Wroclaw, September 2009

This week I am doing the same as last week in Budapest. It is the same holding, but a different local client; the business is the same, but somehow the 2 sites are completely different.

I am doing the audit - Supply Chain Planning, Supply Chain Operations, and the Distribution Centre.

Budapest, August 2009

I visited my client in Budapest for the week and undertook an audit of the management system I installed 2 years ago. The management system basically comprises the 2 main parts - an organisational separation from planning and operations, and the implementation of lean management tools which would help them to manage the operation efficiently.

I am flying to Budapest again in 2 weeks and continue and follow-up on the audit. I am also presenting a tool for stock management which will help them to make their stock situation visible and act accordingly.

The Role of SCP (Supply Chain Planning)

The main task of SCP is to manage the forecast, plan and communicate, whereas it needs to be decided case by case to which amount and detail the planning part is to be undertaken.

I am perfectly happy with the minimum planning as in output planning, a wish list of which products need to be in the distribution centre at what date. Some planning departments also take over the whole of production planning (scheduling) as in scheduling which product needs to be produced at which line on what day, etc... I truly believe though that this kind of planning should remain within operations (more detail later).

Talking about communication, SCP should bundle the information which gets from the front end (sales and marketing) to operations. Nobody should be allowed to get in touch with operations but SCP.

And, SCP should manage the forecast of Sales and Marketing and allow operations (SCO) to plan resources.

What if...?

What can happen if the operations department does actually do the thinking job and decides for themselves?

- Operations people normally think big, which means, the bigger the batch/lot size, the better for the fixed costs degression.
- They are not enough informed about the market and should solely concentrate on production/operations efficiency.
- Being focused on short term production results, they tend to neglect to look at the long term when it comes to planning and forecasting.
- Too many interfaces (inside and outside communication) distracts them from their real job - an efficient operation and delivery on time and in full.

There are more reasons, but these are the most important ones.

And now for future reference, when I say 'operations' or 'SCO', that actually means Supply Chain Operations. This is the department in the supply chain which "does" things, and that can be usually production, distribution, etc...

The Brains and the Hands

Talking Supply Chain I'd like to start with the model. Like in many areas it is advisable to separate the "brains" from the "hands", which means, don't let the doers decide what they should do and how much. That never ends up at an optimum.

In a project I am always open for suggestions and agree happily on some alterations to the model and tools which I intend to implement, but on that issue I categorically stay tough: NEVER LET PRODUCTION DECIDE WHAT, HOW MUCH AND WHEN THEY HAVE TO PRODUCE SOMETHING!!!