Seeking First to Understand in Supply Chain Design

Well, it has been a long time and thank you for all the readers who stayed close to this.  I have so many thoughts to write about and I realized when I am not writing I get a bit lazy in terms of researching what best in class people are doing.  So, therefore, I need to write.

Today's posting is about "Seeking First to Understand".  As Steven Covey told us, when you are engaging with either your team, customers or your spouse for that matter, you should always "seek first to understand".  God gave us two ears and one month for a reason.  Listen, think and then talk if you have something to say.  

How does this relate to Supply Chain Design?  Simple, when engaging with a customer or one of your team you should spend the vast majority of your time seeking to understand.  Listen to what they have to say, ask probing questions (not yes / no questions but questions that are open ended such as "Tell me More...  "Help me understand...") and then think.

If you are formulating a response in your head while someone is talking then I can assure you that you are not listening.  Despite popular belief, most people and virtually all minds, cannot multitask while communicating.  If you are thinking of your response while the person is talking then you are not listening ... it is that simple.

In Supply Chain design, listening means asking:

1. What are your pain points?
2. What are you trying to accomplish with the brand?
3. What does the client's or the user of the supply chain customers say and think?
4. What does your company want to be known for (for example.. is the competitive advantage being the low cost provider, is it being the high service..i.e. Zappos provider)?

When having one of these sessions you should not respond with immediate ideas but rather with a lot more probing questions.  Then, you think.. and that may take days but you think hard. Only then will you be able to formulate a good strategy.

Thinking is hard work and it is tough because, in general, people like to see action (sometimes any action) and thinking is not an outward action.  But, trust me, it is the right thing to do. 

"The Logistics Failures Will Not Be Repeated" - Part Two

Note:  This is Part 2 of a Two Part Series Concerning Logistics Lessons Learned in The Israeli National Defense Forces (IDF).  You can read Part 1 here. 

This entry deals with an article I read which discussed the logistics failures of the Israeli Defense Forces (IDF) in the last Lebanon War.  I felt the article really applied to what I see as a common business cycle where a business sees success then begins feeling certain elements are not "core" to the business and logistics almost always becomes one of those items.  The business sheds / outsources / under invests in the logistics centers. Inevitably, something happens where logistics becomes a necessary requirement and the company finds out they no longer have the capabilities which they had originally and which may have actually been core to the success.  

Having been caught flat footed the business rushes to reinvest and the cycle starts all over again.  

The IDF found themselves executing this same cycle.  Prior to the Second Lebanon war they had stopped investment and training in the logistics forces, they were not seen as core and their capabilities atrophied to dangerous levels.  Once they went into Lebanon and the IDF literally had soldiers dying of thirst they realized how wrong they were.  This part of my two part article (Again, you can read part 1 here ) discusses the solutions. 

The first item they had to fix was the competency of the forces in terms of both training and equipment.  Due to under investment the logistics forces were the last to get equipment and the last to be invested in for training.  This was fixed and the "competency" level was raised to above 90%.  

A second and very interesting development was the organizational structure they adopted as a result of the learnings during the second Lebanon War.  The reorganization is described:

"Most importantly, following the war, the Logistics Corps was removed from the responsibility of the Ground Forces Branch (to which it had been subordinate a short while before) and once again, became subordinate to the GHQ Logistics Directorate. In addition, we established unified responsibility in the field of logistics – from the GHQ to the level of the individual soldier"

What they found was when the logistics corp was subordinate to the operational forces (ground forces) they were almost always going to be ignored or at the most they would receive just minor investments as they would always be considered "non-core".

In business we see this all the time in organizations where logistics is subordinate to a brand or a commercial part of the business.  Yes, there are great examples of enlightened marketing and commercial general managers who fully understand the competitive advantage of a great logistics team but mostly they under invest because they push all the money to brand, product development and advertising.  They develop a great product, generate huge demand but find their ability to move to market in a timely and efficient manner is limited. 

The IDF essentially bypassed this organization and had the Logistics Corps reporting to equally high levels in the organization. This sends the right signal to the commanders and not only gives logistics a "seat at the table" but actually makes them "equals"  at the table.  

Finally, the IDF established a policy whereby no plans for military action are created without detailed logistics plans built along side the war plans (read: Logistics plans built along side the commercial plans).  This made the ground commanders (read: Commercial General Managers) equally responsible for the logistics successes (and by default responsible for any failures) of an entire operation.  They stated:

"Beyond that, the logistics issue was incorporated in all IDF operational plans. Today, no plan is drawn and no exercise is conducted without fully incorporating logistics planning. During the Second Lebanon War, many IDF commanders did not consider logistic issues a part of their responsibility, mainly because they had become accustomed, over many years of low intensity combat operations in the territories, to a state where logistics support was delivered to them, all the way to the end units on the ground. Now, IDF commanders understand that as part of conducting combat operations, they must be responsible for logistic supplies on the ground, and that without logistics, their combat operations cannot be continued.”

Again, think how many businesses do not incorporate logistics into their overall product development plans or do not incorporate them early enough to matter.  When decisions are made in terms of size, channel distribution, packaging, final assembly etc is when logistics people should be at the table helping and providing input. I call this "Design for Logistics"™  Many times companies get the logistics group involved after all these decisions are made and find out they have developed a "Frankenproduct" which will clog existing logistics networks. 

Concluding Lessons:

There are so many lessons to be learned here by companies and here is my summary:

1. Understand logistics is core to what you do and can provide competitive advantage if you properly invest. 
2. Even if you outsource do not "throw it over the wall".  You need to manage and involved your outsourced partners as if they were part of your organization.
3. Involve Logistics groups at the very beginning of the design and product development phase in a method I call "Design for Logistics"™
4. Think about the organizational structure.  Whatever organizational structure you select ensure the leaders of logistics have equal say and are not subordinate to the commercial organization unless you are absolutely sure the commercial leader will not ignore or under invest in the logistics capabilities. 
5. Invest in training and development of the logistics groups just as you do the commercial side.  

It seems these lessons have to be learned over and over again and it is good to reemphasize them.  Thank goodness lives are not on the line in business as they are in the military so the cost of not learning these lessons are only measured in dollars versus lives.  However, if a company is going to grow and prosper, they ignore these lessons at their own peril.  

Impact of Mega Trends - Design for Logistics

As transportation rates and capacity go through a major change one trend which is clearly developing is what I have called "Design for Logistics".  This "mega trend" ensures the logisticians are involved in the design of the product at the very early stages of development and the reason for this is mostly cube utilization.

We have known for quite some time a critical way to reduce spend is just to consume less.  Seems very logical to me and really passes for being a truism in our industry.  However, what has not happened until recently (on a large scale) is people thinking about this before the product is actually designed and built.  As we all know, once the tooling is in place to make the product the goal of the manufacturing group is to run the tool to death; at that point a change in design becomes very costly and almost impossible to execute.

The solution therefore is to get the logistician involved on the front end.  Of course, we do not want to build any "Aztecs" here (really ugly products which were made ugly to make manufacturing and logistics more efficient).  First and foremost, the product has to meet customer needs and, in most cases, actually "wow" the customer.  However, once we identify the critical components of the product which create that emotion with the consumer, we then take the rest of it and design the hell out of it for efficiency in logistics. This usually means cube utilization.

I heard a high level executive for a major truck stop firm say his fuelings were down by 15% and he was attributing it to more "stuff in the back of the trucks" and therefore less trucks.  I am not sure he had real data to support it however given my experience I believe he was right.  And this trend will continue.  The logical and ultimate conclusion is to eliminate shipments completely (aka, Nook/Kindle e-books and iTunes stores).  We know not everything can be digitized however things can be made smaller, packed tighter and assembled at the point of use versus at a factory (Think IKEA furniture).

If you have not instituted this process in your company, and transportation costs are meaningful to your business, you should immediately think about this important topic.  It is far more complex than I have written here and there are clearly ways to be successful at this and ways to screw it up however you should start it now.