on specific areas to improve staff competency.

Commonly Procurement Training focuses on a combination of practical training and more formal (often longer term) developmental.

CIPS have developed a purchasers toolkit which covers the following attributes:

• Purchasing
• Negotiation
• Relationship Management
• Influencing Skills
• Legal
• Contract Management
• Stores Management

For many this represents an ideal mix of what procurement staff need to know – many will wish to tailor this mix according to needs. Often as not its’ the Negotiation and Legal/Contract Management that tends to be the weak points in many organisations. What about your company – how do they train staff?