People make Supply Chains

A slight diversion away from Investment Stream Mapping (ISM)...

Supply Chain Management: a chain of companies, suppliers, firms that provide supplies to you and that requires Management.

Now that term management includes, but doesn’t mean:

•             The transmission of electronic data on demand, stock and replenishment orders
•             The despatch, transport and receipt of those of orders
•             The production of orders, goods receipt notes, invoices and payments
•             Negotiating and signing supply contracts, quality agreements

What is missing in all of those is the absence of management, which is a people based activity, and is frequently overlooked when we get all hooked up in those transactional statements.

When the Japanese natural disaster hit global supply chains, one of my clients found that the integrity of part of their supply chain was dependent on the strength of the relationship his Purchasing Manager had with a key supplier. In times of short supply, relationships make the difference. Contracts can be interpreted, reasons for non-supply can be created, delays justified. You and your key supplies depend on the people that you are in business with. 

Another client had a multi-million dollar supply contract with just one customer (60%+ of their turnover). They rarely visited that customer at a senior level. The relationship deteriorated, and decisions on future collaborations slipped away. All of those transactional things were happening of course, but the Supply Chain wasn’t being managed.

Don’t fall into the same trap. List out your most important Supply Chains (up and down stream), and ask yourself if you are managing the relationships as well as shipping the paper, emails and goods. Look for the people behind the chain and make sure you are in the game.

Rudyard Kipling and the power of Else

Rudyard Kipling wrote the following advice for researchers:

I keep six honest serving-men
(They taught me all I knew);
Their names are What and Why and When
And How and Where and Who.

Their relevance to mapping our Investment Streams is to make sure that we ask enough questions about all of our customers, what they expect from us and invest in our efforts. Some examples for the car sector:

What do my customers buy? (a car, a lifestyle, travel independence)

Why do they buy? (best credit deal, free servicing, low running costs)

When do they buy? (new registration time, start of a career, for the summer)

How do they buy? (internet searching, Magazine led, Dealer trawling)

Where do they buy? (main dealer, import agency, ex-company cars)

Who buys? (young, old, family builders, boy racers)

And now the power of Else.

Open your mind to all of the possibilities by now going back and asking:

What else?

Why else?

When else? Etc

Use your imagination, look at your competitors, look outside of your industry for Investment needs and streams that offer you a competitive edge.

What else? (service free travelling?)

Why else? (wheel chair storage?)

When? (when a pensioner can access their lump sum?)

Find and deliver a stream that others haven’t thought of to revolutionise your business!

Pause

Drawing in the Customers and their investment needs, then Suppliers is like the first steps of a Sipoc Map. (Suppliers, Inputs, Processes, Outputs and Customers)

But now we pause to consider our purpose before we map.
Why purpose? Well without it we will collect lots of data and become swamped by it, sucked into the enticing comfort zone of data collection. Alternatively if we understand the process and meet the people that are involved then we can always go back if our purpose changes.

Remind ourselves which investment needs are the most important? Which are your competitors better than you at achieving? What will make your customers buy more at lower cost to you, more repeat business and tell their friends and colleagues to buy? Where can you gain a sustainable competitive advantage?

When you have that purpose, that lens through which to look, it's time to go and look at the processes. Go to where it happens: the coalface, the Gemba. Meet the people, understand what they do, what works well and what doesn't. Remember to look with your customers' investments, that lens as you see.

What would those customers think of this if they saw it?
What if a TV company came to visit, a regulator?

Above all understand it. Collect the data that is relevant , especially who is involved, as well as process times, cycle times, queuing times and whatever else seems relevant to your purpose. Capture it on paper because it is more flexible than a screen. Time to digitze it later if you want to do so.
Make sure if you are a member of a team that at least one of you knows the whole stream from supplier to key investment need. If you piecemeal it you'll miss something! Look and listen for those opportunities to improve.

Listen to this blog at http://audioboo.fm/boos/893637

Drawing the Map from Right to Left

Starting the Value Investment Stream Map

So, lets start with the customers. Take a large piece of paper. A3 is the minimum you should start with, you will always need it bigger than this but that comes with more understanding.

And let’s remember now that understanding is the key here. The Map will help you understand where and how to get better.

On the right hand side place the real end user about a third of the way down the paper. Name them and draw a left hand looking eye, to remind us that we should always be looking at this map from their viewpoint, through the lens of the investments that they make. Just in front of that eye list out the investments that you identified for them in a vertical line, highest importance at the top, lowest at the bottom. If some were negligible then cull that and just add a footnote somewhere near the bottom of the paper in tiny writing.

When you have done that draw another eye to the left of the Investments you have listed, and below them, for the customer further “up” the stream and name them. So for instance that could be the retailer after you have already done the end user for a consumer item. Now list their investments, high to low as before.

Keep moving down and left with your “closer customers” and their investment needs.

If you have another set of customer type add them in back on the right hand side.

In the picture you’ll see I’ve added commercial cleaning companies on the bottom of the map looking at washing powder and the description above has been marked as steps 1 though 4 in red.

Last step in today’s blog is the golden thread. Highlight the Investments that are most important in yellow or gold. We will endeavor to make a “golden thread” of those activities and processes/movements that lead to those highlighted in particular.

Next we'll list out your enterprise's suppliers... on the left hand side, in the next blog.

Investment Stream Mapping

Value Investment Steam Mapping

If you'd prefer to listen to this then click here for the Audio boo.

Value Steam Mapping (VSM) easily slips into the “map is the deliverable”, instead of being a record of where we are and an aid to where we are off to. In this and the following pieces, lets re-visit the approach.

First of all lets consider the term Value and throw it out. When you start to map the stream that delivers to a customer, you must properly understand what your end product/service means to that customer. To use that term one last time before we replace it, what do they value?

Your customer, in giving you money for your efforts (let’s stick to that rather than considering non-monetary transactions for now), have also invested:

• Time and effort, travel, in finding and buying your product.
• Association with your brand/image/product: an emotional investment. Their friends will know they have bought you.
• Bought into your method of delivering the product to their use.
• Bought into your way of paying for it.
• Accepted your warranty/service support/upgrade policy.
• Purchased directly or indirectly your packaging methods.

These investments of thought, trust, time and emotion are in addition to the money they pay out for the explicit functions of your product.

So what does this mean? It means that the first step in Value Investment Steam Mapping (ISM) is to properly understand from your customer’s point of view what they are about to invest in you. When you understand what they invest in you, and which investments are the most important to them, you can begin the mapping.

What is the advantage of such an approach? It means that as you consider waste reduction/efficiency improvements you always do it through the lens of that understanding, rather than just cost.

For example, decisions on where and who does a manufacturing step (low cost child labour?) can impact on their moral investment in your brand (“I won’t buy that because of how it’s made”). Mis-read that and however much value you deliver, if you miss the importance of that investment you are mis-designing your business.

In the next item we consider the complexity of multiple customers.