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Rethinking Supply Chains

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guided presentation on Elucidate that explains the 
problems without it, the opportunities it offers and 
the changes required to improve.
Case Study: How Replenishing Inventory by Pulling it thru the Supply Chain increases profits


When Flow Doesn't

How come work gets stalled?  And why doesn't it get going again?  By Henry Fitzhugh Camp, December 29, 2012

Stagnated flow is natural in a world without humans but unnatural in work flow, since the people at the office have an affinity for order. 

FlotsamIn every company, there is flow.  We take advantage of the flow to get work accomplished.  The analogy I came up with is that of a river.  You throw a stick in the river and can reasonably expect it to be carried on downstream by the flow.  However, we all notice that flotsam and jetsam accumulate along the banks, sometimes stuck or just caught in an eddy.  

Our jobs, as managers, are to get the work that is stuck going again – to keep the banks of the river beautifully tidy.  You will agree that it wastes our time managing the sticks that float down the middle of the river.  We make things better by cleaning the bank, seeing that it is obstruction free and that eddies are minimized.  Once complete, we are able to get more accomplished with less work.

But the river analogy is passive.  Shouldn’t we expect that in our companies that the people we pay to aid the flow would keep work flowing?  I know that that expectation in my own company is not met.

Our employees love a clean bank too, just like the one we envision.  However, they live in filth.  In our case, the work we flow is inventory.  I went looking for inventory stuck in our system this month.  It was literally everywhere I looked, without exception.  In the returns from customers location, in the return to supplier location, in the temporary location from which we bill goods shipped directly from our suppliers to customers, in the receiving staging area, in dead inventory without customer demand, in slow moving inventory where there is only slight demand, in consigned locations, in demonstrator stock, in never invoiced deliveries, in paid for goods never received … everywhere.

What happened?  A few of these discoveries were revelations but most were known by one or more people.  Not only that, but the stock had been stranded for many months or years!

CompetitionNow, like many, my business is tough.  Competitors seldom account for the losses that stagnant inventory represent.  After all, they are losses, aren’t they?  Money is paid for inventory but no money ever comes back – common sense.  Using GAAP, they calculate their gross margins on sales but the only cost that is subtracted from sales is the cost of what IS sold.  Commissions and taxes are paid on profits which are not reduced by stagnant inventory.  In other words, my competitors think they make more money than they really do.  Consequently, they sell at too low prices.  They are struggling to attract customers in the highly competitive arena where customers choose on price.  To stay in the game, we charge the same "too low"prices.  But if our investments in so called “assets” too often turn into losses, we are all fighting a losing battle.

Why haven’t our employees already handled these Super Employeeexceptions?  Why aren’t our banks clean?  When the regular process fails to work, people simply avert their gaze.  They have learned not to take chances.  They are horribly frightened of taking an action that might be labeled "wrong" by managers.  They know something has gone awry, yet acting outside the normal course is the last thing they are willing to do.  

Did we do this to them or did they come to us this way?  Regardless of the answer, what do we do now?  Here are a smart guy’s take on it in two different talks.       Animated                    TED Talk

Hmmm …

Happy New Year Henry! Good article, we often do things out of fear or just because thats the way its always been. If you have not read "The Element", its worth the read (Ken Robinson)
David Baker -
Good stuff as always. Thanks. Hope you had a wonderful Christmas and have a great new year.
Tom Corea -
Enjoyed this, Thanks. Check out a guy named Leon Botstein, Pres. of Bard College, who has written some good stuff on this subject. Happy New Year to all
Tim Wickes -
Very true! Makes a cnhgae to see someone spell it out like that. :)
Mickey -
Liked the blog and Ken Robinson. No doubt about it, you and I were both ADHD! Funny, I have been interviewing kids for Washington and Lee for three years in Arizona and I am sure pissing their parents off. I have espoused the notion that their kids will get more out of a liberal arts education than by studying for a trade. To get their attention, I suggest that studying a trade will get them a job, but that their chances for leadership and making a difference will be enhanced if they study
Chris Volk -
Henry - great stuff. I've been thinking about Flow since Eli brought it up as a unifier of popular disciplines a few years back. In going a bit further, and it seems like common sense, there appears to be four flows: 1) Information Flow (which almost always precedes physical flow), 2) Physical Flow; 3) Decision Flow (physical flow gets blocked by non-decisions) & 4) Cash Flow. I haven't been able to come up with a 5th Flow. Food for thought. Thanks for the brain vitamin in your blog.
Mark Stanley -
Thanks Henry for sharing this... It's hard to argue against any of your points. Good fuel to start the New Year. Have a great one...

Pat Bennett -
Good blog Hank. Seth Godin preaches the exact same thought about the US education system. The curricula is still based on the age of the Industrial Revolution. It’s totally ridiculous.
Watson Courtenay -
Henry, Good points. I like the analogy of the river. It does make sense to deal with the banks. The issue to address is the process to dramatically improve flow. TOC can significantly improve how quickly the water moves downstream. We can turn a slow-flowing stream into a fast-flowing river or even a waterfall. I think a great reference on flow and the process is the paper I worked on with Eli Goldratt titled "Standing on the Shoulders of Giants" describing the four concepts of flow.
That kind of tihnikng shows you're on top of your game
Thanks Henry – I’ve seen clips from robinson before, he’s good. I’ve long thought that way too many children are overmedicated. Like the arts, sports can liberate children from the medicating tendencies of adults.
George Vieth -
Thoroughly enjoyed the stand up comedy with a serious message that U posted in yr blog. I am thankful that I did not grow up in the ADHD drug age as I might have been treated for same for my "out of control" tendency to move and pace when I think. Also being that I am from the car of the queens empire I am partial to the dry English humor.
Anthony Awerbuch -
Great analogy Henry and as an employer most of my life, it seems that very few actually innately have what it takes to even know the banks are there, let alone the initiative to clear them. Unfortunately, employers may have to be the exemplar and educator.
Hi Henry, looks familiar :-)! Have a great New Year... Regards, Peter
Peter Mol -
Thanks Henry, I think Robinson is right. I was bored out of my skull all through school, luckily I liked to read & I guess that's how I got "educated."
Embry Rucker -
Thanks, Henry. Happy New Year for you too! David
David Proveda -
Enjoyed the videos of you and Sir Ken. Have a great new years.
Bob Zoller -

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