Volume 2 May 15, 2001
Comments From Our Readers
New On The Maset Web Site
Feature Of This Issue
Welcome to the second issue of MASET NEWS. First, let me apologize to some of you since you received up to eight copies of the MASET NEWS. It seems that my Sprint Broadband, my Outlook e-mail system, and the operator - me -- all goofed up. The net result was that some of you received multiple copies. Hopefully we will not make the same mistakes this time. We have taken a number of steps in the journey of Continuous Improvement to fix the problems. If you still are getting more than one copy please let us know.
Please help us increase the circulation of the MASET NEWS by forwarding your copy to others in the organization that can benefit from reading it. We also invite you to send us the e-mail addresses of anyone else you think should receive his or her own copy. We will gladly add them to the distribution.
The MASET NEWS is being sent to you to as a method of communicating between MASET and our many interested Friends, Customers, and Potential Customers. Please let us have your comments, thoughts, and ideas so that we may better serve you. You may write us at Charles.Loew@masetllc.com. We would love to hear from you.
COMMENTS FROM OUR READERS:
I would like to thank the many readers that sent us their comments concerning the MASET NEWS. They were welcome and we do solicit your input.
I would like to share one comment with you that I thought was very thought provoking. "The article that Paul wrote was excellent and really hit the mark in many businesses today. I was disappointed that Paul did not spend time talking about the fact that many of the actions currently being taken also destroy the cohesive morale of an organization". The effect of destroying the Corporate Culture or "the cohesive morale of the organization" will permanently change an organization. In most cases, the remaining employees perceive the reasons of the change as negative; the results will be negative and felt for years to come within that organization. Would any of our readers care to provide examples from their past where this has occurred to share with others?
In this section of MASET NEWS we hope to have articles, comments, and other pieces of valuable information from you, our readers. Please send your contributions to this section to me at Charles.Loew@masetllc.com. We reserve the right to determine what will be published, but will endeavor to publish everything that is sent to us. I look forward to receiving your contributions to this section.
NEW ON THE MASET WEB SITE:
Since the last issue of the MASET NEWS there have been a number of additions to our WEB pages.
Three new associates have joined us. Larry Brodsky, Jodie Filardo, and Jim Kasper. Please review their capabilities at http://masetllc.com/ about/resumes.shtml.
Three new quotes from our Customers have been added. We thank Angela Bombardieri, Anthony Scander, and Pai Lien for their contributions. To read their comments about working with the MASET Consultants, please go to the appropriate web page http://masetllc.com/about/quotes.shtml.
As any leader knows, "it is lonely at the top". One of the services that we offer is "Executive Mentoring". A number of the MASET Consultants have "been there, done that" and are willing to help you expand your abilities and add to the probabilities of success in these trying times. Please review our description of Executive Mentoring http://masetllc.com/products/434.shtml and contact us if you are interested or in need of this service. We try to match your needs with compatible individuals to assist you.
Corporate Venturing is a method of growing the Organization in areas totally different than the current business of the organization. It is the way to identify and insure the long-term growth of your organization. Bob Burton led this effort very successfully at Motorola for over 10 years. Assistance in establishing a Corporate Venturing Activity, evaluating an existing Corporate Venturing Program, or even establishing a team to set up this type of an organization are all within the scope of MASET. Please check out our descriptive write-up of this new service at http://masetllc.com/products/435.shtml.
Finally we have added 17 new training courses and workshops to our portfolio of available training. We have also re-grouped our training by subject to help you find the exact training courses and workshops to meet your specific needs. Please review the new Training and Workshop section of our web page at http://masetllc.com/training.shtml.
FEATURE OF THIS ISSUE:
This month our feature article covers the Supply Chain and the benefits that streamlining this important part of your organization can have on the bottom line. In Management we all try to improve the productivity of our own organizations but often ignore the effectiveness of our partners and suppliers. Read how some organizations have totally lost the potential savings and how others have successfully used Supply Chain Management as a tool to increase Total Customer Satisfaction and reduce the costs to your firm on the bottom line.
SUPPLY CHAIN MANAGEMENT
$3 BILLION SPENT AND STILL COUNTING
- Carl Cooper
Once upon a time there was a company implementing a new Supply Chain System. The plan was aggressive enough - to build a seamless, agile environment for a global supply chain process, linking their physical and technological assets. Strategically, it was to give this consumer products company a marketplace competitive advantage.
Problems started to surface in the planning phase and continued on into implementation - complex supply chain processes remaining unchanged, system education deficiency, IT customization, and software failure.
- Its inventory and distribution system sent $100 million of product in the wrong direction.
- They spent $400 million on its supply chain system.
- Inventory problems from software difficulties took another $100 million.
- The public markets took notice - its market cap went down by $2.5 billion - that's B as in billion.
What an expensive lesson - OVER $3.0 BILLION
What is it that went wrong? They forgot the basics - distinctive competencies. Competitive advantages cannot be found in IT systems/Enterprise Integration software or any Technology. These competencies are short-lived. We should realize that market valuations will no longer be inflated by apparently strong quarters or the overall euphoria of the stock market. The fundamental metrics still hold. It really is the positioning of value and the time to value these companies can bring.
Remember this if you forget all else - there are only two areas of true distinctive competencies - people and process. Maset, with an implementation success rate in excess of 95%, begins by examining the critical business issues and processes. In its approach, nothing is taken for granted. Most processes within organizations are done the way they are because they were always done that way. Introducing IT/Enterprise Integration has increased the speed of most processes but has done very little to improve the processes themselves. As a result, we just wind up doing mostly non-value-added steps faster.
Poorly engineered processes take too long, pass through too many hands, and cost too much. Well-designed processes are basic, sleek, elegant, effective, highly efficient and absolutely value-added in the eyes of the customer.
In addition, once Maset analyzes the critical business issues and processes and value-flow considered, it usually becomes clear that the present organization chart just won't work. New skills, usually enhanced from previous role prescriptions and requiring education and training, are needed to fulfill the new value-added processes. As layers separating the top and bottom levels of the organization begin to peel away, decision making in Supply Chain Management is pushed lower and lower; it becomes faster and more responsive and at lower cost. People start to take ownership for their work and for their customers. Satisfaction inside and outside the organization increases substantially.
By focusing on Supply Chain as a function, we typically ignore the fact that the Supply Chain is first and foremost a process. It is the process of effectively planning, acquiring and distributing product/services, and insuring proper interaction with product/design engineering, quality, logistics, manufacturing, suppliers (and the supplier's supplier), and the customer base (and the customer's customer).
REMEMBER - FUNCTIONS DO NOT CREATE VALUE - PROCESSES DO.
Now that I've said that, there are functions that do add some value based on customer needs and wants, but those that contribute less than others can be eliminated or right-sized. Often we have strategically outsourced activities that contribute little or no value for the customer base.
Maset sends a clear message on Supply Chain Management - processes must relate to the big picture; to the companies' distinctive competencies and goals; to customer satisfaction, market and product development, and total cost effectiveness. We have found that the most successful companies in reducing product development cycle times, improving product/service quality, and increasing return on capital are those that stress Team Supply Chain Management.
So how do we instill value in a Supply Chain? Every $ saved in the Chain goes right to the bottom line as 100% profit. By embracing Process Improvement through Cross Functional Process Mapping, we reduce the cost to serve, increase quality, and drastically reduce the time to serve. For customers, that translates into better VALUE.
By comparison to the example used at the beginning, companies instituting our Process Improvement methodology in their Supply Chain Management have experienced substantial improvements. The metrics shown below is from an International Consumer Products company and, by utilizing our Team-based approach, were able to accomplish these improvements in under 12 months.
PROCESS BEFORE AFTER
Requisition Process Time 12 days 1 day
Supply Chain Mgmt. Operational Cost $20 mil $12 mil
Warranty Claims (% sales) 7% 2.2%
Purchase Order Accuracy 72% 99%
Distribution Schedule Met 72% 97%
Customer Satisfaction 55% 95%
Purchasing Savings (% purchases) 2% 11%
Maset insures avoidance of the Deadly Sins associated with change implementation in Supply Chain Management:
- Insures the improvements are tied to strategic issues the business faces such as improved logistics, reduced inventory turns, higher customer satisfaction, greater market share, developing world class suppliers and, of course, profitability. They are all tied to measurable goals.
- Supply Chain Management Teams develop clear, appropriate charters and hold themselves accountable for fulfillment. Deliverables are generated including workflows, benchmark information, action plans, cost-benefit analysis, measurements, etc.
- Consideration is given to how the changes in Supply Chain Management will affect the existing personnel and those to work in the new system. Maset identifies how factors in the Human Performance System - resources, tools, training, feedback, and rewards - need to change to support the new processes. For example, to perform effectively in a redesigned distribution process, associates need: real time information on orders, inventories, letters of credit status, training and rewards for performance including interaction with sales, manufacturing, finance, etc., not just how well they have performed in their "silos."
- Insures an effective measurement system and other parts of the infrastructure necessary for continuous improvement. Process improvement must rest on a foundation of measures. These insure that department goals serve the greater good of cross-functional process effectiveness; that they reflect both customer and financial needs at the end of the process and upstream; and that they represent the "critical few" metrics of process health that should command management's attention.
If your Supply Chain Management System is not operating at optimum levels or you would like more information on our approach to Supply Chain Management and Process Improvements, then check our Web site under Supply Chain Management www.masetllc.com/products/428.shtml and the associated diagnostic tools www.masetllc.com/diagnostic/four.shtml.
"The best way to predict the future
is to create it"
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