Ian talks about assumptions in the supply chain

Shovel to Shovel Supply Chain Thinking. Part of a recent presentation in London

Boundaries and Buffett

Boundaries are where it gets complicated. I'm not talking about regional boundaries though recent events in Ukraine (substitute another dispute if reading this after 2014) are consistent with this.

Boundaries, where responsibilities change, hand-offs in processes are where assumptions are enormously important.

Some of the biggest boundaries are between partners in Supply Chains, between shipment and arrival, between forecast and order, audit and auditee.

When I was taught about Finite Element Analysis as a young engineer, the assumptions you made as to how your model would operate and the answers it would give were explicitly linked to the boundary conditions you set (or observed from test).

I'll be talking more about this at the "Supply Chain: Simplifying the Tiers" event in London this month (Supply Chain at the Ambassadors).

And the Buffett part? Warren Buffet is quoted as saying that until you have to write it down you haven't really had to think something through. So I always like to see key assumptions written down and shared. Across boundaries, between Supply Chain partners.

"I've got a good idea, let's restrict travel!"

Third quarter figures are looking a little dicey, analysts will be looking for a result in the guidance EPS (Earnings Per Share) range, and Sales don't just magically appear out of nowhere.

What can we do to bring the results in on course, and send a signal to the troops about how serious we are?

"Let's restrict travel!"

"Only essential travel allowed"

"All travel has to be approved by the General Manager/Senior VP/Deity"

"Corporate Travel ban"

etc....

Supply Chain improvement, good procurement, quality audits, collaborative working with suppliers, troubleshooting, developing better planning and risk management tools, Plans for every part (PFEP), discovering new vendors...

All of those involve a degree of personal interaction, especially in the early stages and hence travel. When a majority of the cost base is dependent on Supply Chain innovation and competitive advantage too, what does a travel ban do for the future of the business?

Next Shoring: Popular, catchy, but old school. Tea and Ketchup history lesson

Next Shoring has entered our Politician's language; it speaks of the return of manufacturing, rebalancing the economy and maybe even more jobs. It appeared in this Blog in 2008 and I can trace it back to at least 2005 in McKinseys thought leadership work.

Next Shoring is defined by McKinsey as "...not about about the shift of manufacturing from one place to another but about adapting to, and preparing for, the changing nature of manufacturing everywhere." Mckinsey next-shoring: a CEOs guide

So CEOs listen up!

But lets put some perspective on this and other revelations about matching local needs & manufacturing opportunities from our own recent history.

Tea was first introduced into India by the British, in an attempt to break the Chinese monopoly on tea. The British used Chinese seeds, plus Chinese planting and cultivating techniques to launch a tea industry by offering land in Assam to any European who agreed to cultivate tea for export.

I used to work for HJ Heinz, and the company history will tell you that from a US beginning in 1869, they exported their new Tomato Ketchup to the UK in 1886, followed by Cream of Tomato Soup in 1910 and Beans and more. A new production site in the UK made thousands of tonnes of product in its first year in the roaring twenties.

Next Shoring, reshoring, offshoring. CEOs think about your business and it's loci, and don't be too in awe of the "very latest thinking"!

Contracts: 3 "large print" points

It shows that I'm not a Lawyer, but I have to admit that as I've aged the importance of Contracts to me has risen. Whether Tom Waits, Amos 'n' Andy or Archbishop Fulton J. Sheen coined the phrase:

"The large print giveth and the small print taketh away"

I have work colleagues who have had reason to thank their small print, or blame it... to the tune of hundreds of thousands of pounds. When things go wrong, it pays to have thought ahead and captured in the contract the correct disposition of the result.

Reviewing contracts, your own and others', requires a crystal clear understanding of your purpose in contracting, and sufficient experience in reading and negotiating contracts of a particular type. That experience may come in-house, or from external legal advice. I say of that "particular type" because I recently reviewed a contract outside of my normal comfort zone, and my lack of established reference points was obvious to me. So my learning points are to make sure that:

• You and anyone advising you is clear on your purpose in contracting
• You have or apply sufficient experience of the type of contract you will be signing
• You and any advisors have thought through what might go wrong and how you would want it dealt with if it does.

Happy signing!

Bandwidth tax and Checklists

Two excellent books I would recommend are Scarcity: Why having too little means so much and The Checklist Manifesto.

In Scarcity, the authors have written an excellent and thought provoking book, founded in the effect that scarcity has on how we behave and even our intelligence and ability to cope, The "tax on Bandwidth" conclusion, drawn from the research and evidence in the book supports my own observations, both personally and of clients. The strategies proposed in the book, and tested in some environments to overcome the impact of Scarcity and the tax are intuitively satisfying and a challenge to all of us to apply correctly rather than label behaviours as poor and dismiss them.

The Checklist Manifesto tackles with great detail (the primarily surgical examples are explicit), a topic that appears bound to be dry as dust, but really isn't. As an avowed believer in checklists, this book raised my understanding of what the good design of them looks like and the measurable impact that they can have in key situations. It also tackles some of my concerns about them such as the perception that it hinders creativity (it shouldn't), and the dangers of getting the level of detail wrong (OCD tendencies and lack of user involvement can be dangerous here). The importance of testing, review and modification of a new checklist along with tailoring to local situations was also highlighted by comparing common Surgery checklists in "1st" v "3rd" world Operating Theatres.

Enjoy and apply!