Supply Chain Management For Dummies. Daniel Stanton

Sigma and can teach other people how to manage process improvement projects.

       Master Black Belts have such a high level of mastery that they can train and supervise Black Belts.

      Step 4: Improve

      The next step is putting the knowledge you gained from data analysis into action by making changes to improve the process. These changes can happen all at once, or they can be introduced over time. Commonly, this phase includes some pilot studies to provide confirmation that the changes provide the expected benefits before you implement them throughout a process. If you decide that several improvements need to be brought online over time, you can sequence them in a multigenerational project plan (MGPP). An MGPP is like a road map that shows the order in which you will implement improvements.

      Step 5: Control

      The funny thing about improving a process is that sometimes, when you stop paying attention to it, the process goes right back to working the way it did before you improved it. In Six Sigma, the final step is establishing a system to ensure that the improvements you made become permanent. Control often involves performing ongoing measurements and reporting to show that the improvements remain in place and continue to provide consistency over time.

      Theory of Constraints

The Theory of Constraints (TOC) is one of the simplest, most powerful supply chain concepts. The basic idea is that every process is limited by some kind of constraint. (Think of the saying “A chain is only as strong as its weakest link.”) TOC is about tuning an entire supply chain to run at the same pace as the slowest step in the process.

      There are many examples of how constraints control all the processes around us. In the world of auto racing, there are times when you need to limit the speed at which cars travel around the track, so you send out a pace car that no one is allowed to pass. When you’re draining a bathtub, the rate at which water flows out is constrained by the size of your drain. In other words, the most restrictive step in a process is the one that constrains the entire system. TOC helps you focus improvement efforts on the constraints because that is where you can have the greatest effect on the supply chain.

      After you find the constraint, you have two choices:

       Slow all the other steps so that they run at the same speed as the constraining step. This option prevents the buildup of inventory between the steps in your process.

       Improve the constraint so that the entire system moves faster. As you continue to improve the constraint (perhaps by using Six Sigma), eventually, the constraint is no longer the slowest step in your process and stops being a constraint. Some other step becomes the constraint that’s limiting your process, and the cycle starts again.

      Suppose that you have a supply chain that involves several steps. Your customers, at the end of the supply chain, want to buy 1,000 widgets each month. But you can deliver only 750. How do you find the problems and fix them so that you can increase the capacity of your supply chain and sell your customers the products they want?

      Because of TOC, you know that the entire process is limited by a single constraint — in this case, the slowest step in the process. Instead of trying to fix everything, you need to start by figuring out which step is slowing the rest of the system.

      After you find the constraint, you can slow all the other steps so that the entire system is running at the same speed — in this case, tuning each step to produce only 750 widgets per month. That way, you won’t have inventory building up in between the steps of your process. But you also won’t be meeting all of your customer’s needs.

      Alternatively, you can improve the constraint, allowing the entire supply chain to move faster. As you continue to make improvements, the constraint no longer limits the process. At that point, some other step has become the constraint. Then you need to shift your focus to the new constraint.

TOC was made popular by a novel called The Goal, by Eliyahu M. Goldratt (North River Press, 2014). Herbie was one of the characters in the book, and his name has since been adopted in TOC to describe the constraining step in any process. Although looking for a constraint may sound obvious, the problem is that constraints are often hard to find. When a constraint is at the beginning of a process (like a pace car) or at the end of a process (like a bath drain) then the process is probably stable. When a constraint occurs in the middle of a process, the constraint can cause chaos. For example, a machine in the middle of an assembly line that breaks down might be a Herbie. But until you look at it from the perspective of TOC, people might not see how the starts and stops of that one machine actually cause inefficiencies throughout the whole supply chain and lower the company’s overall capacity.

Structuring Supply Chain Projects

      Projects are the way that companies make changes. Because supply chains need to adapt to changes all the time, project management has become an important part of supply chain management. One common characteristic of supply chain projects is that they tend to be cross-functional. You may need to have logisticians and operations managers, human resources professionals, information technology experts, and accountants working together, which can create challenges in terms of communication and workload. First, you need to look at the unique characteristics of supply chain projects and how they can create management challenges. Then you need to have a set of principles that help you lead cross-functional projects and navigate these challenges effectively.

      Managing cross-functional project teams

      Supply chains connect companies and cut across the silos within a company. As a result, supply chain projects commonly involve team members from many functions. A supply chain project team might include people from business development, customer services, shipping, receiving, manufacturing, information technology, accounting, and human resources. Managing cross-functional supply chain projects is a great way to develop a broad network and a deep understanding of the complexity of supply chains. The project manager must master the use of influence, pay careful attention to communications, and help team members manage their priorities for the benefit of the team.

      Bringing people with diverse skill sets together as a project team can be a great way to stimulate innovation and accelerate change.

Cross-functional project teams have some major challenges too. Three of the most common challenges for cross-functional project managers are authority and influence, communication, and prioritization.

      Authority and Influence

      Authority means that you have the ability to hire, fire, reward, and correct someone. Often, key team members report to managers in another division in the company and are only loaned to the project. This is an example of a matrix organization. In matrix organizations, it can be difficult for the project manager to address performance issues directly because they do not have the authority to do so. If the project manager doesn’t have the authority to manage the team members, they will need to rely on influence to keep all the team members pulling in the same direction.

      Communication

      Experts in any field have their own tools, rules, and language. In supply chain management, the same word can mean something different things depending on the context. Transportation companies (such as steamship lines and trucking companies) refer to their customer as the shipper, whereas their customers often use the term shipper to describe the transportation company. The project manager needs to be able to translate among functions and encourage people to explain what they’re trying to say without using jargon.

      Prioritization