State of the Supply Chain Union - Part 2

This is a follow-up to our State of the Supply Chain Union blog from late February.  In this blog, we talked about three interrelated issues that American companies are facing these days.

1. Too much work and too few people.
2. Loss of process and process improvement focus.
3. Not understanding and fully communicating the capabilities of the supply chain.

We continue to hear evidence and examples of these issues preventing companies from achieving their full potential.  

Recently, Mark Gavoor, met with Bob Schlagheck of DTE Energy.  They were discussing these issues and how work and work life has changed.  Bob said the from his point of view, "It used to be about doing the job right and now it is just about getting the job done."  This certainly supports our thesis about organizations having put process improvement aside because of the volume of work.  Things are done just enough to get by.  Efficiencies are not captured and standardized.  Thus, the same issues are faced and "solved" over and over again i.e. that is they are never really solved.

This might be about one generation complaining about the work ethic and smarts of a younger generation.  This is certainly a trap that is easy to fall into but we do not believe that is the case today. Everyone, at every age, is muttering about this issue.  It is part of the new normal that is the result of the Great Recession.

Perhaps re-engineering is part of the answer. Yes, re-engineering.

Re-engineering has been associated with downsizing since Michael Hammer first started using the term. There are executives that have made re-engineering central to their career and it has always meant downsizing.  It has always meant cutting staff.  The underlying belief is that people will always figure out how to get things done.  Using process improvement methods such as Six Sigma certainly the remaining staff figure out how to get things done more efficiently.

Re-engineering today has to be about optimizing the human resources, the business process, and technology to get the most efficiency.  As technology became more prevalent and powerful, re-engineering always meant a reduction in people.  There is a point where this socio-tech system is optimized and further reductions will actually have a negative effect on productivity.  Our thesis is that many organizations are at the point where they may actually need to add people to become more productive.

It is not possible to measure how much this is costing businesses.  The stories we hear involve inefficient execution of the work and rework.  It is not like these problems are not acknowledged. Companies are not just taking this as seriously as they should.  When we say companies... we mean management.  There are certainly initiatives to try to solve problems and improve the way processes perform.  Teams are assigned to try to solve chronic problems.  Sustainable results, however, are hard to come by.  People complain about mind numbing meetings hashing over the same issues and ideas. Often when teams come up with recommendations, management support is not there to fund or implement the recommendations the teams have made.  This saps the energy and expectation of the next team assembled to solve the same problem.  

Think of an Indy or NASCAR pit crew.  The team size, the procedures, and training are all geared to achieving minimizing the pit stop time.  Reducing or increasing the the crew size will actually add time. The pit crew is actually "right sized" and right trained for the job at hand.

Executives who have built their careers on constantly reducing staff are ill prepared to judiciosly add staff.  Our advice is to employ the same methodology as used in engineering business processes for ERP implementations.  Map the AS-IS process, define the TO-BE process, develop a plan to get there, and then implement the plan.  The primary goal is to get the job done right as efficiently, reliably, and effectively as possible... not to continue to reduce headcount.