Published in “Liquid Planners” website, August 25, 2016
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Supply chains continue to increase in complexity. I’ve observed this firsthand from managing hundreds of projects in manufacturing organizations over the last 25 years, including navigating end-to-end supply chain. Being able to effectively manage this complexity is essential to achieve important business objectives–growth and profitability.
For starters, you want to identify the factors that contribute to these complexities: the geographical spread of customers and suppliers; risk and security considerations; regulatory and compliance hurdles; increased customer expectations for shortened lead times, and an increase in the number of players involved are all factors that are increasing supply chain complexity. After all, we live in a global world!
A common thread through all these factors is the number of connection points between suppliers and customers.
Connection Points Drive Complexity
My most successful clients manage complexity by focusing in on connection points. Connection points are those points that link two or more unique people, processes, systems, functions or supply chain partners.
For example, when two functional departments work together to introduce a new product, there will undoubtedly be several points of intersection. These points are typically more complex to manage, and create a higher degree of delays and issues than other points in the new product development process. Imagine developing a new product while collaborating with suppliers and customers. The customers are providing feedback and suggestions on their needs; in the meantime, the suppliers could be collaborating on a new design, new packaging or ways to reduce line scrap. These connection points increase complexity. And one of the most effective ways to manage these complexities is using project management processes and tools.
Here are three ways project management helps teams manage the connection points of supply chain complexity.
- Use the Critical Path Method
These supply chain connection points are usually on the critical path of the project. Critical path, a project management technique used to show the sequence of activities in a project schedule, helps organizations get a handle on this complexity. Project management software lets you visualize this critical path—a path that includes tasks with dependencies, arranged in a particular order that’s required to complete the project on the shortest path to success.
Using project management tools to identify and manage the critical path is an effective way to do everything from reminding product groups of upcoming collaborative tasks, to making sure that teams and vendors are focusing on the right activity at the right time, or at least aware of delays that can affect other pressing deadlines.
Once you know the tasks specific to the critical path, the secret to success is to focus 80 percent of your attention on these particular tasks. This way you simplify your approach but have the largest impact.
- Communicate and Collaborate
It’s no secret that communication is at the crux of success when managing complexity. For example, a SIOP (sales and inventory operation plan) or a sales and operations planning process can run across supply chain partners, which provides a vehicle to communicate and collaborate on demand-and-supply topics.
I’ve worked with manufacturers and distributors from a wide variety of industries (aerospace, building products, food) and found that although a SIOP process does an effective job of aligning demand and supply, it does an even better job of facilitating the cross-communication of all the functions of an organization—often including the customers and suppliers.
Another way to bridge any communication gaps is to use collaborative project management software. It provides a single source of truth for project and team activity and schedule updates, especially when connection points include global teams working in different time zones.
Here’s another simple way to approach communication to streamline supply chain complexities: Pick up the phone. If the operations plan or project management platform reveals incoming issues, talk to those task owners who are dependent on you, as well as the people you’re dependent upon.
- Use Agile Processes
Last but definitely not least, consider following an Agile approach to managing supply chain complexity. Agile, a set of fast and flexible processes that accounts for change, helps teams adapt to marketplace opportunities, and improves business performance, lets you to break down complexity into reasonable chunks. Once you try a simple set of circumstances, you add layers of complexity and test again. Thus, it becomes easier to identify issues and manage complexity because you understand what each layer of complexity affects.
Here’s an example: I once worked with a building products manufacturer to select an ERP system and design business processes for the new ERP system. My team started out by reviewing a simple configuration. Once we got the simple configuration working, we added complexity—layers of options customers might request, data we wanted to collect for business intelligence reporting, etc. By following this Agile approach, we were able to build up to a solution that supported the business in a faster-moving and more successful way (which also focused on the 80/20 rule from a functionality perspective). If we had tried a complex equation, we would have been challenged to figure out which of the many issues arose from which factor or input.
Since the global recession, volatility and complexity are the new normal in supply chain manufacturing. If you lead a team or a project, the more you learn how to successfully manage complexity, the more you’ll thrive. And simplifying complexity is a starting point that will pay big dividends. Also, in today’s Internet-purchasing world, speed is cornerstone. Since managing complexity improves speed and effectiveness, companies that can manage complexity often leapfrog their competition.