Etapa 1: Acondicionamiento del banco de pruebas experimental para bombas centrífugas. 60

To begin, the critical importance of supply chain as the tool for attaining the next level of process improvement in a business must be re-empha- sized. Of all the improvement techniques being considered today, none offers the range of potential achievement as an end-to-end focus on supply chain. Cost reduction potential peaks under this umbrella effort, as all process steps are brought under scrutiny for possible improvement. Oper- ating issues across the full network are reviewed and most companies find many practices are not as effective as they could be. An intense effort to find the best possible practices becomes the key to bringing solutions to most of those issues. And other opportunities are generated that would not be addressed in normal relationships, as traditional supply chain partners find a wealth of new areas of interaction to consider for simpli- fication and improvement. These are accomplishments that demand cross- area cooperation.

As a firm considers this added-value opportunity, it typically starts by viewing the supply chain in a traditional manner — as a linear, point-to-point, and unidirectional arrangement. That means the company focuses on optimiz- ing the results close to or within its four walls. A manufacturer, for example, will consider the linear processes from supply to its plants, products through distribution, and deliveries to retail stores. A retailer will look at supplies from manufacturers through distribution centers, sales at stores, and returns to distribution. A healthcare provider will study shipments from suppliers through distributors to the healthcare facility.

Exhibit 4.1 illustrates such a linear flow. Firms approaching supply chain will try to manage and improve internal operations with little regard for the total network requirements. In spite of this limitation, progress will be made. Information sharing will improve, albeit reluctantly, between adjacent chain members. Suppliers will provide lower prices for larger volumes. Distributors will re-define their roles and add extra values. Transportation costs will decline. Some customers will work with a manufacturer to improve forecast- ing accuracy and reduce inventory needs.

Mistake 3: Aversion to External Advice  41

As further progress is made, and an infrastructure is attached to the effort, the focus on supply chain and cost reduction generally reaches a crossroad where the firm must decide to continue driving for internal excellence or begin to partner with external allies to get to Level 3 and beyond. At this point, the firm encounters the next dilemma interfering with smooth progress — the refusal to accept external advice. A strong cultural barrier is encountered that stresses the need to keep the continued drive for optimi- zation inside the organization.

The position being put forth should be clarified. All firms will look at outside information. The problem comes in using the information (and the results of applications) and allowing external partners to become a part of the actual improvement effort. Every company today sends people to semi- nars and meetings on supply chain. They have people attend industry-spon- sored symposiums. Books and articles abound and are read thoroughly. But a typical low-level firm will insist that the actual development of its supply chain effort be done with its own people.

To appreciate this dilemma, consider a conversation I had with a senior

executive running the largest business unit for a Fortune 50 company. This

business unit had achieved a good measure of improvement with its effort, but had reached the point of diminishing returns, and this executive was seeking counsel. When I suggested that further progress with his supply chain effort would require some external advice, he responded, “If I have to bring in outsiders, I’ll fire the people I have.” When I asked why he would do that, he gave a further reply, “because it would be an indication that I didn’t have the best people working for me.”

This individual is not atypical of the leaders encountered as further progress is sought. The general impression is that the internal effort is bogged down because the people are not giving enough effort to the tasks. That is not the root problem. Rather, it is typically a case where there is a

Exhibit 4.1 Traditional supply chain. Supplier

Manufacturer

Distributor Retailer

42  The Supply Chain Manager’s Problem-Solver

need for an infusion of new ideas and external thinking. Progress with the individual cited began when we were able to prove that the lack of collab- oration within his own structure was inhibiting further advancement. A few pilots later, with some carefully selected external partners, proved there was a wealth of better practices available if his people could combine their best thinking with that of partners who had found improvements in areas not under the internal scrutiny.

General Motors, a firm decidedly hampered by its historical and cultural inability to accept external advice or to allow outsiders into its inner work- ings, offers an example of a company that has discovered the value of over- coming the aversion problem. GM, whose ability to integrate its suppliers into a collaborative network helping the company to design cars has improved dramatically, discovered it “can save more than six months in overall design and production time. GM asks manufacturers of components such as seats, dashboards, and fuel-injection components to provide input on automobile designs very early in the conceptual phase, which lets the automaker find ways to reduce manufacturing costs by better accommodat- ing suppliers’ products” (Watson, 2001, p. 1).

In fairness, some firms believe if they have made good progress they must be ahead of every competitor, and bringing in outside help will only open the doors to letting the competitors have access to their secrets. A modicum of this concern is justified, but with so much general knowledge being spread so rapidly these days, the lead is often temporary. The better course of action is to solicit external advice, in a collaborative manner, from a few trusted resources so the next levels of progress can be achieved. If there are areas of proprietary information that would cause a competitive problem if leaked to the outside world, they should be clearly defined in the beginning of the collaboration and kept outside of the cooperative actions that take place. We would hardly expect Coca-Cola to share its formula with teams working on transportation improvement.

Supply Chain Requires Internal and External