Supply Chain View

While working on a European distribution strategy assignment for a client earlier this year, I did some work on how to use lower-carbon multi-modal transport and still get goods to the customer on time. So I was interested to read about Tesco’s latest innovation – bringing imported wine down Manchester Ship Canal by barge.

My own investigations found that apart from corporate social responsibility, there were good commercial motivations to use rail, canal and short-sea shipping. Increasing oil prices and carbon taxes represent a significant risk for companies locked into carbon-inefficient strategies. In addition, increasing road congestion lengthens journey times and/or attracts road pricing policies.
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As I’ve been working from home a lot recently, I’ve had the radio on to give the office a bit of a ‘buzz’ and today I overheard this story on BBC 6 Music. Camelot have withdrawn a lottery scratchcard because customers couldn’t work out when they had won.

The customers’ confusion stems from the concept of this scratchcard, as the Manchester Evening News explains:

To qualify for a prize, users had to scratch away a window to reveal a temperature lower than the figure displayed on each card. As the game had a winter theme, the temperature was usually below freezing.

Players, apparently, had trouble comparing two negative numbers and deciding which was the higher.

Do read the MEN article, as it is very funny, if rather depressing. I wrote only last month about how poor numeracy threatens the success of Six Sigma. But failure at this level of simple arithmetical ability would make even the “keep it simple” improvement activities employed in Lean quite hard. I don’t want to get too down about this, because people can still come up with error-proofing ideas, etc without being able to work out that minus six is not less than minus eight.

But would we get better, faster results if our workforce had better basic skills? Undoubtedly.

Links

Manchester Evening News ‘Cool Cash’ card confusion: http://www.manchestereveningnews.co.uk/news/s/1022757_cool_cash_card_confusion

Sometimes people get hung up on semantics. Sometimes it pays to be clear – very clear.

I am currently trying to wade through some waters muddied by misunderstanding and poor use of terminology. My employer has had some good quality experience of Lean (albeit in a fairly small section of its operations) for about four or five years. Now the senior management have woken up to the idea, and have decided that a full Lean programme would benefit the business – without, they admit, a very deep understanding of what they’re getting themselves in for. Let’s leave that issue on one side for now.

What I’ve been grappling with is a difficulty with the terms “Lean” and “Continuous Improvement”. Because understanding of Lean is limited, there is a view that Lean = Tools, and Lean = Manufacturing. For some, Continuous Improvement is an umbrella term that includes Lean, but not exclusively, and also includes Six Sigma and, as one colleague put it “anything else that works”. Read more »

There was a pretty depressing story in the Guardian a few days ago that proposes, in typical newspaper hyperbole, that Britain is in the grip of a numeracy crisis.

For once, the concern is justified. According to the article, there are 3 times as many UK adults with poor numeracy than poor literacy. That’s 15.1 million people with the equivalent of grade G or below at GCSE Maths (an appallingly low benchmark in any case).

What’s more, Tricia Hartley of the charity Campaign for Learning is quoted as saying:

“Many people in senior posts who are responsible for budgets, are really worried about their numeracy.”

As the article points out, there is a much greater social stigma attached to illiteracy than to innumeracy. Well-educated people are quite happy to admit that they were “never any good at maths”. I was surprised to find that senior, well-performing colleagues struggled in Six Sigma training because of their lack of mathematical competence. Those without degrees in science or engineering struggled most. Read more »

This is a question that arises with frightening regularity. Although we generally want both availability and stock turn to continue improving over the long term (and there are various methods of achieving that), nonetheless there are some theoretical limits to those numbers, together with a requirement to decide the availability target for right now.

Let’s start with a definition. The availability from a stocking point (warehouse) is the percentage of customer order lines demanded that are supplied first time from stock during the measurement period. Important points to note are:

• we measure against demand, not sales: sales can be effected by stock availability
• we measure customer order lines, not sales value or items demanded: this is a more representative measure of the customer experience

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You wouldn’t expect a great lesson in Six Sigma from an alcoholic Beat novelist, would you…?

This is from Charles Bukowski‘s first novel, Post Office, which is a semi-autobiographical account of the author’s “career” with the US Postal Service, delivering and sorting mail. I’ve mainly paraphrased the episode in order to respect the author’s copyright.

Chinaski, Bukowski’s alter ego, is called into the supervisor’s office to be taken to task for his poor performance:

“Chinaski, it took you 28 minutes to throw a 23 minute tray.”

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This is the second part of a two-part post. Part 1 was posted last week.

6. Optimise stock over the range

The same investment in stock can produce better or worse levels of availability. This is intuitively obvious if we think of some reductio ad absurdum examples: all of our stock invested in a single slow-moving product will yield very little availability, but held against the fastest moving products will satisfy a good proportion of demand. The subtlety is knowing how to exploit the supply, demand and cost characteristics of each product to hold the optimum stock for a given overall availability. Read more »

This was prompted by a question on the CILT’s eDiscussion forum. I thought the topic deserved a little more room for explanation, so here are my top ten tactics for simultaneous inventory reduction and service improvement. I have divided this into two posts – five tactics today, the next five coming up in part 2.

Perhaps the question should have been phrased in terms of reducing supply chain cost rather than just reducing inventory, but as typical total holding costs for inventory are about 30-35% of valued stock per annum, it’s not a bad start.

1. Reduce lead times

This will allow a downward adjustment of safety stocks, and an improvement in availability. If supplier lead times can be reduced to below the required lead time to the customer, this will remove the requirement to hold stock altogether. Halving lead time should reduce safety stocks by about 30% for the same availability.

For retail supply chains with long lead times and short season cycles, Read more »

I have had a couple of conversations recently that have led me to think about how much overstock we might expect in a Pull supply chain even under fairly idealistic conditions. The first was with a colleague working on a redesign of a warehouse in which a large number of products had stock outside of their reorder point/order-up-to parameters. He took this to be evidence of poor inventory control. The second was with a client whose inventory performance has improved remarkably, but whose faster-moving product showed a level of overstock to the parameters – was it realistic to try and reduce that? Read more »

I have added a permanent page containing a storage capacity calculator that I have put together. This little widget is based on something I knocked up years ago to aid warehouse planning and design.

Please follow the link under the site banner or click here for the storage capacity calculator.