The Path Towards Becoming a Supply Chain Expert Begins with Basic Competency

Sometimes identifying a problem is not in observing what’s going on; sometimes it’s noticing what’s not there.

In my blog, “Where are the Supply Chain Experts?”, written last March 2020, I wrote there were no supply chain experts seen working side by side with business and government leaders in solving supply issues at the height of the CoVID-19 pandemic. 

As media reported issues regarding shortages of medical supplies and consumer goods, we heard no real solutions to the problems.  And as government executives encountered obstacles deploying vaccines, there was no supply chain professional managing proper and efficient distribution. 

There may have been much talk about supply chain issues but there was little in the way of supply chain solutions coming from supply chain experts.

Not that there aren’t any supply chain experts.  There have been numerous podcasts, blogs, and testimonies on the subject but most if not all the supply chain professionals were really just broadcasting opinions.  There wasn’t much in the way of seeing them together with leaders or the leaders even mentioning any of them at all.* 

Simply put, despite the attention, nobody is putting weight in people with supply chain expertise.  Hardly any supply chain professional is in the limelight, even as the global CoVID-19 has brought on the most traumatic economic disruption in history.

There are several reasons which I believe why we don’t see supply chain experts taking the lead in solving major supply chain problems: 

Reason #1: Supply chain people are operations people and operations people are not expected to go out and interact with the outside world.   

The paradigm of operations people is to focus on what’s going within the workplace, that is, they focus inward.  Except to buy or deliver or hire a contractor, operations people don’t really interact with the outside world.

That essentially had been my upbringing in most of my supply chain jobs.  I concentrated on my department, my workplace, the processes within that were assigned to me.  Emphasis was always on what was going on within operations, not without.

Any interactions with the outside world were initiated mostly be people who were not in operations.  Operations people did not initiate such things and I don’t think many do so up to today.

In other words, operations people, especially supply chain professionals, are proactive in what happens within the four (4) walls of factories, warehouses, and offices.  We were not asked to improve the connections enterprises had with vendors, customers, and 3rd party providers.  Executives emphasised performance measures, not relationships.

Reason #2: There aren’t many supply chain experts in the first place. 

Many entrepreneurs are not supply chain professionals and many executives aren’t either.

That’s one reason maybe why we don’t see many chief supply chain officers.  There aren’t that many experienced supply chain managers in the first place. 

It’s not that the leaders don’t recognise the importance of supply chain management even to the extent of having it as an equal in the echelons of top management.  It’s just that there are very few managers with supply chain experience. 

When I say experience, I don’t just mean experience in logistics or manufacturing.  I mean experience as in synchronising operational functions and interacting with customers, vendors, and 3rd parties in procuring, transforming, and moving merchandise from sources to customers.  How many people do we know have this kind of expertise?  Chances are not a lot. 

Reason #3:  Supply Chain education is relatively new and not widespread. 

Many people aren’t schooled in supply chain management.  We can’t blame them for that; supply chain education is relatively new, as in it’s a course that only has been around for only 30 years or so, unlike finance and marketing which have been around for more than a century (longer perhaps).  And supply chain management as a concept and application is still evolving.

Coupled with that are the ones who teach supply chain management.  There aren’t that many supply chain teachers, at least one would call qualified to teach, one who has experience in various supply chain activities.  

Many supply chain courses teach specific subjects that tie in general operations management topics such as inventory management, production planning, transportation management, and operations research.  The trouble is many of these courses don’t tie in the topics together to teach how the supply chain functions as a whole.  They don’t offer the connectivity that illustrates how supply chain operations work together from end to end.

At the same time, supply chain education isn’t really uniform from place to place.  Some schools link supply chains more to logistics while others stress transportation and purchasing.  Some don’t even teach manufacturing’s connection to the supply chain, treating it separately even as it shouldn’t be.  There’s really no formally standard course for supply chains as one would see for law, engineering, or business administration. 

The people graduating from any supply chain management course from the 1990’s to the 2020’s aren’t therefore fully educated in supply chains.  They’re just graduates taught with a hodgepodge of individual courses related to the subject, which in itself isn’t the same from one school to the next, from one teacher to another. 

These make the diplomas and certificates some supply chain schools issue open to doubt.  A certificate or diploma in supply chain management thus testifies to a school’s brand of teaching, not necessarily one that is generally applicable in any industry. 

When it comes to bringing supply chain management to the forefront and developing it as a prominent field that addresses present-day issues via the three (3) aforementioned reasons, what should be done? 

I believe education should be the starting point and the very first step should be to establish basic competency among candidates for the field. 

I define basic competency in supply chain management as where one is familiar with operations, can at least see how to tie them in altogether towards overall optimal performance, and where one has the ability to plan, organise, direct, and control supply chains both in the day-to-day and strategic perspective. 

Basic competency would be the foundation.  Experiences afterward would be the building blocks that would develop the manager’s proficiency. 

Both the education in basic competency and the experience one gains should not be inward looking but focused on the relationships and connections between parties and links within and outside the enterprise. 

It would be a wholly new approach to some entering into the study of supply chains.  But I believe it would be worth it.  Many of the challenges we see in supply chains are precisely occurring in relationships and connections between functions and parties inside and outside enterprises. 

Where can we find the teachers or just even the mentors?  Because there are not many of them, many aspiring students would be left on their own to look for and put together the bits and pieces experiences would bring. 

But even as they may be few, there are those who can at least help new managers attain that basic competency.   I’d like to think I can be one of those teachers given the knowledge and insights I gained from close to 40 years’ experience in the field. 

*[President Joseph Biden of the United States led a “summit on semiconductor and supply chain resilience” in April 2021 in which the President discussed  with chief executive officers (CEOs) how to tackle supply issues particularly in semiconductor chips.  No prominent supply chain expert was seen stepping up to address the issue].     

About Overtimers Anonymous

Six (6) Reasons Why We Need to Learn How to Manage Supply Chains

Why do we need to learn how to manage supply chains?

The answer to the question may seem straightforward at first.   

We need to learn how to manage supply chains so that we can ensure the availability of products and services at the right quantity, right quality, at the time they’re needed, and at a cost that is within stakeholders’ expectations.

But it’s not really that straightforward. 

Supply Chain Management was the idea of Mr. Keith Oliver who sometime in the 1970’s, while working for consultancy firm, Booz Allen Hamilton, developed a vision to break down the functional silos within organisations and integrate operations toward the common purpose of meeting customer requirements. 

Keith Oliver proposed I2M or Integrated Inventory Management in a presentation to a steering committee at the multinational corporation, Philips, in the 1970’s.  But as Oliver struggled to define I2M as the “management of a chain of supply as though it were a single activity,” one of the Philips managers, Mr. Van t’Hoff, suggested Oliver to call it just that:  “total supply chain management.” 

Not many of us really remember Keith Oliver or Mr. Van t’Hoff that much these days but most of us know, or at least heard of, supply chains and supply chain management

Supply Chain Management is a subject that has gained much attention and interest since Messrs Oliver and Vant’Hoff uttered the term.  Just about every enterprise that sells a product recognises the importance of supply chains especially when it comes to deliveries and costs. 

I learned supply chain management mostly on my own, in which I was fortunate to experience different assignments representing various stages of supply chain operations.

I managed inbound receipts of raw materials in which I learned how to plan, schedule, store, and handle incoming receipts.  I learned to be careful in making sure there neither was too much inventory nor too little. 

I managed production operations in which I learned that management is mostly how one works with not only people who are on the factory floor but also with peers from other departments, like purchasing, shipping & transportation, engineering & maintenance, human resources (HR), finance & accounting, and research & development (R&D).

I managed outbound logistics in which I learned that customer service starts not with deliveries but with understanding what customers want. 

From these experiences, I’ve distilled six (6) reasons why we need to learn how to manage supply chains. 

  1. Supply chains are the life-blood of (just about) every enterprise

All enterprises that sell products and services rely on some sort of supply chain for the transformation and flow of resources and merchandise.  The operations that underlie them provide the revenues and dictate the costs which determine the wealth and health of enterprises. 

  • Supply chains go beyond the enterprise’s borders

Supply chains don’t describe what happens within enterprises.  They describe what happens between enterprises.  Managers who are adept about their operations are only at most half-way in managing supply chains.  The real good ones are those who can make the entire supply chain work favourably for their enterprise’s interests. 

  • They’re complicated

No two (2) supply chains are alike, whether one compares enterprises or the operations that run through them.  And every supply chain isn’t really just a single flow of stuff from one end to another.  They’re really interconnected links where items flow in and flow out at various points of every other enterprise’s operation; some of which are visible and some of which are sometimes not. 

  • They’re prone to adversity

Every chain has its weakest links and the more links they are, the more likely they are vulnerable to adversity.  Adversities come in all types of risks and degrees of disruption.  Some are natural; some are man-made.  And they are often unpredictable, which requires some special talent in mitigating, if not avoiding them. 

  • Supply chain success relies on the performance of people

Much emphasis has been made on managing resources when it comes to supply chains.  But supply chain success can only happen with how well people working in them perform.  A lot rides on the workers and operators at different points of the chain and that doesn’t discount stakeholders such as the vendors, customers, information technology professionals, engineers, technicians, executives, and supervisors. 

  • They’re changing

Supply chains are evolving.  And not necessarily uniformly.  Some have hardly changed, such as storage & handling at seaports.  Some have dramatically altered the landscape such as e-commerce portals displacing middlemen in the retail industry.  And not only are they evolving within industries.  Supply chains are coming into play in enterprises one would never think they’d be applicable.  These include business process outsourcing (e.g. call centres), labour contract agencies, insurance, and software development. 

Supply chain management was born from the “aha” moment of Messrs. Keith Oliver and Van t’Hoff.  While the names of both esteemed men have waned from our memories, their brainchild, supply chain management, has become a very popular subject of discussion at enterprises the world over. 

But popularity alone is not enough a reason for why we need to learn how to manage supply chains. 

Supply chain management has become more important as enterprises recognise that it is the manifestation of actual revenue and cost, that it goes beyond borders of businesses, that it addresses complexity and adversity, that people performance is key to success, and that it is changing, not necessarily smoothly but more often in fits and starts. 

I am lucky to have experienced working in various supply chain operations but what it gave me wasn’t credentials but rather, the insights in how supply chains deserve a high place in our management priorities. 

About Overtimers Anonymous

What is a Manager, Anyway?

What is a manager?

That was the first question the group of line managers asked me. 

I just got hired by as a management trainee at a consumer goods company and was on my first month at its Manila manufacturing facility, going through orientation. 

I was required to undergo a qualification test with senior managers to assess how familiar I was with the company’s personnel manual, which detailed policies and benefits for employees.  The session with the line managers was a practice or “mock” qualification before the actual test with the facility’s top executives. 

Even after reading through all the manuals and memorising human resource policies and procedures, I was stumped.  I didn’t know how to answer the question.

“Do not guess!,” one line manager said, who happened to be a 25 year veteran shipping manager in the company.  “Apparently, you do not know what a manager is.” 

And right there, I failed the mock qualification test and had to go back to studying and finding out specifically what a manager is. 

Some will say a manager is a leader.  And that would not be the right answer.

Some will say a manager is a supervisor.  And again, the answer is no. 

A search on the internet will show varying results: 

A manager is a person who is responsible for supervising and motivating employees.”

A manager is an individual that supervises both activities and people within a given organization. In other terms, it is the person in charge of overseeing things that to get done.”

A manager is an expert in his or her field and is a support system for employees.”

“manager: a person who has control or direction of an institution, business, etc., or of a part, division, or phase of it.”

“manager: a person responsible for controlling or administering all or part of a company or similar organization.”

Words such as “responsible,” “supervision,” and “control”, however, don’t provide a complete picture of what a manager is. 

After my disastrous failure at the mock qualification test, the shipping manager approached me and said, “check the Philippine Labour Code.”  I did right away and this is how the Philippines labour law defines a manager:   

(m) “Managerial employee” is one who is vested with the powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment.

ref: Article 219 (m), Labor Code of the Philippines, DOLE Edition, 2016

In later conversations, the line managers said that the Philippine Labour Code was a starting point to knowing what a manager is.  They said:

Managers are representatives of the business.  They have the mandate and authority to make and enforce policies, and to hire & fire people. 

But more than that:

Managers are expected to muster resources to deliver results but what makes a manager different from everyone else is that they have responsibility over people

The late Peter Drucker, famous management guru, said it best when he said:

Management involves getting people to work toward the objectives of the enterprise.

A manager doesn’t just handle resources; a manager isn’t a manager unless he or she has people working for him or her.  

When the line managers met me again for a retaking of the mock qualification, I was able to hurdle the definition of what a manager is.  At the same time, the line managers taught me an important lesson.

You can’t manage anything until you first understand what your role as a manager is.

In a world where enterprises outsource work to third parties and oversee operations from far-away offices, defining what a manager is can be debatable and complicated. 

I don’t really believe a manager is one until he or she directly handles people, as in person, face-to-face, restrictions such as pandemics notwithstanding.  One can have one, two, or a team of a hundred working for him or her.  The point is management when it comes down to it, is all about getting people to work for the goals you as a manager and the enterprise who hired you have set. 

Defining what a manager is the very first step in any enterprise endeavour. 

And in the field of supply chain management, for instance, the most important word is the last one. 

About Overtimers Anonymous

Appreciating the Value of Veteran Employees

When I was a young industrial engineer at the food production division of a multinational company, the accounting department asked me to find out why there was a large reported loss of refined coconut oil.

They’re the ones we always look for when we need something. 

I went to the production manager and he told me to ask Mang Ben.

In the Philippines, calling someone “Mang” is an address of respect usually to an elder.  Mang Ben in my case was a fifty-plus year old veteran who had worked at the multinational’s foods processing department for more than 25 years.  Mang Ben had more experience than everyone else and he would know why there is a reported loss in the coconut oil.  (It turned out to be due to an unsubmitted form that failed to get to accounting). 

Mang Ben could tell how many weeks supply an oil storage tank has just by looking at a gauge and he knew how to “cook” the fats and oils that the multinational produced every day. He could unload a barge of coconut oil all by himself and even called shipping operators to schedule when the barges should arrive such that they’d be timed with the incoming tides.  

I’ve met many workers like Mang Ben in the enterprises I later engaged with.

  • There’s the veteran machine operator who worked for a printing press company.  He knew how to quickly troubleshoot critical equipment and was the one the owners went to if they wanted to know if deadlines could be met; 
  • There’s the storeroom clerk who knew where every spare part of every equipment of the enterprise.  Even if there would be hundreds of items, he’d know where they were kept.  He also had a box of index cards which he used to track the inventory of the items, from when and how many arrived from which vendors to when and how many were given out and to whom; 
  • There was the 30-year-old young lady who was the right-hand assistant of an owner of a trading enterprise which delivered to independent convenience stores.  She knew every inch of the warehouse she was in charge of and knew every step in the trader’s logistics operations, from order to delivery.  She would push people to deliver rush orders and knew the ins and outs of the trading enterprise’s accounting system;
  • There’s the purchasing clerk who was familiar with every vendor of the multinational company she worked for.  From the ones who delivered the expensive chemicals down to the office supplies, she knew who offered the best deals.  She was the go-to person when any of the enterprise’s managers needed something to be bought fast. 

Some executives in the past have cited operations managers’ dependency on people like Mang Ben as a sign of weakness in the system.  Relying on one person for so much may entail risk especially if that employee suddenly becomes absent or leaves the enterprise. 

On the other hand, having a very able veteran brings about opportunities.  Veteran employees like Mang Ben bring a wealth of experience that manuals or consultants can’t equal.  A manual does not quite teach how much to turn a valve in real life to get to just the right cooking temperature as well as how Mang Ben would show it in person.    

Veterans also are likely to know what improvements would be most helpful for an enterprise.  Many veteran labourers at warehouses had given me insights on how storage racks should be laid out and what kind of material handling equipment would help. I was surprised, for example, when the labourers at a toy importer said they’d settle for well-built ladders to climb than expensive forklifts to retrieve bulky boxes from the tallest rack shelves. 

And when it comes to big changes such as building a new warehouse or installing new technology, it also helps to have veterans participate.  Veterans know the products and services of an enterprise very well, if not more so than the owners themselves.  Whenever there is an introduction of something new like a new improved machine or new storage facilities, the veterans would likely have valuable input on what to watch out for especially on quality, efficiency, and service. 

Veterans would know how high a truck dock should be or where in a factory the floor would be strongest to place a new machine.  An architect or civil engineer may offer all the standards but a veteran would know via experience what and where would contribute best for something new. 

Many enterprises have veterans like Mang Ben, employees who have loyally stayed long with the business and know more about the operations than just about anyone else.  Veterans are not signs of weaknesses but people who offer opportunities for educating new employees and to consult with for improvements, whether minor or major. 

We should be grateful for the veterans in our workplace.  They contribute more than what we can appreciate them for. 

About Overtimers Anonymous

Why Redundant Systems are Out-of-the-Question Necessary

I live in Mandaluyong City, Manila, Philippines and on June 2, 2021, there were three (3) announcements:

  1. The Luzon electrical grid was on “red alert,” meaning power failures of up to two (2) hours were imminent due to shortfalls in supply from power plants;
  2. The water utility company, Manila Water, warned that there would be no water supply later in the evening, as the company was planning to fix a water main which could take up to ten (10) hours;
  3. The government’s weather bureau forecasted that a tropical storm was bearing down on Manila, which could bring heavy rains and strong winds.

None of the above happened. 

There was no power interruption.  Water slowed to only a trickle for up to at most a half hour in the middle of the night.  And the storm brought light rain but no strong winds. 

Though it was good news that none of the above happened, the three (3) announcements were disturbing for the following reasons:

  1. They all came as surprises.  The government was assuring ample electrical supply from April to June 2021.  Manila Water had just fixed the water main a few weeks before so we residents didn’t expect there’d be another job that would entail one more whole night of no water.  The weather bureau was predicting the tropical storm wouldn’t reach Luzon but we suddenly saw the new forecast on social media before the storm would hit;
  2. There was no sense of urgencyPoliticians bickered about the power shortages.  Agencies weren’t advising people about the risks in regard to the storm.  And no one was asking communities to prepare for the scheduled water interruption.
  3. These announcements wouldn’t have been necessary if the systems behind each of them were reliable in the first place

All of us rely on electricity and water for our basic needs.  It’s therefore a given that supply should be reliable, as in 100% reliable.  We don’t and shouldn’t accept anything marginally lower. 

If someone tells us we should be happy with 99% reliability in electricity and water, we would ask that person if he’d be happy having no water or power one day out of every 100 days.  We wouldn’t and no one else would. 

Hence, we expect the people who supply us the power and water to be utterly and perfectly dependable.  It’s what we pay for via the bills the utility companies send us and expect us to pay by deadlines with the threat of disconnection if we don’t. 

Electricity and water, like products, easily follow the supply chain model.  Power plants procure raw materials (e.g., coal, oil, gas, wind, solar, geothermal steam) and convert them to electricity which they deliver via transmission lines and distribution grids.  Water companies likewise procure raw water from reservoirs, treat it, and distribute it via their plumbing networks to household and commercial consumers. 

The procurement, transformation, and logistics that comprise every supply chain are present as well in electricity and water utilities.

What makes the power and water supply chains unique is that the products of both are instantly available.  We get power at the flick of a switch and water at the turn of a valve. 

We consumers expect three (3) things from utility companies that supply electricity and water: 

  1. Reliability all the time.  When we consumers need it, the supply should be there. 
  2. Reliability to all.  Supply should be available all the time to all in a utility company’s coverage area.  It is not acceptable if one community has water and power while another has none. 
  3. Reliability in quality.  Utility companies must supply electricity and water at the quality needed.  If our appliances need 220 Volts, it should be 220 Volts, not 250 or 190.  Water should be clean, not dirty. 

Some executives and politicians mistake capacity for reliability.  Some believe if there are more power plants, the more reliable power supply will be.  Likewise, for water, some believe the greater the reservoir capacities, the more reliable water supply would be. 

Capacity is about the capability of assets, such as machines that can produce more and such as storage facilities that can keep more.  But having the ability to make or store more doesn’t make a system more reliable. 

Manila relies on one large reservoir to supply the bulk of its water.  Some people urge that another should be built so that there would be more water available for a growing population.  It’s an issue of capacity, these people say. 

Manila, however, relies on treatment plants to clean and filter the water.  It also relies on a network of pipes to bring the water to consumers. 

What would happen if Manila had lots more water than needed via two (2) reservoirs but had only one treatment plant and one main pipe supplying several of its cities?  The system may have more than enough capacity but wouldn’t exactly be reliable especially if the treatment plant shuts down or a pipe springs a leak.

This is what exactly was the issue for that announcement of no water on June 2, 2021.  A main water pipe needed repair and it was the only one that supplied to a large swath of the city.  One pipe determined the reliable supply of water to hundreds of thousands of people. 

Similarly, it would be nice to have more power plants to have more generating capacity. But if there’s only a single transmission line from each power plant and single substations to process that power before reaching respective consumers, then the power supply may not be as reliable.

Luzon had a shortfall of power supply on June 2, 2021 not because there weren’t enough power plants.  It was because Luzon’s power plants weren’t being managed reliably.  A power plant for instance didn’t have a backup for its boiler facilities that ran its turbine.  Other power plants were down simultaneously for preventive maintenance, which reflected poor scheduling. 

Redundancy is key to dependable reliability in utility companies.  Redundancy is the operation of multiple identical assets for the same process.  Instead of one asset, there’d be two or more even if just one is enough to do on its own.  That means either there’d be at least one idle asset backing up other assets in an operation or several assets running at the same time but at lower capacities as they share serving the total demand. 

For electricity supply, that would mean multiple facilities, not only in the form of multiple power plants but also in multiple transmission grids and substations running parallel to each other. 

For water, that would mean not only multiple reservoirs but also multiple treatment plants and plumbing networks either running parallel or taking turns to be on standby. 

If a transmission line has a fault, the power company can switch to another grid to deliver the electricity.  If a pipe bursts, the water company can switch to an alternate pipeline. 

Some executives, however, see redundancy as a bad thing.  Since it requires extra investment and added operating costs, they would rather not have redundant systems and instead insist that their management teams simply make sure that the systems are always running all the time and perfectly.

Unfortunately, no system is perfect.  Eventually, there will be failure.  It is just not humanly possible to prevent a power line from snapping due to wear and tear or a water treatment plant from shutting down due to an unexpected clog in its filter systems.                                                                                  

Redundancy therefore not only becomes justifiable but also necessary especially when the consumers the utility companies serve, which is practically everyone, demand 100% reliable electricity and water.

Redundancy applies to other supply chains in other industries as well where customers are very sensitive to failure in the delivery of goods and services. 

Enterprises that sell finished products rely on multiple vendors for the same raw materials to avoid run-outs.  They also set contracts with multiple transport providers to ensure there’d be available trucks to deliver the goods. 

Again, some executives mistake capacity for reliability.  They ration procurements from vendors based on percentage of their manufacturing capacities and they ask only so much trucks per transport provider to total only what’s needed to ship in a day.  When a vendor fails to deliver or a trucker doesn’t show up, the enterprise ends up not making what’s needed or delivering to schedule. 

Redundancy means having assets that provide multiples of needed capacity, not just the capacity itself.  It means having multiple sources, multiple facilities, and multiple systems such that when one fails, another picks up the slack. 

And as much as it applies to electricity and water, it is very much applicable to other industries that have very demanding customers.

And it also applies to weather forecasting too.  Weather forecasters rely on multiple monitoring stations and multiple providers for satellite and analytical data.  The data and analyses are redundant but it allows weather forecasters to compare information and come up with more accurate and reliable forecasts.  Which makes it puzzling as to why the forecast was so much wrong before June 2, 2021. 

For critical services like electricity and water, we demand perfect reliability.  Redundancy in systems help assure that reliability.  We expect nothing less from those who provide what we feel we deserve. 

About Overtimers Anonymous

Three Questions Every New Manager Should Ask

Every new manager should always ask three (3) questions about an operation he or she will be in charge of:

  1. What does the book say should be happening?
  2. What do the people say should be happening?
  3. What is really happening? 

Chances are each answer would be totally different from the others. 

What does the book say?

The “book” in this case is the manual, memo, policy, or rule.  What does the book say how an operation should be run? 

What do the people say?

The “people” are the workers running the operation, your boss, and your peers whom you work with.  They’re the men and women on the ground who know their jobs as well as those co-managers who think they know more than you. 

You could also pose the same question to support staff like the inspectors & maintenance technicians, or to foremen and supervisors who oversee the workers.  But I’d put more weight to what the people who are on the front-line say since they’re the ones who are right there doing the job itself.   

What is really happening?

This is what is actually happening which comes from witnessing the operation itself. 

Most of the time the answers to each question differ greatly.  What the book says would differ from what the people you work with say and either would differ from what is happening in real life.

When a new manager notes the different answers, it provides a starting point on how best to manage the people and operations she will be in charge of.  It will lead to more questions like:

  • Why isn’t the operation doing what it’s supposed to as per the manual?
  • Why are people saying differently from what is actually happening?

The idea isn’t to catch people and find fault.  It’s to know what real problems underlie the jobs people are doing and the systems that run them. 

The three (3) questions provide an opening into understanding what those challenges and difficulties are. 

Case in Point:  Production at a Refrigerated Margarine Packing Line

As a new manager of a refrigerated margarine packing line of a multinational consumer goods corporation, it was my job to make sure production would always be maximised.  There was high demand for the corporation’s refrigerated margarine brand at the time and I had to make sure production was in full swing.

I noticed, however, that production per eight-hour shift never was more than 700 packed cases a day. 

I went to check the work styles of the margarine’s operators.  I had the three (3) questions in mind:

What did the book, the company’s manufacturing manual, say? 

The manual said employees must be on the production line at the very start of their shift and can only leave their work-place during breaks and only at the end of their shift.  During their work-time, they must be working and packing to meet output as dictated by the production schedule.

In other words, employees should be working throughout their shift except during breaks. 

But if they are working throughout their shift, then based on time & motion studies, they should easily exceed 700 cases a day.  So why weren’t they?

What did the operators say?

When I asked the operators how come they weren’t exceeding the 700 cases a shift, they said that is the maximum they can humanly do.  Each case is heavy and packing them isn’t as easy as what the manual says. 

When they pack a refrigerated margarine case, they said they have one person scooping up the margarine bars and putting them into a corrugated container.  A second packer tapes the case and stacks it with others on a pallet.  A third person who is also the operator of the production equipment moves the pallet to cold storage adjacent to the packing line and then provides a new pallet for the packets to stack new cases. 

What was really happening?

When I went to discreetly observe the packing operation (I would observe from a spot where they wouldn’t see me), I noticed that there’d only be one operator on the packing line.  The other two wouldn’t be there.  In fact, whenever I observed the operation, there will always be only person doing everything:  packing, stacking, and moving the pallets. 

On the swing shift (afternoon to evening) and graveyard shift (evening to early morning), there would be no production operation for the last two to three hours of each shift.  As in no one present on the production line. 

When I confronted the crews about this, their first answer was that the other operators were on break when I was observing only one person on the line.  When I countered that it wasn’t the designated company break time, they then said they took turns on breaks so that they could run the machine straight without having to turn it off and on again. 

When I asked how come there was no operation for the last two to three hours of a shift, they said they were making up for the break-times they didn’t use up from going straight during the shift.

Finally, when the employees realised they weren’t making sense, they finally said:

Some years ago we were paid on incentive.  We were given a quota of 700 cases a shift.  If we exceed quota, then we will be paid extra.  But the company decided two (2) years before you the manager came to scrap the system and raised every worker’s salaries to make up for the lost incentive.  We at the refrigerated margarine line, however, felt no longer motivated to produce more than 700 cases per shift.  And rather work throughout a shift, each of us operators took turns packing the items on the line.  Each of us would really be working only two (2) hours a shift.  After six (6) hours, when we reached the “quota” of 700 cases, we would all go upstairs to our locker room and rest until quitting time. 

For the succeeding months afterwards, I worked with the refrigerated margarine crew in this regard.  I didn’t outright succeed in getting more production per shift but I did change how production schedules were done and did organise the crews into teams that worked on reducing downtimes.  Productivity actually improved despite the ongoing practice of producing only a fixed quantity per shift. 

Asking those three (3) questions:

  1. What does the book say?
  2. What do the people say?
  3. What is really happening? 

helps managers see what’s happening from three (3) different angles. 

Neither answer may necessarily be the right one.  The idea is to reconcile them all and identify the problems that underlie each one of them. 

About Overtimers Anonymous

Just About Every Enterprise is a Supply Chain Enterprise

I and ten million people in Manila have the same problem every day.  Mobile phone reception—it’s lousy. 

It would take several tries to call someone on my mobile phone and when I do, chances are the conversation would stop in the middle. 

Poor cellular reception is a norm in the Philippines.  It’s just so hard to get a decent signal to have a continuous conversation or get a text out. 

I’m sure telecom companies are doing all they could to improve their services.  I see it with their unrelenting investment in the set-up and maintenance of cell-phone towers as they continue to expand coverage and upgrade reception. 

If we think about it, the operations of telecom companies have similarities to those enterprises who manufacture and deliver finished products.  The good quality mobile phone reception we yearn for is not much unlike the supermarket products in how both are made available to consumers.  In short, both have supply chains. 

The supply chain is a model for enterprises that buy raw materials and produce & deliver merchandise for their customers.  Supply chain management has become a standard when it comes to managing the inventories and logistics of items, from chemicals to consumer goods.

Supply chains, however, aren’t limited to just physically tangible products.  They’re very much applicable to intangible items, such as electricity, health care, and business process outsourcing (BPO) services. 

Supply chains follow the flow of products from their start as raw materials to their conversion to merchandise and subsequent delivery to users.  Service and utility enterprises also follow a path of conversion and delivery not altogether different from product supply chains. 

In manufacturing industries, factories convert raw materials into products. 

In non-manufacturing industries, enterprises convert specific problems and issues into finished services.   Hospitals treat sick patients.  Call centres handle problems and questions.  Telecom companies provide mobile phone receptions resulting in uninterrupted conversations and successful sent messages.  Power utility companies make available electricity from energy sources. 

But It’s not just relating manufacturing and services.  It’s also the logistics behind both.  Whereas manufacturers rely on procurement of materials and logistics for transport and delivery, service enterprises depend on infrastructure and systems to ensure the flow of their operations.

A hospital needs not only ambulances but also the system of managing the dispatch of the ambulances for the assurance of fast turnaround for the benefit to patients needing immediate transport. 

One mistake I observe with service companies is that they limit supply chain management to stuff like spare parts and supplies. 

A large energy corporation for instance has a supply chain executive whose job is to buy equipment and components.  The energy corporation had no structure or strategy when it comes to power conversion and delivery.  The energy corporation, hence, had big issues in unreliable power delivery due to poor planning in energy generation and power plant capacities. 

The success of a supply chain model starts with its scope.  Does the supply chain manager of the enterprise handle the total flow from start (procurement/purchasing), to its conversion (production/service operation), and the logistics operations (transport/delivery/orders processing)?  If it misses on any of the aforementioned, chances are the enterprise’s business has a lot of room for improvement.

We consumers want good quality from the things we buy.  Not only the merchandise from the store but also from services such as mobile phone reception, electricity at the flick of a switch, and the best health care. 

The supply chain model is just as much applicable for intangible services as much as it is for tangible items.  Most if not all enterprises have supply chains for what they offer and deliver.  We just need to recognise that managing the operations with supply chains in mind can go a long way to bringing excellence and win-win results. 

If only the telecom companies can think like this, then maybe we’d get better service with our cell-phones. 

About Overtimers Anonymous

Supply Chains Must Have These Five (5) Traits

What’s all the fuss about supply chains?

An Evergreen container ship, the Ever Given, got stuck at the Suez Canal in late March 2021.  The solution was simple:  dig out the sand it’s grounded on and tow the ship to a nearby lake.  Unfortunately, because it’s a big heavy ship and the Suez Canal is a narrow shipping lane between Asia and Europe, a traffic jam of vessels ensued at both ends of the canal. 

The media jumped on the Ever Given’s predicament and soon enough, it became a global talk-of-the-town.  Supply chains became a hot topic as media analysts speculated on shortages of merchandise as container cargo ship arrivals were delayed due to the logjam. 

The Ever Given’s saga at the Suez Canal riveted the world.  It created so much buzz that weeks after the ship finally was freed, people were still talking about it and more so about supply chains. 

One stuck ship had created so much fuss.

Supply chains have been the focus of media attention since countries started locking down their cities and territories at the onset of the COVID-19 pandemic in early 2020. 

At first, media reported shortages in food, personal protective equipment (PPE), and supplies.  Then there were the reports about transportation bottlenecks in air and sea freight due to restrictions at borders and ports. 

More than a year later, by March 2021, the news shifted toward cargo congestions at North American ports, spiking consumer demand, shortfalls in semiconductor chips leading to automotive factory shutdowns, and the lack of available shipping containers as international trade picked up

And as vaccines became available, just about every so-called expert raised the spectre of not enough injections for everyone due to weaknesses in global supply chains.

But is all the fuss pointing to real problems in supply chains?  Or are they just exaggerations exacerbated by media and analysts seeking attention?

The COVID-19 pandemic disrupted just about every enterprise on Earth.

  • Many saw the emptied grocery shelves and many more waited in long lines to buy medicines and toiletries. 
  • Farmers threw away vegetables and poultry business owners cut production as inventories grew and demand fell.  There was plenty of food available in 2020 and then there were the shortages, particularly meat, in 2021; 
  • It wasn’t easy for some of us to find spare parts for fixing our cars, trucks, or motorcycles.  This was especially true as some car dealers and shops closed due to lockdown restrictions. 

We realised how fragile product supply chains can be in the era of the pandemic.  And as a result, we have seen the supply chain landscape changing before our very eyes.

So, yes, there are real problems in supply chains and no, the media weren’t exaggerating about those problems. 

The Ever Given wasn’t a wake-up call but the media attention is.  Supply chains need to be managed in a different light after all the disruptions enterprises have experienced. 

Where do we start? 

I recommend identifying what traits a supply chain should have:

  • They need to be proactive especially when it comes to demand.  Demand is a primary driver of supply chain flow and if it was already hard to predict what customers will buy, it was even more so during the pandemic and likely stay that way in the post-pandemic eras.  Supply chain professionals need to be at least one step ahead in anticipating, capturing, and cultivating demand in the planning and execution of customer fulfilment services. 
  • Many executives believe supply chains need to build in resilience.  Resilience is the ability to recover from difficulties—to spring back into shape after a shock.  I don’t fully agree.  Resilience implies that enterprises roll with the punches of disruptions, taking in hits and then healing afterward.  In my opinion, enterprise supply chains should learn to parry; they should build in resistance to whatever a bad disruption may bring.   Supply chains therefore should be versatile.  Enterprises shouldn’t just be ready to adapt or resist disruption; they should also be ready to initiate disruption.  And what does an enterprise need to manifest that?  Versatility
  • Supply chains must be productive.  Productive not as in efficient but as in performing effectively towards meeting and exceeding enterprise goals and strategies.  Supply chains are not generic.  Though they may share common standards such as service, cost, and quality, the extent of how each individual supply chain performs depends on the mission of the enterprise each works with. 
  • Supply chains need to be organised.  This is not just about having a structure that puts functions like purchasing, manufacturing, and logistics under one roof.  It’s also about having unified systems that connect and encourage vendors, enterprises, and customers to collaborate to a common cause.  
  • And last but not least, supply chains must be sustainable.  No, not the environment-friendly kind of sustainable but the type in which an enterprise can count on its supply chain for a perpetually reliable supply of resources, such as products, materials, components, energy, human resources, and/or working capital. 

Note that I didn’t mention digital as a needed trait.  As of now, I don’t see it is a needed trait despite what many may say.  Yes, it’s a whole new world and a whole new normal with e-commerce more dominant than ever and with technologies trending towards artificial intelligence, blockchains, and cryptocurrencies.  But as much as they will be hard to ignore in the near future, supply chains don’t need to be digital as a trait.  Supply chains would need to go digital as a means—a means towards being proactive with demand, versatile, productive, organised, and sustainable

About Overtimers Anonymous

Non-Moving Inventories: The Supply Chain’s Elephant in the Room

The phrase, “elephant in the room,” is said to have originated from a fable by Ivan Krylov that tells about “a man who goes to a museum and notices all sorts of tiny things, but fails to notice an elephant.”  It has become a favourite expression for an obvious problem or issue that for some reason gets muddled, forgotten, or avoided. 

Just about every supply chain has an elephant in its room and in many cases, it’s called non-moving inventory. 

Non-moving inventories are items that have ended up idle in storage or on the factory floor for extended periods of time.  Non-moving inventories can be raw materials, packaging materials, spare parts, work-in-process, or finished goods.  They are merchandise that were acquired or produced at a cost but have become unattractive in value.

Non-moving inventories end up as they are for a variety of reasons: 

  1. the enterprise produced more than what could actually be sold;
  2. items are defective, rejections, damaged, or were returned from customers;
  3. items are old, obsolete, expired, or discontinued;

Whatever the reason, enterprise executives would see them as one thing:  a nuisance that takes up valuable space and ties up working capital.   

But they are more than a nuisance.    Non-moving inventories are cash investments that went to naught, as they had lost their selling value.  They are blots to marketers who see them not only as visible failures of their promotional strategies but also as barriers to introducing new products. Some enterprises hold their marketing and sales executives accountable for non-moving inventories and would insist they lead in running them out before any new product is introduced. 

Non-moving inventories are potential threats.  When non-moving inventories grow in size or quantity, they not only become the elephants in the stock-room or storage facility, they also become risks.  An extreme example is when non-moving ammonium nitrate fertiliser exploded in a Beirut, Lebanon warehouse in 2020:  https://www.theguardian.com/world/2020/aug/04/huge-explosion-beirut-lebanon-shatters-windows-rocks-buildings 

The good news is many non-moving inventories don’t end up exploding.  The bad news is that even if they don’t explode, they are a potential threat to the enterprise’s balance sheet and to its future growth. 

Despite their nuisance and threat, many enterprises take for granted non-moving inventories and instead try to get them away from their sight. 

A case in point: a large corporation that makes steel beams and heavy metal parts hired a chief information officer (CIO) to streamline the inventory system.  To appreciate the company’s products and materials, the new CIO toured the corporation’s main factory and warehouse which was just outside the city.  He noticed a huge pile of rusting steel products at a far side of the facility and asked what they were.  The plant manager who was his tour guide said the items were scrap. 

The CIO asked how come there’s so much of the “scrap?”

The plant manager said, “I don’t know. They’ve been sitting there for years ever since I was hired.”

When the CIO reported the “scrap” to the Chief Executive Officer, the latter was outraged. 

“They [his chief finance officer & chief manufacturing officer] told me that they got rid of that stuff many years ago!”, the CEO exclaimed. 

The CEO summoned the CFO and Chief Manufacturing Officer (CMfgO) and ordered a thorough audit. 

The CFO and CMfgO were furious at the new CIO for making them look bad for exposing the hidden inventories.  Within a few weeks, they drove the CIO to resign after they constantly hurled negative comments about him and refused to cooperate with him in improving the inventory system. 

As for the non-moving inventories, they continued to sit in that far corner of the company’s factory, where executives once again forgot about them.

For the steel company, the non-moving inventories would come back to haunt the executives.  This is especially true as the non-moving items would multiply in size and take up more space.  It would become a problem when the enterprise entered hard times and had difficulty paying debts.  Auditors would no doubt point to the non-moving inventories as where the company’s cash is tied up. 

How then does one get rid of non-moving inventories?  The answers are straightforward but can be controversial: 

  • Sell Them Even at a Loss

Sell non-moving inventories at the best but most attractive price possible.  If one can only sell them at scrap value, so be it. 

Some finance executives, however, caution against such drastic selling.  It’s one thing to convert non-moving inventories to cash; it’s another to sell them very cheaply.  Losses in balance sheets attract negative attention especially if an enterprise is publicly listed.  But if one wants to once and for all remove the elephant in the room, this is usually the number one solution, whatever the hit it will bring to an enterprise’s financial reputation. 

  • Throw Them Away

This is worse than selling at scrap value but sometimes it’s the next best option if the enterprise needs valuable space and the alternative is to pay dearly for more space. 

Throwing stuff away can also be a hassle given all the compliance protocols it might entail (e.g. environmental impact). But if the items are toxic or dangerous to carry for extended periods of time, the enterprise might not have much of a choice.

  • Salvage Whatever Can Be Recycled or Reused

Some enterprises would invest in salvaging what can be reusable or re-saleable from non-moving inventories.  It’s never an attractive option as it will often require significant expense in time, materials, and equipment.  But it can be a compromise in that salvaging non-moving stock may not result in a sudden hit to an enterprise’s accounting books.  It would also be an opportunity for enterprises to dispose items gradually while getting something back in return. 

  • Process the Work-In-Process (WIP)

Many manufacturing enterprises have work-in-process inventories (WIP).  They’re the stuff that lie between production operations, usually waiting their turn for the next step in a manufacturing process. 

Some manufacturers, however, keep their WIP waiting too long, sometimes too long that the WIP loses value from deterioration and expiration.  This happens when manufacturers don’t follow first-in first-out (FIFO), customers cancel orders while items are in production, or managers allow other orders to “jump the line” or move other WIP ahead of others. 

I’ve seen WIP stored in one place for more than three (3) years, hidden away in a dark corner of a factory, their values long written off by auditors who thought they were losses. 

Even if written off, WIP takes up space and represent poor management resulting in waste.  And even as operations managers may succeed in hiding and getting rid of them, poor manufacturing practices will undoubtedly result in more WIP time to time. 

The answer to avoiding non-moving WIP is to process them right away.  If they are no longer needed, then either the manufacturing manager should process them anyway, scrap them, or salvage some value from them.  Manufacturing managers should also have a policy to always process all the WIP within a maximum number of days, if not hours. 

The best way to get rid of non-moving inventories is to avoid having them in the first place.  Unfortunately, many enterprises are stuck with them, in one form or another.  Eventually, non-moving inventories become easy to spot as an elephant in a room would be.  They’d be that pile of junk, that stack of unidentified boxes, that pallet of dusty cartons, those drums behind the building, or that huge tank that managers have no idea what it contains. 

Any non-moving inventory will stick out like a sore thumb.  We may try to ignore them but they’ll grow into something larger and harder to afford if we let them. 

Let’s not let them.  Enterprises should get rid of them as fast as possible.  Teamwork with financial auditors and accountants would help because when one has to remove an elephant, one needs all the help one can get.    

About Overtimers Anonymous

What Organising Really Means

There are four (4) basic functions to management:  planning, organising, directing, and controlling. 

We can picture what planning, directing, and controlling are.  They’re kind of straightforward and self-explanatory.  Organising, however, is not. 

When we “organise,” what’s the first thing that comes to mind?  We perhaps think of putting our stuff in order, like filing away papers and cleaning out the clutter.  Maybe we see organising as rearranging the tables of our subordinates, laying out the machinery, and scheduling who’ll work from home versus who’ll be at the office.  It can be that we think it is about making an organisational chart that shows the positions of people. 

Organising as a management function, however, is more than just all of the above. 

The dictionary defines organise as “cause to be structured or ordered or operating according to some principle or idea,” and “arrange by systematic planning and united effort.”  The key words are structure, order, and arrange and it is done for a principle or idea via systematic planning and united effort.

Organising is therefore not just making things neat.  It’s about making things ready for a specific purpose.  The “things” in this case are people, assets, resources, and products

Organising People

Managers organise people to do their jobs efficiently and effectively.  Organising is about employing and deploying the people crucial to making the enterprise’s goals into realities.  These include those we directly hire, i.e. employees, and those we engage with such as contractors and vendors. 

The tasks in organising people include team building, organisational development, training, defining job descriptions or scopes of work, and assignment of duties and responsibilities. 

Organising Assets

To get things done, managers need to have their assets in place and ready to be used.  These include having enough funds to pay for them and prepping them for operation. 

There have been many times I’ve seen managers order equipment and then realising they didn’t set aside enough money to pay the seller, causing delays in installation and start-ups.  

Organising assets includes tasks such as allocating cash in conjunction with budgets, setting up work stations, making and doing a checklist for preventive maintenance, calibrating gauges, running diagnostics, preparing storage space, and housekeeping.

Organising Resources

Resources are the materials, supplies, energy, water, and spare parts that we need to get things done.

Managers tend to underestimate the organisation of resources. 

Organising resources include preparing purchase orders, putting items in their proper place, checking that item codes are updated in the information system, informing security and receiving clerks what vendors are delivering the next day, clarifying policies such as first-in first-out retrieval, cycle counting of items to reconcile with inventory records, and regular quality inspections of critical components & parts. 

Organising Products

Similar to organising resources, we should make sure products are in their proper places, their codes complete in our computers, and delivery documents are arranged visibly for dispatch. Organising products also includes classifying each product’s inventory policy, marshalling finished goods for staging, categorising them by segment, group, family, and stock-keeping unit, and fixing the process descriptions and parameters of each. 

Organising products is no less important than organising people, assets, and resources.  In many cases, it should be the first to be done before the rest.

Organisation is not the same as organising.  The former is about structure; the latter is function.  Organising is work we may call mundane but necessary because the devil is in the details.  We can plan, direct, and control but if we don’t organise, that is, focus on things, make sure they’re in order, arranged, and ready for the strategies we will execute, then we’ll for sure run into trouble. 

Leaders rally people to a cause.  Managers organise people, assets, resources, and products to make real the goals of the cause.   

About Overtimers Anonymous