In this episode Tony Hines takes a look at Kaizen a Japanese word for Continuous Improvement or Change for the Better. This approach was central to the success of Japanese manufacturing systems. Toyota embedded Kaizen in its manufacturing system. The approach is useful for all organizations and as important today as it ever was.
Developing teams that understand how they can play their part in achieving cost effective solutions to supply chain problems is key to creating value. In this episode Tony Hines discusses what it means to be cost effective and explains why it is necessary for all organizations.
Being cost effective is a culture that can be developed in any organization achieving more with less. It is a key principle for lean thinking. Everyone in the organization needs to understand cost and their part in the process of using resources wisely. Controlling cost is part of the culture but this is not necessarily just reducing cost. It is about using resources effectively.
Teams have to act and be responsible for cost within their control. To do so they need to know what these costs are and to do that they need data transformed into information. Dashboards often form the basis for action.
Agility is important for responding to the unexpected and to manage risk. Lean principles such as lowering waste is one of the pillars of being and acting responsibly when it comes to cost effectiveness.
The team leader plays a pivotal role in developing and embedding cost effectiveness in their part of the organization. The team leader sets direction in line with organization policies and cost effectiveness is a practice. Shared understanding comes from discussing and working with team members to achieve goals. The leader is a motivator and a coach. Find out more when you listen to this episode.
In this episode of Chain Reaction Tony Hines discusses cost concepts that are essential to understand for those managing supply chains. Sources of value and cost in the supply chain and the wider system are examined in the discussions. To achieve supply chain advantage you must understand cost and value. Some of the most important things to understand about costs are direct costs related to the products or activities undertaken and costs that are related to time. Cost elements are materials, labor and overheads. Risk costs, Cycle Time Costs, Conversion Cost, Non-Value Added Cost and Supply Network Cost are all necessary to control value streams. It is essential that every business understands cost concepts and how they impact the supply chain . Value is created by activities but which activities are creating value and which create cost. Do you know the difference between cost, value and profit? Do you know which costs are related to time or products? Know why this is necessary. Do you know which costs contribute to the profitability of the supply chain? Listen and find out more.
Value added is another important concept that all businesses need to be aware of. Identifying sources of value and cost is an important supply chain management issue. The difference between input costs and output costs is a measure of value added. Do you know the difference between cost and investment? It is a distinction that should be made carefully. You invest capital to capture future revenue with the investments made.
The Total Cost of Ownership is another financial concept that all supply chain professionals should have some understanding of. The purchase price of an item is one element of the cost of ownership. There are three elements of cost in TCO which are pre-ownership cost, acquisition cost and post ownership cost. These are examined in the context of supply chains.
Kaizen is briefly discussed in the context of cost in supply chains. Wastage is one of the biggest costs in any supply chain – Mura, Muri and Muda.
If you're wondering what transport at zero mph is listen to the episode. Tony Hines discusses why transport at zero is on the rise. Demand is increasing for goods but supply is often short in the time of Covid. Production capacity is short too as plant closures have occurred on a regular basis. In the last episode we discussed the problems due to shipping transport. This week we take a look at one very important aspect of distribution which is often underestimated but without it we would not be able to get goods on time for business, pleausre or everyday needs. Demand for warehousing is increasing as just in time systems (JiT) falter. In the UK we have turbulence due to Brexit bureaucracy adding to the challenges faced by business. The growing demand for bigger warehouses and the lower demand for retail stores are related. As town centers have seen footfall stall finger action on mobile, PC and tablets have hit max velocity for consumer demand. Triggering demand for space to hold inventories.
Miquel Serracanta Domenech asked me a question last week about my thoughts on the disruptions in global shipping following disruption at Yantian and other ports in China due to Covid 19. A supplementary question was what will the new normal look like? Many businesses are asking the question: Where is my box? This got me thinking more about the problems currently being experienced by many businesses who want to import or export their goods and the knock on effect it has on global supply chains. In this article I want to examine global sea trade carried by containers in a little more detail.
Things are desperate for some businesses attempting to book containers to move their imports and exports. Reports of price increases as much as five times higher than a year ago for containers between Chinese ports and the UK with average box prices up by 400 per cent. Similar price increases are being experienced in the EU and in the United States. The main reasons given by shippers and logistic firms is that there is a box shortage and yet there are now more boxes in the world than ever according to the statistics held by UNCTAD, World Shipping Council and the large shippers operating in these markets. So where are they? Where's my box? Another reason given is that boxes are in the wrong places and the shippers have not been able to move as many empty boxes to the return ports as they would in normal times. Demand for boxes is also said to be higher than normal. While these reasons are plausible it is also clear that the profits earned by the largest players are increasing despite Covid 19. So is it the case that these large businesses dominating the global sea trade have seen an opportunity to clawback some profit by fixing higher prices through a quasi cartel?
Listen to find out more…
We like to spot trends and we like to make lists. So here is my list of ten supply chain trends creating supply chain advantage for 2021.
1. Develop Resilient Supply Chains
2. Digital Transformation of Supply Chains
3. Sustainable Supply Chains
4. Visibility and Transparency
5. Risk Reduction Strategies
6. Managing Layered Complexity
7. Demand Sensing Technologies
8. Contactless Commerce
9. Cyber Threat Strategies
10, Intermodal Logistics
Tony Hines discusses his ten trending strategies creating supply chain advantage.
In this episode Tony Hines discusses pressing problems and how to solve them. In the discussion he defines and explains what is meant by a pressing problem. Drawing on supply chain concepts he puts pressing problems in context. The theory of constraints is used to focus attention on critical problems. A number of tools and techniques are briefly discussed that may help to solve an organization's pressing problem.
So what are pressing problems? When it comes to business we often think that we have many pressing problems. In truth there will be just a few. These are the problems that will disrupt the business if they are not addressed. In the strategy literature they refer to such problems as those that are critical. Identifying such problems is not always easy. Often this is because managers spend more time doing than thinking. It is essential that tiime is set aside for thinking.
We know that reflexive managers learn from their mistakes. In developing processes and practices with the aim of improving performance we learn to adapt and respond flexibly to the circumstances we are faced with. Resilience is a term that we use to talk about effective responses to bounce back from events that disrupt performance.
The episode also contains supply chain news from around the globe.
In this week's episode Tony Hines discusses predictions and the unpredictable. Forecasts are built on the premise that the future is a continuation of the past. Data are gathered about previous performances and projected forward to give a forecast. If you have line items that are fairly standard and demand is stable then forecasting techniques are very useful but what if demand is more unpredictable? Reasons for why we assume the past is continued into the future are almost hardwired into the human psyche. In a wide ranging discusion examining reasons why this is natural arguments are advanced to explain and understand why we should be far more questioning if we want to understand forecasts and why predictions rely far more on assumptions than data alone.
To paraphrase Roald Dahl this is a tale of the unexpected. We should always think about the unexpected as the norm. Not many things in life go exactly to plan so why are we so surprised when things go wrong? If you are a supply chain professional you know with some certainty that something is likely to disrupt the best laid plans. The response is what matters. What can you do to put things back on track quickly? This is why there is much talk about resilience.
For all those students of supply chain along with professionals that spent hours playing the ‘Beer Game’ you know that disruption is normal. You also have learned from the experience and know that to correct disruption and the causes of it often makes it worse given the actions taken to make adjustment to flows within the supply chain. In other words it is not simple. It is complicated. Would a simple algorithm solve the problem?
The Science of Prediction
If you follow professional sports you will know that the bookies favourite does not always win. This is one reason we like it. In our sporting lives unpredictability makes it exciting, exhilarating and a unique experience. We love the fact that you cannot be sure of the prediction. Why then when we return to our working lives do we expect things to happen as planned? Should we just learn to accept it as a matter of fact and not be too concerned? After all isn’t an exciting, exhilarating and unique experience attractive to make our working lives better?
Listen to the episode to find out more…
Also in this episode find out why container freight costs have increased by 400 per cent since 2020, get an update about the fire onboard a container ship near Columbo, Sri Lanka and find out why the Evergiven is still stuck in the Great Bitter Lake in the Suez Canal.
In this episode of Chain Reaction – All about supply chain advantage Tony Hines draws attention to key business skills developed by supply chain professionals. The skills are transferrable and could take you on a journey to the 'C' Suite and even to CEO. Many people on the Board of retail and FMCG businesses have spent some time working in the supply chains of businesses where they cut their teeth. There are a number of notable CEO's with previous when it comes to supply chains including Tim Cook at Apple, Alan George Lafley at Proctor and Gamble, Tom Hayes at Ocean Spray Cranberries Inc. and Mary T. Bara at General Motors.
Talent streaming from those with supply chain backgrounds is inevitable in today's business environment. Working in supply chain roles is most probably better for chances of becoming a business leader of the future than an MBA. It would of course be great to combine both so you could develop you professional skills in work complemented by an academic or professional qualification to recognise the talent formally.
Listen to the podcast to find out more.
Digital acceleration, cyber security risks, sustainability, cost effectiveness and fashion are also on this week’s agenda alongside the role and responsibilities of joining the ‘C’ suite and taking up a leadership role.
Remember to check out Tony Hines Blog where you will find an article entitled “Welcome to the 'C' Suite”.
This episode is about digital transformation building supply chain capabilities which are underpinned by blockchain technology.
Tony Hines discusses how Digital Transformation has impacted every aspect of supply chains from sourcing, procurement, purchase contracts, supplier contracts, transport, distribution, information systems, payments, tracking and tracing goods through the supply chain creating visibility. Many parts of the system are automated using artificial intelligence and machine learning. Trust can be established in digital systems using Blockchain Technology across the distributed networks. Transformational strategies build capabilities to optimize end to end supply chains.