Chain Reaction Podcast The Ghost of Christmas Past
In this Christmas Special this is the first of three episodes looking at past, present and future of supply chains. In this episode Tony Hines looks at the road travelled by supply chain professionals over the past half century and more. Noting that the phrase supply chain itself was only coined back in 1982 and then it was simply looking at what went on in a single firm. It is remarkable to think of all the parts that had to come together to make up the total supply chain system we recognise today. Re-organizing production flows, seeking efficiency and focusing on customers has led to the many developments discussed in this episode.
Time is money. If you can reduce time in processes in the supply chain then cost is taken out while output is constant. Therefore, productivity increases. Since Henry Ford developed his automobile company owners and managers sought ways to achieve this. Frederick Winslow Taylor (1856-1915) ‘Speedy Taylor ‘was Ford’s consultant engineer studying and observing time taken for activities in production systems and seeking ways to reduce it. Taylor developed the principles of scientific management. Engineers had always searched for efficiency in developing machines and now this skill was applied to organization and management processes. His ideas led to surge in work-study-engineers across manufacturing industry and his legacy can be seen in the International Standards such as the ISO 9000 quality standards. Standardization for routine repetitive activities meant that times could be set determining production times and line flow speeds. These ideas were applied and developed in military production making machinery including vehicles, planes, ships and weaponry for two world-wars. Efficiency is the focus for the production and supply system. Peter Drucker (1973) said “On Taylor's `scientific management' rests, above all, the tremendous surge of affluence in the last seventy-five years which has lifted the working masses in the developed countries well above any level recorded, even for the well-to-do.”
Many of the ideas developed to improve efficiencies in supply chains had their roots in Taylor’s legacy of scientific management in the first decade of the 20th Century. We can list a litany of techniques and tools that have been developed following through on Taylor’s ideas: Workflow O&M,Capacity Planning,Throughput Measures, PDCA, RBV,DRP, MRP, Inventory Management, CPR, JiT, TQM, Kaizen, Quality Standards, Standard Costing, BPR, Lean, Agile, Leagile, Time-Based-Competition, Standard Time Measurement, TACKT Time, Value Added amongst them.
The purpose of a supply chain is not simply to be efficient although that is a good start it is to focus on the customer. “It is the customer who determines what a business is. It is the customer alone whose willingness to pay for a good or for services converts economic resource into wealth…what the business thinks it produces is not of first importance. What the customer thinks he or she is buying, what he or she considers value is decisive – it determines what a business is, what it produces and whether it will prosper.” (Drucker 1973)
The two key messages from the Ghost of Christmas Past are that efficiency and effectiveness are the key aims of all supply chains. It is at our peril we lose sight of that.