…and one more thing on the supply chain

This is the last in a series of four articles that discuss the supply chain. Well, it could be the last, it really depends on what happens with the next article. If we look back at the other articles, the first was OMG…IT’S DEVASTATING…the stock market? NO, well…yes, but I’m talking about the Supply Chain, and talks about the Toyota Production System, and how you have to work with your suppliers all along the supply chain in order to make sure that the suppliers stay viable. The second, How Deep is Your Production System? Refers to how many companies implement many improvement ideas into their production system, but miss real opportunities by not taking it across the organization. And the third, So…What Happens When Requirements Change? A story about the Toyota Production System, explains how, within the Toyota Production System, changes in requirements seldom change, but when they do, what happens.

Here are the Key Points

Here are what I consider the key take aways from the first three articles, these could have been expressly stated or just implied:

·      Working with your suppliers to create a relationship that is mutually beneficial, is, in my opinion, a much better way to go, than creating an adversarial relationship

·      When things do not go as planned, early communication, and understanding the hardships that will be presented is key

·      It needs to be a two way street

·      When it comes to implementing operating models, it needs to be wide AND deep. Encompassing more than just PRODUCTION. Calling it the Toyota Production System, actually did it a disservice, because it then encapsulates it into a set of tools to implement. For those of you who have studied eastern philosophies, there is a monk named Lao Tsu, who was the father of Taoism, and he would say, once you say you know the Tao, you really don’t know the Tao.

·      When implementing an operating system, in order to really achieve and sustain meaningful improvements all aspects of the company must be engaged including, but not limited to, engineering, purchasing and scheduling…and of course, production.

·      The frozen period, in terms of freezing a schedule that can be planned to, especially with long lead times, is a critical component of any operating system.

·      And finally, how when requirements change, it is not all about the bottom line of your company, but what will keep the supply chain flowing and not cause disruptions, which could reverberate down the entire supply chain

A Partnership Example

As those of you who know me, or have read my other articles, know. I like to try and get a point across through the use of experiences I have had or have heard about. Earlier this week, while watching the reality series (yes, living in stay-at-home conditions does move you to things you would not normally do) Making The Cut. It is hosted by Heidi Klum and Tim Gunn, and is a show that takes selected designers through a series of designing of runway and accessible outifts. The winner will get $1,000,000 and design what will be the next global brand. They started with a bunch, maybe 10-12, and are now down to 4. Up until this point, the designers would design, their garments, select the cloth, cut out the patterns, and leave them for a seamstress to sew overnight, with very little interaction between the designer and the seamstress (queue standard work, but that is not what this is about).

One of the designers worked very well with her seamstresses. She involved them in the design of the outfits, the fitting of the models, and the alterations to make sure they fit well on the models. She accepted their suggestions, not as criticism on her designs, but on advice from the experts. She humbled herself in order to accept suggestions (hmmm, that will be an article for later). She finished several hours early.

Another of the contestants, was a bit more harried. He did not work with his seamstresses, but told them what to do. He did not engage with them in the fitting of the models, but did that himself. He fully admitted that he liked to get his designs incorporated, just the way that he thinks they should look, without regard to how manageable they are to put together (does this sound like office engineering, where engineering designs something and gives it to manufacturing to manufacture). He was constantly changing his mind on the fly, stopping the seamstresses in the middle of what they were doing and redirecting. Ultimately, with just a few hours left to go, he was frantic, running all over the place, saying there was no way he would get done in time. The contestant who collaborated, and was complete, ended up giving assistance to the harried one, and he did finish on time. They both passed through to the finals.

The Long Lost Art of Collaboration

In this day of constant cost reduction pressure. You can be on the collaborative side, and work with your suppliers, improve the supply chain and get gains for both of you. Creating a relationship that will live on, in which you will constantly work together to drive improvement. Or you can be like an OEM that I used to supply to, in which, their idea of supply chain management, was telling you that in order to bid on the new model parts, you had to give them a 5% cost reduction on the current model parts, even though there was going to be no change in the part from this model to the next.

Within the Toyota Production System, partnerships are formed for long term mutual gains. Not short term cost reductions. Both parties constantly strive to improve and share in the gains that are attained. Do you bid out contracts every year in order to drive cost reduction? Or do you work with your suppliers (partners) in order to improve the supply chain and drive out costs, where you both benefit from the relationship.

If you are the latter, that is probably why, as a supplier, when the phone rings, the common thought is…OMG, what are they going to demand this time.

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