We Need Better Monitoring Systems

Most executives like performance measures.  Otherwise known as metrics, key performance indicators (KPI’s), analytics, or scorecards, enterprises embrace performance measures as a means to assess how their businesses are doing.

The point of a performance measure is to check how an individual or team is doing against a target that is set by superiors.  (No matter what people may say, it’s always the superior who sets the targets).  Targets are set in line with strategic goals.  Individuals and teams strive to perform such that resulting measures would meet targets to attain the goals. 

But after more than twenty (20) long years since they’ve become popular, performance measures are no longer good enough, especially for supply chains. 

Supply chains are product and service streams.  Materials, merchandise, and information (printed and digital) flow through networks within and between enterprises.  From one operational step to the next, products and services transcend in value as they make their way to their final destinations: the end users.

Supply chains are sensitive to disruption.  When a disruption hits one process, every part of the supply chain feels it.  A delay in the loading of a truck, for instance, may entail a change in production schedules at a manufacturing facility it is supposed to deliver to, which in turn may cause a shortage of a product the facility is supposed to make. 

Performance measures are popular as many people could relate to them.  They are simple and easy to appreciate.  They show how a person’s work is doing versus a target that fits to that person’s tasks.  The performance target would be linked to higher levels of performance measures that would finally connect to a strategic goal. 

Unfortunately, performance measures do not work very well when there are disruptions.  Whereas they are designed such that different levels of an organisation can be made accountable for them, performance measures are not flexible to changing circumstances.  

For example, a production line supervisor is accountable for how many overtime hours his crew works in a week.  His target is that each crew member does not work more than 4 out of 40 hours of overtime per week.  He controls the overtime by rotating his crew members’ leaves such that not many of them have days off at the same time.  But if the supervisor receives a surprise rush order such that he has to make double his weekly volume, he would be forced to ask his crew to go on overtime to meet that order.  His boss, however, would ask him later to explain why he exceeded his weekly overtime target. 

Disruptions are nothing new for supply chains.  They can be big or small.  They are the results of both adversities and opportunities  And they can come periodically or frequently.  They are never identical in cause and they sometimes come in the most mundane manner, like a surprise doubling of a production order such as in the example mentioned above

Performance measures work when supply chains run routinely, much like in a game of sports.  Sports games operate under fixed sets of rules and conditions.  Players score and meet goals to win. But if it rains, the game stops.  In similar fashion, supply chain professionals perform to achieve objectives set by schedules under favourable and predictable working conditions.  But if someone changes the schedule or everyone has to go home because of a disruption like a virus-causing government-mandated lock-down, the performance measures become useless. 

Disruptions are normal.  They aren’t exceptions.  Disruptions occur often as a result of frequent adversities and opportunities that ripple through the fast-paced interconnected world we live in.

What supply chains need are monitoring systems that tell us not only what is going on but also notify us when there is a need to respond.  We need monitoring systems that will tell us about upcoming disruptions and give us time to take action.             

Two things comprise a monitoring system:   visibility and guidance.  Visibility in the form of real-time information and guidance in the form of alerts to events that merit a response. 

An example is a fuel gauge in a car.  The gauge provides visibility on how much fuel is there in a tank.  It also gives guidance via a flashing light that alerts the driver that the fuel tank is almost empty. 

Monitoring systems are not new to supply chains.  Manufacturing managers harness instruments and gauges to monitor production lines and facilitate process control.  A number of enterprises have adopted technologies such as radio-frequency identification (RFID) tags, block-chains, and artificially intelligent command-and-control systems to oversee supply chains even from long distances.   

Many enterprises, however, have had little success in mitigating disruption in their supply chains despite the growth of high-tech monitoring systems.  This is because many monitoring systems aren’t focused towards disruption.  Instead, they are geared towards performance for the sake of measuring results versus strategic goals, which as aforementioned don’t really contribute very much in a frequently disruptive environment. 

We, therefore, need to re-orient supply chains towards monitoring for disruption, not performance.  By watching out for disruption and responding to it, supply chains would be able to muster resources to mitigate it, even perhaps take advantage of it. 

One doesn’t have to start with an intricate, complicated or expensive system.  One can begin with simple reports from various operations along the chain.  For instance, vendors, brokerages firms, and shipping companies can email the status of orders for imported materials. 

Import status report

A status report such as the one above can tell stakeholders about impending issues such as a shipment that’s about to be considered abandoned and subject to penalties.

Supply chain engineers can make improvements step-by-step by tailoring feedback systems to fit different processes.  SMS texts summarising daily customer orders, entered orders in the database, communicated factory orders, MRP II real-time plans are examples.     

      

A supply chain monitoring system can also be like a tsunami warning system: 

Or it can be manifested like a dashboard for supply chain professionals to see:

Whatever the design, the purpose of the monitoring system is to allow stakeholders to watch out for disruption and respond when needed. 

Performance measures have not proven to be helpful in our disruptive-driven world.  We need monitoring systems that provide visibility and guidance especially for supply chains.  They don’t have to be complicated; they just have to be adequate enough to bring attention to disruptions.

Disruptions are a result of both adversity and opportunity.  In either case, it’s always best to be one step ahead whether it be to mitigate or to take advantage of whatever’s out there.  

Bad Things Happen to Everyone

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Asian airlines such as Cathay Pacific, Singapore Airlines, and ANA are known for their excellence in customer service.  A lot of people love flying with these airlines. 

But thanks to the coronavirus (COVID-19) pandemic, these same airlines are experiencing their worst business slump in recent memory.  No one wants to fly these airlines not because their service deteriorated but because nations have closed borders or people risk losing days in quarantine if they travel. 

Customer service excellence has made Asian Airlines the pride of their nations and has given them leadership in competitive air travel industry.  But it took just one adverse virus to bring down their business.    

Adversities such as the coronavirus can quickly kill an enterprise.  It doesn’t matter whether business has been bad or good, whether the enterprise has a very high reputation for service, or whether the enterprise has a very nice reputation.  Adversity has no bias. 

Customer service is very much defined as in we know it when we experience it.    Adversity is the opposite.  We know it when it’s there but we don’t know what shape, size, or form it would take and we don’t really know what the experience will be like.  Adversity comes unexpectedly, without any warning, and we can’t determine its degree until it’s there. 

One may manage service but one cannot manage adversity.  Service is controllable but adversity is not. 

We may mitigate adversity.  At least we can make our enterprises capable to ride them out. 

As much as we don’t know what, when, and how an adversity would arrive, we only have the weapon of our experiences to help us.

It is in experience that we design the drills and exercises to simulate how to deal with adversities like earthquakes and fires.  It is in experience that we formulate security protocols such as daily back-ups of files, updating our anti-malware software, and the simple locking of our doors at night.  It is in experience that we spend time and money to see our dentists and doctors on a regular basis.  And it is in experience that we set emergency response plans that automatically trigger without any delay or need of approval from executive management. 

Drills, exercises, protocols, and check-ups make us ready to meet the next adversity.  They may not address an incoming adversity directly but they help our enterprises become structurally fit to withstand the possibly damaging effects. 

Bad things happen to everyone.  It doesn’t matter if your enterprise is riding high as a reputable service provider or as a ruthless start-up.  Adversity hits without warning and without prejudice.  Only those who are fit with ready methods and structures have the best chances to overcome the impacts. 

About Overtimers Anonymous

Seizing Opportunity and Addressing Adversity via Supply Chain Engineering

We should not focus just on adversity.  We should also focus on opportunity.  We tend to point to adversity when there’s disruption.  But as much as there is adversity behind every disruption, there is also opportunity. 

          This should be common business sense but it can be difficult to accept when there’s a raging disruption going on; something like a pandemic, for example.           

          It’s supply chains that often feel the highest impact when there’s a disruption.  This is because supply chains are made up of vast interconnections within and between enterprises. 

          We blame all sorts of adversities for disruptions.  Adversities can be natural like typhoons and tsunamis or they can be man-made like sudden price increases or an entrepreneur that introduces a new e-commerce app that challenges a traditional corporation’s business. 

          Disruptions, however, are also a result of opportunity.  When an enterprise seizes an opportunity, it means more often than not disrupting its normal way of doing business to make way for a new idea.   

          In the early 1990’s, a company that used to deliver telegrams (i.e. short typed messages) decided to overhaul its operations and sell mobile phones.  Today, Globe Telecom is one of the world’s leading telecommunications firms.   

          Netflix started as an online DVD (digital video-disc) rental company in 1997 and has transformed itself into a video entertainment streaming service and movie-production behemoth.  Netflix caused disruption in the video rental service industry and is causing disruption to the traditional film-making industry.  At the same time, Netflix disrupts its own enterprise by constantly changing its business model.

          Disruptions are the new normal, especially for supply chains.  And since just about every enterprise depends on supply chains, there has never been a greater need for Supply Chain Engineering

          Supply Chain Engineering is about building supply chains with the purpose of boosting productivity and adding versatility so enterprises can not only be competitive but also have the ability to transform. 

          Supply Chain Engineering is Industrial Engineering redefined.  It isn’t scientific management.  It is engineering as it stresses the design and setting up of supply chain systems and structures. 

          Supply Chain Engineering takes into account both adversity and opportunity.  This is because as an engineering discipline, it focuses on putting up systems and structures that will support enterprise strategy.  Engineers construct facilities and install equipment for enterprises to make available their products and services.  In the same way, Supply Chain Engineers (SCEs) bring into reality supply chain systems and structures so enterprises can procure materials and deliver products and services to customers. 

          SCEs are challenged to develop supply chains into ones which will have the capability to change whether in response to adversity or to be ready when enterprises remodel themselves. 

           Disruption is the common denominator of adversity and opportunity.  We tend to sometimes get too preoccupied with adversities such that we pass up opportunities.  Our enterprises should be ready for both.  And the best path to do to do is via Supply Chain Engineering. 

A Letter to All Industrial Engineers: Time to Rise Up

Dear Industrial Engineer:

          I come to you as a fellow Industrial Engineer (IE) with a message.

          It’s time for us to rise up.

          For years, or should I say decades, Industrial Engineering (IE) has been an un-recognized engineering discipline. 

          Many engineers—e.g. civil, mechanical, chemical, electrical—look at us as fakes. 

          Industrial Engineers (IEs) aren’t recognized as technically proficient builders or problem solvers at par with other engineering disciplines.  Even if many of us have professional licenses issued from places like the United States and Europe, we are not respected in many parts of the world.

          Most enterprises and organisations see us as more of management professionals than engineers.  They perceive the specialized courses we take, such as time & motion studies, operations research (OR), facilities planning and inventory systems modelling, as management subjects than technical specializations.  This is despite the fact that we are educated in advanced mathematics and sciences such as calculus, chemistry, and physics, and in engineering courses such as statics & dynamics, materials science, and electrical systems. 

          We are competent in reading and drafting engineering drawings and many of us know how to operate equipment like lathes, drills, presses, and milling machines.  We specialize in advanced statistical models such as linear/non-linear programming, queuing theory, and transportation algorithms. 

          Despite our engineering prowess, very few understand what IEs do.  We ourselves don’t have a clear picture of what Industrial Engineering is.  We’re always finding ourselves struggling to explain what IE is to our peers, co-workers, friends, and fellow family members. 

          The problem is with the title itself.  What does the “Industrial” in Industrial Engineer mean anyway? 

          People know what a civil, chemical, mechanical, or electrical engineer is just by the titles.  But with Industrial Engineer, we have to explain it and most, if not we, still wouldn’t get it. 

          True, many of us IEs, thanks to our training and experience, have successful careers.  Many of us have become top-notch executives and well-off entrepreneurs. 

          It would be nice, however, if we could just have a little more recognition and apply what we know as IEs.  And this is exactly what this letter is all about. 

          We are in the midst of the worst crisis to hit the globe since World War II.  The COVID-19 disease has ravaged communities and brought economies to a standstill.  Enterprises and individuals have lost earnings and incomes as people get sick or are forced to stay home.  Many products are in short supply as manufacturing and logistics facilities have become undermanned or short of materials.  Border closings have delayed or stopped deliveries altogether. 

COVID-19 is the latest and the worst in a series of adversities that has befallen supply chains.  It isn’t the first and it will not be the last.

          Year after year, adversities ranging from natural disasters, cyber-data malware, and trade tariffs have made life difficult for supply chains.  From the September 11, 2001 terror attacks to the climate change crisis, adversities have been buffeting businesses and societies.  They come small but frequently (as in daily traffic jams) or big and infrequently (such as typhoons).   They can come in the form of interruptions (e.g. power failure) or as a man-made business trend (e.g. a new mobile app that makes obsolete traditional package deliveries). 

          As supply chains have become global and more sophisticated, they have become more and more sensitive to adversities.  The challenge to supply chain productivity, and to enterprise survival, is very real. 

          We as IEs are in the best position to deal with adversities.  We have the expertise, the talent, and the tools. 

          For example, amid the crisis of COVID-19, we as IEs can help hospitals reduce wait times for patients via our knowledge of Operations Research (OR).  We can set up forecasting and inventory models to assist hospitals to avoid out-of-stock incidences for medical equipment and supplies.  We can help in improving schedules and reducing wastage in medicines and supplies. 

          When it comes to supply chains, we have the capabilities to analyse and improve the flow processes of materials and merchandise.  We are the experts in optimizing methods and in boosting the productivity of supply chain operations. 

          Before anything else, however, we need to upgrade our identity.  We should stop calling ourselves Industrial Engineers.  It’s too vague. 

          We should instead start calling ourselves Supply Chain Engineers.  Just as with other engineering titles, we need to be recognized quickly for what we do by what we call ourselves.   

          Because supply chains are at the core of global business, it’s time we see ourselves as Supply Chain Engineers.  We can build them, we can improve on them, and we can make them risk-averse and world class. 

          We have evolved and we should continue to do so.  Industrial Engineer as a title belongs to a time when manufacturing was prominent.  Today in the 21st century, supply chains are prominent.  Whether it be in products or services, there will be supply chains.  And we have the means, the skills, and the talent that earns us the title as Supply Chain Engineers. 

          The COVID-19 pandemic has demonstrated the vulnerability of supply chains.  It also has demonstrated the potential value of our vocation as Supply Chain Engineers. 

          We have the ability to change the world for the better.   We are Supply Chain Engineers.   We can make supply chains resistant to present and future adversities and deliver world-class productivity to the enterprise. 

          We have the power and we have the responsibility to demonstrate that power.

          Let’s show them what we got.    

About Overtimers Anonymous

The World Needs Supply Chain Engineers

Not leaders.  Not managers.  Not business executives.  We have plenty of leaders, both real and wannabes.  Managers and executives too; we have enough. 

We need supply chain engineers. 

The global supply chain is a present-day 21st-century reality.  We get much of our goods from all over the world.  We buy shoes from Europe to sell in America.  We ship rice to Australia and import minerals in return.  We travel to trade and we negotiate with our tablets and mobile phones. 

E-commerce has expanded the reach of supply chains.  We order and pay via the Internet.  More and more enterprises deliver door-to-door, business-to-business, person-to-person.  Transportation’s new normal is multi-modal: airplane-to-van, van-to-vessel, vessel-to-truck, truck-to-motorcycle.  Ordinary people ferry food and merchandise to homes as much as courier companies deliver packages to businesses. 

There is so much room for improvement that supply chain management has become a high-profile career choice.  But this is not a promotional message for supply chain management; this is a call for action.  Supply chains are facing challenging adversities and supply chain management, as is, is no longer capable to deal with them. 

Supply chain engineering is the “application of scientific and mathematical principles” for the design and synchronization of highly complex supply chain operations.  It is a field the world needs to synchronize supply chain operations and networks.    

It’s not only because supply chains have so much room for improvement.  It’s also because adversities have become too significant to ignore.  The adversities, which some may classify as supply chain risks, are real. 

Adversities in recent years have caused plenty of pain to supply chains.  They’ve disrupted transport, caused shortages of critical raw materials, and brought widespread inefficiencies.  As much as they’ve been manageable, the adversities are not getting any fewer.  In fact, they’re getting more disruptive and threatening.  To an extent, they can shut down supply chains and cause not only economic failure but also society chaos.  The most prominent example of this is the COVID19 virus pandemic. 

Just as we need doctors to deal with disease, we need engineers to deal with supply chain disruption.  Management as a profession and talent is no longer enough because management is only about planning, organising, directing, and controlling.  We need engineering, that is, we need to have people with skills to design and install systems, networks, and methods to synchronize and integrate the various supply chain operations and make them adversity-resistant. 

We need problem solvers that can define problems before they happen.  Anticipating adversity and mitigating it, if not overcoming it, are the key tasks of the supply chain engineer. 

Where can we find supply chain engineers? 

They’re closer than you think

Where are the Supply Chain Experts?

Supply chain managers are noticeably invisible amid the COVID-19 crisis.

There have been no supply chain executives standing beside national leaders as they made speeches and announcements.

There have been rarely any interviews with supply chain experts about how to deal with shortages of food and difficulties in transportation.  If there were, much of whatever was said had been largely ignored.  

A lot of people have viewed the coronavirus disease, COVID-19, as a medical problem requiring a medical solution, i.e., hospitalization, quarantine, finding a cure.  As much as it is a medical issue, it is more of a problem that needs a social solution. Such a solution needs four (4) things:

  1. convincing everyone to re-align their lifestyles to that of good hygiene, sanitation, avoidance of unnecessary travel & physical contact, and healthy living;
  2. rapid segregation and isolation of suspected infected individuals;
  3. boosting capacities of facilities and mobilization of medical personnel;
  4. synchronising supply chains to stockpile and deliver inventories of essential items such as medical equipment, parts, supplies, food, water, fuel, and other essential goods.

Many countries did the first two, (a) & (b), many are scrambling with difficulty to do (c), and as for (d), it has been a nightmare of shortages and desperation. 

Supply chains are overwhelmed amid the COVID-19 pandemic.  Business firms and organisations are fending for themselves.  There is no united front, no coalitions formed.  There is no high-profile leadership to rally the logistics and manufacturing industries.  Countries aren’t cooperating with each other; how could one therefore expect enterprises to do the same? 

Despite the strides in bringing supply chain talent to corporate board rooms, many executives both in business and government have not engaged the supply chain professionals in the fight versus COVID-19.  Instead, the supply chain experts are relegated to the side-lines, sweating away somewhere untying bottlenecks and moving merchandise as fast as they can to where they are needed the most.   

Many enterprises only see supply chains as networks working within the boundaries of their respective businesses and not as continuous lines of flow of materials and merchandise that cross from one enterprise to another as they accumulate in value from one point to the next: from mines & farms, to factories & warehouses, to stores & e-commerce cross-docks, and finally to users & consumers. 

As much as executives may justify confining supply chain management within imaginary boundaries as a means to foster their respective enterprises’ competitive advantages, there is great potential in designing supply chain systems and networks that synchronise the streams of products, information, and capital from the sources to customer’s shelves. 

This is made more apparent with supply chains becoming more vulnerable to adversities such as COVID-19. 

Adversities are those that disrupt the routines and flows of operations, particularly supply chains.  Adversities come in different forms, degrees, shapes, and sizes.  They are never the same from one to the next (similar, maybe, like with typhoons but different in that typhoons never follow the exact same path with the exact same intensity of wind & rain).

Because supply chains have stretched themselves to the four corners of the world, they have become more susceptible to varying adversities.  Global supply chains are spread thin; their links ever more sensitive to disruption and change.

As supply chains have become global, supply chain management, however, has remained local.  As mentioned, enterprise owners are reluctant to collaborate and link with vendors and customers for fear of compromising their competitive positions.  Hence, there’s no overall organized effort to synchronize because there’s no strategy or structure for such in the first place. 

The COVID-19 pandemic has shown that supply chains can’t function productively without synchronisation.  And it has also shown that societies suffer when supply chains become adversely unproductive. 

How do we synchronise supply chains to make them if not keep them productive? 

The answer is not in management.  It’s in engineering

We Need a Playbook and It’s the Last Thing We Need

Many enterprises and countries around the world have playbooks to deal with pandemics such as COVID-19.  These range from ISO standards and those based on the United States’ Occupational Safety & Health Administration (OSHA), Center of Disease Control & Prevention, and even the US Army Medical Research Institute of Infectious Diseases (USARMIID).   

But as much as present-day playbooks may have protocols for pandemics, they don’t have any for supply chains.  Enterprises and governments may have response plans such as quarantines and allocations of resources for medical facilities & personnel; there wouldn’t be any, however, for cross-border supply chains.

Why is that?  Because global supply chains have become prominent only in recent years.  Governments and many enterprises still manage supply chains as if they exist only within their borders and factories. 

Global supply chain relationships are mostly in the form of contracts with vendors and 3rd party providers.  Most of the links, from the sources, to the transportation, to the storage & deliveries are siloed, that is, they’re autonomous and overseen separately.  Collaborations and interactions are mostly done between individual representatives such as between sales agents and purchasing personnel. 

With no real connection, there is no protocol, and therefore no synchronisation that can overcome widespread disruptions from adversities such as what has happened from COVID-19.  Every link on the supply chain is actually vulnerable to whatever form of adversity, more so a global pandemic.

If enterprises can synchronise (some people call it integrate) their supply chains, then there would be a united front versus any adversities.  Enterprises would be able to adapt together.  Goods would keep moving.  People will get their products.  Economies would remain stable.    

Playbook protocols and procedures, however, are the last thing supply chains need.  Synchronising supply chains requires several things first: 

  1. Management commitment;
  2. Establishing comprehensive policies and strategies;
  3. Setting objectives and performance measures;
  4. Designing structures and systems to support the strategy;

Many enterprises have embraced (1), (2), and (3).  Many have not been fully successful with (4).  This is because many enterprises have trouble finding the talent to do (4). 

Doing (4) is an engineering effort.  It requires talent that will be sought for because before enterprises can sync their supply chains, they’ll need to engineer their networks to establish the links. 

Only then can enterprises rewrite their playbooks and prepare for the next pandemic and whatever adversity that comes their way.